-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, hbzsB4VwDcDgw/ifcqOLxhLaC5tqZG7Yg5jUDMlpwfC9lWiZYbCNo6KWvsOYLeZi fyWq3o3+5bkNq+rOBHj4Lg== 0000006879-94-000010.txt : 19940331 0000006879-94-000010.hdr.sgml : 19940331 ACCESSION NUMBER: 0000006879-94-000010 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940328 FILER: COMPANY DATA: COMPANY CONFORMED NAME: APPALACHIAN POWER CO CENTRAL INDEX KEY: 0000006879 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 540124790 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 001-03457 FILM NUMBER: 94518250 BUSINESS ADDRESS: STREET 1: 40 FRANKLIN RD SW CITY: ROANOKE STATE: VA ZIP: 24011 BUSINESS PHONE: 7039852300 MAIL ADDRESS: STREET 1: 1 RIVERSIDE PLAZA CITY: COLUMBUS STATE: OH ZIP: 43215 10-K 1 1993 10-K - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 10-K ---------------- (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1993 [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from ________ to ________ ----------------
COMMISSION REGISTRANT; STATE OF INCORPORATION; I.R.S. EMPLOYER FILE NUMBER ADDRESS; AND TELEPHONE NUMBER IDENTIFICATION NO. ----------- ----------------------------------- ------------------ 1-3525 American Electric Power Company, Inc. 13-4922640 (A New York Corporation) 1 Riverside Plaza Columbus, Ohio 43215 Telephone (614) 223-1000 0-18135 AEP Generating Company 31-1033833 (An Ohio Corporation) 1 Riverside Plaza Columbus, Ohio 43215 Telephone (614) 223-1000 1-3457 Appalachian Power Company 54-0124790 (A Virginia Corporation) 40 Franklin Road, S.W. Roanoke, Virginia 24011 Telephone (703) 985-2300 1-2680 Columbus Southern Power Company 31-4154203 (An Ohio Corporation) 215 North Front Street Columbus, Ohio 43215 Telephone (614) 464-7700 1-3570 Indiana Michigan Power Company 35-0410455 (An Indiana Corporation) One Summit Square P.O. Box 60 Fort Wayne, Indiana 46801 Telephone (219) 425-2111 1-6858 Kentucky Power Company 61-0247775 (A Kentucky Corporation) 1701 Central Avenue Ashland, Kentucky 41105 Telephone (606) 327-1111 1-6543 Ohio Power Company 31-4271000 (An Ohio Corporation) 301 Cleveland Avenue, S.W. Canton, Ohio 44702 Telephone (216) 456-8173
---------------- AEP Generating Company, Columbus Southern Power Company and Kentucky Power Company meet the conditions set forth in General Instruction J(1)(a) and (b) of Form 10-K and are therefore filing this Form 10-K with the reduced disclosure format specified in General Instruction J(2) to such Form 10-K. ---------------- Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X . No . ---- ---- Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE REGISTRANT TITLE OF EACH CLASS ON WHICH REGISTERED ---------- ------------------- --------------------- AEP Generating Company None American Electric Power Common Stock, Company, Inc. $6.50 par value............... New York Stock Exchange Appalachian Power Cumulative Preferred Stock, Company Voting, no par value: 4 1/2%....................... Philadelphia Stock Exchange 4.50%........................ Philadelphia Stock Exchange 7.40%........................ New York Stock Exchange Columbus Southern None Power Company Indiana Michigan Cumulative Preferred Stock, Power Company Non-Voting, $100 par value: 4 1/8%....................... Midwest Stock Exchange 7.08%........................ New York Stock Exchange Kentucky Power Company None Ohio Power Company Cumulative Preferred Stock, Voting, $100 par value: 7.60%........................ New York Stock Exchange 7 6/10%...................... New York Stock Exchange 8.04%........................ New York Stock Exchange
Indicate by check mark if disclosure of delinquent fil ers pursuant to Item 405 of Regulation S-K ((S)229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in the definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X ----- SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
REGISTRANT TITLE OF EACH CLASS ---------- ------------------- AEP Generating Company None American Electric Power None Company, Inc. Appalachian Power None Company Columbus Southern None Power Company Indiana Michigan None Power Company Kentucky Power Company None Ohio Power Company 4 1/2% Cumulative Preferred Stock, Voting, $100 par value
AGGREGATE MARKET VALUE NUMBER OF SHARES OF VOTING STOCK HELD OF COMMON STOCK BY NON-AFFILIATES OF OUTSTANDING OF THE REGISTRANTS AT THE REGISTRANTS AT FEBRUARY 4, 1994 FEBRUARY 4, 1994 ---------------------- ------------------ AEP Generating Company None 1,000 ($1,000 par value) American Electric Power $6,296,000,000 184,535,000 Company, Inc. ($6.50 par value) Appalachian Power Company 43,000,000 13,499,500 (no par value) Columbus Southern None 16,410,426 Power Company (no par value) Indiana Michigan None 1,400,000 Power Company (no par value) Kentucky Power Company None 1,009,000 ($50 par value) Ohio Power Company 154,000,000 27,952,473 (no par value)
NOTE ON MARKET VALUE OF VOTING STOCK HELD BY NON-AFFILIATES All of the common stock of AEP Generating Company, Appalachian Power Company, Columbus Southern Power Company, Indiana Michigan Power Company, Kentucky Power Company and Ohio Power Company is owned by American Electric Power Company, Inc. (see Item 12 herein). The voting stock owned by non-affiliates of (i) Appalachian Power Company consists of 555,365 shares of Cumulative Preferred Stock, no par value; and (ii) Ohio Power Company consists of 1,712,403 shares of Cumulative Preferred Stock, $100 par value. Some of the series of Cumulative Preferred Stock are not regularly traded. The aggregate market value of the Cumulative Preferred Stock is based on the average of the high and low prices on the closest trading date to February 4, 1994 for series traded on the New York or Philadelphia Stock Exchange, or the most recent reported bid prices for those series not recently traded. Where recent market price information was not available with respect to a series, the market price for such series is based on the price of a recently traded series with an adjustment related to any difference in the current yields of the two series. DOCUMENTS INCORPORATED BY REFERENCE
PART OF FORM 10-K INTO WHICH DOCUMENT DESCRIPTION IS INCORPORATED ----------- ------------------- Portions of Annual Reports of the following companies for the fiscal year ended December 31, 1993: Part II AEP Generating Company American Electric Power Company, Inc. Appalachian Power Company Columbus Southern Power Company Indiana Michigan Power Company Kentucky Power Company Ohio Power Company Portions of Proxy Statement of American Electric Power Company, Inc., dated March 10, 1994, for Annual Meeting of Shareholders Part III Portions of Information Statements of the following companies for 1994 Annual Meeting of Shareholders, to be filed within 120 days after December 31, 1993: Part III Appalachian Power Company Ohio Power Company
---------------- THIS COMBINED FORM 10-K IS SEPARATELY FILED BY AEP GENERATING COMPANY, AMERICAN ELECTRIC POWER COMPANY, INC., APPALACHIAN POWER COMPANY, COLUMBUS SOUTHERN POWER COMPANY, INDIANA MICHIGAN POWER COMPANY, KENTUCKY POWER COMPANY AND OHIO POWER COMPANY. INFORMATION CONTAINED HEREIN RELATING TO ANY INDIVIDUAL REGISTRANT IS FILED BY SUCH REGISTRANT ON ITS OWN BEHALF. EXCEPT FOR AMERICAN ELECTRIC POWER COMPANY, INC., EACH REGISTRANT MAKES NO REPRESENTATION AS TO INFORMATION RELATING TO THE OTHER REGISTRANTS. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF CONTENTS
PAGE NUMBER ------ Glossary of Terms............................................... i Part I Item 1. Business............................................. 1 Item 2. Properties........................................... 37 Item 3. Legal Proceedings.................................... 42 Item 4. Submission of Matters to a Vote of Security Holders............................................. 44 Executive Officers of the Registrants............... ......... 44 Part II Item 5. Market for Registrants' Common Equity and Related Stockholder Matters......................... 47 Item 6. Selected Financial Data.............................. 47 Item 7. Management's Discussion and Analysis of Results of Operations and Financial Condition............... 48 Item 8. Financial Statements and Supplementary Data.......... 48 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.............. 49 Part III Item 10. Directors and Executive Officers of the Registrants......................................... 50 Item 11. Executive Compensation............................... 51 Item 12. Security Ownership of Certain Beneficial Owners and Management...................................... 55 Item 13. Certain Relationships and Related Transactions....... 56 Part IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K................................. 57 Signatures...................................................... 59 Index to Financial Statement Schedules.......................... S-1 Independent Auditors' Report.................................... S-2 Exhibit Index................................................... E-1
GLOSSARY OF TERMS When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below.
TERM MEANING ---- ------- AEGCo.................... AEP Generating Company, an electric utility subsidiary of AEP. AEP...................... American Electric Power Company, Inc. AEP System or the System. The American Electric Power System, an integrated electric utility system, owned and operated by AEP's electric utility subsidiaries. AFUDC.................... Allowance for funds used during construction. Defined in regulatory systems of accounts as the net cost of borrowed funds used for construction and a reasonable rate of return on other funds when so used. APCo..................... Appalachian Power Company, an electric utility subsidiary of AEP. Buckeye.................. Buckeye Power, Inc., an unaffiliated corporation. CCD Group................ CSPCo, CG&E and DP&L. CG&E..................... The Cincinnati Gas & Electric Company, an unaffiliated utility company. Cook Plant............... The Donald C. Cook Nuclear Plant, owned by I&M. CSPCo.................... Columbus Southern Power Company, an electric utility subsidiary of AEP. DOE...................... United States Department of Energy. DP&L..................... The Dayton Power and Light Company, an unaffiliated utility company. Federal EPA.............. United States Environmental Protection Agency. FERC..................... Federal Energy Regulatory Commission (an independent commission within the DOE). I&M...................... Indiana Michigan Power Company, an electric utility subsidiary of AEP. IURC..................... Indiana Utility Regulatory Commission. KEPCo.................... Kentucky Power Company, an electric utility subsidiary of AEP. KPSC..................... Kentucky Public Service Commission. MPSC..................... Michigan Public Service Commission. NEIL..................... Nuclear Electric Insurance Limited. NPDES.................... National Pollutant Discharge Elimination System. NRC...................... Nuclear Regulatory Commission. Ohio EPA................. Ohio Environmental Protection Agency. OPCo..................... Ohio Power Company, an electric utility subsidiary of AEP. OVEC..................... Ohio Valley Electric Corporation, an electric utility company in which AEP and CSPCo own a 44.2% equity interest. PCB's.................... Polychlorinated biphenyls. PFBC..................... Pressurized fluidized-bed combustion, a process in which sulfur is removed during coal combustion and nitrogen oxide formation is minimized. PUCO..................... The Public Utilities Commission of Ohio. RCRA..................... Resource Conservation and Recovery Act of 1976. Rockport Plant........... A generating plant, consisting of two 1,300,000-kilowatt coal- fired generating units, near Rockport, Indiana. SEC...................... Securities and Exchange Commission. Service Corporation...... American Electric Power Service Corporation, a service subsidiary of AEP. TVA...................... Tennessee Valley Authority. VEPCo.................... Virginia Electric and Power Company, an unaffiliated utility company. Virginia SCC............. State Corporation Commission of Virginia. West Virginia PSC........ Public Service Commission of West Virginia. Zimmer or Zimmer Plant... Wm. H. Zimmer Generating Station, commonly owned by CSPCo, CG&E and DP&L.
i PART I ------------------------------------------------------------------- Item 1.BUSINESS - -------------------------------------------------------------------------------- GENERAL AEP was incorporated under the laws of the State of New York in 1906 and reorganized in 1925. It is a public utility holding company which owns, directly or indirectly, all of the outstanding common stock of its operating electric utility subsidiaries. Substantially all of the operating revenues of AEP and its subsidiaries are derived from the furnishing of electric service. The service area of AEP's electric utility subsidiaries covers portions of the states of Indiana, Kentucky, Michigan, Ohio, Tennessee, Virginia and West Virginia. The generating and transmission facilities of AEP's subsidiaries are physically interconnected, and their operations are coordinated, as a single integrated electric utility system. Transmission networks are interconnected with extensive distribution facilities in the territories served. At December 31, 1993, the subsidiaries of AEP had a total of 20,007 employees. AEP, as such, has no employees. The principal operating subsidiaries of AEP are: APCo (organized in Virginia in 1926), which is engaged in the generation, purchase, transmission and distribution of electric power to approximately 838,000 customers in the southwestern portion of Virginia and southern West Virginia, and in supplying electric power at wholesale to other electric utility companies and municipalities in those states and in Tennessee. At December 31, 1993, APCo and its wholly owned subsidiaries had 4,587 employees. A generating subsidiary of APCo, Kanawha Valley Power Company, which owns and operates under Federal license three hydroelectric generating stations located on Government lands adjacent to Government- owned navigation dams on the Kanawha River in West Virginia, sells its net output to APCo. Among the principal industries served by APCo are coal mining, primary metals, chemicals, textiles, paper, stone, clay, glass and concrete products and furniture. In addition to its AEP System interconnection, APCo also is interconnected with the following unaffiliated utility companies: Carolina Power & Light Company, Duke Power Company and VEPCo. A comparatively small part of the properties and business of APCo is located in the northeastern end of the Tennessee Valley. APCo has several points of interconnection with TVA and has entered into agreements with TVA under which APCo and TVA interchange and transfer electric power over portions of their respective systems. CSPCo (organized in Ohio in 1937, the earliest direct predecessor company having been organized in 1883), which is engaged in the generation, purchase, transmission and distribution of electric power to approximately 578,000 customers in Ohio, and in supplying electric power at wholesale to other electric utilities and to municipally owned distribution systems within its service area. At December 31, 1993, CSPCo had 2,143 employees. CSPCo's service area is comprised of two areas in Ohio, which include portions of twenty-five counties. One area includes the City of Columbus and the other is a predominantly rural area in south central Ohio. Approximately 80% of CSPCo's retail revenues are derived from the Columbus area. Among the principal industries served are food processing, chemicals, primary metals, electronic machinery and paper products. In addition to its AEP System interconnection, CSPCo also is interconnected with the following unaffiliated utility companies: CG&E, DP&L and Ohio Edison Company. I&M (organized in Indiana in 1925), which is engaged in the generation, purchase, transmission and distribution of electric power to approximately 525,000 customers in northern and eastern Indiana and southwestern Michigan, and in supplying electric power at wholesale to other electric utility companies, rural electric cooperatives and municipalities. At December 31, 1993, I&M had 3,944 1 employees. Among the principal industries served are transportation equipment, primary metals, fabricated metal products, electrical and electronic machinery, rubber and miscellaneous plastic products and chemicals and allied products. Since 1975, I&M has leased and operated the assets of the municipal system of the City of Fort Wayne, Indiana. In addition to its AEP System interconnection, I&M also is interconnected with the following unaffiliated utility companies: Central Illinois Public Service Company, CG&E, Commonwealth Edison Company, Consumers Power Company, Illinois Power Company, Indianapolis Power & Light Company, Louisville Gas and Electric Company, Northern Indiana Public Service Company, PSI Energy Inc. and Richmond Power & Light Company. KEPCo (organized in Kentucky in 1919), which is engaged in the generation, purchase, transmission and distribution of electric power to approximately 161,000 customers in an area in eastern Kentucky, and in supplying electric power at wholesale to other utilities and municipalities in Kentucky. At December 31, 1993, KEPCo had 842 employees. In addition to its AEP System interconnection, KEPCo also is interconnected with the following unaffiliated utility companies: Kentucky Utilities Company and East Kentucky Power Cooperative Inc. KEPCo is also interconnected with TVA. Kingsport Power Company (organized in Virginia in 1917), which provides electric service to approximately 41,000 customers in Kingsport and eight neighboring communities in northeastern Tennessee. Kingsport Power Company has no generating facilities of its own. It purchases electric power distributed to its customers from APCo. At December 31, 1993, Kingsport Power Company had 102 employees. OPCo (organized in Ohio in 1907 and reincorporated in 1924), which is engaged in the generation, purchase, transmission and distribution of electric power to approximately 657,000 customers in the northwestern, east central, eastern and southern sections of Ohio, and in supplying electric power at wholesale to other electric utility companies and municipalities. At December 31, 1993, OPCo and its wholly owned subsidiaries had 5,749 employees. Among the principal industries served by OPCo are primary metals, stone, clay, glass and concrete products, rubber and plastic products, petroleum refining, chemicals and metal and wire products. In addition to its AEP System interconnection, OPCo also is interconnected with the following unaffiliated utility companies: CG&E, The Cleveland Electric Illuminating Company, DP&L, Duquesne Light Company, Kentucky Utilities Company, Monongahela Power Company, Ohio Edison Company, The Toledo Edison Company and West Penn Power Company. Wheeling Power Company (organized in West Virginia in 1883 and reincorporated in 1911), which provides electric service to approximately 41,000 customers in northern West Virginia. Wheeling Power Company has no generating facilities of its own. It purchases electric power distributed to its customers from OPCo. At December 31, 1993, Wheeling Power Company had 143 employees. Another principal electric utility subsidiary of AEP is AEGCo, which was organized in Ohio in 1982 as an electric generating company. AEGCo sells power at wholesale to I&M, KEPCo and VEPCo. AEGCo has no employees. See Item 2 for information concerning the properties of the subsidiaries of AEP. The Service Corporation provides accounting, administrative, computer, engineering, financial, legal and other services at cost to the AEP System companies. The executive officers of AEP are all employees of the Service Corporation. COST REDUCTION PROGRAM On November 5, 1992, AEP announced a major cost-control program. The program outlined plans to combine certain operations of CSPCo and OPCo, focusing on the functions performed in the headquarters of each company, and to restructure and downsize the operations of the Service Corporation in Columbus, Ohio. The program has resulted in the elimination of over 1,000 positions. 2 REGULATION General AEP and its subsidiaries are subject to the broad regulatory provisions of the Public Utility Holding Company Act of 1935 administered by the SEC. The public utility subsidiaries' retail rates and certain other matters are subject to regulation by the public utility commissions of the states in which they operate. Such subsidiaries are also subject to regulation by the FERC under the Federal Power Act in respect of rates for interstate sale at wholesale and transmission of electric power, accounting and other matters and construction and operation of hydroelectric projects. I&M is subject to regulation by the NRC under the Atomic Energy Act of 1954, as amended, with respect to the operation of the Cook Plant. Conflict of Regulation Public utility subsidiaries of AEP can be subject to regulation of the same subject matter by two or more jurisdictions. In such situations, it is possible that the decisions of such regulatory bodies may conflict or that the decision of one such body may affect the cost of providing service and so the rates in another jurisdiction. In a recent case involving OPCo, the U.S. Court of Appeals for the District of Columbia held that the determination of costs to be charged to associated companies by the SEC under the Public Utility Holding Company Act of 1935 precluded the FERC from determining that such costs were unreasonable for ratemaking purposes. The U.S. Supreme Court also has held that a state commission may not conclude that a FERC approved wholesale power agreement is unreasonable for state ratemaking purposes. Certain actions that would overturn these decisions or otherwise affect the jurisdiction of the SEC and FERC are under consideration by the U.S. Congress and these regulatory bodies. Such conflicts of jurisdiction often result in litigation and if resolved adversely to a public utility subsidiary of AEP could have a material adverse effect on the results of operations or financial condition of such subsidiary or AEP. CLASSES OF SERVICE The principal classes of service from which the major electric utility subsidiaries of AEP derive revenues and the amount of such revenues (from kilowatt-hour sales) during the year ended December 31, 1993 are as follows:
AEP AEGCO APCO CSPCO I&M KEPCO OPCO SYSTEM (A) ----- ---- ----- --- ----- ---- ---------- (IN THOUSANDS) Retail Residential Without Electric Heating................ $ -- $ 242,177 $284,593 $ 205,315 $ 43,325 $ 256,547 $1,052,233 With Electric Heating.. -- 308,242 100,185 97,568 54,139 132,606 728,569 -------- ---------- -------- ---------- -------- ---------- ---------- Total Residential..... -- 550,419 384,778 302,883 97,464 389,153 1,780,802 Commercial............. -- 273,147 328,854 220,938 53,892 241,426 1,153,207 Industrial............. -- 359,946 137,460 250,939 90,501 609,140 1,514,691 Miscellaneous.......... -- 30,627 14,689 5,593 808 8,107 62,879 -------- ---------- -------- ---------- -------- ---------- ---------- Total Retail.......... -- 1,214,139 865,781 780,353 242,665 1,247,826 4,511,579 Wholesale (sales for resale)................. 229,196 289,187 74,942 404,910 48,399 438,855 687,072 -------- ---------- -------- ---------- -------- ---------- ---------- Total from KWH Sales.. 229,196 1,503,326 940,723 1,185,263 291,064 1,686,681 5,198,651 Provision for Revenue Refunds................. -- (331) -- (755) -- -- (926) -------- ---------- -------- ---------- -------- ---------- ---------- Total Net of Provision for Revenue Refunds...... 229,196 1,502,995 940,723 1,184,508 291,064 1,686,681 5,197,725 Other Operating Revenues................ 77 16,109 12,929 18,135 3,188 21,896 71,117 -------- ---------- -------- ---------- -------- ---------- ---------- Total Electric Operating Revenues............. $229,273 $1,519,104 $953,652 $1,202,643 $294,252 $1,708,577 $5,268,842 ======== ========== ======== ========== ======== ========== ==========
- -------- (a) Includes revenues of other subsidiaries not shown and elimination of intercompany transactions. 3 AEP SYSTEM POWER POOL, OFF-SYSTEM POWER SALES AND TRANSMISSION SERVICES AEP's electric utility subsidiaries operate their generating plants and transmission lines as a single interconnected and coordinated electric utility system. APCo, CSPCo, I&M, KEPCo and OPCo are parties to the Interconnection Agreement, dated July 6, 1951, as amended (the Interconnection Agreement), defining how they share the costs and benefits associated with the System's generating plants. This sharing is based upon each company's "member-load- ratio," which is calculated monthly on the basis of each company's maximum peak demand in relation to the sum of the maximum peak demands of all five companies during the preceding 12 months. The following table shows the net credits or (charges) allocated among the parties under the Interconnection Agreement during the years ended December 31, 1991, 1992 and 1993:
1991 1992 1993 ---- ---- ---- (IN THOUSANDS) APCo........................................... $(235,000) $(243,000) $(260,000) CSPCo.......................................... (142,000) (118,000) (141,000) I&M............................................ 148,000 71,000 183,000 KEPCo.......................................... 15,000 26,000 1,000 OPCo........................................... 214,000 264,000 217,000
In addition, APCo, CSPCo, I&M, KEPCo and OPCo are parties to the Transmission Agreement, dated April 1, 1984, as amended (the Transmission Agreement), defining how they share the benefits and burdens associated with their extra-high-voltage transmission system (facilities rated 345 kv and above) and certain facilities operated at lower voltages (138 kv and above). Like the Interconnection Agreement, this sharing is based upon each company's "member-load-ratio." The following table shows the net credits or (charges) allocated among the parties to the Transmission Agreement during the years ended December 31, 1991, 1992 and 1993:
1991 1992 1993 ---- ---- ---- (IN THOUSANDS) APCo................................................ $ (7,000) $(8,000) $(3,200) CSPCo............................................... (31,400) (29,900) (31,200) I&M................................................. 46,200 48,200 47,400 KEPCo............................................... 5,700 4,200 3,800 OPCo................................................ (13,500) (14,500) (16,800)
AEGCo, APCo, CSPCo, I&M, KEPCo and OPCo also sell electric power on a wholesale basis to non-affiliated electric utilities. Such sales are either made by the AEP System and then allocated among APCo, CSPCo, I&M, KEPCo and OPCo based on member-load-ratios or made by individual companies pursuant to various long-term power agreements. The following table shows the amounts contributed to operating income of the various companies from such sales during the years ended December 31, 1991, 1992 and 1993:
1991(A) 1992(A) 1993(A) ------- ------- ------- (IN THOUSANDS) AEGCo(b)............................................. $ 33,900 $ 33,000 $ 32,500 APCo(c).............................................. 23,600 18,100 23,600 CSPCo(c)............................................. 12,500 9,100 12,000 I&M(c)(d)............................................ 35,600 31,300 35,300 KEPCo(c)............................................. 4,800 3,700 4,900 OPCo(c).............................................. 21,500 15,700 20,700 -------- -------- -------- Total System......................................... $131,900 $110,900 $129,000 ======== ======== ========
- -------- (a) Such sales do not include wholesale sales to entities such as municipal agencies that may be full/partial requirement customers of AEP System companies within their service areas. See the table under Classes of Service for revenues from wholesale sales. (b) All amounts for AEGCo are from sales made pursuant to a long-term power agreement. See AEGCo--Unit Power Agreements. (c) All amounts are from System sales which are allocated among APCo, CSPCo, I&M, KEPCo and OPCo based upon member-load-ratio. All System sales made in 1991, 1992 and 1993 were made on a short-term basis, except that $7,300,000, $11,500,000 and $16,800,000, respectively, of the contribution to operating income for the total System were from long-term System sales. (d) In addition to its allocation of System sales, the 1990, 1991 and 1992 amounts for I&M includes $21,100,000, $20,800,000 and $21,600,000 from a long-term agreement to sell 250 megawatts of power scheduled to terminate in 2009. 4 The AEP System has long-term system agreements to sell 100 megawatts of electric power through 1997 and to sell at times up to 200 megawatts of peaking power for at least five years through March 1997 to unaffiliated utilities. The AEP System continues to seek appropriate long-term wholesale power agreements and will sell available power on a short-term basis. The future results of operations of AEP and its operating companies will be affected by their ability to make cost-effective wholesale sales or, if such sales are reduced, their ability to timely raise retail rates. APCo, CSPCo, I&M, KEPCo, OPCo and other System companies also provide transmission services for non-affiliated companies. The following table shows the amounts contributed to operating income of the various companies from such services during the years ended December 31, 1991, 1992 and 1993:
1991 1992 1993 ------- ------- ------- (IN THOUSANDS) APCo.................................................... $ 2,800 $ 3,000 $ 2,900 CSPCo................................................... 2,400 2,500 2,500 I&M..................................................... 6,400 6,600 7,700 KEPCo................................................... 500 600 600 OPCo.................................................... 9,800 10,100 9,900 ------- ------- ------- Total System(a)......................................... $22,600 $23,500 $24,200 ======= ======= =======
- -------- (a) Includes revenues of other System companies not shown. The Energy Policy Act of 1992 amended the Federal Power Act to authorize the FERC under certain conditions to order utilities which own transmission facilities to provide wholesale transmission services for other utilities and entities generating electric power. See Rates--APCo for discussion of a current proceeding in which certain municipal customers seek the FERC to order the AEP System to provide certain transmission services. OVEC AEP, CSPCo and several unaffiliated utility companies jointly own OVEC, which supplies the power requirements of a uranium enrichment plant near Portsmouth, Ohio owned by the DOE. The aggregate equity participation of AEP and CSPCo in OVEC is 44.2%. The DOE demand under OVEC's power agreement, which is subject to change from time to time, is 1,929,000 kilowatts and is scheduled to remain at about that level through the remaining term of the contract. The proceeds from the sale of power by OVEC, aggregating $271,000,000 in 1993, are designed to be sufficient for OVEC to meet its operating expenses and fixed costs and to provide a return on its equity capital. APCo, CSPCo, I&M and OPCo, as sponsoring companies, are entitled to receive from OVEC, and are obligated to pay for, the power not required by DOE in proportion to their power participation ratios, which averaged 42.1% in 1993. The power agreement with DOE terminates on December 31, 2005, subject to early termination by DOE on not less than three years notice. The power agreement among OVEC and the sponsoring companies expires by its terms on March 12, 2006. The Clinton Administration is considering closing either the Portsmouth, Ohio uranium enrichment plant or DOE's other enrichment plant in Kentucky. BUCKEYE Contractual arrangements among OPCo, Buckeye and other investor-owned electric utility companies in Ohio provide for the transmission and delivery, over facilities of OPCo and of other investor-owned utility companies, of power generated by the two units at the Cardinal Station owned by Buckeye and back-up power to which Buckeye is entitled from OPCo under such contractual arrangements, to facilities owned by 27 of the rural electric cooperatives which operate in the State of Ohio at 297 delivery points. Buckeye is entitled under such arrangements to receive, and is obligated to pay for, the excess of its maximum one-hour coincident peak demand plus a 15% reserve margin over the 1,226,500 kilowatts of capacity of the generating units which Buckeye currently owns in the Cardinal Station. Such demand, which occurred on January 18, 1994, was recorded at 1,146,933 kilowatts. 5 CERTAIN INDUSTRIAL CONTRACTS Ravenswood Aluminum Corporation and Ormet Corporation operate major aluminum reduction plants in the Ohio River Valley at Ravenswood, West Virginia, and in the vicinity of Hannibal, Ohio, respectively. OPCo supplies all of the power requirements of these plants pursuant to long-term contracts with such companies which, subject to certain curtailment provisions, terminate in 1997 in the case of Ormet and 1998 in the case of Ravenswood. The power requirements of such plants presently aggregate approximately 880,000 kilowatts. Because the price of electricity to Ravenswood and Ormet is based on generation costs at the Muskingum River and Kammer Plants, respectively, the implementation of the Clean Air Act Amendments of 1990 or an unfavorable resolution of the stack height regulation litigation (in the case of Kammer Plant) and administrative proceedings, described under Environmental and Other Matters, could result in a decrease in operations or closure of Ravenswood's and Ormet's aluminum reduction plants. See Legal Proceedings for a discussion of litigation involving Ormet. AEGCO Since its formation, AEGCo's business has consisted of the ownership and financing of its 50% interest in the Rockport Plant and, more recently, leasing of its 50% interest in Unit 2 of the Rockport Plant. The operating revenues of AEGCo are derived from the sale of capacity and energy associated with its interest in the Rockport Plant to I&M, KEPCo and VEPCo, pursuant to unit power agreements. Pursuant to these unit power agreements, AEGCo is entitled to recover its full cost of service from the purchasers and will be entitled to recover future increases in such costs, including increases in fuel and capital costs. See Unit Power Agreements. Pursuant to a capital funds agreement, AEP has agreed to provide cash capital contributions, or in certain circumstances subordinated loans, to AEGCo, to the extent necessary to enable AEGCo, among other things, to provide its proportionate share of funds required to permit continuation of the commercial operation of the Rockport Plant and to perform all of its obligations, covenants and agreements under, among other things, all loan agreements, leases and related documents to which AEGCo is or becomes a party. See Capital Funds Agreement. Unit Power Agreements A unit power agreement between AEGCo and I&M (the I&M Power Agreement) provides for the sale by AEGCo to I&M of all the power (and the energy associated therewith) available to AEGCo at the Rockport Plant. I&M is obligated, whether or not power is available from AEGCo, to pay as a demand charge for the right to receive such power (and as an energy charge for any associated energy taken by I&M) such amounts, as when added to amounts received by AEGCo from any other sources, will be at least sufficient to enable AEGCo to pay all its operating and other expenses, including a rate of return on the common equity of AEGCo as approved by FERC, currently 12.16%. The I&M Power Agreement will continue in effect until the date that the last of the lease terms of Unit 2 of the Rockport Plant has expired unless extended in specified circumstances. Pursuant to an assignment between I&M and KEPCo, and a unit power agreement between KEPCo and AEGCo, AEGCo sells KEPCo 30% of the power (and the energy associated therewith) available to AEGCo from both units of the Rockport Plant. KEPCo has agreed to pay to AEGCo in consideration for the right to receive such power the same amounts which I&M would have paid AEGCo under the terms of the I&M Power Agreement for such entitlement. The KEPCo unit power agreement expires on December 31, 1999, unless extended. A unit power agreement among AEGCo, I&M, VEPCo, and APCo provides for, among other things, the sale of 70% of the power and energy available to AEGCo from Unit 1 of the Rockport Plant to VEPCo by AEGCo from January 1, 1987 through December 31, 1999. VEPCo has agreed to pay to AEGCo in consideration for the right to receive such power those amounts which I&M would have paid AEGCo under the terms of the I&M Power Agreement for such entitlement. Approximately 37% of AEGCo's operating revenue in 1993 was derived from its sales to VEPCo. 6 Capital Funds Agreement AEGCo and AEP have entered into a capital funds agreement pursuant to which, among other things, AEP has unconditionally agreed to make cash capital contributions, or in certain circumstances subordinated loans, to AEGCo to the extent necessary to enable AEGCo to (i) maintain such an equity component of capitalization as required by governmental regulatory authorities, (ii) provide its proportionate share of the funds required to permit commercial operation of the Rockport Plant, (iii) enable AEGCo to perform all of its obligations, covenants and agreements under, among other things, all loan agreements, leases and related documents to which AEGCo is or becomes a party (AEGCo Agreements), and (iv) pay all indebtedness, obligations and liabilities of AEGCo (AEGCo Obligations) under the AEGCo Agreements, other than indebtedness, obligations or liabilities owing to AEP. The Capital Funds Agreement will terminate after all AEGCo Obligations have been paid in full. INDUSTRY PROBLEMS The electric utility industry, including the operating subsidiaries of AEP, has encountered at various times in the last 15 years significant problems in a number of areas, including: delays in and limitations on the recovery of fuel costs from customers; proposed legislation, initiative measures and other actions designed to prohibit construction and operation of certain types of power plants under certain conditions and to eliminate or reduce the extent of the coverage of fuel adjustment clauses; inadequate rate increases and delays in obtaining rate increases; jurisdictional disputes with state public utilities commissions regarding the interstate operations of integrated electric systems; requirements for additional expenditures for pollution control facilities; increased capital and operating costs; construction delays due, among other factors, to pollution control and environmental considerations and to material, equipment and fuel shortages; the economic effects on net income (which when combined with other factors may be immediate and adverse) associated with placing large generating units and related facilities in commercial operation, including the commencement at that time of substantial charges for depreciation, taxes, maintenance and other operating expenses, and the cessation of AFUDC with respect to such units; uncertainties as to conservation efforts by customers and the effects of such efforts on load growth; depressed economic conditions in certain regions of the United States; increasingly competitive conditions in the wholesale and retail markets; proposals to deregulate certain portions of the industry, revise the rules and responsibilities under which new generating capacity is supplied and open access to an electric utility's transmission system; and substantial increases in construction costs and difficulties in financing due to high costs of capital, uncertain capital markets, charter and indenture limitations restricting conventional financing, and shortages of cash for construction and other purposes. SEASONALITY Sales of electricity by the AEP System tend to increase during warmer summer and cooler winter seasons because of the use of electricity by customers for cooling and heating. FRANCHISES The operating companies of the AEP System hold franchises to provide electric service in various municipalities in their service areas. These franchises have varying provisions and expiration dates. In general, the operating companies consider their franchises to be adequate for the conduct of their business. COMPETITION Retail The public utility subsidiaries of AEP generally have the exclusive right to sell electric power at retail within their service areas. However, they do compete with self-generation and with distributors of alternative sources of energy, such as natural gas, fuel oil and coal, within their service areas. The primary factors in such competition are price, reliability of service and the capacity of customers to utilize sources of energy other than electric power. With respect to self-generation, the public utility subsidiaries of AEP believe that they maintain a favorable competitive position on the basis of all of these factors. With respect to alternative 7 sources of energy, the public utility subsidiaries of AEP believe that the reliability of their service and the limited ability of customers to substitute other sources for electric power place them in a favorable competitive position, even though their price may be higher than some such alternative sources of energy. Significant changes in the global economy in recent years have led to increased price competition for industrial companies in the United States, including those served by the AEP System. Such industrial companies have requested price reductions from their suppliers, including their suppliers of electric power. In addition, industrial companies which are downsizing or reorganizing often close a facility based upon its costs, which include, among other things, the cost of electric power. The public utility subsidiaries of AEP cooperate with such customers to meet their business needs through, for example, various off-peak or interruptible supply options and believe that, as low cost suppliers of electric power, they will not be materially adversely affected by this competition and may be benefitted by attracting new industrial customers to their service territories. The legislatures and/or the regulatory commissions in several states have considered or are considering "retail wheeling" which, in general terms, means the transmission by an electric utility of energy produced by another entity over its transmission and distribution system to a retail customer in such utility's service territory. A requirement to transmit directly to retail customers would have the result of permitting retail customers to purchase electric power, at the election of such customers, not only from the electric utility in whose service area they are located but from any other electric utility or independent power producer. The MPSC began a proceeding on September 11, 1992 to investigate a proposal by certain industrial companies for an experiment in retail wheeling in certain service territories in Michigan, not including those of I&M. On August 27, 1993, an administrative law judge recommended that the MPSC authorize such retail wheeling on a voluntary basis and that the proposal had not been shown to be in the public interest, could harm other ratepayers and did not adequately address the issues of stranded investment and utilities' obligation to serve. The MPSC has not yet issued an order in this proceeding. In addition, a retail wheeling bill was introduced in the Ohio House of Representatives in February 1994. Because adoption of retail wheeling would require resolution of complex issues, such as who would pay for the unused generating plant of the utility wheeling such power, it is not clear what effects will flow from its adoption in any state. However, if retail wheeling is adopted, the public utility subsidiaries of AEP believe that they have a favorable competitive position because of their relatively low costs. Wholesale The public utility subsidiaries of AEP, like the electric industry generally, face increasing competition to sell available power on a wholesale basis, primarily to other public utilities. The Energy Policy Act of 1992 was designed, among other things, to foster competition in the wholesale market (a) through amendments to the Public Utility Holding Company Act of 1935, facilitating the ownership and operation of generating facilities by "exempt wholesale generators" (which may include independent power producers as well as affiliates of electric utilities) and (b) through amendments to the Federal Power Act, authorizing the FERC under certain conditions to order utilities which own transmission facilities to provide wholesale transmission services for other utilities and entities generating electric power. The principal factors in competing for such sales are price (including fuel costs), availability of capacity and reliability of service. The public utility subsidiaries of AEP believe that they maintain a favorable competitive position on the basis of all of these factors. However, because of the availability of capacity of other utilities and the lower fuel prices in recent years, price competition has been, and is expected for the next few years to be, particularly important. New Generation When the AEP System needs new generation, the public utility subsidiaries of AEP which wish to provide it will have to compete with exempt wholesale generators, independent power producers and other 8 utilities. Although the specific guidelines for such competition have not yet been developed and may vary from jurisdiction to jurisdiction (see the discussion below), significant factors will include price and reliability. AEP and its subsidiaries believe that they can be competitive as to both of these factors. However, no additional baseload generating capacity is expected to be constructed by the AEP System for some time. See Construction and Financing Program. Indiana: On June 30, 1993, the IURC issued a notice of proposed rulemaking for integrated resource planning which among other things would permit a utility to acquire additional generation through bidding programs or other means. The proposed rules would permit the utility to participate in the bidding process. The Indiana Electric Association, on behalf of a group of utilities including I&M, filed comments that support competitive bidding as an optional method to acquire new generation. Michigan: The MPSC has adopted guidelines governing the acquisition of new capacity by large Michigan electric utilities. The guidelines do not apply to I&M. Ohio: On December 17, 1992, the PUCO issued an order proposing rules for competitive bidding for new generating capacity, including transmission access for winning bidders. The proposed rules would establish a rebuttable presumption of prudence where new generating capacity is acquired through competitive bidding and provide other incentives to use competitive bidding. The proposed rules also contain procedures to ensure that bidders for a utility's new capacity will have open access to certain transmission facilities and prohibit the utility acquiring new capacity from withholding Clean Air Act emission allowances from potential bidders. CSPCo and OPCo filed comments on the proposed rules generally supporting promulgation of rules governing competitive bidding but stating that the rules should not address access to transmission facilities or emission allowances, because existing federal laws address such concerns. Virginia: The Virginia SCC has adopted minimum requirements for any electric utility that elects to acquire new generation through a bidding program. An electric utility is not required to use the bidding process and may participate in the bidding process. West Virginia: On October 8, 1993, the West Virginia PSC issued an order proposing rules that generally require electric utilities to procure competitively all new sources of generation. APCo and Wheeling Power Company filed comments stating that the rules should not require competitive bidding and should permit the utility to participate in the bidding process. NEW BUSINESS DEVELOPMENT AEP continues to consider new business opportunities, particularly those which allow use of its expertise. These endeavors began in 1982 and are conducted through AEP Energy Services, Inc. ("AEPES") and AEP Resources, Inc. ("Resources"). Resources' primary business focus is international and domestic cogeneration, the independent power market, and the privatization of generation facilities in the international market. AEPES has continued to offer consulting services and market AEP System expertise both domestically and internationally. AEPES contracts with other public utilities, commercial concerns and government agencies for the rendition of services and the licensing of intellectual property. These continuing efforts to invest in and develop new business opportunities offer the potential of earning returns which may exceed those of rate-regulated operations. However, because of the absence of any assured return or rate of return, they also involve a higher degree of risk which must be carefully considered and assessed. AEP may make substantial investments in these and other new businesses. CONSTRUCTION AND FINANCING PROGRAM The AEP System companies are engaged in a continuing construction program, involving selection of sites, design and acquisition of equipment, and installation of the generating, transmission, distribution and other facilities necessary to provide for growing demands for electric service. However, AEP's current load forecast indicates no need for new coal-fired baseload generation until sometime after the year 2005. For many 9 years System companies' loads grew at such a rate as to warrant efforts to achieve major economies of scale, and thus reduce or limit the unit cost of the power and energy supplied to the System's customers. From time to time, as the System companies have encountered the industry problems described above, such companies also have encountered limitations on their ability to secure the capital necessary to finance construction expenditures. The System construction program is reviewed continuously and is revised from time to time in response to changes in estimates of customer demand, business and economic conditions, the cost and availability of capital, environmental requirements and other factors. The extent and timing of construction expenditures and the nature of future financing activities may be dependent on, among other things, the timing and amount of additional rate relief received. See Rates. PFBC Projects Tidd Plant: In November 1990, OPCo began operating a 70,000 kilowatt PFBC demonstration plant at the deactivated Tidd Plant on the Ohio River at Brilliant, Ohio. The specific goal of the project is to demonstrate that the combined-cycle PFBC technology is a cost-effective, reliable, and environmentally superior alternative to conventional coal-fired electric power generation with a flue-gas desulfurization system. Through December 31, 1993, the Tidd Plant achieved 5,530 hours of coal-fired operation while demonstrating the viability of the PFBC process in the reduction of targeted sulfur dioxide and nitrogen oxide emissions. See Environmental and Other Matters for information regarding restrictions on sulfur dioxide and nitrogen oxide emissions from coal-fired power plants in the AEP System. Original funding for the Tidd Plant project included provisions for a three-year test period extending through February 1994. At this time, planned funding for the Tidd Plant project contemplates an additional year of operation extending through February 1995. However, if additional testing is required, the test period could be extended past February 1995. The plant is planned to be deactivated at the conclusion of the test program. Total Tidd Plant construction costs (including PFBC development costs) and total Tidd operating costs incurred through December 31, 1993 were $181,898,000 and $25,076,000, respectively. At such date, OPCo had received funding from DOE and the State of Ohio in the aggregate amounts of $59,548,000 and $10,000,000, respectively, and had recovered $123,186,000 from its retail customers. The estimated total construction and operating costs of the Tidd Plant project are $185,000,000 and $40,000,000, respectively, and OPCo expects to receive additional funding from DOE so that the aggregate amount received from it will be $60,200,000. OPCo is currently recovering approximately $500,000 per month from its Ohio electric fuel component jurisdictional customers for costs associated with the Tidd Plant project that are not recovered from DOE or the State of Ohio and incurred after December 1, 1986. The PUCO, however, may consider distributing such costs over total OPCo sales which may result in a prospective reduction in the amount recoverable by OPCo. PFBC Utility Demonstration Project: DOE is cost sharing with APCo development of a 340,000 kilowatt commercial-size PFBC plant adjacent to APCo's Mountaineer Plant in New Haven, West Virginia. DOE has agreed to continue funding the design of the plant through at least January 1996. The present four-year effort to refine the PFBC design extends through January 1996. The ultimate decision to proceed with the construction of the commercial PFBC plant will hinge on the confirmation of the need for new coal-fired baseload capacity, the readiness of PFBC technology, and state regulatory commission approval. Construction Expenditures The following table shows the construction expenditures by AEGCo, APCo, CSPCo, I&M, KEPCo, OPCo and the AEP System and their respective consolidated subsidiaries during 1991, 1992 and 1993 and their current estimate of 1994 construction expenditures, in each case including AFUDC but excluding nuclear fuel and other assets acquired under leases. The construction expenditures for the years 1991-1993 were applied, and it is anticipated that the estimated construction expenditures for 1994 will be applied, approximately as follows to construction of the following classes of assets: 10
1991 1992 1993 1994 ACTUAL ACTUAL ACTUAL ESTIMATE -------- -------- -------- -------- (IN THOUSANDS) AEGCO Generating plant and facilities............. $ 3,700 $ 3,600 $ 3,100 $ 4,300 -------- -------- -------- -------- TOTAL..................................... $ 3,700 $ 3,600 $ 3,100 $ 4,300 ======== ======== ======== ======== APCO Generating plant and facilities (a)......... $ 33,800 $ 34,400 $ 51,200 $ 64,200 Transmission lines and facilities........... 42,500 54,200 36,700 45,800 Distribution lines and facilities........... 102,200 91,600 98,200 92,400 General plant and other facilities.......... 12,300 11,500 4,800 17,300 -------- -------- -------- -------- TOTAL..................................... $190,800 $191,700 $190,900 $219,700 ======== ======== ======== ======== CSPCO Generating plant and facilities............. $ 49,800 $ 21,900 $33,300 $ 39,500 Transmission lines and facilities........... 11,300 11,600 10,100 4,600 Distribution lines and facilities........... 42,900 40,800 40,700 46,400 General plant and other facilities.......... 3,300 1,100 2,200 8,200 -------- -------- -------- -------- TOTAL..................................... $107,300 $ 75,400 $ 86,300 $ 98,700 ======== ======== ======== ======== I&M (b) Generating plant and facilities............. $ 48,200 $ 66,400 $ 50,200 $ 55,800 Transmission lines and facilities .......... 31,700 17,300 10,100 20,000 Distribution lines and facilities........... 38,800 39,200 41,300 42,000 General plant and other facilities.......... 5,000 3,500 6,700 5,200 -------- -------- -------- -------- TOTAL..................................... $123,700 $126,400 $108,300 $123,000 ======== ======== ======== ======== KEPCO Generating plant and facilities............. $ 5,300 $ 4,100 $ 8,100 $ 25,000 Transmission lines and facilities........... 4,000 8,700 6,700 9,400 Distribution lines and facilities........... 19,900 17,500 20,300 19,900 General plant and other facilities.......... 0 1,500 0 4,100 -------- -------- -------- -------- TOTAL..................................... $ 29,200 $ 31,800 $ 35,100 $ 58,400 ======== ======== ======== ======== OPCO Generating plant and facilities (c)(d)...... $132,900 $124,900 $112,700 $ 77,800 Transmission lines and facilities........... 19,500 18,900 28,600 34,300 Distribution lines and facilities........... 41,500 42,800 46,000 47,000 General plant and other facilities.......... 10,000 5,900 10,500 11,300 -------- -------- -------- -------- TOTAL..................................... $203,900 $192,500 $197,800 $170,400 ======== ======== ======== ======== AEP SYSTEM Generating plant and facilities (a)(c)(d)... $273,700 $255,300 $258,600 $266,600 Transmission lines and facilities........... 110,000 111,900 92,800 115,100 Distribution lines and facilities........... 250,800 237,700 252,300 255,800 General plant and other facilities.......... 30,700 23,700 24,400 46,500 -------- -------- -------- -------- TOTAL..................................... $665,200 $628,600 $628,100 $684,000 ======== ======== ======== ========
- -------- (a) Excludes expenditures for PFBC Utility Demonstration Project. See PFBC Projects. (b) Reflects restatement for 1991 to include effect of merging Michigan Power Company into I&M. (c) Includes expenditures for Tidd Plant which have been or are expected to be funded through Federal/state grants and the fuel clause mechanism. See PFBC Projects. (d) Excludes expenditures associated with flue-gas desulfurization system being constructed by a non-affiliate at the Gavin Plant which OPCo has agreed to lease upon completion of construction. Actual expenditures for 1991, 1992 and 1993 and the current estimate for 1994 are $18,683,000, $93,653,000, $256,673,000 and $230,000,000, respectively. See Environmental and Other Matters--CAAA-AEP System Compliance Plan. 11 Reference is made to the footnotes to the financial statements entitled Commitments and Contingencies incorporated by reference in Item 8, for further information with respect to the construction plans of AEP and its operating subsidiaries for the next three years. If the System receives adequate rate relief in future periods, and is able to finance additional construction expenditures, and if the loads which are served by the System increase above the levels currently projected, additional expenditures may be incurred in subsequent years in amounts which would be substantial but which cannot be accurately predicted at this time. Changes in construction schedules and costs, and in estimates and projections of needs for additional facilities, as well as variations from currently anticipated levels of net earnings, Federal income and other taxes, and other factors affecting cash requirements, may increase or decrease the estimates of capital requirements for the System's construction program. Proposed Transmission Facilities: On March 23, 1990, APCo and VEPCo announced plans, subject to regulatory approval, for major new transmission facilities. APCo will construct approximately 115 miles of 765,000-volt line from APCo's Wyoming station in southern West Virginia to APCo's Cloverdale station near Roanoke, Virginia. VEPCo will construct approximately 102 miles of 500,000-volt line from APCo's Joshua Falls station east of Lynchburg, Virginia to VEPCo's Ladysmith station north of Richmond, Virginia. The construction of the transmission lines and related station improvements will provide needed reinforcement for APCo's internal load, reinforce the ability to exchange electric energy between the two companies and relieve present constraints on the transmission of electric energy from potential independent power producers in the APCo service area to VEPCo. APCo's cost is estimated at $245,000,000 while VEPCo's cost is estimated at $164,000,000. Completion of the project is presently scheduled for 1998 but the actual service date will be dependent upon the time necessary to meet various regulatory requirements. Hearings before the Virginia SCC were concluded in September 1993. A report was issued by the hearing examiner in December 1993 which recommended that the Virginia SCC grant APCo approval to construct the proposed 765,000-volt line. A decision by the Virginia SCC is pending. APCo refiled with the West Virginia PSC in February 1993 its application for certification. An application filed in June 1992 was withdrawn at the request of the West Virginia PSC to permit additional time for review by the West Virginia PSC. The West Virginia PSC rejected APCo's application for certification in May 1993, directing APCo to supplement its line siting information. APCo intends to refile its application with the West Virginia PSC. Hearings are expected to be held in late 1994 with a decision expected in early 1995. The Jefferson National Forest (JNF) is directing the preparation of an Environmental Impact Statement (EIS) which will be required prior to the granting of special use permits for crossing Federal lands. The present schedule of the JNF calls for completion of the draft EIS in September 1994 and the final EIS in February 1995. Environmental Expenditures: Expenditures related to compliance with air and water quality standards, included in the gross additions to plant of the System, during 1991, 1992 and 1993 and the current estimate for 1994 are shown below. Substantial expenditures in addition to the amounts set forth below may be required by the System in future years in connection with the modification and addition of facilities at generating plants for environmental quality controls in order to comply with air and water quality standards which may have been or may be adopted.
1991 1992 1993 1994 ACTUAL ACTUAL ACTUAL ESTIMATE -------- ------- ------- -------- (IN THOUSANDS) AEGCo......................................... $ 0 $ 0 $ 0 $ 900 APCo (a)...................................... 7,100 11,200 16,800 22,100 CSPCo......................................... 7,100 6,500 15,800 23,900 I&M........................................... 100 0 0 3,700 KEPCo......................................... 200 100 1,000 9,000 OPCo (b)(c)................................... 56,700 61,600 31,600 24,500 ------- ------- ------- ------- AEP System (a)(b)(c).......................... $71,200 $79,400 $65,200 $84,100 ======= ======= ======= =======
12 - -------- (a) Excludes expenditures for PFBC Utility Demonstration Project. See PFBC Projects. (b) Includes expenditures for Tidd Plant which have been or are expected to be funded through Federal/state grants and the fuel clause mechanism. See PFBC Projects. (c) Excludes expenditures associated with flue-gas desulfurization system being constructed by a non-affiliate at the Gavin Plant which OPCo has agreed, subject to PUCO approval, to lease upon completion of construction. Actual expenditures for 1991, 1992 and 1993 and the current estimate for 1994 are $18,683,000, $93,653,000, $256,673,000 and $230,000,000, respectively. See Environmental and Other Matters--CAAA-AEP System Compliance Plan. Financing It has been the practice of AEP's operating subsidiaries to finance current construction expenditures in excess of available internally generated funds by initially issuing unsecured short-term debt, principally commercial paper and bank loans, at times up to levels authorized by regulatory agencies, and then to reduce the short-term debt with the proceeds of subsequent sales by such subsidiaries of long-term debt securities and preferred stock, and cash capital contributions by AEP to the subsidiaries. It has been the practice of AEP, in turn, to finance cash capital contributions to the common stock equities of the operating subsidiaries by issuing unsecured short-term debt, principally commercial paper, and then to sell additional shares of Common Stock of AEP for the purpose of retiring the short-term debt previously incurred. Since 1985, however, AEP has sold no shares of Common Stock. If necessary, AEP will issue shares of Common Stock pursuant to its Dividend Reinvestment and Stock Purchase Plan. Although prevailing interest costs of short-term bank debt and commercial paper generally have been lower than prevailing interest costs of long-term debt securities, whenever interest costs of short-term debt exceed costs of long-term debt, the companies might be adversely affected by reliance on the use of short-term debt to finance their construction and other capital requirements. During the period 1991-1993, external funds from financings and capital contributions by AEP amounted, with respect to APCo, CSPCo and KEPCo to approximately 37%, 38% and 31%, respectively, of the aggregate construction expenditures shown above. During this same period, the amount of funds used to retire long-term and short-term debt and preferred stock of AEGCo, I&M and OPCo exceeded the amount of funds from financings and capital contributions by AEP. The ability of AEP and its operating subsidiaries to issue short-term debt is limited by regulatory restrictions and, in the case of most of the operating subsidiaries, by provisions contained in their charters and in certain debt and other instruments. The approximate amounts of short-term debt which the companies estimate that they were permitted to issue under the most restrictive such restriction, at January 1, 1994, and the respective amounts of short-term debt outstanding on that date, on a corporate basis, are shown in the following tabulation:
TOTAL SHORT-TERM DEBT AEP AEGCO APCO CSPCO I&M KEPCO OPCO AEP SYSTEM(A) ---------------- ---- ------ ----- ------ ---- ------ ----- -------------- (IN MILLIONS) Amount authorized.... $150 $50 $215 $140 $127 $100 $222 $1,054 ==== === ==== ==== ==== ==== ==== ====== Amount outstanding: Notes payable...... $ -- $15 $ -- $ 12 $ -- $26 $ -- $ 63 Commercial paper... 65 -- 36 13 50 12 38 214 ---- --- ---- ---- ---- ---- ---- ------ $ 65 $15 $ 36 $ 25 $ 50 $38 $ 38 $ 277 ==== === ==== ==== ==== ==== ==== ======
- -------- (a) Includes short-term debt of other subsidiaries not shown. Reference is made to the footnotes to the financial statements incorporated by reference in Item 8 for further information with respect to unused short- term bank lines of credit. In order to issue additional long-term debt and preferred stock, it is necessary for APCo, CSPCo, I&M, KEPCo and OPCo to comply with earnings coverage requirements contained in their respective mortgages, debenture indentures and charters. The most restrictive of these provisions in each instance generally requires 13 (1) for the issuance of additional long-term debt by APCo, I&M and OPCo, for purposes other than the refunding of outstanding long-term debt securities, a minimum, before income tax, earnings coverage of twice the pro forma annual interest charges on long-term debt, (2) for the issuance of first mortgage bonds by CSPCo and KEPCo for purposes other than the refunding of outstanding first mortgage bonds, a minimum, before income tax, earnings coverage of twice the pro forma annual interest charges on first mortgage bonds and (3) for the issuance of additional preferred stock by APCo, I&M and OPCo, a minimum, after income tax, gross income coverage of one and one-half times pro forma annual interest charges and preferred stock dividends, in each case for a period of twelve consecutive calendar months within the fifteen calendar months immediately preceding the proposed new issue. In computing such coverages, the companies include as a component of earnings revenues collected subject to refund (where applicable) and, to the extent not limited by the instrument under which the computation is made, AFUDC, including amounts positioned and classi-fied as an allowance for borrowed funds used during construction. These coverage provisions have from time to time restricted the ability of one or more of the above subsidiaries of AEP to issue senior securities in the amounts considered to be desirable. The respective long-term debt and preferred stock coverages of APCo, CSPCo, I&M, KEPCo and OPCo under their respective debenture indenture, mortgage and charter provisions, calculated on the foregoing basis and in accordance with the respective amounts then recorded in the accounts of the companies, assuming the respective short-term debt of the companies at those dates were to remain outstanding for a twelve-month period at the respective rates of interest prevailing at those dates, were at least those stated in the following table:
DECEMBER 31, -------------- 1991 1992 1993 ---- ---- ---- APCo Debt coverage.................................................. 3.76 3.50 3.62 Preferred stock coverage....................................... 2.08 1.99 2.04 CSPCo Mortgage coverage.............................................. 1.49 2.16 2.91 I&M Debt coverage.................................................. 4.10 3.55 4.59 Preferred stock coverage....................................... 2.24 2.06 2.48 KEPCo Mortgage coverage.............................................. 4.50 3.34 2.19 OPCo Debt coverage.................................................. 3.95 3.36 4.65 Preferred stock coverage....................................... 2.24 2.22 2.88
Although certain other subsidiaries of AEP either are not subject to any coverage restrictions or are not subject to restrictions as constraining as those to which APCo, CSPCo, I&M, KEPCo and OPCo are subject, their ability to finance substantial portions of their construction programs may be subject to market limitations and other constraints unless other assurances are furnished. AEP believes that the ability of its operating subsidiaries to issue short- and long-term debt securities and preferred stock in the amounts required to finance their respective construction programs depends upon the timely approval of pending and future rate increase applications. If one or more of the operating subsidiaries are unable to continue the issuance and sale of securities on an orderly basis, such company or companies will be required to consider the use of alternative financing arrangements, if available, which may be more costly or the curtailment of construction and other outlays. AEP's subsidiaries have also utilized, and expect to continue to utilize, additional financing arrangements, such as leasing arrangements, including the leasing of utility assets, coal mining and 14 transportation equipment and facilities and nuclear fuel. Pollution control revenue bonds have been used in the past and may be used in the future in connection with the construction of pollution control facilities; however, Federal tax law has limited the utilization of this type of financing except for purposes of certain financing of solid waste disposal facilities and of certain refunding of outstanding pollution control revenue bonds issued before August 16, 1986. Shares of AEP Common Stock may be sold by AEP from time to time at prices below the then current book value per share and repurchased by AEP at prices above book value. Such sales or purchases, if any, would have a dilutive effect on the book value of then outstanding shares but are not expected to have a material adverse effect on AEP's business including its future financing plans or capabilities and pending construction projects. CONSERVATION AND LOAD MANAGEMENT For some years, the AEP System has put in place a series of customer programs for encouraging electric conservation and load management (CLM). The CLM programs also are referred to in the electric utility industry as "demand-side management" programs (DSM) since they affect the demand for electricity as opposed to electricity supply. The AEP System is committed to integrated resource planning and has in place a detailed analysis procedure in which effective demand-side and supply-side options are both considered in order to determine the least cost approach to provide reliable electric service for its customers, taking into account environmental and other considerations. Recovery of demand-side program expenditures through rates is being reviewed by AEP's respective regulatory commissions as discussed below in Rates. RATES General In recent years the operating subsidiaries of AEP have filed a series of rate increase applications with their respective state commissions and the FERC and expect that they will continue to do so whenever necessary as increases in operating, construction and capital costs exceed increases in revenues resulting from previously granted rate increases and increased customer demand. All of the seven states served by the AEP System, as well as the FERC, either permit the incorporation of fuel adjustment clauses in a utility company's rates and tariffs, which are designed to permit upward or downward adjustments in revenues to reflect increases or decreases in fuel costs above or below the designated base cost of fuel set forth in the particular rate or tariff, or permit the inclusion of specified levels of fuel costs as part of such rate or tariff. AEP cannot predict the timing or probability of approvals regarding applications for additional rate changes, the outcome of action by regulatory commissions or courts with respect to such matters, or the effect thereof on the earnings and business of the AEP System. FERC Regulatory Matters: On March 31, 1993, the FERC issued its final rules, effective January 1, 1993, regarding accounting for allowances under the Clean Air Act Amendments of 1990. The rules provide for the use of "fair value" in the valuation of allowances traded between affiliates and establishment of FERC accounts to record regulatory assets and liabilities. See Environmental and Other Matters--Air Pollution Control. APCo FERC: On February 14, 1992, APCo filed with the FERC applications for an increase in its wholesale rates to Kingsport Power Company and non-affiliated customers in the amounts of approximately $3,933,000 and $4,759,000, respectively. APCo began collecting the rate increases, subject to refund, on September 15, 1992. In addition, the Financial Accounting Standards Board has issued Statement of Financial Accounting Standards No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions (SFAS 106) which requires employers, beginning in 1993, to accrue for the costs of retiree benefits other than pensions. These rates include the higher level of SFAS 106 costs. On November 9, 1993, the administrative law judge issued an initial decision recommending, among other things, the higher level of postretirement benefits other than pensions under SFAS 106. FERC action on APCo's applications is pending. 15 In June 1993, certain municipal customers filed an application with the FERC for an order requiring the AEP System to provide transmission service for 50 megawatts (mw) of base load power purchased from an unaffiliated utility and the reduction by 50 mw of the power these customers purchase from APCo under existing 10-year Electric Service Agreements ("ESAs"). APCo maintains that its agreements with these customers are full-requirements contracts which preclude the customers from purchasing power from third parties. On December 1, 1993, the administrative law judge issued an initial decision that the ESAs are not full requirements contracts and that the ESAs give these municipal wholesale customers the option of substituting alternative sources of power for energy purchased from APCo. The proposed 50 mw reduction would reduce net non-fuel revenue by $16,900,000 over the period April 1994 through June 1997 (end of ESAs). On February 10, 1994, the FERC issued orders (1) affirming, in part, the administrative law judge's initial decision and (2) instituting a proceeding to determine the appropriate rate and terms for the transmission of this power to the municipal customers. On March 11, 1994, AEP System companies filed a petition for rehearing of the FERC's order affirming the administrative law judge's decision. Virginia: On December 4, 1992, APCo filed with the Virginia SCC a request to increase rates by approximately $31,377,000 annually. APCo's filing requests, among other things, approval to establish a capacity charge tracking mechanism to track changes in its capacity charges from the AEP System Power Pool, increased West Virginia allocated business and occupation taxes discussed below and increased SFAS 106 costs. On December 29, 1992, the Virginia SCC issued an order suspending APCo's proposed rates until May 3, 1993. In June 1993, the Virginia SCC staff recommended a $10,500,000 annual rate increase and, after hearings in July 1993, the Hearing Examiner issued a report recommending a $7,800,000 annual rate increase. A Virginia SCC order is pending. On March 27, 1992, the Virginia SCC issued a final order regarding its investigation of CLM programs of Virginia's utilities. The Virginia SCC adopted rules regarding the rate recovery of promotional allowances designed to achieve energy conservation, load reduction or improved energy efficiency. Rate recovery for such promotions will be allowed only for cost-effective CLM programs, and not for those designed primarily to increase load or market share, unless a company proves that the program is cost-effective and serves the overall public interest. The Virginia SCC also directed Virginia utilities to submit their CLM programs for formal review and approval. In accordance with the March 27, 1992 order of the Virginia SCC, in order to promote the goals of cost-effective utility conservation, efficiency and load management, on October 16, 1992, APCo filed an application with the Virginia SCC for approval to implement six demand side management pilot programs in its service territory, including a residential rate experiment. On March 4, 1993, the Virginia SCC issued an order approving implementation of five of the six programs. The storage water heater program was transferred to APCo's pending Virginia retail rate case discussed above for adjudication. Rate recovery for all of these programs is also being sought in the Virginia rate case. The Virginia SCC, in its order of March 27, 1992, also directed its staff to determine the appropriate methods for evaluating the cost-effectiveness of CLM programs and to submit an interim report outlining the scope and procedure of the investigation. The staff submitted its Report on the Cost/Benefit Analysis of Demand Side Management Programs on February 9, 1993. Therein the staff stated that a multi-perspective approach to determining the cost and benefits of demand-side management programs is needed in order to evaluate the full impact of programs on a utility and its customers. The staff stated that programs should be evaluated from the perspective of the program participant, the non-participant, the utility and all ratepayers. On June 28, 1993, the Virginia SCC issued an order promulgating rules on the proper cost/benefit tests to be conducted on proposed DSM programs. The rules provide that utilities shall analyze a proposed DSM program from a multi- perspective approach considering, at a minimum, the quantifiable benefits and costs of a program to the participating customer, the cost of the DSM program incurred by the utility, the difference between the change in total revenues paid to the utility and the change in total costs to a utility resulting from the DSM program, and the cost of a program as a resource option to the utility and its ratepayers as a whole. The order specifies minimum guidelines to provide direction to utilities in developing applications for 16 approval of DSM programs. Utilities must seek Virginia SCC approval of pilot or experimental programs that involve rates or promotional allowances, but other limited pilot or experimental programs may be conducted without prior approval. West Virginia: In January 1992, APCo filed with the Supreme Court of Appeals of West Virginia a petition for appeal which sought a review and reversal of the West Virginia PSC's November 1, 1991 order which disallowed recovery of $12,700,000 annually relating to the allocation treatment of business and occupation taxes. In April 1992, the court issued an order denying APCo's appeal. APCo has received recovery of the non-West Virginia jurisdictional share of these taxes in its Virginia and FERC jurisdictions. On February 22, 1993, the West Virginia PSC approved an increase in APCo's Expanded Net Energy Cost (ENEC) rates of $24,400,000 annually. ENEC rates are approved annually as part of the West Virginia PSC's review of APCo's power supply costs which include fuel, purchased power and AEP System Power Pool capacity charges and credits for APCo's share of Power Pool generation costs and wholesale sales. In approving the new rates, the West Virginia PSC placed APCo on notice that the annual review process, including the traditional fuel elements of the review and deferred accounting with prospective actual cost recoveries, would be closely examined at the next review. On October 28, 1993, the West Virginia PSC approved, with certain modifications, a settlement agreement among the parties to the ENEC proceeding. The approved agreement temporarily suspended the annual ENEC recovery proceedings, reduced ENEC rates by $8,000,000 annually effective November 1, 1993, and froze current base rates and the reduced ENEC rate for a three-year period ending October 31, 1996. Deferral accounting will not be used for new ENEC cost variances incurred from November 1993 through October 1996. The ENEC actual underrecovery balance on October 31, 1993 of $13,300,000 will be collected through a component of the revised ENEC rates over the three-year period ending October 31, 1996. The agreement also provides for a net decrease in West Virginia depreciation expense of $4,300,000 annually (with no change to base rates) effective November 1, 1995. APCo also agreed to invest at least $90,000,000 in distribution facilities in West Virginia between October 13, 1993 and October 31, 1996. On November 5, 1992, APCo filed an application with the West Virginia PSC for approval to implement seven demand-side management programs. On February 8, 1993, the West Virginia PSC issued an order approving the seven demand side management programs, but limited availability of one program to only existing electric water heating customers. On April 14, 1993, the West Virginia PSC by order clarified the availability to customers with electric water heating and new customers with all-electric homes. CSPCo Zimmer Plant: The Zimmer Plant was placed in commercial operation as a 1,300- megawatt coal-fired plant on March 30, 1991. CSPCo owns 25.4% of the Zimmer Plant with the remainder owned by two unaffiliated companies, CG&E (46.5%) and DP&L (28.1%) (collectively, the Owners). Zimmer Plant--Rate Recovery: On April 2, 1991, CSPCo filed a request with the PUCO to increase rates $202,500,000 on an annual basis principally to recover its share of the costs of operation of the Zimmer Plant and a return on its investment. On May 12, 1992, the PUCO issued an order on CSPCo's rate request. The order provided for a phased-in rate increase of $123,000,000 to be implemented in three steps over a two-year period and excluded from rate base $165,000,000 of Zimmer Plant costs composed of an allowance for funds used during construction accrued from February 1984 through February 1986, nuclear wind-down costs and a loss on the sale of nuclear fuel. The order also provided for the recovery of deferred post in-service operating expenses over 10 years. CSPCo requested a rehearing with the PUCO which was denied except for rehearing of certain minor rate design and accounting related issues. CSPCo and the PUCO staff signed a stipulation agreement resolving the minor issues for which the PUCO granted rehearing. On August 20, 1992, the PUCO approved the stipulation which provided CSPCo with approximately $1,500,000 of additional revenues annually. 17 CSPCo filed an appeal with the Ohio Supreme Court on September 1, 1992 regarding the $165,000,000 excluded from rate base and challenging the PUCO's authority to order a phased-in rate plan. CSPCo's appeal stated (1) that the PUCO failed to abide by the terms of a PUCO-approved 1985 stipulation agreement regarding CSPCo's investment in the Zimmer Plant and (2) that the PUCO did not have authority to order phased-in rates. In November 1993, the Supreme Court issued a decision on CSPCo's appeal affirming the disallowance and finding that the PUCO did not have statutory authority to order phased-in rates. The court instructed the PUCO to fix rates to provide gross annual revenues in accordance with the law and to provide a mechanism to recover the revenues deferred under the phase-in order which through December 31, 1993 totaled $93,900,000. As a result of the ruling, 1993 net income was reduced by $144,500,000 after tax to reflect the disallowance and in January 1994, the PUCO approved a 7.11% or $57,167,000 rate increase effective February 1, 1994. The increase is comprised of a 3.72% base rate increase and a temporary 3.39% surcharge, which will be in effect until the phase-in plan deferrals are recovered, estimated to be for a period of less than four and one-half years. The recovery of deferrals and the increase in rates to the full rate level will not affect net income. Other Ohio Regulatory Matters: On April 30, 1992, CSPCo and OPCo filed their individual 1992 long-term forecast reports and integrated resource plans. On September 23, 1993, the PUCO issued its opinion and order approving CSPCo's and OPCo's long-term forecast reports. The PUCO order directs CSPCo and OPCo to proceed with a number of specific demand-side management programs and any other programs determined to be cost-effective. Reference is made to Environmental and Other Matters--Clean Air Act Amendments of 1990 for a discussion of emission allowances. On January 9, 1992, the PUCO issued an entry opening a generic docket to investigate trading and usage of, and accounting treatment for, emission allowances by electric utilities in Ohio. On January 20, 1993 the PUCO issued proposed guidelines concerning emission allowances, including the guideline that gains or losses on transactions involving emission allowances created by rate base assets should generally flow through to ratepayers. On March 25, 1993, the PUCO issued its final guidelines concerning emission allowances. The final guidelines state that the PUCO expects that Ohio utilities will take advantage of the allowance trading market, and encourages all trades that can be economically justified. The final guidelines include the proposed guideline that gains or losses on transactions involving emission allowances created by rate base assets should generally flow through to ratepayers. The final guidelines also provide that allowance plans, procedures, practices, trading activity, and associated costs should be reviewed annually in the electric fuel component since the cost of these allowances are part of the acquisition and delivery costs of fuel. On September 17, 1993, CSPCo and OPCo filed an Application for Conservation/Renewable Reserve Allowances. The application requested an award of 18 allowances and was certified by the PUCO on September 3, 1993. On January 27, 1994, Federal EPA notified AEP that it would defer awarding allowances to CSPCo and OPCo pending further documentation from the PUCO of CSPCo's and OPCo's compliance with appropriate eligibility requirements. Reference is made to the caption Environmental and Other Matters--Clean Air Amendments of 1990--AEP System Compliance Plan for information regarding AEP's compliance plan which has been filed with the PUCO. In October 1991, the PUCO announced that the Governor of Ohio and the Ohio General Assembly directed the PUCO to develop a long-term energy strategy for the State of Ohio. On December 4, 1992, the PUCO, on behalf of the Interagency Ohio Energy Strategy (OES) Task Force, released its interim report. CSPCo and OPCo jointly filed comments on February 15, 1993. 18 On September 3, 1992 the PUCO began an investigation into incentive based ratemaking under Ohio's existing ratemaking statutes. Joint comments were filed in November 1992 by CSPCo and OPCo. I&M FERC: In June 1990 an initial decision was issued by a FERC administrative law judge regarding a complaint filed by a wholesale customer concerning the reasonableness of I&M's coal costs from an unaffiliated supplier who leased a Utah mining operation from I&M in 1986 and the coal transportation charges of affiliates. In February 1993 the FERC reversed the decision of the administrative law judge and dismissed the complaint. In December 1993 the wholesale customer appealed the FERC order to the U.S. Court of Appeals, District of Columbia Circuit. Indiana: In April 1992 I&M filed testimony and exhibits with the IURC seeking a $44,800,000 increase in annual rates to recover, among other things, increased operating costs including expenses associated with nuclear operation and maintenance, an increase in the provision for the cost of decommissioning the Cook Plant, increased accruals for the cost of postretirement benefits other than pensions as mandated by SFAS 106 and revised depreciation accrual rates. On November 12, 1993, the IURC issued an order granting a $34,700,000 annual rate increase. The IURC approved substantially all of I&M's proposals including, among other things, increased operation and maintenance expenses associated with the Cook Plant with an increase in the provision for nuclear decommissioning costs, increased accruals for the cost of postretirement benefits other than pensions and an increase in depreciation expense based on revised accrual rates (including costs for the demolition of I&M's fossil-fired generating stations at the end of their useful lives). In June 1993 the IURC issued a notice of proposed rulemaking for integrated resource planning (IRP) guidelines, including consideration of demand-side management, resource bidding and independent power producers. In October 1993, the Indiana Electric Association filed the joint comments of some of its members, including I&M, indicating their support for the IURC's efforts to develop new guidelines relating to IRP. Michigan: On February 21, 1992, I&M submitted to the MPSC Staff its three- year conservation plan. After settlement discussions, I&M submitted to Staff a revised three-year conservation plan that reflects demand-side management program costs and an incentive package and that establishes I&M's next Michigan retail rate case as the forum to consider recovery of lost revenues. The MPSC approved a settlement agreement in September 1993 which established recovery of DSM program expenses and an incentive plan. In October 1993, the MPSC approved a settlement agreement authorizing I&M to increase its annual provision for the cost to decommission the Cook Plant from approximately $2,800,000 to a level of $4,000,000, effective November 1, 1993, with further increases to annual levels of $5,100,000 and $6,000,000, six and twelve months later, respectively. KEPCo FERC: On October 28, 1993, KEPCo filed an application to begin serving the City of Vanceburg as a full requirements customer, effective January 1, 1994, which will yield annual revenues of $1,448,000. On August 15, 1991, the KPSC issued an order which initiated its investigation of the compliance strategies of electric utilities related to the Clean Air Act Amendments of 1990. On September 4, 1991, KEPCo filed its preliminary plan for compliance which is the same systemwide compliance report filed with the PUCO discussed under the caption CAAA-AEP System Compliance Plan. KEPCo's Big Sandy Plant is not subject to Phase I emission requirements; however, KEPCo may incur a portion of the costs of Phase I compliance for the AEP System through the AEP System Power Pool. On March 30, 1992, the KPSC issued an order requiring all electric utilities with Phase I affected units to file their complete acid rain permit applications filed with Federal EPA or explain why such permit applications are not being filed. On April 6, 1993, KEPCo responded by letter that KEPCo has no generating units which are Phase I- affected; however, 19 AEP's Phase I permit applications were provided. On August 18, 1993, the KPSC issued an order which indicated utilities should be prepared to explain their actions regarding extension and bonus allowances. For unreasonable activities, cost disallowances would occur. Appropriate ratemaking treatment of allowance trading and use will be determined on a case-by-case basis. On July 24, 1992, the KPSC began an investigation into the feasibility of implementing demand-side management cost recovery and incentive mechanisms. OPCo Reference is made to Rates--CSPCo regarding generic proceedings by the PUCO relating to demand-side management programs, emission allowance trading, the review of OPCo's long-term forecast report, the Ohio Energy Strategy Task Force and incentive-based ratemaking. In April 1991, the municipal wholesale customers of OPCo filed a complaint with the FERC seeking refunds back to 1982 for alleged overcharges for certain affiliated fuel costs. The complaint contends that the price of coal from two of OPCo's affiliated mines violated the FERC's market price requirement for affiliate coal pricing. In February 1993, FERC issued an order dismissing the complaint and, in September 1993, the wholesale customers appealed the FERC order to the U.S. Court of Appeals for the Sixth Circuit. On November 25, 1992, the PUCO issued an order approving a stipulation agreement with OPCo, the staff of the PUCO and the Ohio Consumers' Counsel. The agreement provided for, among other things, a predetermined price of $1.64 per million Btus for coal consumed by OPCo at four of its generating stations for the three-year period ended November 30, 1994; a subsequent 15-year predetermined price of $1.575 per million Btus for coal consumed at the Gavin Plant with quarterly price adjustments; and a limit on the recoverable cost for the Gavin scrubbers which is discussed under Environmental and Other Matters- Clean Air Act Amendments of 1990-AEP System Compliance Plan. After November 30, 2009, the price that OPCo can recover for coal from its affiliated Meigs mine will be limited to the lower of cost or the then-current market price. The predetermined prices will provide OPCo with an opportunity to accelerate recovery of its investment in and the liabilities of its Meigs mining operation attributable to its Ohio jurisdiction to the extent the actual cost of coal burned at the four plants is below the predetermined prices. In March 1993, the Industrial Energy Consumers of OPCo and The Sierra Club appealed the PUCO order to the Supreme Court of Ohio. OPCo has participated in these proceedings. OPCo has restructured its Meigs mining operation to operate at a reduced level of production. As a result, OPCo will purchase replacement coal under long-term contracts and on the spot market. It is expected that the replacement coal will be at prices below the Meigs production costs. Management reviewed the potential impact of the stipulation and restructuring to determine OPCo's ability to recover the cost of its Meigs mining operation. Based on the estimated future cost of coal for the Gavin Plant, management believes that OPCo should be able to recover the Ohio jurisdictional cost of its Meigs mining operation under the terms of the stipulation agreement. In November 1992, the municipal wholesale customers of OPCo filed two complaints. One complaint was filed with the FERC requesting an investigation of OPCo's July 1992 sale of the Martinka mining operation to an unaffiliated company. The FERC dismissed this complaint in June 1993. The other complaint was filed with the SEC requesting an investigation of the Martinka sale and an investigation into the pricing of OPCo's affiliated coal purchases back to 1986. OPCo has filed a response with the SEC seeking to dismiss this complaint. The PUCO is reviewing the Martinka sale and related unaffiliated fuel contracts in OPCo's current fuel clause proceedings. If additional regulatory actions further limit recovery of affiliated coal costs, results of operations could continue to be adversely impacted and the continued operation of some or all of OPCo's affiliated coal mines could be adversely impacted. The inability to recover affiliated coal costs and, if necessary, any future cost of 20 mine closure, including the investment in and cost to maintain the facilities shutdown, leased asset buy-outs, employee benefit costs and required reclamation costs, through the rate-making process or through the disposition of assets could have a material adverse effect on results of operations and financial condition. Reference is made to Construction and Financing Program-PFBC Projects-Tidd Plant for information concerning the recovery through rates of certain Tidd Plant project costs. Reference is made to the caption Environmental and Other Matters--CAAA-AEP System Compliance Plan for information regarding the AEP System's plan to comply with the Clean Air Act Amendments of 1990. FUEL SUPPLY The following table shows the sources of power generated by the AEP System:
1990 1991 1992 1993 ---- ---- ---- ---- Coal................................................... 90% 86% 93% 86% Nuclear................................................ 9% 13% 6% 13% Hydroelectric and other................................ 1% 1% 1% 1%
Variations in the generation of nuclear power are primarily related to refueling outages and, in 1992, a forced outage at Cook Plant Unit 2. See Cook Nuclear Plant. Coal The Clean Air Act Amendments of 1990 provide for the issuance of annual allowance allocations covering sulfur dioxide emissions at levels below historic emission levels for many coal-fired generating units of the AEP System. Phase I of this program must be met by 1995 and Phase II must be met by 2000, with both phases requiring significant changes in coal supplies and suppliers. The full extent of such changes, particularly in regard to Phase II, however, has not been determined. See Environmental and Other Matters--Air Pollution Control--CAAA-AEP System Compliance Plan for the current compliance plan. In order to meet emission standards for existing and new emission sources, the AEP System companies will, in any event, have to obtain coal supplies, in addition to coal reserves now owned by System companies, through the acquisition of additional coal reserves and/or by entering into additional supply agreements, either on a long-term or spot basis, at prices and upon terms which cannot now be predicted. No representation is made that any of the coal rights owned or controlled by the System will, in future years, produce for the System any major portion of the overall coal supply needed for consumption at the coal-fired generating units of the System. Although AEP believes that in the long run it will be able to secure coal of adequate quality and in adequate quantities to enable existing and new units to comply with emission standards applicable to such sources, no assurance can be given that coal of such quality and quantity will in fact be available. No assurance can be given either that statutes or regulations limiting emissions from existing and new sources will not be further revised in future years to specify lower sulfur contents than now in effect or other restrictions. See Environmental and Other Matters herein. The FERC has adopted regulations relating, among other things, to the circumstances under which, in the event of fuel emergencies or shortages, it might order electric utilities to generate and transmit electric energy to other regions or systems experiencing fuel shortages, and to rate-making principles by which such electric utilities would be compensated. In addition, the Federal Government is authorized, under prescribed conditions, to allocate coal and to require the transportation thereof, for the use of power plants or major fuel-burning installations. What regulatory actions, if any, may result from the foregoing, or from further legislative actions relating to a national energy crisis cannot be predicted, but such actions could adversely affect the revenues, operations and properties of AEP. 21 System companies have developed programs to conserve coal supplies at System plants which involve, on a progressive basis, limitations on sales of power and energy to neighboring utilities, appeals to customers for voluntary limitations of electric usage to essential needs, curtailment of sales to certain industrial customers, voltage reductions and, finally, mandatory reductions in cases where current coal supplies fall below minimum levels. Such programs have been filed and reviewed with officials of Federal and state agencies and, in some cases, the state regulatory agency has prescribed actions to be taken under specified circumstances by System companies, subject to the jurisdiction of such agencies. The mining of coal reserves is subject to Federal requirements with respect to the development and operation of coal mines, and to state and Federal regulations relating to land reclamation and environmental protection, including Federal strip mining legislation enacted in August 1977. Continual evaluation and study is given to possible closure of existing coal mines and divestiture or acquisition of coal properties in light of Federal and state environmental and mining laws and regulations which may affect the System's need for or ability to mine such coal. Western coal purchased by System companies is transported by rail to a terminal on the Ohio River for transloading to barges for delivery to generating stations on the river. Subsidiaries of AEP lease approximately 3,200 coal hopper cars to be used in unit train movements, as well as 17 towboats, 295 jumbo barges and 198 standard barges. Subsidiaries of AEP also own or lease coal transfer facilities at various locations on the river. The System generating companies procure coal from coal reserves which are owned or mined by subsidiaries of AEP, and through purchases pursuant to long- term contracts, or on a spot purchase basis, from unaffiliated producers. The following table shows the amount of coal delivered to the AEP System during the past five years, the proportion of such coal which was obtained either from coal-mining subsidiaries, from unaffiliated suppliers under long-term contracts or through spot or short-term purchases, and the average delivered price of spot coal purchased by System companies:
1989 1990 1991 1992 1993 ------ ------ ------ ------ ------ Total coal delivered to AEP operated plants (thousands of tons)............................... 45,025 52,087 45,232 44,738 40,561 Sources (percentage): Subsidiaries........................ 25% 25% 28% 25% 20% Long-term contracts.................. 56% 58% 62% 65% 66% Spot or short-term purchases......... 19% 17% 10% 10% 14% Average price per ton of spot-purchased coal.................................. $25.17 $26.75 $25.40 $23.88 $23.55
The average cost of coal consumed during the past five years by all AEP System companies, AEGCo, APCo, CSPCo, I&M, KEPCo and OPCo is shown in the following tables:
1989 1990 1991 1992 1993 ------ ------ ------ ------ ------ DOLLARS PER TON AEP System Companies......................... $37.05 $35.23 $35.16 $34.31 $33.57 AEGCo........................................ 24.33 21.05 20.65 20.11 17.74 APCo......................................... 39.52 39.77 41.99 43.00 42.65 CSPCo........................................ 35.50 37.01 35.18 33.87 33.87 I&M.......................................... 32.14 27.18 25.57 24.23 23.80 KEPCo........................................ 29.03 30.71 31.38 30.24 27.08 OPCo......................................... 40.04 40.13 40.18 38.36 38.12
22
1989 1990 1991 1992 1993 ------ ------ ------ ------ ------ CENTS PER MILLION BTU'S AEP System Companies.................... 162.44c 158.10c 158.88c 154.41c 150.89c AEGCo................................... 149.75 126.21 123.33 120.90 107.71 APCo.................................... 160.27 160.94 169.48 173.05 173.32 CSPCo................................... 153.77 159.83 152.55 143.94 143.66 I&M..................................... 162.67 143.43 139.16 135.11 129.39 KEPCo................................... 122.92 129.72 132.25 126.92 113.90 OPCo.................................... 172.25 171.10 171.65 163.89 161.25
The coal supplies at AEP System plants vary from time to time depending on various factors, including customers' usage of electric energy, space limitations, the rate of consumption at particular plants, labor unrest and weather conditions which may interrupt deliveries. At December 31, 1993, the System's coal inventory was approximately 58 days of normal System usage. This estimate assumes that the total supply would be utilized by increasing or decreasing generation at particular plants. The following tabulation shows the total consumption during 1993 of the coal- fired generating units of AEP's principal operating subsidiaries, coal requirements of these units over the remainder of their useful lives and the average sulfur content of coal delivered in 1993 to these units. Reference is made to Environmental and Other Matters for information concerning current emissions limitations in the AEP System's various jurisdictions and the effects of the Clean Air Act Amendments.
AVERAGE SULFUR CONTENT ESTIMATED REQUIREMENTS OF DELIVERED COAL TOTAL CONSUMPTION FOR REMAINDER OF ----------------------------- DURING 1993 USEFUL LIVES POUNDS OF SO/2/ (IN THOUSANDS OF TONS) (IN MILLIONS OF TONS)(A) BY WEIGHT PER MILLION BTU'S ------------------------ -------------------------- ---------- ------------------ AEGCo (b)............... 5,077 220 0.3% 0.7 APCo.................... 8,339 321 0.7% 1.1 CSPCo (c)............... 5,406 182 3.2% 5.4 I&M (d)................. 6,572 255 0.7% 1.6 KEPCo................... 2,292 73 1.1% 1.9 OPCo.................... 17,419 538 2.8% 4.8
- -------- (a)Preliminary estimates of the effects of the Clean Air Act Amendments of 1990 are included. (b)Reflects AEGCo's 50% interest in the Rockport Plant. (c)Includes coal requirements for CSPCo's interest in Beckjord, Stuart and Zimmer Plants. (d)Includes I&M's 50% interest in the Rockport Plant. AEGCo: See Fuel Supply--I&M for a discussion of the coal supply for the Rockport Plant. APCo: APCo, or its subsidiaries formerly engaged in coal mining, control coal reserves in the State of West Virginia which contain approximately 42,000,000 tons of clean recoverable coal, ranging in sulfur content between 1.0% and 3.5% sulfur by weight (weighted average, 2.6% sulfur by weight). Substantially all of the coal consumed at APCo's generating plants is obtained from unaffiliated suppliers under long-term contracts or on a spot purchase basis. The average sulfur content by weight of the coal received by APCo at its generating stations approximated 0.7% during 1993, whereas the maximum sulfur content permitted, for emission standard purposes, for existing plants in the regions in which APCo's generating stations are located ranged between 0.78% and 2% by weight depending in some circumstances on the calorific value of the coal which can be obtained for some generating stations. CSPCo: CSPCo owns an undivided one-half interest in 24,000,000 tons of clean recoverable deep-mineable coal in the State of Ohio which is located in the vicinity of its decommissioned Poston Plant and 23 has an average sulfur content of 2.4% by weight. Peabody Coal Company (Peabody), which owns the remaining one-half interest, has the right to mine and sell all of the jointly owned coal to any party on terms negotiated by Peabody. CSPCo has an option and right of first refusal (exercisable within a specified period after tender by Peabody) which will permit it to purchase this coal on the same terms as those of any contract which Peabody may negotiate with a third party. In the event that CSPCo does not exercise such right, it is entitled to receive a royalty on the coal from this reserve which Peabody sells to others. However, in such a case, this coal will not be available for CSPCo's use. CSPCo also owns coal reserves in eastern and southeastern Ohio which contain approximately 46,000,000 tons of clean recoverable coal with a sulfur content of approximately 4.5% sulfur by weight and reserves that contain approximately 10,000,000 tons of clean recoverable coal with a sulfur content of approximately 2.4% sulfur by weight. CSPCo has entered into a coal supply agreement with an unaffiliated supplier for the delivery of 1,600,000 tons of coal per year from 1992 through March 2011. Such coal contains approximately 5% sulfur by weight and is washed to improve its quality and consistency for use principally at Units 1 through 4 of the Conesville Plant. CSPCo has been informed by CG&E and DP&L that, with respect to the CCD Group units partly owned but not operated by CSPCo, sufficient coal has been contracted for or is believed to be available for the approximate lives of the respective units operated by them. Under the terms of the operating agreements with respect to CCD Group units, each operating company is contractually responsible for obtaining the needed fuel. I&M: I&M has acquired surface ownership interest in lands in Wyoming which, it is estimated, are underlaid by approximately 730,000,000 tons of clean recoverable coal with an average sulfur content by weight of approximately 0.5%. Federal and state coal leases which would provide the rights and authorization to extract this coal have not been obtained. I&M is attempting to sell its interest in these lands. I&M has entered into coal supply agreements with unaffiliated suppliers pursuant to which the suppliers are delivering low sulfur coal from surface mines in Wyoming principally for consumption by the Rockport Plant. Under these agreements, the suppliers will sell to I&M, for consumption by I&M at the Rockport Plant or consignment to other System companies, approximately 175,000,000 tons of coal with an average sulfur content not exceeding 1.2 pounds of sulfur dioxide per million Btu's of heat input. A contract for 100,000,000 tons expires on December 31, 2014 and a contract for 75,000,000 tons expires on December 31, 2004. I&M or its subsidiaries own or control coal reserves in Carbon County, Utah which are estimated to contain 227,000,000 tons of clean recoverable coal with an average sulfur content by weight of approximately 0.5% sulfur. In 1986, I&M and its two subsidiaries signed agreements under which certain of such coal rights, land, and related mining and preparation equipment and facilities were leased or subleased on a long-term basis to unaffiliated interests. In 1993, the remainder of those land and coal rights containing approximately 108,000,000 tons of clean recoverable coal were leased on a long-term basis to unaffiliated interests. Mining operations in Carbon County formerly conducted by I&M were suspended in 1984. KEPCo: Substantially all of the coal consumed at KEPCo's Big Sandy Plant is obtained from unaffiliated suppliers under long-term contracts or on a spot purchase basis. KEPCo has entered into coal supply agreements with unaffiliated suppliers pursuant to which KEPCo will receive approximately 2,211,000 tons of coal in 1994. To the extent that KEPCo has additional coal requirements, it may purchase coal from the spot market and/or suppliers under contract to supply other System companies. OPCo: OPCo and certain of its coal-mining subsidiaries own or control coal reserves in the State of Ohio which contain approximately 234,000,000 tons of clean recoverable coal, which ranges in sulfur content 24 between 3.4% and 4.5% sulfur by weight (weighted average, 3.8%), which can be recovered based upon existing mining plans and projections and employing current mining practices and techniques. OPCo and certain of its mining subsidiaries own an additional 113,000,000 tons of clean recoverable coal in Ohio which ranges in sulfur content between 2.4% and 3.4% sulfur by weight (weighted average 2.7%). Recovery of this coal would require substantial development. OPCo and certain of its coal-mining subsidiaries also own or control coal reserves in the State of West Virginia which contain approximately 108,000,000 tons of clean recoverable coal ranging in sulfur content between 1.4% and 3.3% sulfur by weight (weighted average, 2.1%) of which approximately 31,000,000 tons can be recovered based upon existing mining plans and projections and employing current mining practices and techniques. On July 1, 1992, a coal-mining subsidiary of OPCo sold its Martinka mining operations and most of its related coal reserves to an unaffiliated company for approximately $139,000,000 and the assumption of certain future liabilities. Concurrently OPCo entered into a 20-year agreement with an affiliate of the buyer of the Martinka mine to purchase up to 2,500,000 tons of low sulfur coal annually, including coal that will enable OPCo to comply with the Clean Air Act Amendments. The Martinka sale did not have a significant impact on results of operations and financial condition. The Martinka mining operation represented approximately 20% of affiliated coal deliveries to OPCo. Nuclear I&M has made commitments to meet certain of the nuclear fuel requirements of the Cook Plant. The nuclear fuel cycle consists of the mining and milling of uranium ore to uranium concentrates; the conversion of uranium concentrates to uranium hexafluoride; the enrichment of uranium hexafluoride; the fabrication of fuel assemblies; the utilization of nuclear fuel in the reactor; and the reprocessing or other disposition of spent fuel. Steps currently are being taken, based upon the planned fuel cycles for the Cook Plant, to review and evaluate I&M's requirements for the supply of nuclear fuel beyond the existing contractual commitments shown in the following table. I&M has made and will make purchases of uranium in various forms in the spot market until it decides that deliveries under long-term supply contracts are warranted. The following table shows the year through which contracts have been entered into to provide the requirements of the units for the various segments of the nuclear fuel cycle.
URANIUM CONCENTRATES CONVERSION ENRICHMENT (1) FABRICATION REPROCESSING (2) -------------- ----------- --------------- ------------ ---------------- Unit 1.................. -- -- 2000 1998 -- Unit 2.................. -- -- 2000 1998 --
- -------- (1) I&M has a requirements-type contract with DOE. I&M has partially terminated the contract, subject to revocation of the termination, so that it may procure enrichment services cost-effectively from the spot market. I&M also has a contract with Cogema, Inc. for the supply of enrichment services through 1995, depending on market conditions. (2) No reprocessing facility in the United States currently is in operation. I&M has contracted for reprocessing services at a facility on which construction has been halted. Lack of reprocessing services has resulted in the need to increase on-site storage capacity for spent fuel. For purposes of the storage of high-level radioactive waste in the form of spent nuclear fuel, I&M has completed modifications to its spent nuclear fuel storage pool to permit normal operations through 2010. I&M's costs of nuclear fuel consumed do not assume any residual or salvage value for residual plutonium and uranium. Nuclear Waste The Nuclear Waste Policy Act of 1982, as amended, establishes Federal responsibility for the permanent off-site disposal of spent nuclear fuel and high-level radioactive waste. Disposal costs are paid by fees assessed 25 against owners of nuclear plants and deposited into the Nuclear Waste Fund created by the Act. In 1983 I&M entered into a contract with DOE for the disposal of spent nuclear fuel. Under terms of the contract, for the disposal of nuclear fuel consumed after April 6, 1983 by I&M's Cook Plant, I&M is paying to the fund a fee of one mill per kilowatt-hour, which I&M is currently recovering from customers. For the disposal of nuclear fuel consumed prior to April 7, 1983, I&M must pay the U.S. Treasury a fee estimated at approximately $71,964,000, exclusive of interest of $75,845,000 at December 31, 1993. I&M deferred this amount plus accrued interest on its balance sheet pending recovery through the rate-making process. I&M has received regulatory approval for the recovery of this amount and is reducing the amount deferred as it is being recovered. Because of the current uncertainties surrounding DOE's program to provide for permanent disposal of spent nuclear fuel, I&M has not yet commenced paying this fee. At December 31, 1993, funds collected from customers to dispose of spent nuclear fuel and related earnings totaled $133,000,000. I&M has received regulatory approval from all of its jurisdictions to recover an approved level of decommissioning costs in revenues which amounted to $13,000,000 in 1993, $12,000,000 in 1992 and $11,000,000 in 1991. An aggregate amount of $170,000,000 had been set aside by I&M for nuclear decommissioning at December 31, 1993. The recoveries were approved by I&M's state regulatory commissions after the commissions reviewed studies by an independent consulting firm employed by I&M (FERC recovery is based on an earlier study). The most recent study estimates, based on changed conditions (related to delays in DOE's program for disposal of spent nuclear fuel and other factors), that the cost of post-shutdown fuel storage and decommissioning at the Cook Plant is in the range of $588,000,000 to $1.102 billion in 1991 dollars for the cases studied. The substantial increase is primarily due to the possible need to store spent nuclear fuel at the plant site for an extended time after the plant ceases operation, delaying the commencement of dismantling activities. Variables in the length of time spent nuclear fuel must be stored at the plant subsequent to ceasing operations, which is dependent on future developments in DOE's program for disposal of spent nuclear fuel, have widened the range of the estimate. I&M will continue to reevaluate periodically the cost of decommissioning and to seek regulatory approval to revise its rates as necessary. Funds recovered through the rate-making process for disposal of spent nuclear fuel consumed prior to April 7, 1983 and for nuclear decommissioning have been segregated and deposited in external funds for the future payment of such costs. The ultimate cost of radiological decommissioning may be materially different from the amounts derived from the estimates contained in the site-specific study as a result of (a) the type of decommissioning plan selected, (b) the escalation of various cost elements (including, but not limited to, general inflation), (c) the further development of regulatory requirements governing decommissioning, (d) limited experience to date in decommissioning such facilities and (e) the technology available at the time of decommissioning differing significantly from that assumed in these studies. Accordingly, management is unable to provide assurance that the ultimate cost of decommissioning the Cook Plant will not be significantly greater than current projections. In recent years, costs associated with nuclear plants have increased and become less predictable, in large part due to changing regulatory requirements. Nuclear industry-wide and Cook Plant initiatives have contributed to slowing the growth of operating and maintenance costs. However, the ability of I&M to obtain adequate and timely recovery of costs associated with the Cook Plant, including replacement power and retirement costs, has become more uncertain. The Low-Level Waste Policy Act of 1980 (LLWPA) mandates that the responsibility for the disposal of low-level waste rests with the individual states. Low-level radioactive waste consists largely of ordinary trash and other items that have come in contact with radioactive materials. To facilitate this approach, the LLWPA authorized states to enter into regional compacts for low-level waste disposal subject to Congressional approval. The LLWPA also specified that, beginning in 1986, approved compacts may prohibit the importation of low-level waste from other regions, thereby providing a strong incentive for states to enter 26 into compacts. As 1986 approached it became apparent that no new disposal facilities would be operational, and enforcement of the LLWPA would leave no disposal capacity for the majority of the low-level waste generated in the United States. Congress, therefore, passed the Low-Level Waste Policy Amendments Act of 1985 in conjunction with approval of seven regional compacts, including the Midwest Compact which governed the region in which the Cook Plant is located. In 1990, Nevada, South Carolina and Washington, the three states with operating disposal sites, determined that Michigan was out of compliance with milestones established by the LLWPA which were designed to force development of new disposal sites by the end of 1992. Failure of a state or compact region to have met a milestone could result in denial of access to operating sites for waste generators within the state. Since November 1990, the Cook Plant has been denied access to these operating sites. The Cook Plant's low-level radioactive waste is currently being stored on-site. I&M has completed construction of an on-site radioactive material storage facility at the Cook Plant for temporary preshipment storage of the plant's low-level radioactive waste. The facility can hold as much low-level waste as the Cook Plant is expected to produce through approximately 2001, and the building could be expanded to accommodate the storage of such waste through approximately 2017. Currently, the Cook Plant produces about 7,000 cubic feet of low-level waste annually. Management is unable to predict when a permanent disposal site for Michigan low-level waste will be available. Energy Policy Act--Nuclear Fees The Energy Policy Act of 1992 (Energy Act), contains a provision to fund the decommissioning and decontamination of DOE's existing uranium enrichment facilities from a combination of sources including assessments against electric utilities which purchased enrichment services from DOE facilities. I&M's assessment is estimated to be approximately $58,320,000 subject to inflation adjustments and is payable in annual assessments over 15 years commencing in 1993. I&M recorded a provision as a regulatory asset concurrent with the recording of the liability. The first year estimated assessment has been recorded as fuel expense and, under the provisions of the Energy Act, the expense is being recovered in I&M's fuel rate adjustment proceedings. ENVIRONMENTAL AND OTHER MATTERS AEP's subsidiaries are subject to regulation by Federal, state and local authorities with regard to air- and water-quality control and other environmental matters, and are subject to zoning and other regulation by local authorities. It is expected that costs related to environmental requirements will eventually be reflected in the rates of AEP's operating subsidiaries and that, in the long term, AEP's operating subsidiaries will be able to provide for such environmental controls as are required. However, some customers may curtail or cease operations as a consequence of higher energy costs. There can be no assurance that all such costs will be recovered. Except as noted herein, AEP's subsidiaries which own or operate generating facilities generally are in compliance with pollution control laws and regulations. Air Pollution Control Clean Air Act Amendments of 1990: For the AEP System, compliance with the Clean Air Act Amendments of 1990 (CAAA) is expected to require substantial expenditures for which management intends to seek recovery through increases in the rates of AEP's operating subsidiaries. OPCo is expected to incur a major portion of such costs. There can be no assurance that all such costs will be recovered. See Construction and Financing Program--Construction Expenditures. 27 The CAAA creates an emission allowance program pursuant to which utilities are authorized to emit a designated quantity of sulfur dioxide, measured in tons per year, on a system wide or aggregate basis. A utility or utility system will be deemed to operate in compliance with the legislation if its aggregate annual emissions do not exceed the total number of allowances that are allocated to the utility or utility system by the Federal government and net acquisitions through purchases. Effective January 1, 2000, the legislation establishes a maximum national aggregate ceiling on allowances allocated to fossil fuel-fired units larger than 25 MW. The allowance cap is set at 8.95 million tons. Emission reductions are required by virtue of the establishment of annual allowance allocations at a level below historical emission levels for many utility units. For units that emitted sulfur dioxide above a rate of 2.5 pounds per million Btu heat input in 1985, the CAAA establishes sulfur dioxide allowance limitations (caps or ceilings on emissions) premised upon sulfur dioxide emissions at a rate of 2.5 pounds as of the Phase I deadline of January 1, 1995. The following AEP System plants are Phase I-affected units: I&M's Breed Plant and Tanners Creek Unit 4; CSPCo's Beckjord Unit 6, Conesville Units 1-4 and Picway Unit 5; OPCo's Gavin Units 1-2, Muskingum River Units 1-5, Cardinal Unit 1, Mitchell Units 1-2 and Kammer Units 1-3. In the aggregate, these Phase I-affected units must annually limit emissions to no more than Phase I allowances held beginning in 1995. Phase I-affected units which are retrofitted with flue-gas desulfurization equipment (scrubbers) with a removal efficiency of 90% or greater prior to January 1, 1997 may be allocated a sufficient number of reserve allowances to provide a two-year extension to comply with Phase I allowance limitations. On January 11, 1993, Federal EPA published final regulations in the Federal Register which cover the Acid Rain Permit Program, Allowance System, Continuous Emission Monitoring, Excess Emissions Penalties and Offset Plans and Appeal Procedures. These regulations included allocation of allowances for Phase I sources. On March 12, 1993, several environmental groups, the State of New York and a number of utilities (including APCo, CSPCo, I&M, KEPCo and OPCo) filed petitions in the United States Court of Appeals for the District of Columbia Circuit seeking a review of the regulations. Oral argument has been scheduled. Phase I permit applications and compliance plans were filed for all Phase I- affected units in the AEP System and Phase I permits have been issued for Gavin, Muskingum River, Kammer and Breed plants. Proposed permits were issued for Cardinal, Tidd, Mitchell, Conesville and Picway plants and for Amos Units 1 and 2, Big Sandy Unit 2, Glen Lyn Unit 6, Rockport Unit 1 and Tanners Creek Unit 4. Pursuant to regulations promulgated by Federal EPA under Title IV of the CAAA, Phase II affected units may be designated as substitution units in Acid Rain Permit compliance plans. A Phase II substitution unit achieving the applicable Phase I NOx emission limit in 1995 is exempt from any more stringent Phase II NOx emission limits. Phase II units designated as substitution units in AEP system compliance plans included Amos Units 1 and 2, Glen Lyn Unit 6, Rockport Unit 1, Big Sandy Unit 2 and Tidd. Federal EPA is proposing to approve substitution plans for certain of these units for the year 1995 only. For the years 1996-1999, action would be taken based upon regulations then in effect. On September 10, 1993, APCo, CSPCo, I&M, KEPCo and OPCo and a group of unaffiliated utilities filed a petition in the U.S. Court of Appeals for the District of Columbia Circuit seeking a review of the determination by Federal EPA that it had authority to defer action on acid rain compliance plans. Federal EPA has filed a motion to dismiss the appeal. On November 18, 1993, Federal EPA published proposed rule revisions governing substitution and reduced utilization plans which are generally more restrictive than those currently in effect and would apply to Phase I substitution and compensating unit plans for the years 1996-1999. OPCo has filed an Early Ranking Application with Federal EPA for Gavin Units 1 and 2 seeking issuance of extension reserve allowances for both units based on installation of scrubbers. Because of expected oversubscription of these allowances, OPCo and other unaffiliated utilities formed an emission allowance pool 28 to assure receipt of a portion of the allowances. In March 1993, Federal EPA conducted a lottery to determine order of receipt of the allowances. OPCo's application for Gavin Plant received a full allotment of the requested allowances. Based on participation in the emission allowance pool, OPCo will receive approximately 88% of the total allowances it requested. All fossil fuel-fired generating units with capacity greater than 25 MW are affected in Phase II of the acid rain control program. All Phase II-affected units are allocated allowances with which compliance must be accomplished no later than January 1, 2000. The basis for Phase II allowance allocation depends on 1985 sulfur dioxide emission rates--if a unit emitted sulfur dioxide in 1985 at a rate in excess of 1.2 pounds per million Btu heat input, the allowance allocation is premised upon an emission rate of 1.2 pounds as of the Phase II deadline of January 1, 2000; if a unit emitted sulfur dioxide in 1985 at a rate of less than 1.2 pounds, the allowance allocation is in most instances premised upon the actual 1985 emission rate. The CAAA contemplates four general methods of compliance: (i) fuel switching; (ii) technological methods of control such as scrubbers; (iii) capacity utilization adjustments; and (iv) acquisition of allowances to cover anticipated emissions levels. The AEP System permit application and compliance plan filings reflect, to some extent, each method of compliance. The acid rain title also contains provisions concerning nitrogen oxides emissions. On March 1, 1994, the Federal EPA Administrator signed final regulations governing nitrogen oxides emissions from tangentially fired and dry bottom wall-fired boilers at Phase I units. For tangentially fired boilers and dry bottom wall-fired boilers (other than units applying cell burner technology), the proposed emission limitations are 0.45 pounds nitrogen oxides per million Btu heat input and 0.50 pounds nitrogen oxides per million Btu heat input, respectively, and must be achieved no later than January 1, 1995. The five AEP System units which are subject to the January 1, 1995 Phase I deadline are OPCo's Mitchell Units 1-2 and CSPCo's Conesville Units 3 and 4 and Picway Unit 5. With the exception of Conesville Unit 4 for which no retrofit controls are deemed necessary to achieve Phase I NOx emission limitations, the above units will be retrofitted to achieve these limits. Capital expenditures for these activities are included as a component of the cost of compliance with all Phase I requirements applicable to these units. For wet bottom wall-fired boilers, cyclone boilers, units applying cell burner technology and all other types of boilers, emission limitations comparable in cost to the controls applicable to tangentially fired boilers and non-cell burner dry bottom wall-fired boilers are to be adopted no later than January 1, 1997. The 1997 nitrogen oxides emission limitations are required to be met by Phase II-affected sources as of January 1, 2000. The CAAA contains additional provisions, other than the acid rain title, which could require reductions in emissions of nitrogen oxides from fossil fuel-fired power plants. Title I, dealing generally with nonattainment of ambient air quality standards, establishes a tiered system for classifying degrees of nonattainment with air quality standards for ozone and mandates that Federal EPA in cooperation with the states issue, within 240 days of enactment, ozone "attainment" or "nonattainment" designations for airsheds throughout the country. Depending upon the severity of nonattainment within a given nonattainment area, reductions in nitrogen oxides emissions from fossil fuel-fired power plants may be required as part of a state's plan for achieving attainment with ozone air quality standards. The deadlines for submission of new state plans and the accomplishment of mandated emission reductions, as well as the nature of stationary source nitrogen oxides control requirements, also depend upon the severity of a given airshed's nonattainment. While ozone nonattainment is largely restricted to urban areas, several AEP System generating stations could be determined to be affecting ozone concentrations and may therefore eventually be required to reduce nitrogen oxides emissions pursuant to Title I. Plants currently located in areas being evaluated for imposition of additional emission controls include Zimmer and Beckjord Unit 6 (both partially owned by CSPCo), I&M's Tanners Creek Plant, KEPCo's Big Sandy Plant, OPCo's Gavin Plant and APCo's Amos, Sporn, Kanawha River and Mountaineer plants. On February 25, 1994, the West Virginia Department of Environmental Protection issued a Consent Order for APCo's Amos Units 1 and 2, requiring reductions in nitrogen oxides emissions from these units after June 1, 1995. The reduction in nitrogen oxides emissions will be less than that required under Title IV of the CAAA but will be required at an earlier time. 29 Utility boilers are potentially subject to additional control requirements under Title III of the CAAA governing hazardous air pollutant emissions. Federal EPA is directed to conduct studies concerning the potential public health impacts of pollutants identified by the legislation as hazardous in connection with their emission from electric utility steam generating units. Federal EPA was required to report the results of this study to Congress by November 1993 and is required to regulate emission of these pollutants from electric utility steam generating units if it is determined that such regulation is necessary and appropriate, based on the results of the study. Federal EPA has informed Congress that completion of this study will be delayed significantly beyond the November 1993 deadline. Additionally, Federal EPA is directed to study the deposition of hazardous pollutants to the Great Lakes, the Chesapeake Bay, Lake Champlain and other coastal waters. As part of this assessment, Federal EPA is authorized to adopt regulations by November 1995 to prevent serious adverse effects to public health and serious or widespread environmental effects. It is possible that emissions from electric utility generating units may be regulated under this water body deposition assessment program. The CAAA expands the enforcement authority of the Federal government by increasing the range of civil and criminal penalties for violations of the Clean Air Act and enhancing administrative civil provisions, adding a citizens suit provision and imposing a national operating permit system, emission fee program and enhanced monitoring, record keeping and reporting requirements for existing and new sources. CAAA-AEP System Compliance Plan: Management reviewed the provisions of the CAAA and evaluated various compliance strategies on a systemwide basis. The selection of any compliance alternatives for the AEP System's generating plants was dependent on the method of compliance selected for OPCo's Gavin Plant, one of the AEP System's largest plants (2,600 mw) which emits about 25 percent of the System's total sulfur dioxide emissions and about 44 percent of emissions from OPCo's plants in Ohio. Alternatives considered for the Gavin Plant were switching to low-sulfur coal which would come from mines outside Ohio or installation of scrubbers which would allow the continued burning of high- sulfur coal. A systemwide Phase I CAAA compliance report was filed with the PUCO in 1991 comparing preliminary estimates of revenue requirements for the two compliance alternatives at Gavin. Although the preliminary compliance report showed lower projected AEP System revenue requirements for fuel switching rather than installing OPCo-owned scrubbers, the PUCO issued an order which strongly encouraged OPCo to keep both the fuel switching and scrubbing options open. OPCo continued to study the alternatives and in April 1992 filed a Phase I CAAA compliance plan. OPCo's compliance plan filing was made under an Ohio law enacted in 1991 that provides utilities with an opportunity to obtain advance PUCO approval of a compliance plan provided that, among other things, the PUCO determines that it represents a least-cost approach. Once approved by the PUCO, such plans are deemed prudent for subsequent PUCO rate proceedings. On November 25, 1992, the PUCO issued orders approving (i) OPCo's stipulation agreement with the PUCO staff and the Ohio Consumers' Counsel regarding the predetermined price of coal discussed below and in Rates and (ii) OPCo's compliance plan. The actual rate treatment of costs associated with the compliance plan will be determined in a future rate case. In March 1993, the Industrial Energy Consumers of OPCo (IEC) and The Sierra Club each appealed the PUCO orders regarding the stipulation agreement and compliance plan to the Supreme Court of Ohio. The IEC and Sierra Club seek to overturn the PUCO decisions. OPCo has participated in these proceedings. The compliance plan sets forth, as part of an AEP System least-cost strategy, compliance measures for the AEP System's affected generating units including the installation of scrubbers at the Gavin Plant. In order to lower the cost of compliance, the plan proposed to lease the scrubbers which are to be installed at the Gavin Plant early in 1995. The plan also provides for Gavin to burn Ohio high-sulfur coal supplied, in part, by OPCo's affiliated Meigs mine which will operate at reduced capacity and in part by new long-term contracts with unaffiliated sources and spot market purchases. 30 Under the terms of the compliance plan, OPCo's Muskingum River Unit 5 will switch to low-sulfur coal by 1995 and Kammer Units 1-3 will switch to moderate sulfur coal. The PUCO also indicated that management should take steps to have Cardinal Unit 1 available for fuel switching for Phase I compliance. The PUCO is examining in OPCo's current fuel clause proceeding whether it would be a lower-cost alternative to fuel-switch Cardinal Unit 1 in Phase I rather than Phase II as specified in AEP's compliance plan. CSPCo's Conesville Units 1-3 will be modified to enable these units to burn coal or natural gas to comply. Actual fuel choice will depend on the cost and availability of gas. Although the compliance plan originally contemplated that CSPCo's Picway Unit 5 also would be modified to enable this unit to burn coal or natural gas to comply, this proposed modification has been indefinitely deferred. Beckjord Unit 6 (owned with CG&E and DP&L) will switch to moderate sulfur coal. Current plans call for I&M's Tanners Creek Unit 4 to switch to moderate sulfur coal and for retirement of I&M's Breed Plant in 1994. Eight additional units are subject to Phase I rules, but no operating or fuel changes are planned, because they will hold allowances sufficient for compliance. Since the approved plan reflects fuel switching to comply at OPCo's Muskingum River Plant and Cardinal Unit 1, mining operations at OPCo's other wholly-owned coal-mining subsidiaries, Central Ohio Coal Company and Windsor Coal Company, could be shut down. Central Ohio Coal Company and Windsor Coal Company supply coal to Muskingum River Plant and Cardinal Plant, respectively. The current plan for Central Ohio Coal Company provides for continuing at the current operating level until mid-1994, and then reducing to approximately a 50% operating level until 1999. The cost of affiliated mine shutdowns would be substantial. Shutdown costs for Central Ohio Coal Company and Windsor Coal Company include investments in the mines, leased asset buy-outs, reclamation and employee benefits and were estimated to be approximately $250,000,000 at December 31, 1993. Management expects to recover costs of compliance with the CAAA from ratepayers. Lack of recovery of the cost of CAAA compliance, including the lease cost of the Gavin scrubbers and the investment in and cost of closing affected affiliated mining operations, could materially adversely affect AEP's and OPCo's results of operations and financial condition. In August 1992 OPCo signed a stipulation agreement with the PUCO staff and the Ohio Consumers' Counsel which provides that, among other things, the recoverable cost of the Gavin scrubbers is not to exceed $815,000,000. The scrubbers are currently under construction. See Construction and Financing Program. Management expects that the cost of the scrubbers will be at least 10% less than this amount. In September 1992 OPCo entered into an agreement for the lease of scrubbers at the Gavin Plant with JMG Funding, Limited Partnership, an unaffiliated entity. Under the terms of the agreement for lease, OPCo, as agent for JMG, will build the scrubbers and upon completion, subject to certain conditions, will lease the scrubbers from JMG. The agreement for lease provides for JMG to pay the cost of construction. The lease will be accounted for as an operating lease. On December 9, 1993, the PUCO approved the terms of the lease agreement. With respect to the construction of the scrubbers at the Gavin Plant, OPCo has received a permit from the U.S. Army Corps of Engineers to conduct certain activities in the navigable waters and affecting wetlands. Other environmentally related permits have been received from state agencies or are being sought. Global Climate Change: Increasing concentrations of "greenhouse gases," including carbon dioxide (CO/2/), in the atmosphere have led to concerns about the potential for the earth's climate to change. As a result of the AEP System's historical practice of using low-cost indigenous coal supplies to produce electricity, AEP System power plants are significant sources of CO/2/ emissions. The proponents of the theory of global climate change maintain that the increasing concentrations of man-made greenhouse gases will cause some of the sun's energy that is normally radiated back into space to be trapped in the atmosphere and that, as a result, the global temperature will increase. Management is working to support further efforts to properly study the issue of global climate change to define the extent, if any, to which it poses a threat to the environment before new restrictions are imposed. Management is concerned that new laws may be passed or new regulations promulgated without sufficient scientific study and support. 31 At the Earth Summit in Rio de Janeiro, Brazil in June 1992, over 150 nations, including the United States, signed a global climate change treaty. Each country that ratifies the treaty commits itself to a process of achieving the aim of reducing greenhouse gas emissions, including CO/2/, to their 1990 level by the year 2000. On October 7, 1992, the U.S. Senate ratified the treaty. The treaty goes into effect on March 21, 1994. In accordance with the obligations set forth in the global climate change treaty, on April 21, 1993, President Clinton committed the United States to reducing greenhouse gas emissions to 1990 levels by the year 2000. On October 19, 1993, the President unveiled the Administration's Climate Change Action Plan for meeting his emission reduction target. The plan emphasizes reductions in fossil fuel use, the largest source of CO/2/ emissions, primarily through reliance on voluntary energy efficiency programs and voluntary partnerships between the Federal government and U.S. industry. One such collaboration is between the electric utility industry and the U.S. Department of Energy. Known as the Utility Climate Challenge, this initiative is intended to identify voluntary, cost-effective measures to limit or offset future greenhouse gas emissions. Although AEP is participating in this effort, such actions will not be undertaken if they threaten the AEP System's economic competitiveness or if they are unacceptable to its regulators. Since the AEP System is a major emitter of carbon dioxide, its financial condition and results of operations could be materially adversely affected by the imposition of controls on carbon dioxide emissions if the compliance costs incurred are not fully recovered from ratepayers. In addition, any program to stabilize or reduce carbon dioxide emissions is expected to impose substantial costs on industry and society, and could seriously erode the economic base that AEP's operations serve. Ohio: On July 29, 1988, Federal EPA issued a notice of violation alleging that OPCo's Muskingum River Plant operated in violation of Ohio EPA's regulation governing visible emissions during 1987. At a November 1988 enforcement conference pursuant to Clean Air Act Section 113, OPCo representatives presented evidence to Federal EPA indicating that the notice of violation was not supported by factual evidence nor by law. Federal EPA has yet to take further action. On March 9, 1993, Federal EPA, Region V, issued a notice of violation alleging that Stuart Station (owned by CSPCo, CG&E and DP&L) was in violation of Ohio's State Implementation Plan rules relating to opacity. This notice of violation has been resolved without penalty. West Virginia: The West Virginia Air Pollution Control Commission promulgated sulfur dioxide limitations effective February 1978. Federal EPA has approved these regulations as they apply to APCo's and OPCo's plants, except for OPCo's Mitchell and Kammer Plants. The emission limitations for the Mitchell Plant have been approved by Federal EPA for primary ambient air quality (health-related) standards only. The West Virginia Air Pollution Control Commission is obliged to reanalyze sulfur dioxide emission limits for the Mitchell Plant with respect to secondary ambient air quality (welfare- related) standards. Because of the lengthy time and uncertainty associated with the stack height rulemaking and litigation discussed in detail below, it is not certain when Federal EPA will take dispositive action regarding the Mitchell and Kammer Plants. Stack Height Regulations: On June 27, 1985, Federal EPA issued stack height regulations pursuant to an order of the United States Court of Appeals for the District of Columbia Circuit. These regulations were appealed by a number of states, environmental groups and investor-owned electric utilities (including APCo, CSPCo, I&M, KEPCo and OPCo), along with three electric utility trade associations. OPCo also filed a separate petition for review to raise issues unique to its Kammer Plant. Various petitions for reconsideration filed with and denied by Federal EPA were also appealed. This litigation was consolidated into a single case. On January 22, 1988, the U.S. Court of Appeals issued a decision in part upholding the June 1985 stack height rules and remanding certain of the June 1985 rules to Federal EPA for further consideration. With respect to Kammer Plant, the January 1988 court decision rejected OPCo's appeal, holding that Federal EPA acted lawfully in revoking stack height credit previously granted for Kammer Plant in October 1982. OPCo 32 is in the process of initiating administrative proceedings under the 1985 stack height rules with the State of West Virginia and Federal EPA in an effort to preserve stack height credit for Kammer Plant. Federal EPA has yet to commence administrative proceedings to incorporate changes in the 1985 stack height rules as mandated by the January 1988 court decision. While it is not possible to state with particularity the ultimate impact of the final rules on AEP System operations, at present it appears that the most likely AEP System plants at which the final rules could possibly result in substantially more stringent emission limitations are CSPCo's Conesville Plant, AEGCo's and I&M's Rockport Plant, I&M's Tanners Creek Plant and OPCo's Gavin and Kammer plants. Gavin and Rockport plants were not affected by Federal EPA's stack height rules as issued in June 1985. However, the provision exempting these plants was remanded to Federal EPA in the January 1988 court decision. Accordingly, the ultimate impact of the stack height rules on Gavin and Rockport plants will not be known until Federal EPA completes administrative proceedings on remand and reissues final stack height rules. OPCo and AEGCo and I&M intend to participate in the remand rulemaking affecting Gavin and Rockport plants, respectively. State air pollution control agencies will be required to implement the stack height rules by revising emission limitations for sources subject to the rules and submitting such revisions to Federal EPA. On June 1, 1989, Ohio EPA adopted a rule concerning CSPCo's Conesville Plant in response to Federal EPA's stack height rules adopted in 1985. Under Federal EPA policy published in January 1988, emission reductions required by the stack height rules may be obtained at plants other than the plant directly affected by the rules, and thereafter credited to the directly affected plant. Under Ohio EPA's June 1 rule, the sulfur dioxide emission limitations for Conesville Units 5 and 6 remain at 1.2 pounds sulfur dioxide per million Btu heat input as long as the emission rate at CSPCo's retired Poston Units 1-4 remains at 0.0 pounds sulfur dioxide per million Btu heat input. Federal EPA has yet to take action concerning Ohio EPA's June 1 rule. Administrative Developments Regarding Sulfur Dioxide: Federal EPA, in the Federal Register dated April 26, 1988, issued a "provisional" decision that proposed to retain present national ambient air quality standards for sulfur dioxide and did not propose adoption of a new, more restrictive, short-term primary (health-related) standard. Federal EPA is expected to issue a final rule after its review of public comments filed in response to the proposed rule. In the context of this sulfur dioxide standard rulemaking, Federal EPA is considering a number of significant policy changes in the rules governing sulfur dioxide emissions. Principal among these possible regulatory changes is the adoption of a new, short-term primary national ambient air quality standard for sulfur dioxide. Adoption of any of these changes could require substantial reductions in sulfur dioxide emissions from the System's coal-fired generating plants which would entail substantial capital and operating costs. Life Extension: On July 21, 1992, Federal EPA published final regulations in the Federal Register governing application of new source rules to generating plant repairs and pollution control projects undertaken to comply with the Clean Air Act Amendments of 1990. Generally, the rule provides that plants undertaking pollution control projects will not trigger new source review requirements. The Natural Resource Defense Council and a group of utilities, including five AEP System companies, have filed petitions in the U.S. Court of Appeals for the District of Columbia Circuit seeking a review of the regulations. Water Pollution Control Under the Clean Water Act, effluent limitations requiring application of the best available technology economically achievable are to be applied, and those limitations require that no pollutants be discharged if Federal EPA finds elimination of such discharges is technologically and economically achievable. The Clean Water Act provides citizens with a cause of action to enforce compliance with its pollution control requirements. Since 1982, many such actions against NPDES permit holders have been filed. To date, no AEP System plants have been named in such actions. 33 All System Plants are operating with NPDES permits. These will expire during the time period 1994-96, except for Breed Plant's permit which has expired, but for which a timely renewal application was filed. Under EPA's regulations, operation under an expired NPDES permit is authorized provided an application is filed at least 180 days prior to expiration. Renewal applications are being prepared or have been filed for renewal of NPDES permits which expire in 1994. The NPDES permits generally require that certain thermal impact study programs be undertaken. These studies have been completed for all System plants. Thermal variances are in effect for all plants with once-through cooling water, except for Conesville and Muskingum River Plants for which thermal variances expired on May 1, 1993. Requests for revised thermal variances for these two plants have been made but the permitting agency has not made a final determination on the requests. If thermal variances for these plants are not renewed, the plants could be required to reduce generation, particularly in late summer months. Certain mining operations conducted by System companies as discussed under Fuel Supply are also subject to Federal and state water pollution control requirements, which may entail substantial expenditures for control facilities, not included at present in the System's construction cost estimates set forth herein. See Item 3. Legal Proceedings--Meigs Mine with respect to litigation regarding certain discharges from OPCo's Meigs Mines. The Federal Water Quality Act of 1987 requires states to adopt stringent water quality standards for a large category of toxic pollutants and to identify specialized control measures for dischargers to waters where water quality standards are not being met. Implementation of these provisions could result in significant costs to the AEP System if biological monitoring requirements and water quality-based effluent limits are placed in NPDES permits. Hazardous Substances and Wastes Section 311 of the Clean Water Act imposes substantial penalties for spills of Federal EPA-listed hazardous substances into water and for failure to report such spills. The Comprehensive Environmental Response, Compensation, and Liability Act expanded the reporting requirements to cover the release of hazardous substances generally into the environment, including water, land and air. AEP's subsidiaries store and use some of these hazardous substances, including PCB's contained in certain capacitors and transformers, but the occurrence and ramifications of a spill or release of such substances cannot be predicted. The Comprehensive Environmental Response, Compensation, and Liability Act provides governmental agencies with the authority to require clean-up of hazardous waste sites and releases of hazardous substances into the environment. Since liability under this Act is strict and can be applied retroactively, AEP System companies which previously disposed of PCB-containing electrical equipment and other hazardous substances may be required to participate in remedial activities at such disposal sites should environmental problems result. AEP System companies are presently identified as parties responsible for clean-up at nine federal sites, including I&M at five sites, KEPCo at one site, OPCo at two sites and Wheeling Power Company at one site. I&M also has been named as a party responsible for clean-up at one state site. The companies' share of clean-up costs, however, is not expected to be significant. AEP System companies, including I&M and OPCo, also have been named as defendants in contribution lawsuits for two additional sites. In addition to handling hazardous substances, the System companies generate solid waste associated with the combustion of coal, the vast majority of which is fly ash, bottom ash and flue gas desulfurization wastes. These wastes presently are considered to be non-hazardous under RCRA and applicable state law and the wastes are treated and disposed in surface impoundments or landfills in accordance with state permits or authorization. As required by RCRA, EPA evaluated whether high volume coal combustion wastes (such as fly ash, bottom ash and flue gas desulfurization wastes) should be regulated as hazardous waste. In August, 1993 EPA issued a regulatory determination that such high volume coal combustion wastes should not be regulated as hazardous waste. For low volume coal combustion wastes, such as metal and boiler cleaning wastes, Federal EPA will gather additional information and make a regulatory determination by April 1998. 34 Until that time, these low volume wastes are provisionally excluded from regulation under the hazardous waste provisions of RCRA. All presently generated hazardous waste is being disposed of at permitted off-site facilities in compliance with applicable Federal and state laws and regulations. For System facilities which generate such wastes, System companies have filed the requisite notices and are complying with RCRA and applicable state regulations for generators. Nuclear waste produced at the Cook Plant is excluded from regulation under RCRA. Federal EPA's technical requirements for underground storage tanks containing petroleum will require retrofitting or replacement of an appreciable number of tanks. Compliance costs for tank replacement and site remediation have not been significant to date. Electric and Magnetic Fields (EMF) EMF is found everywhere there is electricity. Electric fields are created by the presence of electric charges. Magnetic fields are produced by the flow of those charges. This means that EMF is created by electricity flowing in transmission and distribution lines, or being used in household wiring and appliances. A number of studies in the past several years have examined the possibility of adverse health effects from EMF. While some of the epidemiological studies have indicated some association between exposure to EMF and health effects, the majority of studies have indicated no such association. The epidemiological studies that have received the most public attention reflect a weak correlation between surrogate or indirect estimates of EMF exposure and certain cancers. Studies using direct measurements of EMF exposure show no such association. In addition, the research has not shown any causal relationship between EMF exposure and cancer, or any other adverse health effects. Additional studies, which are intended to provide a better understanding of the subject, are continuing. Federal EPA is currently studying whether exposure to EMF is associated with cancer in humans. In 1990, Federal EPA issued a draft report on EMF, received interagency review and public comment, and is in the process of preparing its final report. A December 1992 brochure from Federal EPA, Questions And Answers About Electric And Magnetic Fields (EMFs), states at page 3, "The bottom line is that there is no established cause and effect relationship between EMF exposure and cancer or other disease." The Energy Policy Act of 1992 established a coordinated Federal EMF research program. The program funding is $65,000,000 over five years, half of which is to be provided by private parties including utilities. AEP has committed to contribute $446,571 over the five-year period. AEP's participation is a continuation of its efforts to support further research and to communicate with its customers about this issue. Its operating company subsidiaries provide their residential customers with information and field measurements on request, although there is no scientific basis for interpreting such measurements. A number of lawsuits based on EMF-related grounds have been filed in recent years against electric utilities. A suit was filed on May 23, 1990 against I&M involving claims that EMF from a 345 KV transmission line caused adverse health effects. No specific amount has been requested for damages in this case and no trial date has been set. Some states have enacted regulations to limit the strength of magnetic fields at the edge of transmission line rights-of-way. No state which the AEP System serves has done so. On March 22, 1993, The Ohio Power Siting Board issued its amended rules providing for additional consideration of the possible effects of EMF in the certification of electric transmission facilities. Under the amended EMF rules, persons seeking approval to build electric transmission lines would have to provide estimates of EMF from transmission lines under a 35 variety of conditions. In addition, applicants would be required to address possible health effects and discuss the consideration of design alternatives with respect to EMF. In April 1993, the State of Indiana enacted a law which provides that the IURC shall determine, based on the preponderance of evidence in the scientific literature, whether rules are necessary to protect the public health from EMF. If the IURC determines that such rules are necessary, the IURC is required to adopt rules that reasonably protect the public health from EMF. Management cannot predict the ultimate impact of the question of EMF exposure and adverse health effects. If further research shows that EMF exposure contributes to increased risk of cancer or other health problems, or if the courts conclude that EMF exposure harms individuals and that utilities are liable for damages, or if states limit the strength of magnetic fields to such a level that the current electricity delivery system must be significantly changed, then the results of operation and financial condition of AEP and its operating subsidiaries could be materially adversely affected unless these costs can be recovered from rate payers. RESEARCH AND DEVELOPMENT AEP and its subsidiaries are involved in a number of research projects which are directed towards developing more efficient methods of burning coal, reducing the contaminants resulting from combustion of coal, and improving the efficiency and reliability of power transmission and distribution, including load management. See Construction and Financing Program--PFBC Projects. AEP System operating companies have elected to join the Electric Power Research Institute (EPRI), a nonprofit organization that manages research and development on behalf of the U.S. electric utility industry. EPRI, founded in 1973, manages technical research and development programs for its members to improve power production, delivery and use. Approximately 700 utilities are members. EPRI has agreed to a membership program with AEP whereby dues will be phased in over four years. AEP's operating companies intend to seek recovery of these dues through rates, which recovery is anticipated to closely relate to each company's membership date. Total research and development expenditures by AEP and its subsidiaries were approximately $13,700,000 for the year ended December 31, 1993, $14,200,000 for the year ended December 31, 1992 and $15,100,000 for the year ended December 31, 1991 including $10,900,000, $11,700,000 and $11,900,000, respectively, for Tidd Plant and related PFBC costs. 36 Item 2.PROPERTIES - -------------------------------------------------------------------------------- At December 31, 1993, subsidiaries of AEP owned (or leased where indicated) generating plants with the net power capabilities (winter rating) shown in the following table:
NET OWNER, KILOWATT PLANT TYPE AND NAME LOCATION (NEAR) CAPABILITY --------------------- ---------------- ----------- AEP Generating Company: Steam -- Coal-Fired: Rockport Plant (AEGCo share) Rockport, Indiana 1,300,000(a) ---------- Appalachian Power Company: Steam -- Coal-Fired: John E. Amos, Units 1 & 2 St. Albans, West Virginia 1,600,000 John E. Amos, Unit 3 (APCo share) St. Albans, West Virginia 433,000(b) Clinch River Carbo, Virginia 705,000 Glen Lyn Glen Lyn, Virginia 335,000 Kanawha River Glasgow, West Virginia 400,000 Mountaineer New Haven, West Virginia 1,300,000 Philip Sporn, Units 1 & 3 New Haven, West Virginia 308,000 Hydroelectric -- Conventional: Buck Ivanhoe, Virginia 10,000 Byllesby Byllesby, Virginia 20,000 Claytor Radford, Virginia 76,000 Leesville Leesville, Virginia 40,000 Niagara Roanoke, Virginia 3,000 Reusens Lynchburg, Virginia 12,000 Hydroelectric -- Pumped Storage: Smith Mountain Penhook, Virginia 565,000 ---------- 5,807,000 ---------- Columbus Southern Power Company: Steam -- Coal-Fired: Beckjord, Unit 6 New Richmond, Ohio 53,000(c) Conesville, Units 1-3, 5 & 6 Coshocton, Ohio 1,165,000 Conesville, Unit 4 Coshocton, Ohio 339,000(c) Picway, Unit 5 Columbus, Ohio 100,000 Stuart, Units 1-4 Aberdeen, Ohio 608,000(c) Zimmer Moscow, Ohio 330,000(c) ---------- 2,595,000 ----------
37
NET OWNER, KILOWATT PLANT TYPE AND NAME LOCATION (NEAR) CAPABILITY --------------------- ---------------- ----------- Indiana Michigan Power Company: Steam -- Coal-Fired: Breed Sullivan, Indiana 325,000(d) Rockport Plant (I&M share) Rockport, Indiana 1,300,000(a) Tanners Creek Lawrenceburg, Indiana 995,000 Steam -- Nuclear: Donald C. Cook Bridgman, Michigan 2,110,000 Gas Turbine: Fourth Street Fort Wayne, Indiana 18,000(e) Hydroelectric -- Conventional: Berrien Springs Berien Springs, Michigan 3,000 Buchanan Buchanan, Michigan 2,000 Constantine Constantine, Michigan 1,000 Elkhart Elkhart, Indiana 1,000 Mottville Mottville, Michigan 1,000 Twin Branch Mishawaka, Indiana 3,000 ---------- 4,759,000 ---------- Kanawha Valley Power Company: Hydroelectric -- Conventional: London Montgomery, West Virginia 16,000 Marmet Marmet, West Virginia 16,000 Winfield Winfield, West Virginia 19,000 ---------- 51,000 ---------- Kentucky Power Company: Steam -- Coal-Fired: Big Sandy Louisa, Kentucky 1,060,000 ---------- Ohio Power Company: Steam -- Coal-Fired: John E. Amos, Unit 3 (OPCo share) St. Albans, West Virginia 867,000(b) Cardinal, Unit 1 Brilliant, Ohio 600,000 General James M. Gavin Cheshire, Ohio 2,600,000 Kammer Captina, West Virginia 630,000 Mitchell Captina, West Virginia 1,600,000 Muskingum River Beverly, Ohio 1,425,000 Philip Sporn, Units 2, 4 & 5 New Haven, West Virginia 742,000 Hydroelectric -- Conventional: Racine Racine, Ohio 48,000 ---------- 8,512,000 ---------- Total Generating Capability............. 24,084,000 ==========
38
NET OWNER, KILOWATT PLANT TYPE AND NAME LOCATION (NEAR) CAPABILITY - --------------------- ---------------- ----------- Summary: Total Steam -- Coal-Fired..................................................... 21,120,000 Nuclear........................................................ 2,110,000 Total Hydroelectric -- Conventional................................................... 271,000 Pumped Storage................................................. 565,000 Other........................................................... 18,000 ---------- Total Generating Capability..................... 24,084,000 ==========
- -------- (a) Unit 1 of the Rockport Plant is owned one-half by AEGCo and one-half by I&M. Unit 2 of the Rockport Plant is leased one-half by AEGCo and one-half by I&M. The leases terminate in 2022 unless extended. (b) Unit 3 of the John E. Amos Plant is owned one-third by APCo and two-thirds by OPCo. (c) Represents CSPCo's ownership interest in generating units owned in common with CG&E and DP&L. (d) I&M plans to close the Breed Plant on March 31, 1994. (e) Leased from the City of Fort Wayne. Indiana. Since 1975, I&M has leased and operated the assets of the municipal system of the City of Fort Wayne, Indiana under a 35-year lease with a provision for an additional 15-year extension at the election of I&M. See Item 1 under Fuel Supply, for information concerning coal reserves owned or controlled by subsidiaries of AEP. The following table sets forth the total circuit miles of transmission and distribution lines of the AEP System, APCo, CSPCo, I&M, KEPCo and OPCo and that portion of the total representing 765,000-volt lines:
TOTAL CIRCUIT MILES OF TRANSMISSION AND CIRCUIT MILES OF DISTRIBUTION LINES 765,000-VOLT LINES -------------------- ------------------- AEP System (a) 123,357(b) 2,022 APCo 48,190 641 CSPCo (a) 13,937 -- I&M 20,634 614 KEPCo 9,735 258 OPCo 27,941 509
- -------- (a)Includes jointly owned lines. (b)Includes lines of other AEP System companies not shown. TITLES The AEP System's electric generating stations are generally located on lands owned in fee simple. The greater portion of the transmission and distribution lines of the System has been constructed over lands of private owners pursuant to easements or along public highways and streets pursuant to appropriate statutory authority. The rights of the System in the realty on which its facilities are located are considered by it to be adequate for its use in the conduct of its business. Minor defects and irregularities customarily found in title to properties of like size and character may exist, but such defects and irregularities do not materially impair the use of the properties affected thereby. System companies generally have the right of eminent domain whereby they may, if necessary, acquire, perfect or secure titles to or easements on privately-held lands used or to be used in their utility operations. Substantially all the physical properties of APCo, CSPCo, I&M, KEPCo and OPCo are subject to the lien of the mortgage and deed of trust securing the first mortgage bonds of each such company. 39 SYSTEM TRANSMISSION LINES AND FACILITY SITING Legislation in the states of Indiana, Kentucky, Michigan, Ohio, Virginia, and West Virginia requires prior approval of sites of generating facilities and/or routes of high-voltage transmission lines. Delays and additional costs in constructing facilities have been experienced as a result of proceedings conducted pursuant to such statutes, as well as in proceedings in which operating companies have sought to acquire rights-of-way through condemnation, and such proceedings may result in additional delays and costs in future years. PEAK DEMAND The AEP System is interconnected through 119 high-voltage transmission interconnections with 29 neighboring electric utility systems. The all-time and 1993 one-hour peak demands were 25,174,000 and 22,142,000 kilowatts, respectively, (including 6,459,000 and 4,043,000 kilowatts, respectively, of scheduled deliveries to unaffiliated systems which the System might, on appropriate notice, have elected not to schedule for delivery) and occurred on January 18, 1994 and July 26, 1993, respectively. The net dependable capacity to serve the System load on such dates, including power available under contractual obligations, was 24,202,000 and 23,896,000 kilowatts, respectively. The all-time and 1993 one-hour internal peak demands were 19,236,000 and 18,085,000 kilowatts, respectively, and occurred on January 19, 1994 and July 28, 1993, respectively. The net dependable capacity to serve the System load on such dates, including power available under contractual arrangements, was 24,202,000 and 23,896,000 kilowatts, respectively. The all-time one-hour integrated and internal net system peak demands and 1993 peak demands for AEP's generating subsidiaries are shown in the following tabulation:
ALL-TIME ONE-HOUR INTEGRATED 1993 ONE-HOUR INTEGRATED NET SYSTEM PEAK DEMAND NET SYSTEM PEAK DEMAND ----------------------------- ----------------------------- (IN THOUSANDS) NUMBER OF NUMBER OF KILOWATTS DATE KILOWATTS DATE ----------- ----- ----------- ---- APCo 8,203 January 19, 1994 6,472 July 7, 1993 CSPCo 3,778 January 18, 1994 3,740 July 9, 1993 I&M 4,700 February 12, 1986 4,312 August 26, 1993 KEPCo 1,575 January 19, 1994 1,340 July 26, 1993 OPCo 7,034 January 18, 1994 6,271 July 26, 1993 ALL-TIME ONE-HOUR INTEGRATED 1993 ONE-HOUR INTEGRATED NET INTERNAL PEAK DEMAND NET INTERNAL PEAK DEMAND ----------------------------- ----------------------------- (IN THOUSANDS) NUMBER OF NUMBER OF KILOWATTS DATE KILOWATTS DATE ----------- ----- ----------- ---- APCo 6,887 January 19, 1994 5,906 February 19, 1993 CSPCo 3,167 August 30, 1993 3,167 August 30, 1993 I&M 3,513 August 17, 1988 3,468 August 27, 1993 KEPCo 1,309 January 19, 1994 1,218 February 19, 1993 OPCo 5,436 January 21, 1994 5,302 August 27, 1993
HYDROELECTRIC PLANTS Licenses for hydroelectric plants, issued under the Federal Power Act, reserve to the United States the right to take over the project at the expiration of the license term, to issue a new license to another entity, or to relicense the project to the existing licensee. In the event that a project is taken over by the United States or licensed to a new licensee, the Federal Power Act provides for payment to the existing licensee of its "net investment" plus severance damages. Licenses for six System hydroelectric plants expired in 1993 and applications for new licenses for these plants were filed in 1991. The existing licenses for these plants were extended on an annual basis and will be renewed automatically until new licenses are issued. No competing license applications were filed. One new license was issued in March 1994. 40 COOK NUCLEAR PLANT Unit 1 of the Cook Plant, which was placed in commercial operation in 1975, has a nominal net electric rating of 1,020,000 kilowatts. Unit 1's availability factor was 100% during 1993 and 64.8% during 1992. Unit 2, of slightly different design, has a nominal net electrical rating of 1,090,000 kilowatts and was placed in commercial operation in 1978. Unit 2's availability factor was 96.6% during 1993 and 19.5% during 1992. The availability of Units 1 and 2 was affected in 1992 by outages to refuel and Unit 2 main turbine/generator vibrational problems. Units 1 and 2 are licensed by the NRC to operate at 100% of rated thermal power to October 25, 2014 and December 23, 2017, respectively. NUCLEAR INSURANCE The Price-Anderson Act limits public liability for a nuclear incident at any nuclear plant in the United States to $9.4 billion. I&M has insurance coverage for liability from a nuclear incident at its Cook Plant. Such coverage is provided through a combination of private liability insurance, with the maximum amount available of $200,000,000, and mandatory participation for the remainder of the $9.4 billion liability, in an industry retrospective deferred premium plan which would, in case of a nuclear incident, assess all licensees of nuclear plants in the U.S. Under the deferred premium plan, I&M could be assessed up to $158,600,000 payable in annual installments of $20,000,000 in the event of a nuclear incident at Cook or any other nuclear plant in the U.S. There is no limit on the number of incidents for which I&M could be assessed these sums. I&M also has property damage, decontamination and decommissioning insurance for loss resulting from damage to the Cook Plant facilities in the amount of $2.75 billion. Nuclear insurance pools provide $1.265 billion of coverage and Nuclear Electric Insurance Limited (NEIL) and Energy Insurance Bermuda (EIB) provide the remainder. If NEIL's and EIB's losses exceed their available resources, I&M would be subject to a total retrospective premium assessment of up to $15,327,023. NRC regulations require that, in the event of an accident, whenever the estimated costs of reactor stabilization and site decontamination exceed $100,000,000, the insurance proceeds must be used, first, to return the reactor to, and maintain it in, a safe and stable condition and, second, to decontaminate the reactor and reactor station site in accordance with a plan approved by the NRC. The insurers then would indemnify I&M for property damage up to $2.5 billion less any amounts used for stabilization and decontamination. The remaining $250,000,000, as provided by NEIL (reduced by any stabilization and decontamination expenditures over $2.5 billion), would cover decommissioning costs in excess of funds already collected for decommissioning. See Fuel Supply--Nuclear Waste. NEIL's extra-expense program provides insurance to cover extra costs resulting from a prolonged accidental outage of a nuclear unit. I&M's policy insures against such increased costs up to approximately $3,500,000 per week (starting 21 weeks after the outage) for one year, $2,350,000 per week for the second and third years, or 80% of those amounts per unit if both units are down for the same reason. If NEIL's losses exceed its available resources, I&M would be subject to a total retrospective premium assessment of up to $8,929,456. POTENTIAL UNINSURED LOSSES Some potential losses or liabilities may not be insurable or the amount of insurance carried may not be sufficient to meet potential losses and liabilities, including liabilities relating to damage to the Cook Plant and costs of replacement power in the event of a nuclear incident at the Cook Plant. Future losses or liabilities which are not completely insured, unless allowed to be recovered through rates, could have a material adverse effect on results of operation and the financial condition of AEP, I&M and other AEP System companies. 41 Item 3.LEGAL PROCEEDINGS - -------------------------------------------------------------------------------- In February 1990 the Supreme Court of Indiana overturned an order of the IURC, affirmed by the Indiana Court of Appeals, which had awarded I&M the right to serve a General Motors Corporation light truck manufacturing facility located in Fort Wayne. In August 1990 the IURC issued an order transferring the right to serve the GM facility to an unaffiliated local distribution utility. In October 1990 the local distribution utility sued I&M in Indiana under a provision of Indiana law that allows the local distribution utility to seek damages equal to the gross revenues received by a utility that renders retail service in the designated service territory of another utility. On November 30, 1992, the DeKalb Circuit Court granted I&M's motion for summary judgment to dismiss the local distribution utility's complaint. The local distribution utility has begun an appeal to the Indiana Court of Appeals. I&M received revenues of approximately $29,000,000 from serving the GM facility. It is not clear whether the plaintiffs claim will be upheld on appeal because the service was rendered in accordance with an IURC order I&M believed in good faith to be valid. On April 4, 1991, then Secretary of Labor Lynn Martin announced that the U.S. Department of Labor ("DOL") had issued a total of 4,710 citations to operators of 847 coal mines who allegedly submitted respirable dust sampling cassettes that had been altered so as to remove a portion of the dust. The cassettes were submitted in compliance with DOL regulations which require systematic sampling of airborne dust in coal mines and submission of the entire cassettes (which include filters for collecting dust particulates) to the Mine Safety and Health Administration ("MSHA") for analysis. The amount of dust contained on the cassette's filter determines an operator's compliance with respirable dust standards under the law. OPCo's Meigs No. 2, Meigs No. 31, Martinka, and Windsor Coal mines received 16, 3, 15 and 2 citations, respectively. MSHA has assessed civil penalties totalling $56,900 for all these citations. OPCo's samples in question involve about 1 percent of the 2,500 air samples that OPCo submitted over a 20-month period from 1989 through 1991 to the DOL. OPCo is contesting the citations before the Federal Mine Safety and Health Review Commission. An administrative hearing was held before an administrative law judge with respect to all affected coal operators. On July 20, 1993, the administrative law judge rendered a decision in this case holding that the Secretary of Labor failed to establish that the presence of a "white center" on the dust sampling filter indicated intentional alteration. The administrative law judge has set for trial the case of an unaffiliated mine to determine if there was an intentional alteration of the dust sampling filter. All remaining cases, including the citations involving OPCo's mines, have been stayed. On September 21, 1993, CSPCo was served with a complaint issued by Region V, Federal EPA which alleged violations by Conesville Plant of the Toxic Substances Control Act and proposed a penalty of $41,000. On October 4, 1993, I&M was served with a complaint issued by Region V, Federal EPA which alleged violations by Breed Plant of the Clean Water Act and proposed a penalty of $70,000. On October 4, 1993, OPCo was served with a complaint issued by Region V, Federal EPA which alleged violations by OPCo's General Service Center (Canton, Ohio) of the Toxic Substances Control Act and proposed a penalty of $24,000. Settlement discussions have been held in each of these cases and it is expected that these matters will be resolved shortly. On June 18, 1993, OPCo was served with a complaint issued by Region V, Federal EPA which alleged violations by Muskingum River Plant of the Toxic Substances Control Act and proposed a penalty of $87,000. In February 1994, OPCo paid a penalty of $12,185 and agreed to undertake supplemental environmental projects in 1994 valued at $61,547. On February 28, 1994, Ormet Corporation filed a complaint in the U.S. District Court, Northern District of West Virginia, against AEP, OPCo, the Service Corporation and two of its employees, Federal EPA and the Administrator of Federal EPA. Ormet is the operator of a major aluminum reduction plant in Ohio and is a customer of OPCo. See Certain Industrial Contracts. Pursuant to the Clean Air Act Amendments of 1990, OPCo received sulfur dioxide emission allowances for its Kammer Plant. See Environmental and Other 42 Matters. Ormet's complaint seeks a declaration that it is the owner of approximately 89% of the Phase I and Phase II allowances issued for use by the Kammer Plant. OPCo believes that since it is the owner and operator of Kammer Plant and Ormet is a contract power customer, Ormet is not entitled to any of the allowances attributable to the Kammer Plant. See Item 1 for a discussion of certain environmental and rate matters. Meigs Mine--On July 11, 1993, water from an adjoining sealed and abandoned mine owned by Southern Ohio Coal Company ("SOCCo"), a mining subsidiary of OPCo, entered Meigs 31 mine, one of two mines currently being operated by SOCCo. Ohio EPA approved a plan to pump water from the mine to certain Ohio River tributaries under stringent conditions for biological and water quality monitoring and restoring the streams after pumping. On July 30, pumping commenced in accordance with the Ohio EPA approved plan. Since September 16, 1993, SOCCo has processed all water removed from the mine through its expanded treatment system and is in compliance with the effluent limitations in its water discharge permit. Pumping has removed most of the water that entered the mine on July 11 and the mine was returned to service in February 1994. On July 26, 1993, the Ohio Department of Natural Resources Division of Reclamation issued an administrative order directing SOCCo to cease pumping due to that agency's concern over possible environmental harm. On July 26, 1993, following SOCCo's appeal of the cessation order, the chairman of the Reclamation Board of Review issued a temporary stay pending a hearing by the full Reclamation Board. On January 14, 1994, the administrative proceeding was settled on the basis of agreements by the Division of Reclamation to dismiss the administrative order and by SOCCo to treat all water removed from the mine in accordance with its discharge permit and to pay certain expenses of the Division of Reclamation. On August 19, 1993, the U.S. District Court for the Southern District of Ohio granted SOCCo's motion for a preliminary injunction against the Federal Office of Surface Mining Reclamation and Enforcement ("OSM") and Federal EPA preventing them from exercising jurisdiction to issue orders to cease pumping. On August 30, 1993, the U.S. Court of Appeals for the Sixth Circuit denied OSM's motion for a stay of the District Court's preliminary injunction but granted Federal EPA's motion for a stay in part which allowed Federal EPA to investigate and make findings with respect to alleged violations of the Clean Water Act and thereafter to exercise its enforcement authority under the Clean Water Act if a violation was identified. On September 2, 1993, Federal EPA issued an administrative order requiring a partial cessation of pumping, the effect of which was delayed by Federal EPA until September 8, 1993. On September 8, 1993, the District Court granted SOCCo's motion requesting that enforcement of the Federal EPA order be stayed. On September 23, 1993, the Court of Appeals ruled that the District Court could not review the Federal EPA order in the absence of a civil enforcement action and lifted the stay. A further decision of the Court of Appeals with respect to the appeal of the preliminary injunction is pending. On January 3, 1994, the District Court held that the complaint filed by SOCCo should not be dismissed and concluded that sufficient legal and factual grounds existed for the court to consider SOCCo's claim that Federal EPA could not override Ohio EPA's authorization for SOCCo to bypass its water treatment system on an emergency basis during pumping activities. In a separate opinion, the District Court denied Federal EPA's request that the District Court defer consideration of SOCCo's motion involving a request for a Declaration of Rights with respect to the mine water releases into area streams. The West Virginia Division of Environmental Protection ("West Virginia DEP") has proposed fining SOCCo $1,800,000 for violations of West Virginia Water Quality Standards and permitting requirements alleged to have resulted from the release of mine water into the Ohio River. SOCCo is meeting with the West Virginia DEP in an attempt to resolve this matter. Although management is unable to predict what enforcement action Federal EPA or OSM may take, the resolution of the aforementioned litigation, environmental mitigation costs and mine restoration costs are not expected to have a material adverse impact on results of operations or financial condition. 43 Item 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - -------------------------------------------------------------------------------- AEP, APCO, I&M AND OPCO. None. AEGCO, CSPCO AND KEPCO. Omitted pursuant to Instruction J(2)(c). ---------------- EXECUTIVE OFFICERS OF THE REGISTRANTS AEP The following persons are, or may be deemed, executive officers of AEP. Their ages are given as of March 15, 1994.
NAME AGE OFFICE (A) ---- --- ---------- E. Linn Draper, Jr... 52 Chairman of the Board, President and Chief Executive Officer of AEP and of the Service Corporation Peter J. DeMaria..... 59 Treasurer of AEP; Executive Vice President- Administration and Chief Accounting Officer of the Service Corporation William J. Lhota..... 54 Executive Vice President of the Service Corporation A. Joseph Dowd....... 64 Secretary of AEP; Senior Vice President, General Counsel and Assistant Secretary of the Service Corporation Charles A. Ebetino, Senior Vice President-Fuel Supply of the Service Jr.................. 41 Corporation Gerald P. Maloney.... 61 Vice President of AEP; Executive Vice President- Chief Financial Officer of the Service Corporation James J. Markowsky... 49 Executive Vice President--Engineering & Construction of the Service Corporation
- -------- (a) All of the executive officers listed above have been employed by the Service Corporation or System companies in various capacities (AEP, as such, has no employees) during the past five years, except E. Linn Draper, Jr. who was Chairman of the Board, President and Chief Executive Officer of Gulf States Utilities Company from 1987 until 1992 when he joined AEP and the Service Corporation. All of the above officers are appointed annually for a one-year term by the board of directors of AEP, the board of directors of the Service Corporation, or both, as the case may be. APCO The names of the executive officers of APCo, the positions they hold with APCo, their ages as of March 15, 1994, and a brief account of their business experience during the past five years appears below. The directors and executive officers of APCo are elected annually to serve a one-year term.
NAME AGE POSITION (A) PERIOD ---- --- ------------ ------ E. Linn Draper, Jr... 52 Director 1992-Present Chairman of the Board and Chief Executive Officer 1993-Present Vice President 1992-1993 Chairman of the Board, President and Chief Executive Officer of AEP and the Service Corporation 1993-Present President of AEP 1992-1993 President and Chief Operating Officer of the Service Corporation 1992-1993 Chairman of the Board, President and Chief Executive Officer of Gulf States Utilities Company 1987-1992 Joseph H. Vipperman.. 53 Director 1985-Present President and Chief Operating Officer 1990-Present Executive Vice President 1989-1990 Vice President 1985-1989 Executive Vice President-Operations of the Service Corporation 1984-1989
44
NAME AGE POSITION (A) PERIOD ---- --- ------------ ------ Peter J. DeMaria......... 59 Director 1988-Present Vice President 1991-Present Treasurer 1978-Present Treasurer of AEP 1978-Present Executive Vice President- Administration and Chief Accounting Officer of the Service Corporation 1984-Present Treasurer of the Service Corporation 1989-1990 A. Joseph Dowd........... 64 Director and Vice President 1977-Present Secretary of AEP 1974-Present Senior Vice President and General Counsel of the Service Corporation 1975-Present Assistant Secretary of the Service Corporation 1969-Present William J. Lhota......... 54 Director 1990-Present Vice President 1989-Present Executive Vice President of the Service Corporation 1993-Present Executive Vice President- Operations of the Service Corporation 1989-1993 President and Chief Operating Officer of CSPCo 1987-1989 Gerald P. Maloney........ 61 Director and Vice President 1970-Present Vice President of AEP 1974-Present Executive Vice President-Chief Financial Officer of the Service Corporation 1991-Present Senior Vice President-Finance of the Service Corporation 1974-1990 James J. Markowsky....... 49 Director 1993-Present Executive Vice President- Engineering and Construction of the Service Corporation 1993-Present Senior Vice President and Chief Engineer of the Service Corporation 1988-1993 Senior Vice President-Fuel Supply Charles A. Ebetino, Jr. . 41 of the Service Corporation 1993-Present Vice President-Fuel Procurement and Transportation of the Service Corporation 1990-1993 Managing Director-Coal Procurement of the Service Corporation 1986-1990
- -------- (a)Positions are with APCo unless otherwise indicated. OPCO The names of the executive officers of OPCo, the positions they hold with OPCo, their ages as of March 15, 1994, and a brief account of their business experience during the past five years appear below. The directors and executive officers of OPCo are elected annually to serve a one-year term.
NAME AGE POSITION (A) PERIOD ---- --- ------------ ------ E. Linn Draper, Jr. . 52 Director 1992-Present Chairman of the Board and Chief Executive Officer 1993-Present Vice President 1992-1993 Chairman of the Board, President and Chief Executive Officer of AEP and the Service Corporation 1993-Present President of AEP 1992-1993 President and Chief Operating Officer of the Service Corporation 1992-1993 Chairman of the Board, President and Chief Executive Officer of Gulf States Utilities Company 1987-1992 Director, President and Chief Carl A. Erikson...... 43 Operating Officer 1993-Present Vice President 1990-1992 Vice President of the Service Corporation and Executive Assistant to E. Linn Draper, Jr. 1992-Present Assistant to Executive Vice President-Operations of the Service Corporation 1989-1990 Peter J. DeMaria..... 59 Director and Treasurer 1978-Present Vice President 1991-Present Treasurer of AEP 1978-Present Executive Vice President- Administration and Chief Accounting Officer of the Service Corporation 1984-Present Treasurer of the Service Corporation 1989-1990
45
NAME AGE POSITION (A) PERIOD ---- --- ------------ ------ A. Joseph Dowd....... 64 Director and Vice President 1977-Present Secretary of AEP 1974-Present Senior Vice President and General Counsel of the Service Corporation 1975-Present Assistant Secretary of the Service Corporation 1969-Present William J. Lhota..... 54 Director and Vice President 1989-Present Executive Vice President of the Service Corporation 1993-Present Executive Vice President-Operations of the Service Corporation 1989-1993 President and Chief Operating Officer of CSPCo 1987-1989 Gerald P. Maloney.... 61 Director 1973-Present Vice President 1970-Present Vice President of AEP 1974-Present Executive Vice President-Chief Financial Officer of the Service Corporation 1991-Present Senior Vice President-Finance of the Service Corporation 1974-1990 James J.Markowsky.... 49 Director 1989-Present Executive Vice President-Engineering and Construction of the Service Corporation 1993-Present Senior Vice President and Chief Engineer of the Service Corporation 1988-1993 Charles A. Ebertino, Senior Vice President-Fuel Supply of Jr.................. 41 the Service Corporation 1993-Present Vice President-Fuel Procurement and Transportation of the Service Corporation 1990-1993 Managing Director-Coal Procurement of the Service Corporation 1986-1990
- -------- (a)Positions are with OPCo unless otherwise indicated. 46 PART II --------------------------------------------------------------------- Item 5.MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS - -------------------------------------------------------------------------------- AEP. AEP Common Stock is traded principally on the New York Stock Exchange. The following table sets forth for the calendar periods indicated the high and low sales prices for the Common Stock as reported on the New York Stock Exchange Composite Tape and the amount of cash dividends paid per share of Common Stock.
PER SHARE --------------- QUARTER ENDED MARKET PRICE - ------------- --------------- HIGH LOW DIVIDEND(1) ------- ------- ----------- March 1992.......................................... $34 1/4 $30 3/8 $.60 June 1992........................................... 32 5/8 30 3/8 .60 September 1992...................................... 35 1/4 31 3/4 .60 December 1992....................................... 33 3/8 30 3/4 .60 March 1993.......................................... 37 32 .60 June 1993........................................... 38 1/2 33 3/8 .60 September 1993...................................... 40 3/8 37 1/4 .60 December 1993....................................... 39 5/8 34 5/8 .60
- -------- (1) See Note 5 of the Notes to the Consolidated Financial Statements of AEP for information regarding restrictions on payment of dividends. At December 31, 1993, AEP had approximately 194,000 shareholders of record. AEGCO, APCO, CSPCO, I&M, KEPCO AND OPCO. The information required by this item is not applicable as the common stock of all these companies is held solely by AEP. Item 6.SELECTED FINANCIAL DATA - -------------------------------------------------------------------------------- AEGCO. Omitted pursuant to Instruction J(2)(a). AEP. The information required by this item is incorporated herein by reference to the material under Selected Consolidated Financial Data in the AEP 1993 Annual Report (for the fiscal year ended December 31, 1993). APCO. The information required by this item is incorporated herein by reference to the material under Selected Consolidated Financial Data in the APCo 1993 Annual Report (for the fiscal year ended December 31, 1993). CSPCO. Omitted pursuant to Instruction J(2)(a). I&M. The information required by this item is incorporated herein by reference to the material under Selected Consolidated Financial Data in the I&M 1993 Annual Report (for the fiscal year ended December 31, 1993). KEPCO. Omitted pursuant to Instruction J(2)(a). OPCO. The information required by this item is incorporated herein by reference to the material under Selected Consolidated Financial Data in the OPCo 1993 Annual Report (for the fiscal year ended December 31, 1993). 47 Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION - -------------------------------------------------------------------------------- AEGCO. Omitted pursuant to Instruction J(2)(a). Management's narrative analysis of the results of operations and other information required by Instruction J(2)(a) is incorporated herein by reference to the material under Management's Narrative Analysis of Results of Operations in the AEGCo 1993 Annual Report (for the fiscal year ended December 31, 1993). AEP. The information required by this item is incorporated herein by reference to the material under Management's Discussion and Analysis of Results of Operations and Financial Condition in the AEP 1993 Annual Report (for the fiscal year ended December 31, 1993). APCO. The information required by this item is incorporated herein by reference to the material under Management's Discussion and Analysis of Results of Operations and Financial Condition in the APCo 1993 Annual Report (for the fiscal year ended December 31, 1993). CSPCO. Omitted pursuant to Instruction J(2)(a). Management's narrative analysis of the results of operations and other information required by Instruction J(2)(a) is incorporated herein by reference to the material under Management's Narrative Analysis of Results of Operations in the CSPCo 1993 Annual Report (for the fiscal year ended December 31, 1993). I&M. The information required by this item is incorporated herein by reference to the material under Management's Discussion and Analysis of Results of Operations and Financial Condition in the I&M 1993 Annual Report (for the fiscal year ended December 31, 1993). KEPCO. Omitted pursuant to Instruction J(2)(a). Management's narrative analysis of the results of operations and other information required by Instruction J(2)(a) is incorporated herein by reference to the material under Management's Narrative Analysis of Results of Operations in the KEPCo 1993 Annual Report (for the fiscal year ended December 31, 1993). OPCO. The information required by this item is incorporated herein by reference to the material under Management's Discussion and Analysis of Results of Operations and Financial Condition in the OPCo 1993 Annual Report (for the fiscal year ended December 31, 1993). Item 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - -------------------------------------------------------------------------------- AEGCO. The information required by this item is incorporated herein by reference to the financial statements and supplementary data described under Item 14 herein. AEP. The information required by this item is incorporated herein by reference to the financial statements and supplementary data described under Item 14 herein. APCO. The information required by this item is incorporated herein by reference to the financial statements and supplementary data described under Item 14 herein. CSPCO. The information required by this item is incorporated herein by reference to the financial statements and supplementary data described under Item 14 herein. I&M. The information required by this item is incorporated herein by reference to the financial statements and supplementary data described under Item 14 herein. 48 KEPCO. The information required by this item is incorporated herein by reference to the financial statements and supplementary data described under Item 14 herein. OPCO. The information required by this item is incorporated herein by reference to the financial statements and supplementary data described under Item 14 herein. Item 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE - -------------------------------------------------------------------------------- AEGCO, AEP, APCO, CSPCO, I&M, KEPCO AND OPCO. None. 49 PART III -------------------------------------------------------------------- Item 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS - -------------------------------------------------------------------------------- AEGCO. Omitted pursuant to Instruction J(2)(c). AEP. The information required by this item is incorporated herein by reference to the material under Nominees for Director and Share Ownership of Directors and Executive Officers of the definitive proxy statement of AEP, dated March 10, 1994, for the 1994 annual meeting of shareholders. Reference also is made to the information under the caption Executive Officers of the Registrants in Part I of this report. APCO. The information required by this item is incorporated herein by reference to the material under Election of Directors of the definitive information statement of APCo for the 1994 annual meeting of stockholders, to be filed within 120 days after December 31, 1993. Reference also is made to the information under the caption Executive Officers of the Registrants in Part I of this report. CSPCO. Omitted pursuant to Instruction J(2)(c). I&M. The names of the directors and executive officers of I&M, the positions they hold with I&M, their ages as of March 15, 1994, and a brief account of their business experience during the past five years appear below. The directors and executive officers of I&M are elected annually to serve a one- year term.
NAME AGE POSITION (A)(B)(C) PERIOD ---- --- ------------------ ------ E. Linn Draper, Jr. . 52 Director 1992-Present Chairman of the Board and Chief 1993-Present Executive Officer Vice President 1992-1993 Chairman of the Board, President and 1993-Present Chief Executive Officer of AEP and of the Service Corporation President of AEP 1992-1993 President and Chief Operating 1992-1993 Officer of the Service Corporation Chairman of the Board, President and 1987-1992 Chief Executive Officer of Gulf States Utilities Company Richard C. Menge..... 58 Director 1976-Present President and Chief Operating 1989-Present Officer Mark A. Bailey....... 41 Director and Vice President 1989-Present Peter J. DeMaria..... 59 Director 1992-Present Vice President 1991-Present Treasurer 1978-Present Treasurer of AEP 1978-Present Executive Vice President- 1984-Present Administration and Chief Accounting Officer of the Service Corporation Treasurer of the Service Corporation 1989-1990 William N. D'Onofrio. 45 Director and Vice President 1984-Present A. Joseph Dowd....... 64 Director 1993-Present Vice President 1977-Present Secretary of AEP 1974-Present Senior Vice President and General 1975-Present Counsel of the Service Corporation Assistant Secretary of the Service 1969-Present Corporation
50
NAME AGE POSITION (A)(B)(C) PERIOD ---- --- ------------------ ------ William J. Lhota..... 54 Director and Vice President 1989-Present Executive Vice President of the 1993-Present Service Corporation Executive Vice President-Operations 1989-1993 of the Service Corporation Gerald P. Maloney.... 61 Director 1978-Present Vice President 1970-Present Vice President of AEP 1974-Present Executive Vice President-Chief 1991-Present Financial Officer of the Service Corporation Senior Vice President-Finance of the 1974-1990 Service Corporation R. E. Prater......... 43 Director 1993-Present Division Manager 1989-Present D. B. Synowiec....... 50 Director 1993-Present Plant Manager 1990-1993 Assistant Plant Manager 1983-1990 W. E. Walters........ 46 Director 1991-Present Executive Assistant to President 1987-Present Charles A. Ebetino, Senior Vice President-Fuel Supply of 1993-Present Jr. ................. 41 the Service Corporation Vice President-Fuel Procurement & 1990-1993 Transportation of the Service Corporation Managing Director-Coal Procurement 1986-1990 of the Service Corporation Vice President 1993-Present James J. Markowsky... 49 Executive Vice President-Engineering 1993-Present & Construction of the Service Corporation Senior Vice President and Chief 1988-1993 Engineer of the Service Corporation
- -------- (a)Positions are with I&M unless otherwise indicated. (b)Dr. Draper is a director of Pacific Nuclear Systems, Inc. and Mr. Lhota is a director of Huntington Bancshares Incorporated. (c)Messrs. DeMaria, Dowd, Draper, Lhota and Maloney are directors of AEGCo, APCo, CSPCo, KEPCo and OPCo. Messrs. DeMaria, Dowd, Draper and Maloney are also directors of AEP. KEPCO. Omitted pursuant to Instruction J(2)(c). OPCO. The information required by this item is incorporated herein by reference to the material under the heading Election of Directors of the definitive information statement of OPCo for the 1994 annual meeting of shareholders, to be filed within 120 days after December 31, 1993. Reference also is made to the information under the caption Executive Officers of the Registrants in Part I of this report. Item 11.EXECUTIVE COMPENSATION - ------------------------------------------------------------------------------- AEGCO. Omitted pursuant to Instruction J(2)(c). AEP. The information required by this item is incorporated herein by reference to the material under Compensation of Directors, Executive Compensation and the performance graph of the definitive proxy statement of AEP, dated March 10, 1994, for the 1994 annual meeting of shareholders. APCO. The information required by this item is incorporated herein by reference to the material under Executive Compensation of the definitive information statement of APCo for the 1994 annual meeting of stockholders, to be filed within 120 days after December 31, 1993. CSPCO. Omitted pursuant to Instruction J(2)(c). KEPCO. Omitted pursuant to Instruction J(2)(c). 51 OPCO. The information required by this item is incorporated herein by reference to the material under Executive Compensation of the definitive information statement of OPCo for the 1994 annual meeting of shareholders, to be filed within 120 days after December 31, 1993. I&M Certain executive officers of I&M are employees of the Service Corporation. The salaries of these executive officers are paid by the Service Corporation and a portion of their salaries has been allocated and charged to I&M. The following table shows for 1993, 1992 and 1991 the compensation earned from all AEP System companies by (i) the chief executive officer and four other most highly compensated executive officers (as defined by regulations of the SEC) of I&M at December 31, 1993 and (ii) a chief executive officer and executive officer, both of whom retired in 1993. Summary Compensation Table
ANNUAL COMPENSATION --------------------------------- ALL OTHER SALARY BONUS COMPENSATION NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2) --------------------------- ---- ------- ------- ------------ E. LINN DRAPER, JR.--Chairman of the board 1993 538,333 148,742 18,180 and chief executive officer of I&M; chairman 1992 395,833 8,730 63,700 of the board, president and chief executive officer of AEP and the Service Corporation; chairman of the board and chief executive officer of other AEP System companies (3) RICHARD E. DISBROW--Chairman of the board and 1993 200,000 55,260 102,753 chief executive officer of I&M, AEP, the 1992 600,000 13,234 17,676 Service Corporation and other AEP System 1991 540,000 86,994 17,272 companies (3) PETER J. DEMARIA--Vice president, treasurer 1993 280,000 77,364 17,811 and director of I&M; treasurer and director 1992 273,000 6,021 15,576 of AEP; executive vice president- 1991 258,000 41,564 14,987 administration and chief accounting officer and director of the Service Corporation; vice president, treasurer and director of other AEP System companies JOHN E. KATLIC--Senior vice president-fuel 1993 279,167 74,677 45,452 supply and director of the Service 1992 325,000 6,400 9,396 Corporation; president, chief operating 1991 300,000 38,419 9,402 officer and director of coal mining subsidiaries (retired October 31, 1993) G. P. MALONEY--Vice president and director of 1993 269,000 74,325 18,000 I&M; vice president of AEP; executive vice 1992 261,000 5,757 17,036 president-chief financial officer and 1991 246,000 39,631 16,662 director of the Service Corporation; vice president and director of other AEP System companies A. JOSEPH DOWD--Vice president and director 1993 268,000 61,707 15,760 of I&M; secretary and director of AEP; 1992 260,000 4,779 13,876 senior vice president, general counsel, 1991 245,000 32,891 14,002 assistant secretary and director of the Service Corporation; vice president and director of other AEP System companies WILLIAM J. LHOTA--Vice president and director 1993 249,000 68,799 17,160 of I&M; executive vice president and 1992 230,000 5,073 15,116 director of the Service Corporation; vice 1991 210,000 33,831 14,385 president and director of other AEP System companies
- -------- (1) Reflects payments under the AEP Management Incentive Compensation Plan ("MICP") in which individuals in key management positions with AEP System companies participate. Amounts for 1993 are estimates but should not change significantly. For 1991 and 1993, these amounts included both cash paid and a portion deferred in the form of restricted stock units. These units are paid out in cash after three years based on the price of AEP Common Stock at that time. Dividend equivalents are paid during the three- year period. At December 31, 1993, Dr. Draper and Messrs. DeMaria, Maloney, Dowd and Lhota held 813, 746, 715, 593 and 639 units having a value of $30,177, $27,701, $26,526, $22,020 and $23,730, respectively, based upon a $37 1/8 per share closing price of AEP's Common Stock as reported on the New York Stock Exchange. For 1992, MICP payments were made entirely in cash. 52 (2) Includes amounts contributed by AEP System companies under the American Electric Power System Employees Savings Plan on behalf of their employee participants. For 1993 this amount was $7,075 for Dr. Draper and Messrs. Katlic, Maloney, Dowd and Lhota and $6,000 for Mr. Disbrow and $7,006 for Mr. DeMaria. The AEP System Savings Plan is available to all employees of AEP System companies (except for employees covered by certain collective bargaining agreements) who have met minimum service requirements. Includes director's fees for AEP System companies. For 1993 these fees were: Dr. Draper, $11,105; Mr. Disbrow, $3,580; Mr. DeMaria, $10,805; Mr. Katlic, $2,300; Mr. Maloney, $10,925; Mr. Dowd, $8,685; and Mr. Lhota, $10,085. Includes payments of $93,173 and $36,077 for unused accrued vacation which Messrs. Disbrow and Katlic, respectively, received upon their retirement. (3) Dr. Draper was elected chairman of the board and chief executive officer of I&M and other AEP System companies and chairman of the board, president and chief executive officer of AEP and the Service Corporation, succeeding Mr. Disbrow, who retired, effective April 28, 1993. Retirement Benefits The American Electric Power System Retirement Plan provides pensions for all employees of AEP System companies (except for employees covered by certain collective bargaining agreements), including the executive officers of I&M. The Retirement Plan is a noncontributory defined benefit plan. The following table shows the approximate annual annuities under the Retirement Plan that would be payable to employees in certain higher salary classifications, assuming retirement at age 65 after various periods of service. The amounts shown in the table are the straight life annuities payable under the Plan without reduction for the joint and survivor annuity. Retirement benefits listed in the table are not subject to any deduction for Social Security or other offset amounts. The retirement annuity is reduced 3% per year in the case of retirement between ages 60 and 62 and further reduced 6% per year in the case of retirement between ages 55 and 60. If an employee retires after age 62, there is no reduction in the retirement annuity. PENSION PLAN TABLE
YEARS OF ACCREDITED SERVICE ----------------------------------------------------- HIGHEST AVERAGE ANNUAL EARNINGS 15 20 25 30 35 40 - --------------- -------- -------- -------- -------- -------- -------- $250,000................. $ 58,155 $ 77,540 $ 96,925 $116,310 $135,695 $152,230 350,000................. 82,155 109,540 136,925 164,310 191,695 214,970 450,000................. 106,155 141,540 176,925 212,310 247,695 277,620 550,000................. 130,155 173,540 216,925 260,310 303,695 340,270 700,000................. 166,155 221,540 276,925 332,310 387,695 434,245
Compensation upon which retirement benefits are based consists of the average of the 36 consecutive months of the employee's highest salary, as listed in the Summary Compensation Table, out of the employee's most recent 10 years of service. With respect to Messrs. Disbrow and Katlic, since they retired in 1993, the amounts of $600,000 and $316,944, respectively, are the actual salaries upon which their retirement benefits are based. Mr. Disbrow's retirement benefit was enhanced by computing his benefit based on his 1992 base salary. As of December 31, 1993, the number of full years of service credited under the Retirement Plan to each of the executive officers of I&M named in the Summary Compensation Table were as follows: Dr. Draper, 1 year; Mr. Disbrow, 39 years; Mr. DeMaria, 34 years; Mr. Katlic, 10 years; Mr. Maloney, 38 years; Mr. Dowd, 31 years; and Mr. Lhota, 29 years. Dr. Draper's employment agreement described below provides him with a supplemental retirement annuity that credits him with 24 years of service in addition to his years of service credited under the Retirement Plan less his actual pension entitlement under the Retirement Plan and any pension entitlements from prior employers. 53 Mr. Katlic has a contract with the Service Corporation under which the Service Corporation agrees to provide him with a supplemental retirement annuity equal to the annual pension that Mr. Katlic would have received with service of 30 years under the AEP System Retirement Plan as then in effect, less his actual annual pension entitlement under the Retirement Plan. Mr. Katlic commenced receiving his supplemental annuity upon his retirement effective October 31, 1993. AEP has determined to pay supplemental retirement benefits to 23 AEP System employees (including Messrs. Disbrow, DeMaria, Maloney and Lhota) whose pensions may be adversely affected by amendments to the Retirement Plan made as a result of the Tax Reform Act of 1986. Such payments, if any, will be equal to any reduction occurring because of such amendments. Upon his retirement on April 28, 1993, Mr. Disbrow began receiving an annual supplemental benefit of $2,642. Assuming retirement of the remaining eligible employees in 1994, none would be eligible to receive supplemental benefits. AEP made available a voluntary deferred-compensation program in 1982 and 1986, which permitted certain executive employees of AEP System companies to defer receipt of a portion of their salaries. Under this program, an executive was able to defer up to 10% or 15% annually (depending on the terms of the program offered), over a four-year period, of his or her salary, and receive supplemental retirement or survivor benefit payments over a 15-year period. The amount of supplemental retirement payments received is dependent upon the amount deferred, age at the time the deferral election was made, and number of years until the executive retires. The following table sets forth, for the executive officers named in the Summary Compensation Table, the amounts of annual deferrals and, assuming retirement at age 65, annual supplemental retirement payments under the 1982 and 1986 programs.
1982 PROGRAM 1986 PROGRAM ------------------------- ------------------------- ANNUAL ANNUAL AMOUNT OF ANNUAL ANNUAL AMOUNT OF AMOUNT SUPPLEMENTAL AMOUNT SUPPLEMENTAL DEFERRED RETIREMENT DEFERRED RETIREMENT (4-YEAR PAYMENT (4-YEAR PAYMENT NAME PERIOD) (15-YEAR PERIOD) PERIOD) (15-YEAR PERIOD) - ---- -------- ---------------- -------- ---------------- Mr. Disbrow................. $15,000 $54,375 -- -- Mr. DeMaria................. 10,000 52,000 $13,000 $53,300 Mr. Katlic.................. 15,000 24,500 -- -- Mr. Maloney................. 15,000 67,500 16,000 56,400 Mr. Dowd.................... 10,000 34,000 10,000 25,500
Employment Agreement Dr. Draper has a contract with AEP and the Service Corporation which provides for his employment for an initial term from no later than March 15, 1992 until March 15, 1997. Dr. Draper commenced his employment with AEP and the Service Corporation on March 1, 1992. AEP or the Service Corporation may terminate the contract at any time and, if this is done for reasons other than cause and other than as a result of Dr. Draper's death or permanent disability, the Service Corporation must pay Dr. Draper's then base salary through March 15, 1997, less any amounts received by Dr. Draper from other employment. -------------- Directors of I&M receive a fee of $100 for each meeting of the Board of Directors attended in addition to their salaries. -------------- The AEP System is an integrated electric utility system and, as a result, the member companies of the AEP System have contractual, financial and other business relationships with the other member companies, such as participation in the AEP System savings and retirement plans and tax returns, sales of electricity, transportation and handling of fuel, sales or rentals of property and interest or dividend payments on the securities held by the companies' respective parents. 54 Item 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT - ------------------------------------------------------------------------------- AEGCO. Omitted pursuant to Instruction J(2)(c). AEP. The information required by this item is incorporated herein by reference to the material under Share Ownership of Directors and Executive Officers of the definitive proxy statement of AEP, dated March 10, 1994, for the 1994 annual meeting of shareholders. APCO. The information required by this item is incorporated herein by reference to the material under Share Ownership of Directors and Executive Officers in the definitive information statement of APCo for the 1994 annual meeting of stockholders, to be filed within 120 days after December 31, 1993. CSPCO. Omitted pursuant to Instruction J(2)(c). I&M. All 1,400,000 outstanding shares of Common Stock, no par value, of I&M are directly and beneficially held by AEP. Holders of the Cumulative Preferred Stock of I&M generally have no voting rights, except with respect to certain corporate actions and in the event of certain defaults in the payment of dividends on such shares. The table below shows the number of shares of AEP Common Stock that were beneficially owned, directly or indirectly, as of December 31, 1993, by each director and nominee of I&M and each of the executive officers of I&M named in the summary compensation table, and by all directors and executive officers of I&M as a group. It is based on information provided to I&M by such persons. No such person owns any shares of any series of the Cumulative Preferred Stock of I&M. Unless otherwise noted, each person has sole voting power and investment power over the number of shares of AEP Common Stock set forth opposite his name. Fractions of shares have been rounded to the nearest whole share.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP (A) ------------------------ Mark A. Bailey................................. 594 Peter J. DeMaria............................... 5,789(b)(c) Richard E. Disbrow............................. 9,822(b) William N. D'Onofrio........................... 2,948 A. J. Dowd..................................... 4,707 E. Linn Draper, Jr............................. 951(b) J. E. Katlic................................... 2,290 William J. Lhota............................... 6,673(b)(c) Gerald P. Maloney.............................. 4,227(b)(c) Richard C. Menge............................... 2,652(b) R. E. Prater................................... 1,609 D. B. Synowiec................................. 1,808 W. E. Walters.................................. 3,729 All directors and executive officers as a group (13 persons).................................. 125,076(c)(d)
- -------- (a) The amounts include shares held by the trustee of the AEP Employees Savings Plan, over which directors, nominees and executive officers have voting power, but the investment/disposition power is subject to the terms of such Plan, as follows: Mr. Bailey, 550 shares; Mr. DeMaria, 2,081 shares; Mr. Disbrow, 4,027 shares; Mr. D'Onofrio, 2,889 shares; Mr. Katlic, 2,230 shares; Mr. Lhota, 5,245 shares; Mr. Maloney, 2,142 shares; Mr. Menge, 2,566 shares; Mr. Prater, 1,561 shares; Mr. Synowiec, 1,754 shares; Mr. Walters, 3,685 shares; and all directors and executive officers as a group, 33,806 shares. Messrs. Disbrow's, Dowd's and Maloney's holdings include 85 shares each; Messrs. Bailey's, DeMaria's, D'Onofrio's, Katlic's, Lhota's, Menge's, Prater's, Synowiec's, and Walter's holdings include 44, 83, 59, 60, 60, 62, 48, 53 and 45 shares, respectively; and the holdings of all directors and executive officers as a group include 738 shares, each held by the trustee of the AEP Employee Stock Ownership Plan, over which shares such persons have sole voting power, but the investment/disposition power is subject to the terms of such Plan. 55 (b) Includes shares with respect to which such directors, nominees and executive officers share voting and investment power as follows: Mr. DeMaria, 3,624 shares; Mr. Disbrow, 283 shares; Mr. Draper, 115 shares; Mr. Lhota, 1,368 shares; Mr. Maloney, 2,000 shares; Mr. Menge, 24 shares; and all directors and executive officers as a group, 7,883 shares. Mr. DeMaria disclaims beneficial ownership of 807 shares. (c) 85,231 shares in the American Electric Power System Educational Trust Fund, over which Messrs. DeMaria, Lhota and Maloney share voting and investment power as trustees (they disclaim beneficial ownership of such shares), are not included in their individual totals, but are included in the group total. (d) Represents less than 1 percent of the total number of shares outstanding on December 31, 1993. KEPCO. Omitted pursuant to Instruction J(2)(c). OPCO. The information required by this item is incorporated herein by reference to the material under Share Ownership of Directors and Executive Officers in the definitive information statement of OPCo for the 1994 annual meeting of shareholders, to be filed within 120 days after December 31, 1993. Item 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - ------------------------------------------------------------------------------- AEP. The information required by this item is incorporated herein by reference to the material under Transactions With Management of the definitive proxy statement of AEP, dated March 10, 1994, for the 1994 annual meeting of shareholders. APCO, I&M AND OPCO. None. AEGCO, CSPCO, AND KEPCO. Omitted pursuant to Instruction J(2)(c). 56 PART IV ------------------------------------------------------------------- Item 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K - -------------------------------------------------------------------------------- (a) The following documents are filed as a part of this report: 1. Financial Statements: PAGE ---- The following financial statements have been incorporated herein by reference pursuant to Item 8. AEGCo: Independent Auditors' Report; Statements of Income for the years ended December 31, 1993, 1992 and 1991; Statements of Retained Earnings for the years ended December 31, 1993, 1992 and 1991; Balance Sheets as of December 31, 1993 and 1992; Statements of Cash Flows for the years ended December 31, 1993, 1992 and 1991; Notes to Financial Statements. AEP and its subsidiaries consolidated: Consolidated Statements of Income for the years ended December 31, 1993, 1992 and 1991; Consolidated Statements of Retained Earnings for the years ended December 31, 1993, 1992 and 1991; Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1992 and 1991; Consolidated Balance Sheets as of December 31, 1993 and 1992; Notes to Consolidated Financial Statements; Schedule of Cumulative Preferred Stocks of Subsidiaries at December 31, 1993 and 1992; Schedule of Consolidated Long-term Debt Outstanding at December 31, 1993 and 1992; Independent Auditors' Report. APCo: Independent Auditors' Report; Consolidated Statements of Income for the years ended December 31, 1993, 1992 and 1991; Consolidated Balance Sheets as of December 31, 1993 and 1992; Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1992 and 1991; Consolidated Statements of Retained Earnings for the years ended December 31, 1993, 1992 and 1991; Notes to Consolidated Financial Statements. CSPCo: Independent Auditors' Report; Consolidated Statements of Income for the years ended December 31, 1993, 1992 and 1991; Consolidated Balance Sheets as of December 31, 1993 and 1992; Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1992 and 1991; Consolidated Statements of Retained Earnings for the years ended December 31, 1993, 1992 and 1991; Notes to Consolidated Financial Statements. I&M: Independent Auditors' Report; Consolidated Statements of Income for the years ended December 31, 1993, 1992 and 1991; Consolidated Balance Sheets as of December 31, 1993 and 1992; Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1992 and 1991; Consolidated Statements of Retained Earnings for the years ended December 31, 1993, 1992 and 1991; Notes to Consolidated Financial Statements. KEPCo: Independent Auditors' Report; Statements of Income for the years ended December 31, 1993, 1992 and 1991; Statements of Retained Earnings for the years ended December 31, 1993, 1992 and 1991; Statements of Cash Flows for the years ended December 31, 1993, 1992 and 1991; Balance Sheets as of December 31, 1993 and 1992; Notes to Financial Statements.
57
PAGE ---- OPCo: Independent Auditors' Report; Consolidated Statements of Income for the years ended December 31, 1993, 1992 and 1991; Consolidated Balance Sheets as of December 31, 1993 and 1992; Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1992 and 1991; Consolidated Statements of Retained Earnings for the years ended December 31, 1993, 1992 and 1991; Notes to Consolidated Financial Statements. 2. Financial Statement Schedules: Financial Statement Schedules are listed in the Index to Financial Statement Schedules (Certain schedules have been omitted because the required information is contained in the notes to financial statements or because such schedules are not required or are not applicable.)...... S-1 Independent Auditors' Report............................................. S-2 3. Exhibits: Exhibits for AEGCo, AEP, APCo, CSPCo, I&M, KEPCo and OPCo are listed in the Exhibit Index and are incorporated herein by reference.............. E-1
(b) No Reports on Form 8-K were filed during the quarter ended December 31, 1993. 58 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. THE SIGNATURE OF THE UNDERSIGNED COMPANY SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING REFERENCE TO SUCH COMPANY AND ANY SUBSIDIARIES THEREOF. AEP Generating Company By: /s/ G. P. Maloney --------------------------------- (G. P. MALONEY, VICE PRESIDENT) Date: March 23, 1994 PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. THE SIGNATURE OF EACH OF THE UNDERSIGNED SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING REFERENCE TO THE ABOVE-NAMED COMPANY AND ANY SUBSIDIARIES THEREOF. SIGNATURE TITLE DATE --------- ----- ---- (I) PRINCIPAL EXECUTIVE OFFICER: *E. Linn Draper, Jr. President, Chief Executive Officer and Director (II) PRINCIPAL FINANCIAL OFFICER: /s/ G. P. Maloney Vice President and March 23, 1994 - ------------------------------------- Director (G. P. MALONEY) (III) PRINCIPAL ACCOUNTING OFFICER: /s/ P. J. DeMaria Vice President, March 23, 1994 - ------------------------------------- Treasurer and (P. J. DEMARIA) Director (IV) A MAJORITY OF THE DIRECTORS: *A. Joseph Dowd *Henry Fayne *John R. Jones, III *Wm. J. Lhota *James J. Markowsky /s/ G. P. Maloney *By: ---------------------------------- March 23, 1994 (G. P. MALONEY, ATTORNEY-IN-FACT) 59 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. American Electric Power Company, Inc. By: /s/ G. P. Maloney --------------------------------- (G. P. MALONEY, VICE PRESIDENT) Date: March 23, 1994 PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. SIGNATURE TITLE DATE --------- ----- ---- (I) PRINCIPAL EXECUTIVE OFFICER: *E. Linn Draper, Jr. Chairman of the Board, President, Chief Executive Officer and Director (II) PRINCIPAL FINANCIAL OFFICER: /s/ G. P. Maloney Vice President and March 23, 1994 - ------------------------------------- Director (G. P. MALONEY) (III) PRINCIPAL ACCOUNTING OFFICER: /s/ P. J. DeMaria Treasurer and March 23, 1994 - ------------------------------------- Director (P. J. DEMARIA) (IV) A MAJORITY OF THE DIRECTORS: *A. Joseph Dowd *Robert M. Duncan *Arthur G. Hansen *Lester A. Hudson, Jr. *Angus E. Peyton *Toy F. Reid *W. Ann Reynolds *Linda Gillespie Stuntz *Morris Tanenbaum *Ann Haymond Zwinger *By: /s/ G. P. Maloney ---------------------------------- March 23, 1994 (G. P. MALONEY, ATTORNEY-IN-FACT) 60 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. THE SIGNATURE OF THE UNDERSIGNED COMPANY SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING REFERENCE TO SUCH COMPANY AND ANY SUBSIDIARIES THEREOF. Appalachian Power Company By: /s/ G. P. Maloney --------------------------------- (G. P. MALONEY, VICE PRESIDENT) Date: March 23, 1994 PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. THE SIGNATURE OF EACH OF THE UNDERSIGNED SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING REFERENCE TO THE ABOVE-NAMED COMPANY AND ANY SUBSIDIARIES THEREOF. SIGNATURE TITLE DATE --------- ----- ---- (I) PRINCIPAL EXECUTIVE OFFICER: *E. Linn Draper, Jr. Chairman of the Board, Chief Executive Officer and Director (II) PRINCIPAL FINANCIAL OFFICER: /s/ G. P. Maloney Vice President and March 23, 1994 - ------------------------------------- Director (G. P. MALONEY) (III) PRINCIPAL ACCOUNTING OFFICER: /s/ P. J. DeMaria Vice President, March 23, 1994 - ------------------------------------- Treasurer and (P. J. DEMARIA) Director (IV) A MAJORITY OF THE DIRECTORS: *A. Joseph Dowd *Luke M. Feck *Wm. J. Lhota *James J. Markowsky *J. H. Vipperman *By: /s/ G. P. Maloney ---------------------------------- March 23, 1994 (G. P. MALONEY, ATTORNEY-IN-FACT) 61 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. THE SIGNATURE OF THE UNDERSIGNED COMPANY SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING REFERENCE TO SUCH COMPANY AND ANY SUBSIDIARIES THEREOF. Columbus Southern Power Company By: /s/ G. P. Maloney --------------------------------- (G. P. MALONEY, VICE PRESIDENT) Date: March 23, 1994 PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. THE SIGNATURE OF EACH OF THE UNDERSIGNED SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING REFERENCE TO THE ABOVE-NAMED COMPANY AND ANY SUBSIDIARIES THEREOF. SIGNATURE TITLE DATE --------- ----- ---- (I) PRINCIPAL EXECUTIVE OFFICER: *E. Linn Draper, Jr. Chairman of the Board, Chief Executive Officer and Director (II) PRINCIPAL FINANCIAL OFFICER: /s/ G. P. Maloney Vice President and March 23, 1994 - ------------------------------------- Director (G. P. MALONEY) (III) PRINCIPAL ACCOUNTING OFFICER: Vice President, March 23, 1994 /s/ P. J. DeMaria Treasurer and - ------------------------------------- Director (P. J. DEMARIA) (IV) A MAJORITY OF THE DIRECTORS: *A. Joseph Dowd *C. A. Erikson *Henry Fayne *Wm. J. Lhota *James J. Markowsky *By: /s/ G. P. Maloney ---------------------------------- March 23, 1994 (G. P. MALONEY, ATTORNEY-IN-FACT) 62 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. THE SIGNATURE OF THE UNDERSIGNED COMPANY SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING REFERENCE TO SUCH COMPANY AND ANY SUBSIDIARIES THEREOF. Indiana Michigan Power Company By: /s/ G. P. Maloney --------------------------------- (G. P. MALONEY, VICE PRESIDENT) Date: March 23, 1994 PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. THE SIGNATURE OF EACH OF THE UNDERSIGNED SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING REFERENCE TO THE ABOVE-NAMED COMPANY AND ANY SUBSIDIARIES THEREOF. SIGNATURE TITLE DATE --------- ----- ---- (I) PRINCIPAL EXECUTIVE OFFICER: *E. Linn Draper, Jr. Chairman of the Board, Chief Executive Officer and Director (II) PRINCIPAL FINANCIAL OFFICER: /s/ G. P. Maloney Vice President and March 23, 1994 - ------------------------------------- Director (G. P. MALONEY) (III) PRINCIPAL ACCOUNTING OFFICER: /s/ P. J. DeMaria Vice President, March 23, 1994 - ------------------------------------- Treasurer and (P. J. DEMARIA) Director (IV) A MAJORITY OF THE DIRECTORS: *Mark A. Bailey *W. N. D'Onofrio *A. Joseph Dowd *Wm. J. Lhota *Richard C. Menge *R. E. Prater *D. B. Synowiec *W. E. Walters *By: /s/ G. P. Maloney March 23, 1994 ---------------------------------- (G. P. MALONEY, ATTORNEY-IN-FACT) 63 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. THE SIGNATURE OF THE UNDERSIGNED COMPANY SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING REFERENCE TO SUCH COMPANY AND ANY SUBSIDIARIES THEREOF. Kentucky Power Company By: /s/ G. P. Maloney --------------------------------- (G. P. MALONEY, VICE PRESIDENT) Date: March 23, 1994 PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. THE SIGNATURE OF EACH OF THE UNDERSIGNED SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING REFERENCE TO THE ABOVE-NAMED COMPANY AND ANY SUBSIDIARIES THEREOF. SIGNATURE TITLE DATE --------- ----- ---- (I) PRINCIPAL EXECUTIVE OFFICER: *E. Linn Draper, Jr. Chairman of the Board, Chief Executive Officer and Director (II) PRINCIPAL FINANCIAL OFFICER: /s/ G. P. Maloney Vice President and March 23, 1994 - ------------------------------------- Director (G. P. MALONEY) (III) PRINCIPAL ACCOUNTING OFFICER: /s/ P. J. DeMaria Vice President, March 23, 1994 - ------------------------------------- Treasurer and (P. J. DEMARIA) Director (IV) A MAJORITY OF THE DIRECTORS: *C. R. Boyle, III *A. Joseph Dowd *Wm. J. Lhota *Ronald A. Petti *By: /s/ G. P. Maloney --------------------------------- March 23, 1994 (G. P. MALONEY, ATTORNEY-IN-FACT) 64 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. THE SIGNATURE OF THE UNDERSIGNED COMPANY SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING REFERENCE TO SUCH COMPANY AND ANY SUBSIDIARIES THEREOF. Ohio Power Company By: /s/ G. P. Maloney --------------------------------- (G. P. MALONEY, VICE PRESIDENT) Date: March 23, 1994 PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. THE SIGNATURE OF EACH OF THE UNDERSIGNED SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING REFERENCE TO THE ABOVE-NAMED COMPANY AND ANY SUBSIDIARIES THEREOF. SIGNATURES TITLE DATE ---------- ----- ---- (I) PRINCIPAL EXECUTIVE OFFICER: *E. Linn Draper, Jr. Chairman of the Board, Chief Executive Officer and Director (II) PRINCIPAL FINANCIAL OFFICER: /s/ G. P. Maloney Vice President and March 23, 1994 - ------------------------------------- Director (G. P. MALONEY) (III) PRINCIPAL ACCOUNTING OFFICER: /s/ P. J. DeMaria Vice President, March 23, 1994 - ------------------------------------- Treasurer and (P. J. DEMARIA) Director (IV) A MAJORITY OF THE DIRECTORS: *A. Joseph Dowd *C. A. Erikson *Henry Fayne *Wm. J. Lhota *James J. Markowsky *By: /s/ G. P. Maloney March 23, 1994 ---------------------------------- (G. P. MALONEY, ATTORNEY-IN-FACT) 65 INDEX TO FINANCIAL STATEMENT SCHEDULES
PAGE ---- INDEPENDENT AUDITORS' REPORT.............................................. S-2 The following financial statement schedules for the years ended December 31, 1993, 1992 and 1991 are included in this report on the pages indicated. AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES Schedule V -- Property, Plant and Equipment........................ S-3 Schedule VI -- Accumulated Depreciation and Amortization of Property, Plant and Equipment..................... S-4 Schedule VIII -- Valuation and Qualifying Accounts and Reserves....... S-5 Schedule IX -- Short-term Borrowings................................ S-6 AEP GENERATING COMPANY Schedule V -- Property, Plant and Equipment........................ S-7 Schedule VI -- Accumulated Depreciation of Property, Plant and Equipment..................... S-8 Schedule IX -- Short-term Borrowings................................ S-9 APPALACHIAN POWER COMPANY AND SUBSIDIARIES Schedule V -- Property, Plant and Equipment........................ S-10 Schedule VI -- Accumulated Depreciation and Amortization of Property, Plant and Equipment..................... S-11 Schedule VIII -- Valuation and Qualifying Accounts and Reserves....... S-12 Schedule IX -- Short-term Borrowings................................ S-13 COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES Schedule V -- Property, Plant and Equipment........................ S-14 Schedule VI -- Accumulated Depreciation of Property, Plant and Equipment..................... S-15 Schedule VIII -- Valuation and Qualifying Accounts and Reserves....... S-16 Schedule IX -- Short-term Borrowings................................ S-17 INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES Schedule V -- Property, Plant and Equipment........................ S-18 Schedule VI -- Accumulated Depreciation and Amortization of Property, Plant and Equipment..................... S-19 Schedule VIII -- Valuation and Qualifying Accounts and Reserves....... S-20 Schedule IX -- Short-term Borrowings................................ S-21 KENTUCKY POWER COMPANY Schedule V -- Property, Plant and Equipment........................ S-22 Schedule VI -- Accumulated Depreciation and Amortization of Property, Plant and Equipment..................... S-23 Schedule VIII -- Valuation and Qualifying Accounts and Reserves....... S-24 Schedule IX -- Short-term Borrowings................................ S-25 OHIO POWER COMPANY AND SUBSIDIARIES Schedule V -- Property, Plant and Equipment........................ S-26 Schedule VI -- Accumulated Depreciation and Amortization of Property, Plant and Equipment..................... S-27 Schedule VIII -- Valuation and Qualifying Accounts and Reserves....... S-28 Schedule IX -- Short-term Borrowings................................ S-29
S-1 INDEPENDENT AUDITORS' REPORT American Electric Power Company, Inc. and Subsidiaries: We have audited the consolidated financial statements of American Electric Power Company, Inc. and its subsidiaries and the financial statements of certain of its subsidiaries, listed in Item 14 herein, as of December 31, 1993 and 1992, and for each of the three years in the period ended December 31, 1993, and have issued our reports thereon dated February 22, 1994; such financial statements and reports are included in your respective 1993 Annual Report to Shareowners and are incorporated herein by reference. Our audits also included the financial statement schedules of American Electric Power Company, Inc. and its subsidiaries and of certain of its subsidiaries, listed in Item 14. These financial statement schedules are the responsibility of the respective Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedules, when considered in relation to the corresponding basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. Deloitte & Touche Columbus, Ohio February 22, 1994 S-2 AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN F COLUMN F COLUMN F COLUMN F - -------------------------------------------------------------------------------- 1993 1992 1991 1990 ----------- ----------- ----------- ----------- BALANCE AT BALANCE AT BALANCE AT BALANCE AT END OF END OF END OF END OF CLASSIFICATION PERIOD PERIOD PERIOD PERIOD - -------------------------------------------------------------------------------- (IN THOUSANDS) ELECTRIC UTILITY PLANT: Production: Steam -- Fossil-fired....... $ 7,595,258 $ 7,663,103 $ 7,562,339 $ 6,598,477 Steam -- Nuclear............ 1,483,872 1,454,541 1,442,892 1,401,648 Transmission................. 3,169,347 3,108,787 3,001,159 2,898,426 Distribution................. 3,743,047 3,549,332 3,362,168 3,196,734 General (including mining as- sets and nuclear fuel)...... 1,406,159 1,443,436 1,485,322 1,429,040 Construction Work in Pro- gress....................... 314,489 290,547 294,258 1,128,399 ----------- ----------- ----------- ----------- Total Electric Utility Plant...................... 17,712,172 17,509,746 17,148,138 16,652,724 NONUTILITY PROPERTY AND OTHER PROPERTY INVESTMENTS.......... 399,182 392,348 357,543 361,593 ----------- ----------- ----------- ----------- Total....................... $18,111,354 $17,902,094 $17,505,681 $17,014,317 =========== =========== =========== ===========
Total additions of $676,404,000 in 1993, $718,154,000 in 1992 and $733,909,000 in 1991 were less than 10% of the total as of the respective year- ends. Retirements or sales of $278,435,000 in 1993, $297,460,000 in 1992 and $198,352,000 in 1991 were less than 10% of the total as of the respective year- ends. There were no additions to individual accounts in excess of two percent of total assets other than transfers from Construction Work in Progress. Amortization of nuclear fuel of $41,325,000 in 1993, $19,343,000 in 1992 and $50,124,000 in 1991 was credited directly to the property account and charged to fuel expense. In 1993 other charges include a reduction of $157,535,000 to reflect the PUCO disallowance of a portion of the Zimmer Plant investment as discussed in Note 3 of the Notes to Consolidated Financial Statements. The methods used to compute the annual provisions for depreciation are described in Note 1 of the Notes to Consolidated Financial Statements. The current provisions were determined using the following composite rates for functional classes of property:
FUNCTIONAL CLASS OF PROPERTY COMPOSITE ANNUAL RATE - -------------------------------------------------------------------------------- Production: Steam -- Fossil-fired................................. 3.2% to 4.6% Steam -- Nuclear...................................... 3.4% Transmission........................................... 1.7% to 2.7% Distribution........................................... 3.4% to 4.2% General................................................ 1.7% to 3.8%
S-3 AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES SCHEDULE VI -- ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - -------------------------------------------------------------------------------- ADDITIONS OTHER BALANCE AT CHARGED TO CHANGES -- BALANCE AT BEGINNING COSTS AND RETIREMENTS ADD END OF DESCRIPTION OF PERIOD EXPENSES OR SALES (DEDUCT) PERIOD - -------------------------------------------------------------------------------- (IN THOUSANDS) YEAR ENDED DECEMBER 31, 1993 ACCUMULATED DEPRECIA- TION AND AMORTIZATION OF ELECTRIC UTILITY PLANT: Production: Steam -- Fossil- fired.................. $3,031,186 $266,379 $102,831 $(10,299) $3,184,435 Steam -- Nuclear.. 691,605 57,274 26,196 1 722,684 Transmission........ 988,745 61,924 14,346 2,128 1,038,451 Distribution........ 1,060,477 131,114 72,527 1,693 1,120,757 General............. 509,247 72,205 56,792 21,144 545,804 ---------- -------- -------- -------- ---------- Total........... $6,281,260 $588,896 $272,692 $ 14,667 $6,612,131 ========== ======== ======== ======== ========== ACCUMULATED DEPRECIA- TION AND AMORTIZATION OF NON- UTILITY PROPERTY AND OTHER PROPERTY IN- VESTMENTS........... $ 112,089 $ 10,924 $ 12,196 $ 8,283 $ 119,100 ========== ======== ======== ======== ========== YEAR ENDED DECEMBER 31, 1992: ACCUMULATED DEPRECIA- TION AND AMORTIZATION OF ELECTRIC UTILITY PLANT: Production: Steam -- Fossil- fired.................. $2,852,539 $260,053 $ 83,573 $ 2,167 $3,031,186 Steam -- Nuclear.. 638,563 54,842 1,800 691,605 Transmission........ 940,326 60,390 11,705 (266) 988,745 Distribution........ 1,010,778 126,184 77,317 832 1,060,477 General............. 509,978 76,441 95,332 18,160 509,247 ---------- -------- -------- -------- ---------- Total........... $5,952,184 $577,910 $269,727 $ 20,893 $6,281,260 ========== ======== ======== ======== ========== ACCUMULATED DEPRECIA- TION AND AMORTIZATION OF NON- UTILITY PROPERTY AND OTHER PROPERTY IN- VESTMENTS........... $ 100,293 $ 10,064 $ (178) $ 1,554 $ 112,089 ========== ======== ======== ======== ========== YEAR ENDED DECEMBER 31, 1991: ACCUMULATED DEPRECIA- TION AND AMORTIZATION OF ELECTRIC UTILITY PLANT: Production: Steam -- Fossil- fired.................. $2,659,971 $249,507 $ 57,998 $ 1,059 $2,852,539 Steam -- Nuclear.. 589,526 55,140 6,033 (70) 638,563 Transmission........ 904,357 59,073 22,706 (398) 940,326 Distribution........ 953,193 120,499 64,364 1,450 1,010,778 General............. 481,296 78,059 62,429 13,052 509,978 ---------- -------- -------- -------- ---------- Total........... $5,588,343 $562,278 $213,530 $ 15,093 $5,952,184 ========== ======== ======== ======== ========== ACCUMULATED DEPRECIA- TION AND AMORTIZATION OF NON- UTILITY PROPERTY AND OTHER PROPERTY IN- VESTMENTS........... $ 95,070 $ 11,232 $ 7,282 $ 1,273 $ 100,293 ========== ======== ======== ======== ==========
S-4 AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E - ----------------------------------------------------------------------------------------- ADDITIONS ----------------------- BALANCE AT CHARGED TO CHARGED TO BALANCE AT BEGINNING COSTS AND OTHER END OF DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD - ----------------------------------------------------------------------------------------- (IN THOUSANDS) YEAR ENDED DECEMBER 31, 1993: DEDUCTED FROM ASSETS: Accumulated Provision for Uncollectible Ac- counts............ $ 7,287 $ 14,237 $ 4,163(a) $21,639(b) $ 4,048 ======== ======== ======= ======= ======== NOT SHOWN ELSEWHERE: Operating Reserves: Maintenance........ $ 8,123 $(1,036) $ 184(c) $ 3,918(d) $ 3,353 Nuclear Plant Decommissioning Costs.......... 146,451 23,255(e) -0- -0- 169,706 Uranium Enrichment Decontamination and Decommissioning Fund Assess- ment........... 45,500 -0- -0- 10,517(d) 34,983 Workers' Compensa- tion and Other. 60,348 24,762 2,521 29,591(d,f) 58,040 -------- -------- ------- ------- -------- Total............ $260,422 $ 46,981 $ 2,705 $44,026 $266,082 ======== ======== ======= ======= ======== YEAR ENDED DECEMBER 31, 1992: DEDUCTED FROM ASSETS: Accumulated Provision for Uncollectible Ac- counts............ $ 9,599 $ 12,888 $ 4,096(a) $19,296(b) $ 7,287 ======== ======== ======= ======= ======== NOT SHOWN ELSEWHERE: Operating Reserves: Maintenance........ $ 12,874 $ (878) $ 385(c) $ 4,258(d) $ 8,123 Nuclear Plant Decommissioning Costs.......... 125,716 20,735(e) -0- -0- 146,451 Uranium Enrichment Decontamination and Decommissioning Fund Assess- ment........... -0- -0- 45,500 -0- 45,500 Workers' Compensa- tion and Other. 52,987 29,012 12,956 34,607(d) 60,348 -------- -------- ------- ------- -------- Total............ $191,577 $48,869 $58,841 $38,865 $260,422 ======== ======== ======= ======= ======== YEAR ENDED DECEMBER 31, 1991: DEDUCTED FROM ASSETS: Accumulated Provision for Uncollectible Ac- counts............ $ 11,827 $12,517 $ 3,625(a) $18,370(b) $ 9,599 ======== ======== ======= ======= ======== NOT SHOWN ELSEWHERE: Operating Reserves: Maintenance........ $ 20,831 $ (1,531) $ 221(c) $ 6,647(d) $ 12,874 Nuclear Plant Decommissioning Costs.......... 106,632 19,084(e) -0- -0- 125,716 Workers' Compensa- tion and Other. 47,142 29,449 2,987 26,591(d) 52,987 -------- -------- ------- ------- -------- Total............ $174,605 $47,002 $ 3,208 $33,238 $191,577 ======== ======== ======= ======= ========
- -------- (a)Recoveries on accounts previously written off. (b)Uncollectible accounts written off. (c)Billings to others. (d)Payments and accrual adjustments. (e)Includes interest on trust funds. (f)Adjust royalty provision. S-5 AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES SCHEDULE IX -- SHORT-TERM BORROWINGS - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - ---------------------------------------------------------------------------------- MAXIMUM AVERAGE WEIGHTED CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE AGGREGATE BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (B) - ---------------------------------------------------------------------------------- (DOLLARS IN THOUSANDS) YEAR ENDED DECEMBER 31, 1993: Notes Payable......... $ 65,526 3.5% $ 70,425 $ 47,282 3.3% Commercial Paper...... 213,450 3.7 256,950 141,829 3.3 YEAR ENDED DECEMBER 31, 1992: Notes Payable......... $ 79,150 4.0% $115,875 $ 72,889 3.9% Commercial Paper...... 174,004 4.1 314,355 167,328 4.2 YEAR ENDED DECEMBER 31, 1991: Notes Payable......... $ 76,783 5.3% $149,970 $ 82,886 6.3% Commercial Paper...... 335,600 5.4 335,600 170,528 6.3
- -------- (a)Sum of month-end short-term borrowings divided by number of months outstanding. (b)Interest for the period divided by average amount outstanding. S-6 AEP GENERATING COMPANY SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN F COLUMN F COLUMN F COLUMN F - ------------------------------------------------------------------------------- 1993 1992 1991 1990 ---------- ---------- ---------- ---------- BALANCE AT BALANCE AT BALANCE AT BALANCE AT END OF END OF END OF END OF CLASSIFICATION PERIOD PERIOD PERIOD PERIOD - ------------------------------------------------------------------------------- (IN THOUSANDS) ELECTRIC UTILITY PLANT: Production -- Steam -- Fossil- fired............................. $627,502 $622,274 $619,728 $616,469 General.......................... 1,757 1,774 1,809 1,830 Construction Work in Progress.... 1,773 3,933 3,762 4,654 -------- -------- -------- -------- Total.......................... $631,032 $627,981 $625,299 $622,953 ======== ======== ======== ========
Total additions of $4,089,000 in 1993, $4,512,000 in 1992 and $3,796,000 in 1991 were less than 10% of the total as of the respective year-ends. Retirements or sales of $1,038,000 in 1993, $1,830,000 in 1992 and $1,450,000 in 1991 were less than 10% of the total as of the respective year-ends. There were no additions to individual accounts in excess of two percent of total assets. The methods used to compute the annual provisions for depreciation are described in Note 1 of the Notes to Financial Statements. The current provisions were determined using the following composite rates for functional classes of property:
FUNCTIONAL CLASS OF PROPERTY COMPOSITE ANNUAL RATE - -------------------------------------------------------------------------------- Production -- Steam-- Fossil-fired.................. 3.5% General............................................. 3.8%
S-7 AEP GENERATING COMPANY SCHEDULE VI -- ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - -------------------------------------------------------------------------------- ADDITIONS OTHER BALANCE AT CHARGED TO CHANGES -- BALANCE AT BEGINNING COSTS AND RETIREMENTS ADD END OF DESCRIPTION OF PERIOD EXPENSES OR SALES (DEDUCT) PERIOD - -------------------------------------------------------------------------------- (IN THOUSANDS) YEAR ENDED DECEMBER 31, 1993: ACCUMULATED DEPRECIA- TION OF ELECTRIC UTILITY PLANT: Production -- Steam-- Fossil- fired........... $160,443 $21,899 $ 980 $-0- $181,362 General............. 215 40 30 225 -------- ------- ------ ---- -------- Total............. $160,658 $21,939 $1,010 $-0- $181,587 ======== ======= ====== ==== ======== YEAR ENDED DECEMBER 31, 1992: ACCUMULATED DEPRECIA- TION OF ELECTRIC UTILITY PLANT: Production -- Steam-- Fossil- fired........... $140,465 $21,679 $1,701 $-0- $160,443 General............. 201 45 31 215 -------- ------- ------ ---- -------- Total............. $140,666 $21,724 $1,732 $-0- $160,658 ======== ======= ====== ==== ======== YEAR ENDED DECEMBER 31, 1991: ACCUMULATED DEPRECIA- TION OF ELECTRIC UTILITY PLANT: Production -- Steam-- Fossil- fired........... $120,447 $21,506 $1,491 $ 3 $140,465 General............. 156 59 11 (3) 201 -------- ------- ------ ---- -------- Total............. $120,603 $21,565 $1,502 $-0- $140,666 ======== ======= ====== ==== ========
S-8 AEP GENERATING COMPANY SCHEDULE IX -- SHORT-TERM BORROWINGS - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - ---------------------------------------------------------------------------------- MAXIMUM AVERAGE WEIGHTED CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE AGGREGATE BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (B) - ---------------------------------------------------------------------------------- (DOLLARS IN THOUSANDS) YEAR ENDED DECEMBER 31, 1993: Notes Payable......... $15,250 3.5% $15,250 $15,250 3.4% YEAR ENDED DECEMBER 31, 1992: Notes Payable......... $ -0- --% $ -0- $ -0- --% YEAR ENDED DECEMBER 31, 1991: Notes Payable......... $ -0- --% $ -0- $ -0- --%
- -------- (a)Sum of month-end short-term borrowings divided by number of months outstanding. (b)Interest for the period divided by average amount outstanding. S-9 APPALACHIAN POWER COMPANY AND SUBSIDIARIES SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN F COLUMN F COLUMN F COLUMN F - -------------------------------------------------------------------------------- 1993 1992 1991 1990 ---------- ---------- ---------- ---------- BALANCE AT BALANCE AT BALANCE AT BALANCE AT END OF END OF END OF END OF CLASSIFICATION PERIOD PERIOD PERIOD PERIOD - -------------------------------------------------------------------------------- (IN THOUSANDS) ELECTRIC UTILITY PLANT: Production: Steam -- Fossil-fired.......... $1,631,038 $1,605,660 $1,589,041 $1,550,486 Hydro.......................... 149,967 146,048 144,971 143,482 Transmission..................... 987,147 956,169 893,110 857,490 Distribution..................... 1,225,436 1,153,799 1,086,706 1,021,681 General.......................... 140,942 131,654 112,648 93,342 Construction Work in Progress.... 59,170 45,405 58,357 54,034 ---------- ---------- ---------- ---------- Total Electric Utility Plant... 4,193,700 4,038,735 3,884,833 3,720,515 NONUTILITY PROPERTY AND OTHER PROP- ERTY INVESTMENTS.................. 86,275 87,908 87,059 85,791 ---------- ---------- ---------- ---------- Total.......................... $4,279,975 $4,126,643 $3,971,892 $3,806,306 ========== ========== ========== ==========
Total additions of $201,169,000 in 1993, $198,116,000 in 1992 and $196,937,000 in 1991 were less than 10% of the total as of the respective year- ends. Retirements or sales of $47,254,000 in 1993, $42,926,000 in 1992 and $32,428,000 in 1991 were less than 10% of the total as of the respective year- ends. There were no additions to individual accounts in excess of two percent of total assets other than transfers from Construction Work in Progress. The methods used to compute the annual provisions for depreciation are described in Note 1 of the Notes to Consolidated Financial Statements. The current provisions were determined using the following composite rates for functional classes of property:
FUNCTIONAL CLASS OF PROPERTY COMPOSITE ANNUAL RATE - -------------------------------------------------------------------------------- Production: Steam -- Fossil-fired............................... 3.6% Hydro............................................... 2.5% Transmission........................................... 2.2% Distribution........................................... 3.5% General................................................ 3.3%
S-10 APPALACHIAN POWER COMPANY AND SUBSIDIARIES SCHEDULE VI -- ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - -------------------------------------------------------------------------------- ADDITIONS OTHER BALANCE AT CHARGED TO CHANGES -- BALANCE AT BEGINNING COSTS AND RETIREMENTS ADD END OF DESCRIPTION OF PERIOD EXPENSES OR SALES (DEDUCT) PERIOD - -------------------------------------------------------------------------------- (IN THOUSANDS) YEAR ENDED DECEMBER 31, 1993: ACCUMULATED DEPRECIA- TION AND AMORTIZATION OF ELECTRIC UTILITY PLANT: Production: Steam -- Fossil- fired.................. $ 770,638 $ 57,009 $17,212 $1,081 $ 811,516 Hydro............. 68,895 3,356 376 (2) 71,873 Transmission........ 255,010 20,202 5,459 116 269,869 Distribution........ 341,780 40,966 27,966 (129) 354,651 General............. 40,755 7,346 5,774 619 42,946 ---------- -------- ------- ------ ---------- Total............. $1,477,078 $128,879 $56,787 $1,685 $1,550,855 ========== ======== ======= ====== ========== ACCUMULATED DEPRECIATION AND AMORTIZATION OF NONUTILITY PROPERTY AND OTHER PROPERTY INVESTMENTS......... $ 35,874 $ 1,844 $ 512 $ 664 $ 37,870 ========== ======== ======= ====== ========== YEAR ENDED DECEMBER 31, 1992: ACCUMULATED DEPRECIA- TION AND AMORTIZATION OF ELECTRIC UTILITY PLANT: Production: Steam -- Fossil- fired.................. $ 727,961 $ 53,934 $12,262 $1,005 $ 770,638 Hydro............. 66,603 2,717 425 68,895 Transmission........ 241,793 19,141 5,912 (12) 255,010 Distribution........ 330,855 40,110 29,196 11 341,780 General............. 37,862 6,676 4,028 245 40,755 ---------- -------- ------- ------ ---------- Total............. $1,405,074 $122,578 $51,823 $1,249 $1,477,078 ========== ======== ======= ====== ========== ACCUMULATED DEPRECIA- TION AND AMORTIZA- TION OF NONUTILITY PROP- ERTY AND OTHER PROPERTY IN- VESTMENTS........... $ 32,865 $ 1,858 $ 4 $1,155 $ 35,874 ========== ======== ======= ====== ========== YEAR ENDED DECEMBER 31, 1991: ACCUMULATED DEPRECIA- TION AND AMORTIZATION OF ELECTRIC UTILITY PLANT: Production: Steam -- Fossil- fired.................. $ 684,633 $ 52,686 $10,339 $ 981 $ 727,961 Hydro............. 64,154 2,701 253 1 66,603 Transmission........ 229,699 18,113 5,426 (593) 241,793 Distribution........ 312,964 37,621 20,328 598 330,855 General............. 36,859 5,448 4,891 446 37,862 ---------- -------- ------- ------ ---------- Total............. $1,328,309 $116,569 $41,237 $1,433 $1,405,074 ========== ======== ======= ====== ========== ACCUMULATED DEPRECIA- TION AND AMORTIZA- TION OF NONUTILITY PROP- ERTY AND OTHER PROPERTY IN- VESTMENTS........... $ 30,214 $ 1,868 $ 155 $ 938 $ 32,865 ========== ======== ======= ====== ==========
S-11 APPALACHIAN POWER COMPANY AND SUBSIDIARIES SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E - ---------------------------------------------------------------------------------- ADDITIONS --------------------- BALANCE AT CHARGED TO CHARGED TO BALANCE AT BEGINNING COSTS AND OTHER END OF DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD - ---------------------------------------------------------------------------------- (IN THOUSANDS) YEAR ENDED DECEMBER 31, 1993: DEDUCTED FROM ASSETS: Accumulated Provi- sion for Uncollectible Ac- counts........... $ 724 $3,392 $627(a) $3,399(b) $ 1,344 ======= ====== ==== ====== ======= NOT SHOWN ELSEWHERE: Operating Reserves for Workers' Compen- sation and Other. $ 9,159 $6,021 $738 $3,940(c) $11,978 ======= ====== ==== ====== ======= YEAR ENDED DECEMBER 31, 1992: DEDUCTED FROM ASSETS: Accumulated Provi- sion for Uncollectible Ac- counts........... $ 987 $1,810 $672(a) $2,745(b) $ 724 ======= ====== ==== ====== ======= NOT SHOWN ELSEWHERE: Operating Reserves for Workers' Compensa- tion and Oth- er........... $ 9,033 $3,486 $518 $3,878(c) $ 9,159 ======= ====== ==== ====== ======= YEAR ENDED DECEMBER 31, 1991: DEDUCTED FROM ASSETS: Accumulated Provi- sion for Uncollectible Ac- counts........... $ 989 $2,036 $527(a) $2,565(b) $ 987 ======= ====== ==== ====== ======= NOT SHOWN ELSEWHERE: Operating Reserves for Workers' Compensa- tion and Oth- er........... $10,822 $3,397 $490 $5,676(c) $ 9,033 ======= ====== ==== ====== =======
- -------- (a) Recoveries on accounts previously written off. (b) Uncollectible accounts written off. (c) Payments and transfers. S-12 APPALACHIAN POWER COMPANY AND SUBSIDIARIES SCHEDULE IX -- SHORT-TERM BORROWINGS - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - ----------------------------------------------------------------------------------- MAXIMUM AVERAGE WEIGHTED CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE AGGREGATE BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (B) - ----------------------------------------------------------------------------------- (DOLLARS IN THOUSANDS) YEAR ENDED DECEMBER 31, 1993: Notes Payable......... $ 3,400 3.6% $19,000 $ 5,021 3.3% Commercial Paper...... 36,100 3.4 78,050 49,548 3.2 YEAR ENDED DECEMBER 31, 1992: Notes Payable......... $ 4,300 4.0% $ 5,050 $ 4,692 4.1% Commercial Paper...... 75,550 3.9 80,500 46,665 4.5 YEAR ENDED DECEMBER 31, 1991: Notes Payable......... $ 5,150 5.1% $17,950 $ 7,523 6.3% Commercial Paper...... 93,900 5.2 93,900 36,584 6.7
- -------- (a) Sum of month-end short-term borrowings divided by number of months outstanding. (b) Interest for the period divided by average amount outstanding. S-13 COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN F COLUMN F COLUMN F COLUMN F - -------------------------------------------------------------------------------- 1993 1992 1991 1990 ---------- ---------- ---------- ---------- BALANCE AT BALANCE AT BALANCE AT BALANCE AT END OF END OF END OF END OF CLASSIFICATION PERIOD PERIOD PERIOD PERIOD - -------------------------------------------------------------------------------- (IN THOUSANDS) ELECTRIC UTILITY PLANT: Production -- Steam -- Fossil- fired.............................. $1,443,506 $1,586,554 $1,581,389 $ 712,451 Transmission..................... 295,539 292,125 282,610 267,777 Distribution..................... 755,342 719,781 685,486 652,894 General.......................... 97,874 94,599 93,262 89,617 Construction Work in Progress.... 52,794 31,447 24,512 852,760 ---------- ---------- ---------- ---------- Total Electric Utility Plant... 2,645,055 2,724,506 2,667,259 2,575,499 NONUTILITY PROPERTY AND OTHER PROP- ERTY INVESTMENTS.................. 20,465 19,253 18,219 17,900 ---------- ---------- ---------- ---------- Total.......................... $2,665,520 $2,743,759 $2,685,478 $2,593,399 ========== ========== ========== ==========
Total additions of $97,455,000 in 1993, $80,279,000 in 1992 and $111,856,000 in 1991 were less than 10% of the total as of the respective year-ends. Retirements or sales of $18,161,000 in 1993, $21,999,000 in 1992 and $19,773,000 in 1991 were less than 10% of the total as of the respective year- ends. There were no additions to individual accounts in excess of two percent of total assets other than transfers from Construction Work in Progress. In 1993 other charges include a reduction of $157,535,000 to reflect the PUCO disallowance of a portion of the Zimmer Plant investment as discussed in Note 2 of the Notes to Consolidated Financial Statements. The methods used to compute the annual provisions for depreciation are described in Note 1 of the Notes to Consolidated Financial Statements. The current provisions were determined using the following composite rates for functional classes of property:
FUNCTIONAL CLASS OF PROPERTY COMPOSITE ANNUAL RATE - -------------------------------------------------------------------------------- Production -- Steam -- Fossil-fired..................... 3.2% Transmission............................................ 2.3% Distribution............................................ 3.7% General................................................. 3.5%
S-14 COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES SCHEDULE VI -- ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - ----------------------------------------------------------------------------------- ADDITIONS OTHER BALANCE AT CHARGED TO CHANGES -- BALANCE AT BEGINNING COSTS AND RETIREMENTS ADD END OF DESCRIPTION OF PERIOD EXPENSES OR SALES (DEDUCT) PERIOD - ----------------------------------------------------------------------------------- (IN THOUSANDS) YEAR ENDED DECEMBER 31, 1993: ACCUMULATED DEPRECIA- TION OF ELECTRIC UTILITY PLANT: Production -- Steam -- Fossil-fired... $336,754 $48,779 $ 6,847 $(10,213)(a) $368,473 Transmission........ 117,462 6,351 586 123,227 Distribution........ 272,536 27,043 8,392 (4) 291,183 General............. 27,615 5,398 4,083 4 28,934 -------- ------- ------- -------- -------- Total............. $754,367 $87,571 $19,908 $(10,213) $811,817 ======== ======= ======= ======== ======== ACCUMULATED DEPRECIA- TION OF NONUTILITY PROP- ERTY AND OTHER PROPERTY IN- VESTMENTS........... $ 932 $ 120 $ 221 $ -0- $ 831 ======== ======= ======= ======== ======== YEAR ENDED DECEMBER 31, 1992: ACCUMULATED DEPRECIA- TION OF ELECTRIC UTILITY PLANT: Production -- Steam -- Fossil-fired... $298,466 $50,423 $12,135 $336,754 Transmission........ 112,456 6,493 1,061 $ (426) 117,462 Distribution........ 254,597 26,250 8,737 426 272,536 General............. 27,566 4,602 4,508 (45) 27,615 -------- ------- ------- -------- -------- Total............. $693,085 $87,768 $26,441 $ (45) $754,367 ======== ======= ======= ======== ======== ACCUMULATED DEPRECIA- TION OF NONUTILITY PROP- ERTY AND OTHER PROPERTY IN- VESTMENTS........... $ 777 $ 160 $ 50 $ 45 $ 932 ======== ======= ======= ======== ======== YEAR ENDED DECEMBER 31, 1991: ACCUMULATED DEPRECIA- TION OF ELECTRIC UTILITY PLANT: Production -- Steam -- Fossil-fired... $265,452 $43,051 $10,037 $298,466 Transmission........ 106,471 6,760 753 $ (22) 112,456 Distribution........ 236,574 25,759 7,758 22 254,597 General............. 30,644 4,348 7,395 (31) 27,566 -------- ------- ------- -------- -------- Total............. $639,141 $79,918 $25,943 $ (31) $693,085 ======== ======= ======= ======== ======== ACCUMULATED DEPRECIA- TION OF NONUTILITY PROP- ERTY AND OTHER PROPERTY IN- VESTMENTS........... $ 877 $ 142 $ 287 $ 45 $ 777 ======== ======= ======= ======== ========
- -------- (a) Reflects the write-off of accumulated depreciation related to a portion of the Zimmer Plant investment that was disallowed by the PUCO as discussed in Note 2 of the Notes to Consolidated Financial Statements. S-15 COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E - ---------------------------------------------------------------------------------- ADDITIONS --------------------- BALANCE AT CHARGED TO CHARGED TO BALANCE AT BEGINNING COSTS AND OTHER END OF DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD - ---------------------------------------------------------------------------------- (IN THOUSANDS) YEAR ENDED DECEMBER 31, 1993: DEDUCTED FROM ASSETS: Accumulated Provi- sion for Uncollectible Accounts........ $1,332 $4,167 $2,106(a) $6,614(b) $ 991 ====== ====== ====== ====== ====== NOT SHOWN ELSEWHERE: Operating Reserves for Workers' Compen- sation and Oth- er.............. $3,226 $2,026 $ 207 $ 432 $5,027 ====== ====== ====== ====== ====== YEAR ENDED DECEMBER 31, 1992: DEDUCTED FROM ASSETS: Accumulated Provi- sion for Uncollectible Accounts........ $1,134 $4,593 $1,981(a) $6,376(b) $1,332 ====== ====== ====== ====== ====== NOT SHOWN ELSEWHERE: Operating Reserves for Workers' Compen- sation and Oth- er.............. $3,779 $ (63) $ 123 $ 613(c) $3,226 ====== ====== ====== ====== ====== YEAR ENDED DECEMBER 31, 1991: DEDUCTED FROM ASSETS: Accumulated Provi- sion for Uncollectible Accounts........ $1,272 $4,407 $1,753(a) $6,298(b) $1,134 ====== ====== ====== ====== ====== NOT SHOWN ELSEWHERE: Operating Reserves for Workers' Compen- sation and Oth- er.............. $1,620 $2,704 $ 59 $ 604(c) $3,779 ====== ====== ====== ====== ======
- -------- (a) Recoveries on accounts previously written off. (b) Uncollectible accounts written off. (c) Payments. S-16 COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES SCHEDULE IX -- SHORT-TERM BORROWINGS - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - ----------------------------------------------------------------------------------- MAXIMUM AVERAGE WEIGHTED CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE AGGREGATE BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (B) - ----------------------------------------------------------------------------------- (DOLLARS IN THOUSANDS) YEAR ENDED DECEMBER 31, 1993: Notes Payable......... $12,500 3.6% $37,250 $22,861 3.3% Commercial Paper...... 12,725 3.8 60,250 21,756 3.3 YEAR ENDED DECEMBER 31, 1992: Notes Payable......... $34,750 3.9% $71,600 $36,534 3.8% Commercial Paper...... 19,069 4.2 73,910 45,251 4.1 YEAR ENDED DECEMBER 31, 1991: Notes Payable......... $15,725 5.2% $52,275 $31,583 6.2% Commercial Paper...... 50,475 5.6 50,475 26,929 6.3
- -------- (a) Sum of month-end short-term borrowings divided by number of months outstanding. (b) Interest for the period divided by average amount outstanding. S-17 INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN F COLUMN F COLUMN F COLUMN F - ------------------------------------------------------------------------------- 1993 1992 1991 1990 ---------- ---------- ---------- ---------- --- BALANCE AT BALANCE AT BALANCE AT BALANCE AT END OF END OF END OF END OF CLASSIFICATION PERIOD PERIOD PERIOD PERIOD - ------------------------------------------------------------------------------- (IN THOUSANDS) ELECTRIC UTILITY PLANT: Production: Steam -- Fossil-fired...... $1,118,655 $1,105,364 $1,085,337 $1,074,214 Steam -- Nuclear........... 1,483,872 1,454,541 1,442,892 1,401,648 Transmission................. 839,198 829,507 815,742 786,206 Distribution................. 608,752 576,309 551,055 520,988 General (including nuclear fuel)......................... 152,470 182,414 157,340 185,781 Construction Work in Pro- gress......................... 88,010 118,345 83,454 97,390 ---------- ---------- ---------- ---------- Total Electric Utility Plant......................... 4,290,957 4,266,480 4,135,820 4,066,227 NONUTILITY PROPERTY AND OTHER PROPERTY INVESTMENTS.......... 193,493 191,743 190,518 200,405 ---------- ---------- ---------- ---------- Total...................... $4,484,450 $4,458,223 $4,326,338 $4,266,632 ========== ========== ========== ==========
Total additions of $125,247,000 in 1993, $175,728,000 in 1992 and $149,187,000 in 1991 were less than 10% of the total as of the respective year- ends. Retirements or sales of $61,586,000 in 1993, $25,301,000 in 1992 and $40,396,000 in 1991 were less than 10% of the total as of the respective year- ends. There were no additions to individual accounts in excess of two percent of total assets other than transfers from Construction Work in Progress. Amortization of nuclear fuel of $41,325,000 in 1993, $19,343,000 in 1992 and $50,124,000 in 1991 was credited directly to the property account and charged to fuel expense. The methods used to compute the annual provisions for depreciation are described in Note 1 of the Notes to Consolidated Financial Statements. The current provisions were determined using the following composite rates for functional classes of property:
FUNCTIONAL CLASS OF PROPERTY COMPOSITE ANNUAL RATE - -------------------------------------------------------------------------------- Production: Steam -- Fossil-fired................................. 4.6% Steam -- Nuclear...................................... 3.4% Transmission............................................ 1.9% Distribution............................................ 4.2% General................................................. 3.8%
S-18 INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES SCHEDULE VI -- ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - --------------------------------------------------------------------------------------------------- ADDITIONS OTHER BALANCE AT CHARGED TO CHANGES -- BALANCE AT BEGINNING COSTS AND RETIREMENTS ADD END OF DESCRIPTION OF PERIOD EXPENSES OR SALES (DEDUCT) PERIOD - --------------------------------------------------------------------------------------------------- (IN THOUSANDS) YEAR ENDED DECEMBER 31, 1993: ACCUMULATED DEPRECIATION AND AMORTIZATION OF ELECTRIC UTILITY PLANT: Production: Steam -- Fossil-fired.............. $ 447,978 $ 42,417 $14,608 $ 6 $ 475,793 Steam -- Nuclear................... 691,605 57,274 26,196 1 722,684 Transmission......................... 277,512 17,316 1,717 (17) 293,094 Distribution......................... 180,363 21,710 11,179 17 190,911 General.............................. 33,980 5,610 7,228 (15) 32,347 ---------- -------- ------- ------ ---------- Total............................ $1,631,438 $144,327 $60,928 $ (8) $1,714,829 ========== ======== ======= ====== ========== ACCUMULATED DEPRECIATION AND AMORTIZATION OF NONUTILITY PROPERTY AND OTHER PROPERTY INVESTMENTS................. $ 62,766 $ 7,992 $ 9,615 $7,616 $ 68,759 ========== ======== ======= ====== ========== YEAR ENDED DECEMBER 31, 1992: ACCUMULATED DEPRECIATION AND AMORTIZATION OF ELECTRIC UTILITY PLANT: Production: Steam -- Fossil-fired.............. $ 419,455 $ 40,964 $12,427 $ (14) $ 447,978 Steam -- Nuclear................... 638,563 54,842 1,800 691,605 Transmission......................... 259,890 17,076 (446) 100 277,512 Distribution......................... 171,809 20,349 11,690 (105) 180,363 General.............................. 31,632 5,126 2,795 17 33,980 ---------- -------- ------- ------ ---------- Total............................ $1,521,349 $138,357 $28,266 $ (2) $1,631,438 ========== ======== ======= ====== ========== ACCUMULATED DEPRECIATION AND AMORTIZATION OF NONUTILITY PROPERTY AND OTHER PROPERTY INVESTMENTS............ $ 55,028 $ 7,296 $ (93) $ 349 $ 62,766 ========== ======== ======= ====== ========== YEAR ENDED DECEMBER 31, 1991: ACCUMULATED DEPRECIATION AND AMORTIZATION OF ELECTRIC UTILITY PLANT: Production: Steam -- Fossil-fired.............. $ 386,116 $ 40,567 $ 7,302 $ 74 $ 419,455 Steam -- Nuclear................... 589,526 55,140 6,033 (70) 638,563 Transmission......................... 251,438 16,767 8,369 54 259,890 Distribution......................... 163,965 19,424 11,582 2 171,809 General.............................. 30,240 5,259 3,775 (92) 31,632 ---------- -------- ------- ------ ---------- Total............................ $1,421,285 $137,157 $37,061 $ (32) $1,521,349 ========== ======== ======= ====== ========== ACCUMULATED DEPRECIATION AND AMORTIZATION OF NONUTILITY PROPERTY AND OTHER PROPERTY INVESTMENTS........ $ 52,730 $ 8,767 $ 6,759 $ 290 $ 55,028 ========== ======== ======= ====== ==========
S-19 INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E - ------------------------------------------------------------------------------------------ ADDITIONS ----------------------- BALANCE AT CHARGED TO CHARGED TO BALANCE AT BEGINNING COSTS AND OTHER END OF DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD - ------------------------------------------------------------------------------------------ (IN THOUSANDS) YEAR ENDED DECEMBER 31, 1993: DEDUCTED FROM ASSETS: Accumulated Provision for Uncollectible Ac- counts............ $ 562 $ 1,380 $ 624(a) $ 2,062(b) $ 504 ======== ======= ======= ======= ======== NOT SHOWN ELSEWHERE: Operating Reserves: Maintenance........ $ 2,162 $ 685 $ -0- $ 2,847(d) $ -0- Nuclear Plant Decommissioning Costs........... 146,451 23,255(e) -0- 169,706 Uranium Enrichment Decontamination and Decommissioning Fund Agreement. 45,500 -0- -0- 10,517(d) 34,983 Workers' Compensation, Coal Inventory Adjustment, and Other.......... 9,348 1,197 1,619 6,894(d)(f) 5,270 -------- ------- ------- ------- -------- Total............ $203,461 $25,137 $ 1,619 $20,258 $209,959 ======== ======= ======= ======= ======== YEAR ENDED DECEMBER 31, 1992: DEDUCTED FROM ASSETS: Accumulated Provision for Uncollectible Ac- counts............ $ 629 $ 1,736 $ 650(a) $ 2,453(b) $ 562 ======== ======= ======= ======= ======== NOT SHOWN ELSEWHERE: Operating Reserves: Maintenance........ $ 4,466 $ 356 $ -0- $ 2,660(d) $ 2,162 Nuclear Plant Decommissioning Costs........... 125,716 20,735(e) -0- -0- 146,451 Uranium Enrichment Decontamination and Decommissioning Fund Agreement. -0- -0- 45,500 -0- 45,500 Workers' Compensation, Coal Inventory Adjustment, and Other.......... 15,184 2,065 1,296 9,197(d) 9,348 -------- ------- ------- ------- -------- Total............ $145,366 $23,156 $46,796 $11,857 $203,461 ======== ======= ======= ======= ======== YEAR ENDED DECEMBER 31, 1991: DEDUCTED FROM ASSETS: Accumulated Provision for Uncollectible Ac- counts............ $ 714 $ 1,674 $ 645(a) $ 2,404(b) $ 629 ======== ======= ======= ======= ======== NOT SHOWN ELSEWHERE: Operating Reserves: Maintenance........ $ 7,551 $ -0- $ 118(c) $ 3,203(d) $ 4,466 Nuclear Plant Decommissioning Costs........... 106,632 19,084(e) -0- -0- 125,716 Workers' Compensation, Coal Inventory Adjustment, and Other.......... 9,489 9,418 2,607 6,330(d) 15,184 -------- ------- ------- ------- -------- Total............ $123,672 $28,502 $ 2,725 $ 9,533 $145,366 ======== ======= ======= ======= ========
- -------- (a) Recoveries on accounts previously written off. (b) Uncollectible accounts written off. (c) Billings to others. (d) Payments and accrual adjustments. (e) Includes interest on trust funds. (f) Adjust Royalty Provision. S-20 INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES SCHEDULE IX -- SHORT-TERM BORROWINGS - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - ----------------------------------------------------------------------------------- MAXIMUM AVERAGE WEIGHTED CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE AGGREGATE BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (B) - ----------------------------------------------------------------------------------- (DOLLARS IN THOUSANDS) YEAR ENDED DECEMBER 31, 1993: Notes Payable......... $ -0- -- % $17,200 $17,200 3.3% Commercial Paper...... 50,075 3.6 50,075 27,832 3.3 YEAR ENDED DECEMBER 31, 1992: Notes Payable......... $ -0- -- % $23,800 $12,431 3.9% Commercial Paper...... 44,200 4.3 44,200 25,509 4.0 YEAR ENDED DECEMBER 31, 1991: Notes Payable......... $14,850 5.4% $32,325 $14,810 6.4% Commercial Paper...... 36,100 5.5 36,100 15,010 6.4
- -------- (a) Sum of month-end short-term borrowings divided by number of months outstanding. (b) Interest for the period divided by average amount outstanding. S-21 KENTUCKY POWER COMPANY SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN F COLUMN F COLUMN F COLUMN F - -------------------------------------------------------------------------------- 1993 1992 1991 1990 ---------- ---------- ---------- ---------- BALANCE AT BALANCE AT BALANCE AT BALANCE AT END OF END OF END OF END OF CLASSIFICATION PERIOD PERIOD PERIOD PERIOD - -------------------------------------------------------------------------------- (IN THOUSANDS) ELECTRIC UTILITY PLANT: Production -- Steam -- Fossil- fired........................... $211,617 $205,771 $204,045 $201,362 Transmission..................... 249,966 243,002 239,138 231,346 Distribution..................... 281,834 267,280 254,146 241,053 General.......................... 54,637 54,397 50,927 48,334 Construction Work in Progress.... 9,374 10,406 8,453 11,020 -------- -------- -------- -------- Total Electric Utility Plant... 807,428 780,856 756,709 733,115 NONUTILITY PROPERTY AND OTHER PROP- ERTY INVESTMENTS.................. 6,846 7,249 7,217 7,217 -------- -------- -------- -------- Total.......................... $814,274 $788,105 $763,926 $740,332 ======== ======== ======== ========
Total additions of $37,808,000 in 1993, $35,203,000 in 1992 and $31,369,000 in 1991 were less than 10% of the total as of the respective year-ends. Retirements or sales of $12,000,000 in 1993, $11,352,000 in 1992 and $8,092,000 in 1991 were less than 10% of the total as of the respective year-ends. There were no additions to individual accounts in excess of two percent of total assets other than transfers from Construction Work in Progress. The methods used to compute the annual provisions for depreciation are described in Note 1 of the Notes to Financial Statements. The current provisions were determined using the following composite rates for functional classes of property:
FUNCTIONAL CLASS OF PROPERTY COMPOSITE ANNUAL RATE - -------------------------------------------------------------------------------- Production -- Steam -- Fossil-fired.................... 3.8% Transmission........................................... 1.7% Distribution........................................... 3.5% General................................................ 2.5%
S-22 KENTUCKY POWER COMPANY SCHEDULE VI -- ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - -------------------------------------------------------------------------------- ADDITIONS OTHER BALANCE AT CHARGED TO CHANGES -- BALANCE AT BEGINNING COSTS AND RETIREMENTS ADD END OF DESCRIPTION OF PERIOD EXPENSES OR SALES (DEDUCT) PERIOD - -------------------------------------------------------------------------------- (IN THOUSANDS) YEAR ENDED DECEMBER 31, 1993: ACCUMULATED DEPRECIA- TION AND AMORTIZATION OF ELECTRIC UTILITY PLANT: Production -- Steam -- Fossil-fired... $116,273 $ 7,853 $ 4,849 $-0- $119,277 Transmission........ 57,652 4,168 1,221 (1) 60,598 Distribution........ 52,542 9,405 5,233 9 56,723 General............. 11,875 2,329 2,103 (26) 12,075 -------- ------- ------- ---- -------- Total............. $238,342 $23,755 $13,406 $(18) $248,673 ======== ======= ======= ==== ======== ACCUMULATED DEPRECIA- TION OF NONUTILITY PROP- ERTY AND OTHER PROPERTY IN- VESTMENTS........... $ 828 $ 83 $ -0- $-0- $ 911 ======== ======= ======= ==== ======== YEAR ENDED DECEMBER 31, 1992: ACCUMULATED DEPRECIA- TION AND AMORTIZATION OF ELECTRIC UTILITY PLANT: Production -- Steam -- Fossil-fired... $110,714 $ 7,739 $ 2,184 $ 4 $116,273 Transmission........ 54,759 4,030 1,131 (6) 57,652 Distribution........ 49,640 8,966 6,064 52,542 General............. 11,096 2,181 1,369 (33) 11,875 -------- ------- ------- ---- -------- Total............. $226,209 $22,916 $10,748 $(35) $238,342 ======== ======= ======= ==== ======== ACCUMULATED DEPRECIA- TION OF NONUTILITY PROP- ERTY AND OTHER PROPERTY IN- VESTMENTS........... $ 740 $ 88 $ -0- $-0- $ 828 ======== ======= ======= ==== ======== YEAR ENDED DECEMBER 31, 1991: ACCUMULATED DEPRECIA- TION AND AMORTIZATION OF ELECTRIC UTILITY PLANT: Production -- Steam -- Fossil-fired... $104,631 $ 7,524 $ 1,441 $-0- $110,714 Transmission........ 51,827 4,102 1,133 (37) 54,759 Distribution........ 47,370 8,531 6,292 31 49,640 General............. 9,808 1,811 493 (30) 11,096 -------- ------- ------- ---- -------- Total............. $213,636 $21,968 $9,359 $(36) $226,209 ======== ======= ======= ==== ======== ACCUMULATED DEPRECIA- TION OF NONUTILITY PROP- ERTY AND OTHER PROPERTY IN- VESTMENTS........... $ 663 $ 77 $ -0- $-0- $ 740 ======== ======= ======= ==== ========
S-23 KENTUCKY POWER COMPANY SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E - --------------------------------------------------------------------------------- ADDITIONS --------------------- BALANCE AT CHARGED TO CHARGED TO BALANCE AT BEGINNING COSTS AND OTHER END OF DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD - --------------------------------------------------------------------------------- (IN THOUSANDS) YEAR ENDED DECEMBER 31, 1993: DEDUCTED FROM ASSETS: Accumulated Provi- sion for Uncollectible Accounts........ $ 248 $ 390 $179(a) $ 609(b) $ 208 ====== ====== ==== ====== ====== NOT SHOWN ELSEWHERE: Operating Reserves for Workers' Compen- sation and Other....... $2,023 $1,323 $(22) $ 692(c) $2,632 ====== ====== ==== ====== ====== YEAR ENDED DECEMBER 31, 1992: DEDUCTED FROM ASSETS: Accumulated Provi- sion for Uncollectible Accounts........ $ 352 $ 630 $106(a) $ 840(b) $ 248 ====== ====== ==== ====== ====== NOT SHOWN ELSEWHERE: Operating Reserves for Workers' Compen- sation and Other....... $1,962 $1,162 $(34) $1,067(c) $2,023 ====== ====== ==== ====== ====== YEAR ENDED DECEMBER 31, 1991: DEDUCTED FROM ASSETS: Accumulated Provi- sion for Uncollectible Accounts........ $ 148 $ 645 $ 84(a) $ 525(b) $ 352 ====== ====== ==== ====== ====== NOT SHOWN ELSEWHERE: Operating Reserves for Workers' Compen- sation and Other....... $1,240 $1,309 $121 $ 708(c) $1,962 ====== ====== ==== ====== ======
- -------- (a) Recoveries on accounts previously written off. (b) Uncollectible accounts written off. (c) Payments. S-24 KENTUCKY POWER COMPANY SCHEDULE IX -- SHORT-TERM BORROWINGS - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - ----------------------------------------------------------------------------------- MAXIMUM AVERAGE WEIGHTED CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE AGGREGATE BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (B) - ----------------------------------------------------------------------------------- (DOLLARS IN THOUSANDS) YEAR ENDED DECEMBER 31, 1993: Notes Payable......... $26,250 3.5% $26,250 $ 7,240 3.4% Commercial Paper...... 11,900 3.8 35,300 19,394 3.4 YEAR ENDED DECEMBER 31, 1992: Notes Payable......... $ 5,350 4.2% $13,000 $ 6,845 4.1% Commercial Paper...... 11,550 4.2 11,550 4,350 3.8 YEAR ENDED DECEMBER 31, 1991: Notes Payable......... $18,500 5.0% $20,525 $11,675 7.9% Commercial Paper...... -0- -- 21,200 8,908 6.8
- -------- (a) Sum of month-end short-term borrowings divided by number of months outstanding. (b) Interest for the period divided by average amount outstanding. S-25 OHIO POWER COMPANY AND SUBSIDIARIES SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN F COLUMN F COLUMN F COLUMN F - -------------------------------------------------------------------------------- 1993 1992 1991 1990 ---------- ---------- ---------- ---------- BALANCE AT BALANCE AT BALANCE AT BALANCE AT END OF END OF END OF END OF CLASSIFICATION PERIOD PERIOD PERIOD PERIOD - -------------------------------------------------------------------------------- (IN THOUSANDS) ELECTRIC UTILITY PLANT: Production -- Steam -- Fossil- fired............................. $2,412,973 $2,391,432 $2,337,827 $2,300,012 Transmission..................... 767,548 758,134 741,085 727,159 Distribution..................... 766,639 731,559 689,588 668,259 General (including mining as- sets)............................. 754,347 773,122 879,533 826,522 Construction Work in Progress.... 100,820 79,535 113,323 102,125 ---------- ---------- ---------- ---------- Total Electric Utility Plant... 4,802,327 4,733,782 4,761,356 4,624,077 NONUTILITY PROPERTY AND OTHER PROP- ERTY INVESTMENTS.................. 89,558 83,953 52,748 49,179 ---------- ---------- ---------- ---------- Total.......................... $4,891,885 $4,817,735 $4,814,104 $4,673,256 ========== ========== ========== ==========
Total additions of $197,089,000 in 1993, $201,737,000 in 1992 and $228,500,000 in 1991 were less than 10% of the total as of the respective year- ends. Retirements or sales of $128,775,000 in 1993, $191,662,000 in 1992 and $90,472,000 in 1991 were less than 10% of the total as of the respective year- ends. There were no additions to individual accounts in excess of two percent of total assets other than transfers from Construction Work in Progress. The methods used to compute the annual provisions for depreciation are described in Note 1 of the Notes to Consolidated Financial Statements. The current provisions for other than mining assets were determined using the following composite rates for functional classes of property:
FUNCTIONAL CLASS OF PROPERTY COMPOSITE ANNUAL RATE - -------------------------------------------------------------------------------- Production -- Steam -- Fossil-fired..................... 3.6% Transmission............................................ 1.7% Distribution............................................ 3.9% General................................................. 2.1%
The current provisions for mining assets were calculated by use of the following methods:
DESCRIPTION METHOD ------------------------------- ---------------------------------------- Mining Structures and Equipment Straight-Line method (original lives range from 1 to 30 years) Coal Interests and Mine Units-of-production method (based on Development Costs estimated recoverable tonnages; current rate averages 55 cents per ton)
S-26 OHIO POWER COMPANY AND SUBSIDIARIES SCHEDULE VI -- ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - -------------------------------------------------------------------------------- ADDITIONS OTHER BALANCE AT CHARGED TO CHANGES -- BALANCE AT BEGINNING COSTS AND RETIREMENTS ADD END OF DESCRIPTION OF PERIOD EXPENSES OR SALES (DEDUCT) PERIOD - -------------------------------------------------------------------------------- (IN THOUSANDS) YEAR ENDED DECEMBER 31, 1993: ACCUMULATED DEPRECIA- TION AND AMORTIZA- TION OF ELECTRIC UTILITY PLANT: Production -- Steam-- Fossil-fired... $1,130,205 $ 85,065 $ 57,958 $ (1,172) $1,156,140 Transmission........ 265,418 13,130 5,261 2,029 275,316 Distribution........ 180,959 28,503 18,480 1,750 192,732 General (including mining assets)......... 339,429 38,022 30,100 20,543 367,894 ---------- -------- -------- -------- ---------- Total............. $1,916,011 $164,720 $111,799 $ 23,150 $1,992,082 ========== ======== ======== ======== ========== ACCUMULATED DEPRECIA- TION OF NONUTILITY PROPERTY AND OTHER PROPERTY INVEST- MENTS............... $ 11,467 $ 800 $ 1,652 $ (2) $ 10,613 ========== ======== ======== ======== ========== YEAR ENDED DECEMBER 31, 1992: ACCUMULATED DEPRECIA- TION AND AMORTIZA- TION OF ELECTRIC UTILITY PLANT: Production -- Steam-- Fossil-fired... $1,088,875 $ 82,596 $ 42,438 $ 1,172 $1,130,205 Transmission........ 255,931 12,903 3,493 77 265,418 Distribution........ 172,672 27,180 19,357 464 180,959 General (including mining assets)......... 354,233 45,633 78,384 17,947 339,429 ---------- -------- -------- -------- ---------- Total............. $1,871,711 $168,312 $143,672 $ 19,660 $1,916,011 ========== ======== ======== ======== ========== ACCUMULATED DEPRECIA- TION OF NONUTILITY PROPERTY AND OTHER PROPERTY INVEST- MENTS............... $ 10,740 $ 588 $ (139) $ -0- $ 11,467 ========== ======== ======== ======== ========== YEAR ENDED DECEMBER 31, 1991: ACCUMULATED DEPRECIA- TION AND AMORTIZA- TION OF ELECTRIC UTILITY PLANT: Production -- Steam-- Fossil-fired... $1,034,539 $ 81,472 $ 27,136 $ -0- $1,088,875 Transmission........ 250,219 12,600 7,093 205 255,931 Distribution........ 162,754 25,983 16,780 715 172,672 General (including mining assets)......... 328,787 51,907 39,192 12,731 354,233 ---------- -------- -------- -------- ---------- Total............. $1,776,299 $171,962 $ 90,201 $ 13,651 $1,871,711 ========== ======== ======== ======== ========== ACCUMULATED DEPRECIA- TION OF NONUTILITY PROPERTY AND OTHER PROPERTY INVEST- MENTS............... $ 10,473 $ 347 $ 80 $ -0- $ 10,740 ========== ======== ======== ======== ==========
S-27 OHIO POWER COMPANY AND SUBSIDIARIES SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E - ------------------------------------------------------------------------------------ ADDITIONS --------------------- BALANCE AT CHARGED TO CHARGED TO BALANCE AT BEGINNING COSTS AND OTHER END OF DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD - ------------------------------------------------------------------------------------ (IN THOUSANDS) YEAR ENDED DECEMBER 31, 1993: DEDUCTED FROM ASSETS: Accumulated Provi- sion for Uncollectible Ac- counts........... $ 4,353 $ 4,812 $ 549(a) $ 8,754(b) $ 960 ======= ======= ======= ======= ======= NOT SHOWN ELSEWHERE: Operating Reserves: Maintenance....... $ 5,961 $(1,721) $ 184(c) $ 1,071(d) $ 3,353 Reclamation....... 8,537 7,508 -0- 7,313(d) 8,732 Workers' Compensa- tion and Oth- er........... 20,302 5,790 (91) 9,327(d) 16,674 ------- ------- ------- ------- ------- Total........... $34,800 $11,577 $ 93 $17,711 $28,759 ======= ======= ======= ======= ======= YEAR ENDED DECEMBER 31, 1992: DEDUCTED FROM ASSETS: Accumulated Provi- sion for Uncollectible Ac- counts........... $ 4,815 $ 4,084 $ 618(a) $ 5,164(b) $ 4,353 ======= ======= ======= ======= ======= NOT SHOWN ELSEWHERE: Operating Reserves: Maintenance....... $ 8,336 $(1,239) $ 297(c) $ 1,433(d) $ 5,961 Reclamation....... 9,089 7,456 -0- 8,008(d) 8,537 Workers' Compensa- tion and Oth- er........... 7,938 11,690 11,026 10,352(d) 20,302 ------- ------- ------- ------- ------- Total........... $25,363 $17,907 $11,323 $19,793 $34,800 ======= ======= ======= ======= ======= YEAR ENDED DECEMBER 31, 1991: DEDUCTED FROM ASSETS: Accumulated Provi- sion for Uncollectible Ac- counts........... $ 8,540 $ 2,042 $ 557(a) $ 6,324(b) $ 4,815 ======= ======= ======= ======= ======= NOT SHOWN ELSEWHERE: Operating Reserves: Maintenance....... $11,532 $(1,531) $ 56(c) $ 1,721(d) $ 8,336 Reclamation....... 13,121 2,329 -0- 6,361(d) 9,089 Workers' Compensa- tion and Oth- er........... 6,873 9,355 (295) 7,995(d) 7,938 ------- ------- ------- ------- ------- Total........... $31,526 $10,153 $ (239) $16,077 $25,363 ======= ======= ======= ======= =======
- -------- (a) Recoveries on accounts previously written off. (b) Uncollectible accounts written off. (c) Billings to others. (d) Payments. S-28 OHIO POWER COMPANY AND SUBSIDIARIES SCHEDULE IX -- SHORT-TERM BORROWINGS - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - ----------------------------------------------------------------------------------- MAXIMUM AVERAGE WEIGHTED CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE AGGREGATE BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (B) - ----------------------------------------------------------------------------------- (DOLLARS IN THOUSANDS) YEAR ENDED DECEMBER 31, 1993: Notes Payable......... $ 2,251 3.1% $ 45,650 $10,564 3.2% Commercial Paper...... 38,000 3.6 68,700 33,033 3.4 YEAR ENDED DECEMBER 31, 1992: Notes Payable......... $ -0- --% $ 26,000 $14,167 4.2% Commercial Paper...... -0- -- 102,945 70,711 4.2 YEAR ENDED DECEMBER 31, 1991: Notes Payable......... $ 1,208 6.0% $ 45,995 $13,065 6.0% Commercial Paper...... 132,325 5.4 132,325 77,492 6.3
- -------- (a) Sum of month-end short-term borrowings divided by number of months outstanding. (b) Interest for the period divided by average amount outstanding. S-29 EXHIBIT INDEX Certain of the following exhibits, designated with an asterisk(*), are filed herewith. The exhibits not so designated have heretofore been filed with the Commission and, pursuant to 17 C.F.R. (S)201.24 and (S)240.12b-32, are incorporated herein by reference to the documents indicated in brackets following the descriptions of such exhibits. Exhibits, designated with a dagger (+), are management contracts or compensatory plans or arrangements required to be filed as an exhibit to this form pursuant to Item 14(c) of this report. AEGCO
EXHIBIT NUMBER DESCRIPTION ------- ----------- 3(a) -- Copy of Articles of Incorporation of AEGCo [Registration Statement on Form 10 for the Common Shares of AEGCo, File No. 0-18135, Exhibit 3(a)]. 3(b) -- Copy of the Code of Regulations of AEGCo [Registration Statement on Form 10 for the Common Shares of AEGCo, File No. 0-18135, Exhibit 3(b)]. 10(a) -- Copy of Capital Funds Agreement dated as of December 30, 1988 between AEGCo and AEP [Registration Statement No. 33-32752, Exhibit 28(a)]. 10(b)(1) -- Copy of Unit Power Agreement dated as of March 31, 1982 between AEGCo and I&M, as amended [Registration Statement No. 33-32752, Exhibits 28(b)(1)(A) and 28(b)(1)(B)]. 10(b)(2) -- Copy of Unit Power Agreement, dated as of August 1, 1984, among AEGCo, I&M and KEPCo [Registration Statement No. 33- 32752, Exhibit 28(b)(2)]. 10(b)(3) -- Copy of Agreement, dated as of October 1, 1984, among AEGCo, I&M, APCo and Virginia Electric and Power Company [Registration Statement No. 33-32752, Exhibit 28(b)(3)]. 10(c)(1)(A) -- Copy of Lease Agreement (AEGCO Trust 1), dated as of December 1, 1989, between AEGCo and Wilmington Trust Company [Registration Statement No. 33-32752, Exhibit 28(c)(1)(C)]. *10(c)(1)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 1), dated as of October 15, 1990. 10(c)(2)(A) -- Copy of Lease Agreement (AEGCO Trust 2), dated as of December 1, 1989, between AEGCo and Wilmington Trust Company [Registration Statement No. 33-32752, Exhibit 28(c)(2)(C)]. *10(c)(2)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 2), dated as of October 15, 1990. 10(c)(3)(A) -- Copy of Lease Agreement (AEGCO Trust 3), dated as of December 1, 1989, between AEGCo and Wilmington Trust Company [Registration Statement No. 33-32752, Exhibit 28(c)(3)(C)]. *10(c)(3)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 3), dated as of October 15, 1990. 10(c)(4)(A) -- Copy of Lease Agreement (AEGCO Trust 4), dated as of December 1, 1989, between AEGCo and Wilmington Trust Company [Registration Statement No. 33-32752, Exhibit 28(c)(4)(C)]. *10(c)(4)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 4), dated as of October 15, 1990. 10(c)(5)(A) -- Copy of Lease Agreement (AEGCO Trust 5), dated as of December 1, 1989, between AEGCo and Wilmington Trust Company [Registration Statement No. 33-32752, Exhibit 28(c)(5)(C)]. *10(c)(5)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 5), dated as of October 15, 1990. 10(c)(6)(A) -- Copy of Lease Agreement (AEGCO Trust 6), dated as of December 1, 1989, between AEGCo and Wilmington Trust Company [Registration Statement No. 33-32752, Exhibit 28(c)(6)(C)]. *10(c)(6)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 6), dated as of October 15, 1990. *13 -- Copy of those portions of the AEGCo 1993 Annual Report (for the fiscal year ended December 31, 1993) which are incorporated by reference in this filing, *24 -- Power of Attorney.
E-1 AEGCO (continued)
EXHIBIT NUMBER DESCRIPTION ------- ----------- AEP++ 3(a) -- Copy of Restated Certificate of Incorporation of AEP, dated April 26, 1978 [Registration Statement No. 2-62778, Exhibit 2(a)]. 3(b)(1) -- Copy of Certificate of Amendment of the Restated Certificate of Incorporation of AEP, dated April 23, 1980 [Registration Statement No. 33-1052, Exhibit 4(b)]. 3(b)(2) -- Copy of Certificate of Amendment of the Restated Certificate of Incorporation of AEP, dated April 28, 1982 [Registration Statement No. 33-1052, Exhibit 4(c)]. 3(b)(3) -- Copy of Certificate of Amendment of the Restated Certificate of Incorporation of AEP, dated April 25, 1984 [Registration Statement No. 33-1052, Exhibit 4(d)]. 3(b)(4) -- Copy of Certificate of Change of the Restated Certificate of Incorporation of AEP, dated July 5, 1984 [Registration Statement No. 33-1052, Exhibit 4(e)]. 3(b)(5) -- Copy of Certificate of Amendment of the Restated Certificate of Incorporation of AEP, dated April 27, 1988 [Registration Statement No. 33-1052, Exhibit 4(f)]. 3(c) -- Composite copy of the Restated Certificate of Incorporation of AEP, as amended. [Registration Statement No. 33-1052, Exhibit 4(g)]. 3(d) -- Copy of By-Laws of AEP, as amended through July 26, 1989 [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1989, File No. 1-3525, Exhibit 3(d)]. 10(a) -- Interconnection Agreement, dated July 6, 1951, among APCo, CSPCo, KEPCo, OPCo and I&M and with the Service Corporation, as amended [Registration Statement No. 2-52910, Exhibit 5(a); Registration Statement No. 2-61009, Exhibit 5(b); and Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1990, File No. 1-3525, Exhibit 10(a)(3)]. 10(b) -- Copy of Transmission Agreement, dated April 1, 1984, among APCo, CSPCo, I&M, KEPCo, OPCo and with the Service Corporation as agent, as amended [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1985, File No. 1-3525, Exhibit 10(b); and Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1988, File No. 1- 3525, Exhibit 10(b)(2)]. +10(c)(1) -- AEP Deferred Compensation Agreement for certain executive officers [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1985, File No. 1-3525, Exhibit 10(e)]. +10(c)(2) -- Amendment to AEP Deferred Compensation Agreement for certain executive officers [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1986, File No. 1-3525, Exhibit 10(d)(2)]. +10(d) -- AEP Deferred Compensation Agreement for directors, as amended, effective October 24, 1984 [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1984, File No. 1-3525, Exhibit 10(e)]. +10(e) -- AEP Accident Coverage Insurance Plan for directors [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1985, File No. 1-3525, Exhibit 10(g)]. +10(f) -- AEP Retirement Plan for directors [Annual Report on Form 10- K of AEP for the fiscal year ended December 31, 1986, File No. 1-3525, Exhibit 10(g)]. *+10(g)(1)(A) -- Excess Benefits Plan. +10(g)(1)(B) -- Guaranty by AEP of the Service Corporation Excess Benefits Plan [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1990, File No. 1-3525, Exhibit 10(h)(1)(B)]. *+10(g)(2) -- AEP System Supplemental Savings Plan (Non-Qualified). *+10(g)(3) -- Service Corporation Umbrella Trust(TM) for Executives.
E-2 AEP++ (continued)
EXHIBIT NUMBER DESCRIPTION ------- ----------- +10(h)(1) -- Employment Agreement between E. Linn Draper, Jr. and AEP and the Service Corporation [Annual Report on Form 10-K of AEGCo for the fiscal year ended December 31, 1991, File No. 0- 18135, Exhibit 10(g)(3)]. +10(h)(2) -- Employment Agreement between John E. Katlic and the Service Corporation [Annual Report on Form 10-K of AEGCo for the fiscal year ended December 31, 1990, File No. 0-18135, Exhibit 10(g)(2)]. *+10(i)(1) -- AEP Management Incentive Compensation Plan. *+10(i)(2) -- American Electric Power System Performance Share Incentive Plan. 10(j)(1)(A) -- Copy of Lease Agreement (AEGCO Trust 1), dated as of December 1, 1989, between AEGCo and Wilmington Trust Company [Registration Statement No. 33-32752, Exhibit 28(c)(1)(C)]. 10(j)(1)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 1), dated as of October 15, 1990. [Annual Report on Form 10-K of AEGCo for the fiscal year ended December 31, 1993, File No. 0-18135, Exhibit 10(c)(1)(B)]. 10(j)(2)(A) -- Copy of Lease Agreement (AEGCO Trust 2), dated as of December 1, 1989, between AEGCo and Wilmington Trust Company [Registration Statement No. 33-32752, Exhibit 28(c)(2)(C)]. 10(j)(2)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 2), dated as of October 15, 1990. [Annual Report on Form 10-K of AEGCo for the fiscal year ended December 31, 1993, File No. 0-18135, Exhibit 10(c)(2)(B)]. 10(j)(3)(A) -- Copy of Lease Agreement (AEGCO Trust 3), dated as of December 1, 1989, between AEGCo and Wilmington Trust Company [Registration Statement No. 33-32752, Exhibit 28(c)(3)(C)]. 10(j)(3)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 3), dated as of October 15, 1990. [Annual Report on Form 10-K of AEGCo for the fiscal year ended December 31, 1993, File No. 0-18135, Exhibit 10(c)(3)(B)]. 10(j)(4)(A) -- Copy of Lease Agreement (AEGCO Trust 4), dated as of December 1, 1989, between AEGCo and Wilmington Trust Company [Registration Statement No. 33-32752, Exhibit 28(c)(4)(C)]. 10(j)(4)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 4), dated as of October 15, 1990. [Annual Report on Form 10-K of AEGCo for the fiscal year ended December 31, 1993, File No. 0-18135, Exhibit 10(c)(4)(B)]. 10(j)(5)(A) -- Copy of Lease Agreement (AEGCO Trust 5), dated as of December 1, 1989, between AEGCo and Wilmington Trust Company [Registration Statement No. 33-32752, Exhibit 28(c)(5)(C)]. 10(j)(5)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 5), dated as of October 15, 1990. [Annual Report on Form 10-K of AEGCo for the fiscal year ended December 31, 1993, File No. 0-18135, Exhibit 10(c)(5)(B)]. 10(j)(6)(A) -- Copy of Lease Agreement (AEGCO Trust 6), dated as of December 1, 1989, between AEGCo and Wilmington Trust Company [Registration Statement No. 33-32752, Exhibit 28(c)(6)(C)]. 10(j)(6)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 6), dated as of October 15, 1990. [Annual Report on Form 10-K of AEGCo for the fiscal year ended December 31, 1993, File No. 0-18135, Exhibit 10(c)(6)(B)]. 10(j)(7)(A) -- Copy of Lease Agreement (I&M Trust 1), dated as of December 1, 1989, between I&M and Wilmington Trust Company [Registration Statement No. 33-32753, Exhibit 28(a)(1)(C)].
E-3 AEP++ (continued)
EXHIBIT NUMBER DESCRIPTION ------- ----------- 10(j)(7)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 1), dated as of October 15, 1990 [Annual Report on Form 10-K of I&M for the fiscal year ended December 31, 1993, File No. 1-3570, Exhibit 10(e)(1)(B)] 10(j)(8)(A) -- Copy of Lease Agreement (I&M Trust 2), dated as of December 1, 1989, between I&M and Wilmington Trust Company [Registration Statement No. 33-32753, Exhibit 28(a)(2)(C)]. 10(j)(8)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 2), dated as of October 15, 1990 [Annual Report on Form 10-K of I&M for the fiscal year ended December 31, 1993, File No. 1-3570, Exhibit 10(e)(2)(B)]. 10(j)(9)(A) -- Copy of Lease Agreement (I&M Trust 3), dated as of December 1, 1989, between I&M and Wilmington Trust Company [Registration Statement No. 33-32753, Exhibit 28(a)(3)(C)]. 10(j)(9)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 3), dated as of October 15, 1990 [Annual Report on Form 10-K of I&M for the fiscal year ended December 31, 1993, File No. 1-3570, Exhibit 10(e)(3)(B)]. 10(j)(10)(A) -- Copy of Lease Agreement (I&M Trust 4), dated as of December 1, 1989, between I&M and Wilmington Trust Company [Registration Statement No. 33-32753, Exhibit 28(a)(4)(C)]. 10(j)(10)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 4), dated as of October 15, 1990 [Annual Report on Form 10-K of I&M for the fiscal year ended December 31, 1993, File No. 1-3570, Exhibit 10(e)(4)(B)]. 10(j)(11)(A) -- Copy of Lease Agreement (I&M Trust 5), dated as of December 1, 1989, between I&M and Wilmington Trust Company [Registration Statement No. 33-32753, Exhibit 28(a)(5)(C)]. 10(j)(11)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 5), dated as of October 15, 1990 [Annual Report on Form 10-K of I&M for the fiscal year ended December 31, 1993, File No. 1-3570, Exhibit 10(e)(5)(B)]. 10(j)(12)(A) -- Copy of Lease Agreement (I&M Trust 6), dated as of December 1, 1989, between I&M and Wilmington Trust Company [Registration Statement No. 33-32753, Exhibit 28(a)(6)(C)]. 10(j)(12)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 6), dated as of October 15, 1990 [Annual Report on Form 10-K of I&M for the fiscal year ended December 31, 1993, File No. 1-3570, Exhibit 10(e)(6)(B)]. 10(k) -- Copy of Agreement for Lease, dated as of September 17, 1992, between JMG Funding, Limited Partnership and OPCo [Annual Report on Form 10-K of OPCo for the fiscal year ended December 31, 1992, File No. 1-6543, Exhibit 10(l)]. *13 -- Copy of those portions of the AEP 1993 Annual Report (for the fiscal year ended December 31, 1993) which are incorporated by reference in this filing. *21 -- List of subsidiaries of AEP. *23 -- Consent of Deloitte & Touche. *24 -- Power of Attorney. APCO++ 3(a) -- Copy of Restated Articles of Incorporation of APCo, and amendments thereto to March 24, 1992 [Registration Statement No. 33-50163; Exhibit 4(a)]. *3(b) -- Copy of Articles of Amendment to the Restated Articles of Incorporation of APCo dated October 4, 1993 and October 28, 1993. *3(c) -- Composite copy of the Restated Articles of Incorporation of APCo, as amended. 3(d) -- Copy of By-Laws of APCo [Annual Report on Form 10-K of APCo for the fiscal year ended December 31, 1990, File No. 1-3457 Exhibit 3(d)].
E-4 APCO++ (continued)
EXHIBIT NUMBER DESCRIPTION ------- ----------- 4(a) -- Copy of Mortgage and Deed of Trust, dated as of December 1, 1940, between APCo and Bankers Trust Company and R. Gregory Page, as Trustees, as amended and supplemented to May 15, 1993 [Registration Statement No. 2-7289, Exhibit 7(b); Registration Statement No. 2-19884, Exhibit 2(1); Registration Statement No. 2-24453, Exhibit 2(n); Registration Statement No. 2-60015, Exhibits 2(b)(2), 2(b)(3), 2(b)(4), 2(b)(5), 2(b)(6), 2(b)(7), 2(b)(8), 2(b)(9), 2(b)(10), 2(b)(12), 2(b)(14), 2(b)(15), 2(b)(16), 2(b)(17), 2(b)(18), 2(b)(19), 2(b)(20), 2(b)(21), 2(b)(22), 2(b)(23), 2(b)(24), 2(b)(25), 2(b)(26), 2(b)(27) and 2(b)(28); Registration Statement No. 2-64102, Exhibit 2(b)(29); Registration Statement No. 2-66457, Exhibits (2)(b)(30) and 2(b)(31); Registration Statement No. 2-69217, Exhibit 2(b)(32); Registration Statement No. 2-86237, Exhibit 4(b); Registration Statement No. 33-11723, Exhibit 4(b); Registration Statement No. 33-17003, Exhibit 4(a)(ii); Registration Statement No. 33-30964, Exhibit 4(b); Registration Statement No. 33-40720, Exhibit 4(b); Registration Statement No. 33-45219, Exhibit 4(b); Registration Statement No. 33-46128, Exhibits 4(b) and 4(c); Registration Statement No. 33-53410, Exhibit 4(b); Registration Statement No. 33-59834, Exhibit 4(b); Registration Statement No. 33-50229, Exhibits 4(b) and 4(c)]. *4(b) -- Copy of Indentures Supplemental dated October 1, 1993 and November 1, 1993 to Mortgage and Deed of Trust. 10(a)(1) -- Copy of Power Agreement, dated October 15, 1952, between OVEC and United States of America, acting by and through the United States Atomic Energy Commission, and, subsequent to January 18, 1975, the Administrator of the Energy Research and Development Administration, as amended [Registration Statement No. 2-60015, Exhibit 5(a); Registration Statement No. 2-63234, Exhibit 5(a)(1)(B); Registration Statement No. 2-66301, Exhibit 5(a)(1)(C); Registration Statement No. 2-67728, Exhibit 5(a)(1)(D); Annual Report on Form 10-K of APCo for the fiscal year ended December 31, 1989, File No. 1-3457, Exhibit 10(a)(1)(F); and Annual Report on Form 10-K of APCo for the fiscal year ended December 31, 1992, File No. 1-3457, Exhibit 10(a)(1)(B)]. 10(a)(2) -- Copy of Inter-Company Power Agreement, dated as of July 10, 1953, among OVEC and the Sponsoring Companies, as amended [Registration Statement No. 2-60015, Exhibit 5(c); Registration Statement No. 2-67728, Exhibit 5(a)(3)(B); and Annual Report on Form 10-K of APCo for the fiscal year ended December 31, 1992, File No. 1-3457, Exhibit 10(a)(2)(B)]. 10(a)(3) -- Copy of Power Agreement, dated July 10, 1953, between OVEC and Indiana-Kentucky Electric Corporation, as amended [Registration Statement No. 2-60015, Exhibit 5(e)]. 10(b) -- Copy of Interconnection Agreement, dated July 6, 1951, among APCo, CSPCo, KEPCo, OPCo and I&M and with the Service Corporation, as amended [Registration Statement No. 2-52910, Exhibit 5(a); Registration Statement No. 2-61009, Exhibit 5(b); Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1990, File No. 1-3525, Exhibit 10(a)(3)]. 10(c) -- Copy of Transmission Agreement, dated April 1, 1984, among APCo, CSPCo, I&M, KEPCo, OPCo and with the Service Corporation as agent, as amended [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1985, File No. 1-3525, Exhibit 10(b); Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1988, File No. 1-3525, Exhibit 10(b)(2)]. +10(d)(1) -- AEP Deferred Compensation Agreement for certain executive officers [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1985, File No. 1-3525, Exhibit 10(e)]. +10(d)(2) -- Amendment to AEP Deferred Compensation Agreement for certain executive officers [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1986, File No. 1-3525, Exhibit 10(d)(2)]. +10(e)(1) -- Management Incentive Compensation Plan [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1993, File No. 1-3525, Exhibit 10(i)].
E-5 APCO++ (continued)
EXHIBIT NUMBER DESCRIPTION ------- ----------- +10(e)(2) -- American Electric Power System Performance Share Incentive Plan [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1993, File No. 1-3525, Exhibit 10(i)(2)]. +10(f)(1) -- Excess Benefits Plan [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1993, File No. 1-3525, Exhibit 10(g)(1)(A)]. +10(f)(2) -- AEP System Supplemental Savings Plan (Non-Qualified) [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1993, File No. 1-3525, Exhibit 10(g)(2)]. +10(f)(3) -- Umbrella Trust(TM) for Executives [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1993, File No. 1-3525, Exhibit 10(g)(3)]. +10(g)(1) -- Employment Agreement between E. Linn Draper, Jr. and AEP and the Service Corporation [Annual Report on Form 10-K of AEGCo for the fiscal year ended December 31, 1991, File No. 0- 18135, Exhibit 10(g)(3)]. +10(g)(2) -- Employment Agreement between John E. Katlic and the Service Corporation [Annual Report on Form 10-K of AEGCo for the fiscal year ended December 31, 1990, File No. 0-18135, Exhibit 10(g)(2)]. *12 -- Statement re: Computation of Ratios *13 -- Copy of those portions of the APCo 1993 Annual Report (for the fiscal year ended December 31, 1993) which are incorporated by reference in this filing. 21 -- List of subsidiaries of APCo [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1993, File No. 1- 3525, Exhibit 22]. *23 -- Consent of Deloitte & Touche *24 -- Power of Attorney CSPCO++ 3(a) -- Copy of Amended Articles of Incorporation of CSPCo [Registration Statement No. 33-45950, Exhibit 4(a)]. 3(b)(1) -- Copy of Certificate of Amendment to Amended Articles of Incorporation of CSPCo, dated November 19, 1990 [Registration Statement No. 33-45950, Exhibit 4(b)]. 3(b)(2) -- Copy of Certificate of Amendment to Amended Articles of Incorporation of CSPCo, dated March 6, 1992 [Certificate of Notification on Form U-6B-2, dated March 23, 1992]. 3(c) -- Composite copy of Amended Articles of Incorporation of CSPCo, as amended [Annual Report on Form 10-K of CSPCo for the fiscal year ended December 31, 1991, File No. 1-2680, Exhibit 3(c)]. 3(d) -- Copy of Code of Regulations and By-Laws of CSPCo [Annual Report on Form 10-K of CSPCo for the fiscal year ended December 31, 1987, File No. 1-2680, Exhibit 3(d)]. 4(a) -- Copy of Indenture of Mortgage and Deed of Trust, dated September 1, 1940, between CSPCo and City Bank Farmers Trust Company (now Citibank, N.A.), as trustee, as supplemented and amended [Registration Statement No. 2-59411, Exhibits 2(B) and 2(C); Registration Statement No. 2-80535, Exhibit 4(b); Registration Statement No. 2-87091, Exhibit 4(b); Registration Statement No. 2-93208, Exhibit 4(b); Registration Statement No. 2-97652, Exhibit 4(b); Registration Statement No. 33-7081, Exhibit 4(b); Registration Statement No. 33-12389, Exhibit 4(b); Registration Statement No. 33-19227, Exhibits 4(b), 4(e), 4(f), 4(g) and 4(h); Registration Statement No. 33-35651, Exhibit 4(b); Registration Statement No. 33-46859, Exhibits 4(b) and 4(c); Registration Statement No. 33-50316, Exhibits 4(b) and 4(c); Registration Statement No. 33-60336; Exhibits 4(b), 4(c) and 4(d); Registration Statement No. 33-50447, Exhibits 4(b) and 4(c)]. *4(b) -- Copy of Supplemental Indentures dated October 1, 1993, January 1, 1994 and March 1, 1994 to Indenture of Mortgage and Deed of Trust.
E-6 CSPCO++ (continued)
EXHIBIT NUMBER DESCRIPTION ------- ----------- 10(a)(1) -- Copy of Power Agreement, dated October 15, 1952, between OVEC and United States of America, acting by and through the United States Atomic Energy Commission, and, subsequent to January 18, 1975, the Administrator of the Energy Research and Development Administration, as amended [Registration Statement No. 2-60015, Exhibit 5(a); Registration Statement No. 2-63234, Exhibit 5(a)(1)(B); Registration Statement No. 2-66301, Exhibit 5(a)(1)(C); Registration Statement No. 2-67728, Exhibit 5(a)(1)(B); Annual Report on Form 10-K of APCo for the fiscal year ended December 31, 1989, File No. 1-3457, Exhibit 10(a)(1)(F); and Annual Report on Form 10-K of APCo for the fiscal year ended December 31, 1992, File No. 1-3457, Exhibit 10(a)(1)(B)]. 10(a)(2) -- Copy of Inter-Company Power Agreement, dated July 10, 1953, among OVEC and the Sponsoring Companies, as amended [Registration Statement No. 2-60015, Exhibit 5(c); Registration Statement No. 2-67728, Exhibit 5(a)(3)(B); and Annual Report on Form 10-K of APCo for the fiscal year ended December 31, 1992, File No. 1-3457, Exhibit 10(a)(2)(B)]. 10(a)(3) -- Copy of Power Agreement, dated July 10, 1953, between OVEC and Indiana-Kentucky Electric Corporation, as amended [Registration Statement No. 2-60015, Exhibit 5(e)]. 10(b) -- Copy of Interconnection Agreement, dated July 6, 1951, among APCo, CSPCo, KEPCo, OPCo and I&M and the Service Corporation, as amended [Registration Statement No. 2-52910, Exhibit 5(a); Registration Statement No. 2-61009, Exhibit 5(b); and Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1990, File No. 1-3525, Exhibit 10(a)(3)]. 10(c) -- Copy of Transmission Agreement, dated April 1, 1984, among APCo, CSPCo, I&M, KEPCo, OPCo, and with the Service Corporation as agent, as amended [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1985, File No. 1-3525, Exhibit 10(b); and Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1988, File No. 1-3525, Exhibit 10(b)(2)]. *12 -- Statement re: Computation of Ratios. *13 -- Copy of those portions of the CSPCo 1993 Annual Report (for the fiscal year ended December 31, 1993) which are incorporated by reference in this filing. 21 -- List of subsidiaries of CSPCo [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1993, File No. 1-3525, Exhibit 22]. *23 -- Consent of Deloitte & Touche. *24 -- Power of Attorney. I&M++ *3(a) -- Copy of the Amended Articles of Acceptance of I&M and amendments thereto. *3(b) -- Composite Copy of the Amended Articles of Acceptance of I&M, as amended. 3(c) -- Copy of the By-Laws of I&M [Annual Report on Form 10-K of I&M for the fiscal year ended December 31, 1990, File No 1-3570, Exhibit 3(d)].
E-7 I&M++ (continued)
EXHIBIT NUMBER DESCRIPTION ------- ----------- 4(a) -- Copy of Mortgage and Deed of Trust, dated as of June 1, 1939, between I&M and Irving Trust Company (now The Bank of New York) and various individuals, as Trustees, as amended and supplemented [Registration Statement No. 2-7597, Exhibit 7(a); Registration Statement No. 2-60665, Exhibits 2(c)(2), 2(c)(3), 2(c)(4), 2(c)(5), 2(c)(6), 2(c)(7), 2(c)(8), 2(c)(9), 2(c)(10), 2(c)(11), 2(c)(12), 2(c)(13), 2(c)(14), 2(c)(15), (2)(c)(16), and 2(c)(17); Registration Statement No. 2-63234, Exhibit 2(b)(18); Registration Statement No. 2- 65389, Exhibit 2(a)(19); Registration Statement No. 2-67728, Exhibit 2(b)(20); Registration Statement No. 2-85016, Exhibit 4(b); Registration Statement No. 33-5728, Exhibit 4(c); Registration Statement No. 33-9280, Exhibit 4(b); Registration Statement No. 33-11230, Exhibit 4(b); Registration Statement No. 33-19620, Exhibits 4(a)(ii), 4(a)(iii), 4(a)(iv) and 4(a)(v); Registration Statement No. 33-46851, Exhibits 4(b)(i), 4(b)(ii) and 4(b)(iii); Registration Statement No. 33-54480, Exhibits 4(b)(i) and 4(b)(ii); Registration Statement No. 33-60886, Exhibit 4(b)(i); Registration Statement No. 33-50521, Exhibits 4(b)(i), 4(b)(ii) and 4(b)(iii)]. *4(b) -- Copy of Indentures Supplemental dated October 15, 1993 and February 1, 1994 to Mortgage and Deed of Trust. 10(a)(1) -- Copy of Power Agreement, dated October 15, 1952, between OVEC and United States of America, acting by and through the United States Atomic Energy Commission, and, subsequent to January 18, 1975, the Administrator of the Energy Research and Development Administration, as amended [Registration Statement No. 2-60015, Exhibit 5(a); Registration Statement No. 2-63234, Exhibit 5(a)(1)(B); Registration Statement No. 2-66301, Exhibit 5(a)(1)(C); Registration Statement No. 2- 67728, Exhibit 5(a)(1)(D); Annual Report on Form 10-K of APCo for the fiscal year ended December 31, 1989, File No. 1-3457, Exhibit 10(a)(1)(F); and Annual Report on Form 10-K of APCo for the fiscal year ended December 31, 1992, File No. 1-3457, Exhibit 10(a)(1)(B)]. 10(a)(2) -- Copy of Inter-Company Power Agreement, dated as of July 10, 1953, among OVEC and the Sponsoring Companies, as amended [Registration Statement No. 2-60015, Exhibit 5(c); Registration Statement No. 2-67728, Exhibit 5(a)(3)(B); Annual Report on Form 10-K of APCo for the fiscal year ended December 31, 1992, File No. 1-3457, Exhibit 10(a)(2)(B)]. 10(a)(3) -- Copy of Power Agreement, dated July 10, 1953, between OVEC and Indiana-Kentucky Electric Corporation, as amended [Registration Statement No. 2-60015, Exhibit 5(e)]. 10(b) -- Copy of Interconnection Agreement, dated July 6, 1951, between APCo, CSPCo, KEPCo, I&M, and OPCo and with the Service Corporation, as amended [Registration Statement No. 2-52910, Exhibit 5(a); Registration Statement No. 2-61009, Exhibit 5(b); and Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1990, File No. 1-3525, Exhibit 10(a)(3)]. 10(c) -- Copy of Transmission Agreement, dated April 1, 1984, among APCo, CSPCo, I&M, KEPCo, OPCo and with the Service Corporation as agent, as amended [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1985, File No. 1-3525, Exhibit 10(b); and Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1988, File No. 1-3525, Exhibit 10(b)(2)]. *10(d) -- Copy of Nuclear Material Lease Agreement, dated as of December 1, 1990, between I&M and DCC Fuel Corporation. 10(e)(1)(A) -- Copy of Lease Agreement (I&M Trust 1), dated as of December 1, 1989, between I&M and Wilmington Trust Company [Registration Statement No. 33-32753, Exhibit 28(a)(1)(C)]. *10(e)(1)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 1), dated as of October 15, 1990.
E-8 I&M++ (continued)
EXHIBIT NUMBER DESCRIPTION ------- ----------- 10(e)(2)(A) -- Copy of Lease Agreement (I&M Trust 2), dated as of December 1, 1989, between I&M and Wilmington Trust Company [Registration Statement No. 33-32753, Exhibit 28(a)(2)(C)]. *10(e)(2)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 2), dated as of October 15, 1990. 10(e)(3)(A) -- Copy of Lease Agreement (I&M Trust 3), dated as of December 1, 1989, between I&M and Wilmington Trust Company [Registration Statement No. 33-32753, Exhibit 28(a)(3)(C)]. *10(e)(3)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 3), dated as of October 15, 1990. 10(e)(4)(A) -- Copy of Lease Agreement (I&M Trust 4), dated as of December 1, 1989, between I&M and Wilmington Trust Company [Registration Statement No. 33-32753, Exhibit 28(a)(4)(C)]. *10(e)(4)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 4), dated as of October 15, 1990. 10(e)(5)(A) -- Copy of Lease Agreement (I&M Trust 5), dated as of December 1, 1989, between I&M and Wilmington Trust Company [Registration Statement No. 33-32753, Exhibit 28(a)(5)(C)]. *10(e)(5)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 5), dated as of October 15, 1990. 10(e)(6)(A) -- Copy of Lease Agreement (I&M Trust 6), dated as of December 1, 1989, between I&M and Wilmington Trust Company [Registration Statement No. 33-32753, Exhibit 28(a)(6)(C)]. *10(e)(6)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 6), dated as of October 15, 1990. *12 -- Statement re: Computation of Ratios *13 -- Copy of those portions of the I&M 1993 Annual Report (for the fiscal year ended December 31, 1993) which are incorporated by reference in this filing. 21 -- List of subsidiaries of I&M [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1993, File No. 1- 3525, Exhibit 22]. *23 -- Consent of Deloitte & Touche. *24 -- Power of Attorney. KEPCO 3(a) -- Copy of Restated Articles of Incorporation of KEPCo [Annual Report on Form 10-K of KEPCo for the fiscal year ended December 31, 1991, File No. 1-6858, Exhibit 3(a)]. 3(b) -- Copy of By-Laws of KEPCo [Annual Report on Form 10-K of KEPCo for the fiscal year ended December 31, 1990, File No. 1-6858, Exhibit 3(b)]. 4(a)(1) -- Copy of Mortgage and Deed of Trust, dated May 1, 1949, between KEPCo and Bankers Trust Company, as supplemented and amended [Registration Statement No. 2-65820, Exhibits 2(b)(1), 2(b)(2), 2(b)(3), 2(b)(4), 2(b)(5), and 2(b)(6); Registration Statement No. 33-39394, Exhibits 4(b) and 4(c); Registration Statement No. 33-53226, Exhibits 4(b) and 4(c); Registration Statement No. 33-61808, Exhibits 4(b) and 4(c)]. *4(a)(2) -- Copy of Indentures Supplemental dated May 1, 1993, June 1, 1993 and June 15, 1993 to Mortgage and Deed of Trust. 10(a) -- Copy of Interconnection Agreement, dated July 6, 1951, among APCo, CSPCo, KEPCo, I&M and OPCo and with the Service Corporation, as amended [Registration Statement No. 2-52910, Exhibit 5(a); Registration Statement No. 2-61009, Exhibit 5(b); and Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1990, File No. 1-3525, Exhibit 10(a)(3)].
E-9 KEPCO (continued)
EXHIBIT NUMBER DESCRIPTION ------- ----------- 10(b) -- Copy of Transmission Agreement, dated April 1, 1984, among APCo, CSPCo, I&M, KEPCo, OPCo and with the Service Corporation as agent, as amended [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1985, File No. 1-3525, Exhibit 10(b); and Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1988, File No. 1-3525, Exhibit 10(b)(2)]. *12 -- Statement re: Computation of Ratios. *13 -- Copy those portions of the KEPCo 1993 Annual Report (for the fiscal year ended December 31, 1993) which are incorporated by reference in this filing. *23 -- Consent of Deloitte & Touche. *24 -- Power of Attorney. OPCO++ 3(a) -- Copy of Amended Articles of Incorporation of OPCo, and amendments thereto to April 6, 1993 [Registration Statement No. 33-50139, Exhibit 4(a)]. *3(b) -- Copy of Certificates of Amendment to the Amended Articles of Incorporation of OPCo, dated October 4, 1993 and October 28, 1993. *3(c) -- Composite copy of the Amended Articles of Incorporation of OPCo, as amended. 3(d) -- Copy of Code of Regulations of OPCo [Annual Report on Form 10-K of OPCo for the fiscal year ended December 31, 1990, File No. 1- 6543, Exhibit 3(d)]. 4(a) -- Copy of Mortgage and Deed of Trust, dated as of October 1, 1938, between OPCo and Manufacturers Hanover Trust Company (now Chemical Bank), as Trustee, as amended and supplemented [Registration Statement No. 2-3828, Exhibit B-4; Registration Statement No. 2-60721, Exhibits 2(c)(2), 2(c)(3), 2(c)(4), 2(c)(5), 2(c)(6), 2(c)(7), 2(c)(8), 2(c)(9), 2(c)(10), 2(c)(11), 2(c)(12), 2(c)(13), 2(c)(14), 2(c)(15), 2(c)(16), 2(c)(17), 2(c)(18), 2(c)(19), 2(c)(20), 2(c)(21), 2(c)(22), 2(c)(23), 2(c)(24), 2(c)(25), 2(c)(26), 2(c)(27), 2(c)(28), 2(c)(29), 2(c)(30), and 2(c)(31); Registration Statement No. 2-83591, Exhibit 4(b); Registration Statement No. 33-21208, Exhibits 4(a)(ii), 4(a)(iii) and 4(a)(vi); Registration Statement No. 33-31069, Exhibit 4(a)(ii); Registration Statement No. 33-44995, Exhibit 4(a)(ii); Registration Statement No. 33-59006, Exhibits 4(a)(ii), 4(a)(iii) and 4(a)(iv); Registration Statement No. 33- 50373, Exhibits 4(a)(ii), 4(a)(iii) and 4(a)(iv)]. *4(b) -- Copy of Indentures Supplemental dated October 1, 1993, November 1, 1993 and December 1, 1993. 10(a)(1) -- Copy of Power Agreement, dated October 15, 1952, between OVEC and United States of America, acting by and through the United States Atomic Energy Commission, and, subsequent to January 18, 1975, the Administrator of the Energy Research and Development Administration, as amended [Registration Statement No. 2-60015, Exhibit 5(a); Registration Statement No. 2-63234, Exhibit 5(a)(1)(B); Registration Statement No. 2-66301, Exhibit 5(a)(1)(C); Registration Statement No. 2-67728, Exhibit 5(a)(1)(D); Annual Report on Form 10-K of APCo for the fiscal year ended December 31, 1989, File No. 1-3457, Exhibit 10(a)(1)(F); Annual Report on Form 10-K of APCo for the fiscal year ended December 31, 1992, File No. 1-3457, Exhibit 10(a)(1)(B)]. 10(a)(2) -- Copy of Inter-Company Power Agreement, dated July 10, 1953, among OVEC and the Sponsoring Companies, as amended [Registration Statement No. 2-60015, Exhibit 5(c); Registration Statement No. 2-67728, Exhibit 5(a)(3)(B); Annual Report on Form 10-K of APCo for the fiscal year ended December 31, 1992, File No. 1-3457, Exhibit 10(a)(2)(B)]. 10(a)(3) -- Copy of Power Agreement, dated July 10, 1953, between OVEC and Indiana-Kentucky Electric Corporation, as amended [Registration Statement No. 2-60015, Exhibit 5(e)].
E-10 OPCO++ (continued)
EXHIBIT NUMBER DESCRIPTION ------- ----------- 10(b) -- Copy of Interconnection Agreement, dated July 6, 1951, between APCo, CSPCo, KEPCo, I&M and OPCo and with the Service Corporation, as amended [Registration Statement No. 2-52910, Exhibit 5(a); Registration Statement No. 2-61009, Exhibit 5(b); Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1990, File 1-3525, Exhibit 10(a)(3)]. 10(c) -- Copy of Transmission Agreement, dated April 1, 1984, among APCo, CSPCo, I&M, KEPCo, OPCo and with the Service Corporation as agent [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1985, File No. 1-3525, Exhibit 10(b); Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1988, File No. 1-3525, Exhibit 10(b)(2)]. 10(d) -- Copy of Agreement, dated June 18, 1968, between OPCo and Kaiser Aluminum & Chemical Corporation (now known as Ravenswood Aluminum Corporation) and First Supplemental Agreement thereto [Registration Statement No. 2-31625, Exhibit 4(c); Annual Report on Form 10-K of OPCo for the fiscal year ended December 31, 1986, File No. 1-6543, Exhibit 10(d)(2)]. *10(e) -- Copy of Power Agreement, dated November 16, 1966, between OPCo and Ormet Generating Corporation and First Supplemental Agreement thereto. *10(f) -- Copy of Amendment No. 1, dated October 1, 1973, to Station Agreement dated January 1, 1968, among OPCo, Buckeye and Cardinal Operating Company, and amendments thereto. +10(g)(1) -- AEP Deferred Compensation Agreement for certain executive officers [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1985, File No. 1-3525, Exhibit 10(e)]. +10(g)(2) -- Amendment to AEP Deferred Compensation Agreement for certain executive officers [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1986, File No. 1-3525, Exhibit 10(d)(2)]. +10(h)(1) -- Management Incentive Compensation Plan [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1993, File No. 1-3525, Exhibit 10(i)]. +10(h)(2) -- American Electric Power System Performance Share Incentive Plan [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1993, File No. 1-3525, Exhibit 10(i)(2)]. +10(i)(1) -- Excess Benefits Plan [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1993, File No. 1-3525, Exhibit 10(g)(1)(A)]. +10(i)(2) -- AEP System Supplemental Savings Plan (Non-Qualified) [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1993, File No. 1-3525, Exhibit 10(g)(2)]. +10(i)(3) -- Umbrella Trust (TM) for Executives [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1993, File No. 1- 3525, Exhibit 10(g)(3)]. +10(j)(1) -- Employment Agreement between E. Linn Draper, Jr. and AEP and the Service Corporation [Annual Report on Form 10-K of AEGCo for the fiscal year ended December 31, 1991, File No. 0-18135, Exhibit 10(g)(2)]. +10(j)(2) -- Employment Agreement between John E. Katlic and the Service Corporation [Annual Report on Form 10-K of AEGCo for the fiscal year ended December 31, 1990, File No. 0-18135, Exhibit 10(g)(2)]. 10(k) -- Agreement for Lease dated as of September 17, 1992 between JMG Funding, Limited Partnership and OPCo [Annual Report on Form 10- K of OPCo for the fiscal year ended December 31, 1992, File No. 1-6543, Exhibit 10(l)]. *12 -- Statement re: Computation of Ratios. *13 -- Copy of those portions of the OPCo 1993 Annual Report (for the fiscal year ended December 31, 1993) which are incorporated by reference in this filing.
E-11 OPCO++ (continued)
EXHIBIT NUMBER DESCRIPTION ------- ----------- 21 -- List of subsidiaries of OPCo [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1993, File No. 1-3525, Exhibit 22]. *23 -- Consent of Deloitte & Touche. *24 -- Power of Attorney.
-------------- ++Certain instruments defining the rights of holders of long-term debt of the registrants included in the financial statements of registrants filed herewith have been omitted because the total amount of securities authorized thereunder does not exceed 10% of the total assets of registrants. The registrants hereby agree to furnish a copy of any such omitted instrument to the SEC upon request. E-12 EX-3 2 EXHIBIT 3(B) ARTICLES OF AMENDMENT APPALACHIAN POWER COMPANY ARTICLES OF AMENDMENT to the RESTATED ARTICLES OF INCORPORATION, AS AMENDED 1. The name of the corporation is APPALACHIAN POWER COMPANY. 2. The amendment is to create a new Series of 600,000 shares of Cumulative Preferred Stock, without par value, consisting of shares of such Cumulative Preferred Stock with designation, description and terms as follows: (a) The distinctive serial designation of such series shall be "5.92% Cumulative Preferred Stock". (b) The annual dividend rate for such series shall be 5.92% per share per annum, which dividend shall be calculated, per share, at such percentage multiplied by $100, and the date from which dividends on all shares of said series issued prior to the record date for the dividend payable February 1, 1994, shall be cumulative, shall be the date of initial issuance of the shares of such series. (c) Such series shall not be subject to redemption prior to October 1, 2003; the regular redemption price for shares of such series shall be $100 per share on or after October 1, 2003, plus an amount equal to accrued and unpaid dividends to the date of redemption. (d) The preferential amounts to which the holders of shares of such series shall be entitled upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation shall be $100 per share, plus accrued and unpaid dividends. (e)(1) A sinking fund shall be established for the retirement of the shares of such series. So long as there shall remain outstanding any shares of such series, the Corporation shall, to the extent not prohibited by law, on November 1, 2003, and on each November 1 thereafter to and including November 1, 2007, redeem as and for a sinking fund requirement, a number of shares equal to 5% of the total number of shares initially classified as 5.92% Cumulative Preferred Stock in these Articles of Amendment at a sinking fund redemption price of $100 per share plus accrued unpaid dividends to the date of redemption. The remaining shares of such series outstanding on November 1, 2008 will be redeemed as a final sinking fund requirement, to the extent not prohibited by law, on such date at a sinking fund redemption price of $100 per share plus accrued and unpaid dividends to the date of redemption. The sinking fund requirement shall be cumulative so that if on any such November 1 the sinking fund requirement shall not have been met, then such sinking fund requirement, to the extent not met, shall become an additional sinking fund requirement for the next succeeding November 1 on which such redemption may be effected. (2) The Corporation shall be entitled, at its election, to credit against the sinking fund requirement due on November 1 of any year pursuant to subparagraph (e)(1) shares of such series theretofore purchased or otherwise acquired by the Corporation and not previously credited against any such sinking fund requirement. (f) The shares of such series shall not have any rights to convert the same into and/or purchase stock of any other series or class or any other securities, or any special rights other than those specified herein. 3. The amendment was adopted on September 21, 1993. 4. The amendment was duly adopted by the Board of Directors of the Corporation without shareholder action and shareholder action was not required. 5. The amendment, and the certificate issued by the Virginia State Corporation Commission related thereto, shall be effective on October 13, 1993. APPALACHIAN POWER COMPANY By_/s/ Jeffrey D. Cross__ (Jeffrey D. Cross) Assistant Secretary October 4, 1993 APPALACHIAN POWER COMPANY ARTICLES OF AMENDMENT to the RESTATED ARTICLES OF INCORPORATION, AS AMENDED 1. The name of the corporation is APPALACHIAN POWER COMPANY. 2. The amendment is to create a new Series of 500,000 shares of Cumulative Preferred Stock, without par value, consisting of shares of such Cumulative Preferred Stock with designation, description and terms as follows: (a) The distinctive serial designation of such series shall be "5.90% Cumulative Preferred Stock". (b) The annual dividend rate for such series shall be 5.90% per share per annum, which dividend shall be calculated, per share, at such percentage multiplied by $100, and the date from which dividends on all shares of said series issued prior to the record date for the dividend payable February 1, 1994, shall be cumulative, shall be the date of initial issuance of the shares of such series. (c) Such series shall not be subject to redemption prior to November 1, 2003; the regular redemption price for shares of such series shall be $100 per share on or after November 1, 2003, plus an amount equal to accrued and unpaid dividends to the date of redemption. (d) The preferential amounts to which the holders of shares of such series shall be entitled upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation shall be $100 per share, plus accrued and unpaid dividends. (e)(1) A sinking fund shall be established for the retirement of the shares of such series. So long as there shall remain outstanding any shares of such series, the Corporation shall, to the extent not prohibited by law, on November 1, 2003, and on each November 1 thereafter to and including November 1, 2007, redeem as and for a sinking fund requirement, a number of shares equal to 5% of the total number of shares initially classified as 5.90% Cumulative Preferred Stock in these Articles of Amendment at a sinking fund redemption price of $100 per share plus accrued unpaid dividends to the date of redemption. The remaining shares of such series outstanding on November 1, 2008 will be redeemed as a final sinking fund requirement, to the extent not prohibited by law, on such date at a sinking fund redemption price of $100 per share plus accrued and unpaid dividends to the date of redemption. The sinking fund requirement shall be cumulative so that if on any such November 1 the sinking fund requirement shall not have been met, then such sinking fund requirement, to the extent not met, shall become an additional sinking fund requirement for the next succeeding November 1 on which such redemption may be effected. (2) The Corporation shall be entitled, at its election, to credit against the sinking fund requirement due on November 1 of any year pursuant to subparagraph (e)(1) shares of such series theretofore purchased or otherwise acquired by the Corporation and not previously credited against any such sinking fund requirement. (f) The shares of such series shall not have any rights to convert the same into and/or purchase stock of any other series or class or any other securities, or any special rights other than those specified herein. 3. The amendment was adopted on October 21, 1993. 4. The amendment was duly adopted by the Board of Directors of the Corporation without shareholder action and shareholder action was not required. 5. The amendment, and the certificate issued by the Virginia State Corporation Commission related thereto, shall be effective on November 4, 1993. APPALACHIAN POWER COMPANY By_/s/ Jeffrey D. Cross__ (Jeffrey D. Cross) Assistant Secretary October 28, 1993 EX-3 3 EXHIBIT 3(C) COMPOSITE ARTICLES [COMPOSITE] RESTATED ARTICLES OF INCORPORATION OF APPALACHIAN POWER COMPANY (a Virginia Public Service Corporation) ARTICLE I NAME The name of the Corporation is: APPALACHIAN POWER COMPANY ARTICLE II PURPOSE The purpose of the Corporation is to conduct business as a public service company for the generation, transmission, distribution and sale of electricity within and without the Commonwealth of Virginia, with all the rights, powers and privileges of such companies conferred by the constitution and laws of the Commonwealth of Virginia as they now or may hereafter exist. The Corporation shall have the power to conduct any business in any place, other than the Commonwealth of Virginia, authorized or permitted by the laws thereof. ARTICLE III Directors The number of Directors shall be fixed by the By-Laws. In the absence of a By-Law establishing the number of Directors, the number of Directors shall be ten. ARTICLE IV Common Stock The Corporation shall have authority to issue 30,000,000 shares of Common Stock without par value. No holder of Common Stock shall have any pre-emptive right to acquire unissued shares of the Corporation or to acquire any securities convertible into or exchangeable for such shares or to acquire any options, warrants or rights to purchase such shares. ARTICLE V Cumulative Preferred Stock The Corporation shall have authority to issue 8,000,000 shares of Cumulative Preferred Stock without par value, except that the aggregate involuntary liquidation price for all shares of Cumulative Preferred Stock outstanding may not exceed $300,000,000. Subject to the provisions of the following paragraphs (1) through (11) hereof, the Board of Directors is hereby empowered to cause the Cumulative Preferred Stock to be issued in series with such variations as may be determined by the Board of Directors prior to the issue thereof. (1) The shares of the Cumulative Preferred Stock of different series may vary as to: (a) the distinctive serial designations; (b) the rate of dividends and the dates from which dividends shall be cumulative as provided in paragraph (2); (c) the price or prices at and the terms and conditions on which such shares may be redeemed; (d) the amount or amounts payable upon such shares in event of involuntary liquidation; (e) the amount or amounts payable upon such shares in event of voluntary liquidation; (f) sinking fund provisions (if any) for the redemption or purchase of such shares; and (g) the terms and conditions (if any) on which such shares may be converted. The shares of all series of the Cumulative Preferred Stock shall in all other respects be equal, except for the right to vote as provided herein. No shares of the Cumulative Preferred Stock shall be entitled to any right of partici- pation. (2) The holders of each series of the Cumulative Pre- ferred Stock at the time outstanding shall be entitled to receive, but only when and as declared by the Board of Directors, out of funds legally available for the payment of dividends, cumulative preferential dividends, at the annual dividend rate for the particular series fixed therefor as herein provided, payable quarter-yearly on the first days of February, May, August and November in each year, to stockholders of record on the respective dates, not exceeding fifty (50) days and not less than ten (10) days preceding such dividend payment dates, fixed for the purpose by the Board of Directors. The shares of any series of Cumulative Preferred Stock issued by the Corporation prior to June 1, 1977, for which the annual dividend rate is designated as a specified percentage per annum, shall be entitled to receive such dividends, calculated, per share, at the percentage specified for such series multiplied by $100. No dividends shall be declared on any series of the Cumulative Preferred Stock in respect of any quarter-yearly dividend period unless there shall likewise be declared on all shares of all series of the Cumulative Preferred Stock at the time outstanding, like proportionate dividends, ratably, in proportion to the respective annual dividend rates fixed therefor, in respect of the same quarter-yearly dividend period, to the extent that such shares are entitled to receive dividends for such quarter-yearly dividend period. The dividends on shares of all series of the Cumulative Preferred Stock shall be cumulative. Dividends on shares of any series shall be cumulative from the date or dates fixed by the Board of Directors, or, if not so fixed, from the date of the initial issuance of such shares. All dividends declared payable to the holders of record of the Cumulative Preferred Stock of any series as of a date on which shares of the Cumulative Preferred Stock of such series are owned by the Corporation shall be deemed to have been paid in respect of such shares owned by the Corporation on such date. Unless dividends on all outstanding shares of each series of the Cumulative Preferred Stock, at the annual dividend rate and from the dates for accumulation thereof fixed as herein provided shall have been paid for all past quarter-yearly dividend periods, but without interest on cumulative dividends, no dividends shall be paid or declared and no other distribution shall be made on the Common Stock, and no Common Stock shall be purchased or otherwise acquired for value by the Corporation. The holders of the Cumulative Preferred Stock of any series shall not be entitled to receive any dividends thereon other than the dividends referred to in this paragraph (2). (3) The Corporation, by action of its Board of Directors, may redeem the whole or any part of any series of the Cumulative Preferred Stock, at any time or from time to time, by paying in cash the redemption price of the shares of the particular series fixed therefor as herein provided, together with a sum in the case of each share of each series so to be redeemed, computed at the annual dividend rate for the series of which the particular share is a part from the date from which dividends on such share became cumulative to the date fixed for such redemption, less the aggregate of the dividends theretofore or on such redemption date paid thereon. Notice of every such redemption shall be given by publication at least once in one daily newspaper printed in the English language and of general circulation in Roanoke, Virginia, and in one daily newspaper printed in the English language and of general circulation in the Borough of Manhattan, The City of New York, the first publication in such newspapers to be at least thirty (30) days and not more than ninety (90) days prior to the date fixed for such redemption. At least thirty (30) days' and not more than ninety (90) days' previous notice of every such redemption shall also be mailed to the holders of record of the shares of the Cumulative Preferred Stock so to be redeemed, at their respective addresses as the same shall appear on the books of the Corporation; but no failure to mail such notice nor any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of the Cumulative Preferred Stock so to be redeemed. In case of the redemption of a part only of any series of the Cumulative Preferred Stock at the time outstanding, the Corporation shall select by lot, or in such other manner as the Board of Directors may determine, the shares so to be redeemed. The Board of Directors shall have full power and authority, subject to the limitations and provisions herein contained, to prescribe the manner in which, and the terms and conditions upon which, the shares of the Cumulative Preferred Stock shall be redeemed from time to time. If such notice of redemption shall have been duly given by publication, and if on or before the redemption date specified in such notice all funds necessary for such redemption shall have been set aside by the Corporation, separate and apart from its other funds, in trust for the account of the holders of the shares to be redeemed, so as to be and continue to be available therefor, then, notwithstanding that any certificate for such shares so called for redemption shall not have been surrendered for cancellation, from and after the date fixed for redemption, the shares represented thereby shall no longer be deemed outstanding, the right to receive dividends thereon shall cease to accrue and all rights with respect to such shares so called for redemption shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive, out of the funds so set aside in trust, the amount payable upon redemption thereof, without interest; provided, however, that the Corporation may, after giving notice by publication of any such redemption as hereinbefore provided or after giving to the bank or trust company hereinafter referred to irrevocable authorization to give such notice by publication, and at any time prior to the redemption date specified in such notice, deposit in trust, for the account of the holders of the shares to be redeemed, funds necessary for such redemption with a bank or trust company in good standing, organized under the laws of the United States of America or of the State of New York, doing business in the Borough of Manhattan, The City of New York, and having capital, surplus and undivided profits aggregating at least $50,000,000, or organized under the laws of the Commonwealth of Virginia, doing business in the City of Richmond, Virginia, and having capital, surplus and undivided profits aggregating at least $10,000,000, designated in such notice of redemption, and, upon such deposit in trust, all shares with respect to which such deposit shall have been made shall no longer be deemed to be outstanding, and all rights with respect to such shares shall forthwith cease and terminate, except only the right of the holders thereof to receive, out of the funds so deposited in trust, from and after the date of such deposit, the amount payable upon the redemption thereof, without interest. Nothing herein contained shall limit any right of the Corporation to purchase or otherwise acquire any shares of the Cumulative Preferred Stock; provided, however, that the Corporation shall not, if and when dividends payable on the Cumulative Preferred Stock shall be in default, purchase or otherwise acquire for value any shares of the Cumulative Preferred Stock (except by redemption of all outstanding shares of each series of the Cumulative Preferred Stock) unless such purchase or acquisition shall have been ordered, approved, or permitted by the Securities and Exchange Commission or any successor commission under the provisions of the Public Utility Holding Company Act of 1935 as at the time in effect. (4) Before any amount shall be paid to, or any assets distributed among, the holders of the Common Stock upon any liquidation, dissolution or winding up of the Corporation, and after paying or providing for the payment of all creditors of the Corporation, the holders of each series of the Cumulative Preferred Stock at the time outstanding shall be entitled to be paid in cash the amount for the particular series fixed therefor as herein provided, together with a sum in the case of each such share of each series, computed at the annual dividend rate for the series of which the particular share is a part, from the date from which dividends on such share became cumulative to the date fixed for the payment of such distributive amount, less the aggregate of the dividends theretofore or on such date paid thereon; but no payments on account of such distributive amounts shall be made to the holders of any series of the Cumulative Preferred Stock unless there shall likewise be paid at the same time to the holders of each other series of the Cumulative Preferred Stock at the time outstanding like proportionate distributive amounts, ratably, in proportion to the full distributive amounts to which they are respectively entitled as herein provided. The holders of the Cumulative Preferred Stock of any series shall not be entitled to receive any amounts with respect thereto upon any liquidation, dissolution or winding up of the Corporation other than the amounts referred to in this paragraph. Neither the consolidation or merger of the Corporation with any other corporation or corporations, nor the sale or transfer by the Corporation of all or any part of its assets, shall be deemed to be a liquidation, dissolution or winding up of the Corporation. (5) Whenever the full dividends on all series of the Cumulative Preferred Stock at the time outstanding for all past quarter-yearly dividend periods shall have been paid or declared and set apart for payment, then, subject to the provisions of subparagraph (7)(B)(c) hereof, such dividends (payable in cash, stock or otherwise) as may be determined by the Board of Directors may be declared and paid on the Common Stock, but only out of funds legally available for the payment of dividends; provided, however, that so long as any shares of the Cumulative Preferred Stock of any series are outstanding, the Corporation shall not declare or pay any dividends on the Common Stock of the Corporation except as follows: (a) If and so long as the Common Stock Equity at the end of the calendar month immediately preceding the date on which a dividend on the Common Stock is declared is, or as a result of such dividend would become, less than 20% of total capitalization, the Corporation shall not declare such dividends in an amount which, together with all other dividends on the Common Stock paid within the year ending with and including the date on which such dividend is payable, exceeds 50% of the net income of the Corporation available for dividends on the Common Stock for the twelve full calendar months immediately preceding the calendar month in which such dividends are declared, except in an amount not exceeding the aggregate of dividends on the Common Stock which could have been, but have not been, declared under this clause (a); and (b) If and so long as the Common Stock Equity at the end of the calendar month immediately preceding the date on which a dividend on the Common Stock is declared is, or as a result of such dividend would become, less than 25% but not less than 20% of total capitalization, the Corporation shall not declare such dividends in an amount which, together with all other dividends on the Common Stock paid within the year ending with and including the date on which such dividend is payable, exceeds 75% of the net income of the Corporation available for dividends on the Common Stock for the twelve full calendar months immediately preceding the calendar month in which such dividends are declared, except in an amount not exceeding the aggregate of dividends on the Common Stock which could have been, but have not been, declared under clause (a) above and this clause (b). (c) At any time when the Common Stock Equity is 25% or more of total capitalization, the Corporation may not declare dividends on shares of the Common Stock which would reduce the Common Stock Equity below 25% of total capitalization, except to the extent provided in clauses (a) and (b) above. For purposes of this paragraph (5): (i) The term "Common Stock" shall mean any stock of the Corporation ranking junior to the Cumulative Preferred Stock as to dividends or assets; the term "dividends" shall mean any dividend or distribution on the Common Stock (other than in shares of Common Stock) or any purchase or acquisition for value of any shares of Common Stock; and the term "Common Stock Equity" shall mean the aggregate of the par value of, or stated capital represented by, the outstanding shares of Common Stock, all earned surplus and capital surplus, and any premiums on the Common Stock then carried on the books of the Corporation, less (I) the excess, if any, of the aggregate amount payable on involuntary liquidation of the Corporation upon all outstanding shares of the Cumulative Preferred Stock of the Corporation of all series (including any stock of the Corporation ranking prior to or on a parity with the Cumulative Preferred Stock) over the sum of the aggregate stated capital attributable to such shares and any premiums thereon; (II) any amounts on the books of the Corporation known, or estimated if not known, to represent the excess, if any, of recorded value over original cost of used or useful utility plant; and (III) any intangible items set forth on the asset side of the balance sheet of the Corporation as the result of accounting convention, such as unamortized debt discount and expense; provided, however, that no deductions shall be required to be made in respect of items referred to in subdivision (II) and (III) of this subparagraph (i) in cases in which such items are being amortized or are provided for, or are being provided for, by reserves. (ii) The term "total capitalization" shall mean the aggregate of (I) the principal amount of all outstanding indebtedness of the Corporation maturing more than twelve months after the date of issue thereof, and (II) the stated capital represented by, and any premiums carried on the books of the Corporation in respect of, the outstanding shares of all classes of the capital stock of the Corporation, earned surplus and capital surplus, less any amounts required to be deducted pursuant to subdivisions (II) and (III) of subparagraph (i) above in the determination of Common Stock Equity. (6) In the event of any liquidation, dissolution or winding up of the Corporation, all assets and funds of the Corporation remaining after paying or providing for the payment of all creditors of the Corporation and after paying or providing for the payment to the holders of shares of all series of the Cumulative Preferred Stock of the full distributive amounts to which they are respectively entitled as herein provided, shall be divided among and paid to the holders of the Common Stock according to their respective rights and interests. (7)(A) So long as any shares of the Cumulative Preferred Stock of any series are outstanding, the Corporation shall not, without the consent (given by vote at a meeting called for that purpose) of the holders of more than two-thirds of the total number of votes which holders of the outstanding shares of the Cumulative Preferred Stock of all series are entitled to cast: (a) Increase the total authorized amount of the Cumulative Preferred Stock; or (b) Create or authorize any series of stock (other than a series of the Cumulative Preferred Stock) ranking prior to or on a parity with Cumulative Preferred Stock as to assets or dividends, or create or authorize any obligation or security convertible into shares of stock of any such series, or issue any shares of any such stock ranking prior to the Cumulative Preferred Stock (other than upon the conversion of any such convertible obligation or security), or issue any such convertible obligation or security, more than twelve months in the case of any such issuance after the date as of which the Corporation was empowered to create or authorize such prior ranking stock or such convertible obligation or security; or (c) Amend, alter, change or repeal any of the express terms of the Cumulative Preferred Stock or of any series of the Cumulative Preferred Stock then outstanding in a manner prejudicial to the holders thereof; provided, however, that if any such amendment, alteration, change or repeal would be prejudicial to the holders of one or more, but not all, of the series of the Cumulative Preferred Stock at the time outstanding, such consent of the holders of two-thirds of the total number of votes which holders of the shares of each series prejudicially affected are entitled to cast shall be required. (B) So long as any shares of the Cumulative Preferred Stock of any series are outstanding, the Corporation shall not, without the consent (given by vote at a meeting called for that purpose) of the holders of a majority of the total number of votes which holders of the outstanding shares of the Cumulative Preferred Stock of all series are entitled to cast, unless the consent of the holders of shares having some greater proportion of the total vote is required: (a) Merge or consolidate with or into any other corporation or corporations, or sell or otherwise dispose of all or substantially all of its assets, unless such merger, consolidation, sale or disposition, or the issuance and assumption of all securities to be issued or assumed in connection with any such transaction, shall have been ordered, approved, or permitted by the Securities and Exchange Commission or any successor commission under the provisions of the Public Utility Holding Company Act of 1935 as at the time in effect; provided that the provisions of this clause (a) shall not apply to a purchase or other acquisition by the Corporation of franchises or assets of another corporation in any manner which does not involve a merger or consolidation; or (b) Issue or assume any evidences of indebtedness, secured or unsecured, other than bonds or other securities representing indebtedness of the character described hereafter in (1), (2), (3), (4), (5) and (6) of this clause (b), for purposes other than the refunding or renewing of outstanding evidences of indebtedness theretofore issued or assumed by the Corporation resulting in equal or longer maturities or redeeming or otherwise retiring all outstanding shares of the Cumulative Preferred Stock, if, immediately after such issue or assumption, (I) the total principal amount of all such indebtedness issued or assumed by the Corporation and then outstanding (including the evidences of indebtedness then to be issued or assumed) would exceed twenty per centum (20%) of the aggregate of (i) the total principal amount of all bonds or other securities representing indebtedness of the character described hereafter in (1), (2), (3), (4), (5) and (6) of this clause (b), issued or assumed by the Corporation and then to be outstanding, and (ii) the stated capital and surplus of the Corporation as then to be stated on the books of account of the Corporation, unless such evidences of indebtedness are (1) bonds of the Corporation issued under the Mortgage of the Corporation to Bankers Trust Company and R. Gregory Page, as Trustees, dated as of December 1, 1940 (hereinafter referred to as the "bonds of the Corporation"), or (2) any bonds issued under a new mortgage replacing said Mortgage, dated as of December 1, 1940, or (3) any bonds issued under any other new mortgage of the Corporation provided that said Mortgage, dated as of December 1, 1940, or any mortgage replacing it, shall have been irrevocably closed against the authentication of additional bonds thereunder, or (4) any indebtedness secured by bonds of the Corporation or by bonds issued under any such new mortgage, in either case in a principal amount not in excess of the principal amount of such pledged bonds, or (5) any indebtedness secured by bonds issued under a mortgage existing at the time of acquisition on property acquired by the Corporation, whether by consolidation, merger, exchange, purchase, lease, or in any other way whatsoever, provided that said mortgage, or any mortgage replacing it, shall be irrevocably closed against the authentication of additional bonds thereunder, or (6) obligations to pay the purchase price of material or equipment made in the ordinary course of the Corporation's business, or (II) the total outstanding principal amount of all unsecured notes, debentures or other securities representing unsecured debt of the Corporation (other than obligations of the character described in (6) of this clause (b)) would thereby exceed twenty per centum (20%) of the aggregate of (i) the total principal amount of all bonds or other secured indebtedness of the Corporation, and (ii) the stated capital and surplus of the Corporation as then to be stated on the books of account of the Corporation, or (III) the total outstanding principal amount of all unsecured notes, debentures or other securities representing unsecured indebtedness of the Corporation (other than obligations of the character described in (6) of this clause (b) of maturities of less than 10 years would thereby exceed then per centum (10%) of the aggregate of (i) the total principal amount of all bonds or other secured indebtedness of the Corporation, and (ii) the stated capital and surplus of the Corporation as then to be stated on the books of account of the Corporation; provided that, for the purposes of this clause (b) only, the payment due upon the maturity of unsecured debt having an original single maturity of 10 or more years or the payment due upon the final maturity of any unsecured serial debt which had original maturities of 10 or more years shall not be regarded as unsecured debt of a maturity of less than 10 years until such payment shall be required to be made within 3 years; or (c) Issue any additional shares, or reissue any reacquired shares, of Cumulative Preferred Stock or of any other class of stock ranking on a parity with the outstanding shares of the Cumulative Preferred Stock as to dividends or assets for any purpose other than to refinance an amount of outstanding Cumulative Preferred Stock, or stock ranking prior to or on a parity with the Cumulative Preferred Stock as to dividends or assets, having an aggregate involuntary liquidation price equal to the aggregate involuntary liquidation price of such issued or reissued shares, unless (i) the net income of the Corporation, determined in accordance with generally accepted accounting principles to be available for the payment of dividends for a period of twelve consecutive calendar months within the fifteen calendar months immediately preceding the calendar month of such issuance, is equal to at least twice the annual dividend requirements on the Cumulative Preferred Stock (including dividend requirements on any class of stock ranking prior to or on a parity with the shares to be issued as to dividends or assets), which will be outstanding immediately after the issuance of such shares; (ii) the gross income of the Corporation for said period, determined in accordance with generally accepted accounting principles (but in any event after all taxes including taxes based on income), is equal to at least one and one-half times the aggregate of the annual interest charges on indebtedness of the Corporation (excluding interest charges on indebtedness to be retired by the application of the proceeds from the issuance of such shares) and the annual dividend require- ments on the Cumulative Preferred Stock (including dividend requirements on any class of stock ranking prior to or on a parity with the shares to be issued as to dividends or assets), which will be outstanding immediately after the issuance of such shares; and (iii) the aggregate of the Common Stock Equity (the words "Common Stock" and "Common Stock Equity" having, for the purposes of this subpara- graph (7)(B)(c), the respective meanings defined in paragraph (5)(i) hereof) is at least equal to the aggregate amount payable in connection with an involuntary liquidation of the Corporation with respect to all shares of the Cumulative Preferred Stock and all shares of stock, if any, ranking prior thereto or on a parity therewith as to dividends or assets, which will be outstanding immediately after the issuance of such shares of Cumulative Preferred Stock or stock ranking prior to or on a parity therewith. If for the purposes of meeting the require- ments of subdivision (iii) of clause (c), it shall have been necessary to take into consideration any earned surplus of the Corporation, the Corporation shall not thereafter pay any dividends on or make any distributions in respect of, or purchase or otherwise acquire for value, Common Stock which would result in reducing the Common Stock Equity to an amount less than the amount payable on involuntary liquidation of the Corporation with respect to all shares of the Cumulative Preferred Stock and all shares ranking prior to or on a parity with the Cumulative Preferred Stock as to dividends or assets, at the time outstanding. If during the period as of which gross income is to be determined for the purposes set forth in clause (c), the amount, if any, required to be expended by the Corporation for property additions pursuant to a renewal and replacement fund or similar fund established under its mortgage indenture shall exceed the amount deducted in the determination of such gross income on account of depreciation and amortization of electric plant acquisition adjustments, such excess shall also be deducted in determining such gross income. (8) No holder of Cumulative Preferred Stock shall have any pre-emptive right to acquire unissued shares of the Corporation or to acquire any securities convertible into or exchangeable for such shares or to acquire any options, warrants or rights to purchase such shares. (9)(A) Every holder of any series of Cumulative Preferred Stock issued by the Corporation prior to June 1, 1977, shall be entitled to vote together with the holders of the Common Stock (every holder of Common Stock having one vote for each share of stock held) for the election of Directors and upon all other matters, except as otherwise provided in this paragraph (9) or in para-graph (7) hereof or as otherwise required by law. Every holder of any series of Cumulative Preferred Stock issued by the Corporation on or after June 1, 1977, shall be entitled to vote only as provided in paragraph (7), as provided in subparagraphs (B) through (F) of this paragraph (9) or as otherwise required by law. (B) On any matter on which the holders of any series of the Cumulative Preferred Stock shall be entitled to vote, each share shall entitle the holder thereof to a vote equal to the fraction of which the involuntary liquidation price fixed for such share as herein provided is the numerator and $100 is the denominator. (C) If and when dividends payable on the Cumulative Preferred Stock shall be in default in an amount equivalent to four (4) full quarter-yearly dividends on all shares of all series of the Cumulative Preferred Stock at the time outstanding, and until all dividends in default on the Cumulative Preferred Stock shall have been paid, the holders of all shares of the Cumulative Preferred Stock, voting separately as one class, shall be entitled to elect the smallest number of Directors necessary to constitute a majority of the full Board of Directors, and the holders of the Common Stock, voting separately as a class, shall be entitled to elect the remaining Directors of the Corporation. The terms of office of all persons who may be Directors of the Corporation at the time shall terminate upon the election of a majority of the Board of Directors by the holders of the Cumulative Preferred Stock, whether or not the holders of the Common Stock shall then have elected the remaining Directors of the Corporation. (D) If and when all dividends then in default on the Cumulative Preferred Stock at the time outstanding shall be paid (and such dividends shall be declared and paid out of any funds legally available therefor as soon as reasonably practicable), the Cumulative Preferred Stock shall thereupon be divested of any special right with respect to the election of Directors provided in subparagraph (C) hereof, and the voting power of the Cumulative Preferred Stock and the Common Stock shall revert to the status existing before the occurrence of such default; but always subject to the same provisions for vesting such special rights in the Cumulative Preferred Stock in case of further like default or defaults in dividends thereon. Upon the termination of any such special right upon payment of all accumulated and defaulted dividends on such stock, the terms of office of all persons who may have been elected Directors of the Corporation by vote of the holders of the Cumulative Preferred Stock, as a class, pursuant to such special right shall forthwith terminate. (E) In case of any vacancy in the Board of Directors occurring among the Directors elected by the holders of the Cumulative Preferred Stock, as a class, pursuant to subparagraph (C) hereof, the holders of the Cumulative Preferred Stock then outstanding and entitled to vote may elect a successor to hold office for the unexpired term of the Director whose place shall be vacant. In case of a vacancy in the Board of Directors occurring among the Directors elected by the holders of the Common Stock, as a class, pursuant to subparagraph (C) hereof, the holders of the Common Stock then out-standing and entitled to vote may elect a successor to hold office for the unexpired term of the Director whose place shall be vacant. In all other cases, any vacancy occurring among the Directors shall be filled by the vote of a majority of the remaining Directors. (F) Whenever the holders of the Cumulative Preferred Stock, as a class, become entitled to elect Directors of the Corporation pursuant to either sub- paragraph (C) or (E) hereof, or whenever the holders of the Common Stock, as a class, become entitled to elect Directors of the Corporation pursuant to either sub- paragraph (C) or (E) hereof, a meeting of the holders of the Cumulative Preferred Stock or of the Common Stock, as the case may be, shall be held at any time thereafter upon call by the holders of shares of the Cumulative Preferred Stock or of the Common Stock, as the case may be, entitling them to cast at least 1,000 votes for such purpose, or upon call by the Secretary of the Corporation at the request in writing of any stockholder addressed to him at the principal office of the Corporation. At all meetings of stockholders held for the purpose of electing Directors during such times as the holders of shares of the Cumulative Preferred Stock shall have the special right, voting separately as one class, to elect Directors pursuant to either subparagraph (C) or (E) hereof, the presence in person or by proxy of the holders of a majority of the outstanding shares of the Common Stock shall be required to constitute a quorum of such class for the election of Directors, and the presence in person or by proxy of the holders of a majority of the total number of votes which holders of the outstanding shares of all series of the Cumulative Preferred Stock are entitled to cast shall be required to constitute a quorum of such class for the election of Directors; provided, however, that the absence of a quorum of the holders of stock of either such class shall not prevent the election at any such meeting or adjournment thereof of Directors by the other such class if the necessary quorum of the holders of stock of such other class is present in person or by proxy at such meeting; and provided further that in the absence of a quorum of the holders of stock of either such class, the holders of a majority of the votes which holders of the stock of such class who are present in person or by proxy are entitled to cast shall have power to adjourn the election of the Directors to be elected by such class from time to time without notice other than announcement at the meeting until the holders of the requisite number of shares of such class shall be present in person or by proxy. (G) Except when some mandatory provision of law shall be controlling and except as otherwise provided in clause (c) of paragraph (7)(A) hereof and, as regards the special rights of any series of the Cumulative Preferred Stock, as provided in the terms determined for such series, whenever shares of two or more series of the Cumulative Preferred Stock are outstanding, no particular series of the Cumulative Preferred Stock shall be entitled to vote as a separate series on any matter and all shares of the Cumulative Preferred Stock of all series shall be deemed to constitute but one class for any purpose for which a vote of the stockholders of the Corporation by classes may now or hereafter be required. (10) The Corporation may, at any time and from time to time, issue and dispose of any of the authorized and unissued shares of the Cumulative Preferred Stock and Common Stock for such consideration as may be fixed by the Board of Directors, subject to any provisions of law then applicable, and subject to the provisions of any resolutions of the stockholders of the Corporation relating to the issue and disposition of such shares; provided, however, that, in the case of the Cumulative Preferred Stock, such consideration shall have a value not less than the aggregate preferential amount, fixed as herein provided, payable upon such shares in the event of involuntary liquidation. (11) As of June 1, 1977, 1,079,307 shares of the Cumulative Preferred Stock are issued and designated in series; and the Corporation has determined and fixed the designations, descriptions and terms of such series as follows: DIVISION A 4-1/2% Cumulative Preferred Stock 300,000 shares of Cumulative Preferred Stock are designated "4-1/2% Cumulative Preferred Stock." The description and terms of the shares of such series, and the respects in which they shall vary from other shares of Cumulative Preferred Stock, are as follows: (a) The annual dividend rate for such series shall be 4-1/2% per annum; (b) The redemption price for such series shall be $110 per share; (c) The amounts which shall be paid to the holders of shares of such series upon any liquidation, dissolution or winding up of the Corporation shall be $110 per share, upon any voluntary liquidation, dissolution or winding up of the Corporation, except that if such voluntary liquidation, dissolution or winding up of the Corporation shall have been approved by the vote in favor thereof of the holders of a majority of the total number of shares of the 4-1/2% Cumulative Preferred Stock then out-standing, given at a meeting called for that purpose, the amount so payable on such voluntary liquidation, dissolution, or winding up shall be $100 per share; or $100 per share, in the event of any involuntary liquidation, dissolution or winding up of the Corporation; (d) There shall not be any sinking fund provided for the purchase or redemption of shares of the 4-1/2% Cumulative Preferred Stock; and (e) The shares of the 4-1/2% Cumulative Preferred Stock shall not have any rights to convert the same into and/or purchase stock of any other series or class or other securities, or any special rights other than those specified herein. DIVISION B 4.50% Cumulative Preferred Stock 29,307 shares of Cumulative Preferred Stock are designated "4.50% Cumulative Preferred Stock." The description and terms of the shares of such series, and the respects in which they shall vary from other shares of Cumulative Preferred Stock, are as follows: (a) The annual dividend rate for such series shall be 4.50% per annum; (b) The regular redemption price for such series shall be $102 per share; the shares of such series shall be redeemable for the sinking fund provided for such series, or for any other sinking fund applicable to the shares of such series, at $100 per share (hereinafter referred to as the "sinking fund redemption price"); (c) The amounts which shall be paid to the holders of shares of such series upon any liquidation, dissolution or winding up of the Corporation shall be: $104 per share upon any voluntary liquidation, dissolution or winding up of the Corporation, except that if such voluntary liquidation, dissolution or winding up of the Corporation shall have been approved by the vote in favor thereof of the holders of a majority of the total number of shares of such series then outstanding given at a meeting called for that purpose, the amount so payable on such voluntary liquidation, dissolution or winding up shall be $100 per share; or $100 per share upon any involuntary liquidation, dissolution or winding up of the Corporation; (d) There shall be a sinking fund for the benefit of the shares of such series. So long as there shall remain outstanding any shares of such series, the Corporation, after the full dividends on all series of the Cumulative Preferred Stock at the time outstanding for all past quarter-yearly dividend periods shall have been paid or declared and set apart for payment, shall, on or before November 30 in each year, set aside out of funds legally available therefor as the sinking fund requirement for such year an amount in cash sufficient to redeem, at the sinking fund redemption price provided in (b) above, two per cent (2%) of the maximum number of shares of the 4.50% Cumulative Preferred Stock which shall theretofore have been issued and outstanding at any one time (75,000 shares), provided, however, that against the sinking fund requirement for any calendar year the Corporation may credit an amount equal to the sinking fund redemption price in respect of any shares of such series which it may have purchased for retirement or redeemed otherwise than through the sinking fund and not theretofore credited against any sinking fund requirement. Unless the sinking fund requirement for such series for all past sinking fund periods shall have been set aside, no dividends shall be paid or declared and no other distribution shall be made on the Common Stock, and no Common Stock shall be purchased or otherwise acquired for value by the Corporation. The Corporation may apply any cash set aside for sinking fund purposes to the purchase or redemption and cancellation of shares of such series. Any balance of cash so set aside remaining after 90 days from November 30th of each year shall be applied promptly to the redemption and cancellation of shares of such series. All shares to be redeemed through the sinking fund shall be selected by lot in such manner as the Board of Directors of the Corporation may determine. Notwithstanding the foregoing, the cancellation of shares of such series so purchased or redeemed shall not retire such shares or decrease capital except upon compliance with the provisions of Sec. 13.1-63 of the Code of Virginia as at the time in effect; and (e) The shares of such series shall not have any rights to convert the same into and/or purchase stock of any other series or class or other securities, or any special rights other than those specified herein. DIVISION C 8.12% Cumulative Preferred Stock 300,000 shares of Cumulative Preferred Stock are designated "8.12% Cumulative Preferred Stock." The description and terms of the shares of such series, and the respects in which they shall vary from other shares of Cumulative Preferred Stock, are as follows: (a) The annual dividend rate for such series shall be 8.12% per annum; (b) The redemption price for such series shall be $107.59 per share prior to September 1, 1981; $105.56 per share on and after September 1, 1981 but prior to September 1, 1986; $103.53 per share on and after September 1, 1986 but prior to September 1, 1991; and $102.31 per share on September 1, 1991 and thereafter; (c) The preferential amounts to which the holders of shares of such series shall be entitled upon any liquidation, dissolution or winding up of the Corporation shall be the redemption price in effect at the date of any voluntary liquidation, dissolution or winding up of the Corporation; or $100 per share, in the event of any involuntary liquidation, dissolution or winding up of the Corporation; (d) There shall not be any sinking fund provided for the purchase or redemption of shares of such series; and (e) The shares of such series shall not have any rights to convert the same into and/or purchase stock of any other series or class or any other securities, or any special rights other than those specified herein. DIVISION D 7.40% Cumulative Preferred Stock 250,000 shares of Cumulated Preferred Stock are designated "7.40% Cumulative Preferred Stock." The description and terms of the shares of such series, and the respects in which they shall vary from other shares of Cumulative Preferred Stock, are as follows: (a) The annual dividend rate for such series shall be 7.40% per annum; (b) The redemption price for such series shall be $106.92 per share prior to February 1, 1982; $105.07 per share on and after February 1, 1982 but prior to February 1, 1987; $103.22 per share on and after February 1, 1987 but prior to February 1, 1992; and $102.11 per share on February 1, 1992 and thereafter; (c) The preferential amounts to which the holders of shares of such series shall be entitled upon any liquidation, dissolution or winding up of the Corporation shall be the redemption price in effect at the date of any voluntary liquidation, dissolution or winding up of the Corporation; or $100 per share, in the event of any involuntary liquidation, dissolution or winding up of the Corporation; (d) There shall not be any sinking fund provided for the purchase or redemption of shares of such series; and (e) The shares of such series shall not have any rights to convert the same into and/or purchase stock of any other series or class or any other securities, or any special rights other than those specified herein. DIVISION E 8.52% Cumulative Preferred Stock 200,000 shares of Cumulative Preferred Stock are designated "8.52% Cumulative Preferred Stock." The description and terms of the shares of such series, and the respects in which they shall vary from other shares of Cumulative Preferred Stock, are as follows: (a) The annual dividend rate for such series shall be 8.52% per annum; (b) The redemption price for such series shall be $109.52 per share prior to March 1, 1979; $107.39 per share on and after March 1, 1979 but prior to March 1, 1984; $105.26 per share on and after March 1, 1984 but prior to March 1, 1989; $103.13 per share on and after March 1, 1989 but prior to March 1, 1994; and $101.86 per share on March 1, 1994 and thereafter, provided, however, that no share of such series shall be redeemed prior to March 1, 1979 if such redemption is for the purpose or in anticipation of refunding such share, directly or indirectly, through the incurring of debt, or through the issuance of capital stock ranking equally with or prior to the shares of said series as to dividends or assets, if such debt has an effective interest cost to the Corporation (computed in accordance with generally accepted financial practice), or such capital stock has an effective dividend cost to the Corporation (so computed) of less than 8.52% per annum; (c) The preferential amounts to which the holders of shares of such series shall be entitled upon any liquidation, dissolution or winding up of the Corporation shall be the redemption price in effect at the date of any voluntary liquidation, dissolution or winding up of the Corporation; or $100 per share, in the event of any voluntary liquidation, dissolution or winding up of the Corporation; (d) There shall not be any sinking fund provided for the purchase or redemption of shares of such series; and (e) The shares of such series shall not have any rights to convert the same into and/or purchase stock of any other series or class or any other securities, or any special rights other than those specified herein. DIVISION F 9% Cumulative Preferred Stock 600,000 shares of Cumulative Preferred Stock are designated "9% Cumulative Preferred Stock." The description and terms of the shares of such series, and the respects in which they shall vary from other shares of Cumulative Preferred Stock, are as follows: (a) The distinctive serial designation of such series shall be "9% Cumulative Preferred Stock"; (b) The annual dividend rate for such series shall be 9% per share per annum, which dividend shall be calculated, per share, at such percentage multiplied by $100, and the date from which dividends on all shares of said series issued prior to the record date for the dividend payable November 1, 1987, shall be cumulative, shall be the date of issuance of the shares of such series; (c) The regular redemption price for such series shall be $109.00 per share on or prior to August 31, 1992 and thereafter shall be as follows: If Redeemed Regular During 12 Months Redemption Period Ending Price August 31 Per Share 1993 $106.75 1994 106.30 1995 105.85 1996 105.40 1997 104.95 1998 104.50 1999 104.05 2000 103.60 2001 103.15 2002 102.70 2003 102.25 2004 101.80 2005 101.35 2006 100.90 2007 100.45 and thereafter the regular redemption price per share of such series shall be $100 per share; provided, however, that no share of such series shall be redeemed prior to September 1, 1992 if such redemption is for the purpose or in anticipation of refunding such share, directly or indirectly, through the incurring of debt, or through the issuance of capital stock ranking equally with or prior to the shares of said series as to dividends or assets, if such debt has an effective interest cost to the Corporation (computed in accordance with generally accepted financial practice), or such capital stock has an effective dividend cost to the Corporation (so computed) of less than 9.10% per annum; (d) The preferential amounts to which the holders of shares of such series shall be entitled upon any liquidation, dissolution or winding up of the Corporation shall be the redemption price in effect at the date of any voluntary liquidation, dissolution or winding up of the Corporation; or $100 per share, in the event of any involuntary liquidation, dissolution or winding up of the Corporation; (e)(1) A sinking fund shall be established for the retirement of the shares of such series. So long as there shall remain outstanding any shares of such series, the Corporation shall, to the extent permitted by law on November 1 in each year commencing with the year 1992, redeem as and for a sinking fund requirement, out of funds legally available therefor, a number of shares equal to 5% of the total number of shares classified as 9% Cumulative Preferred Stock in these Articles of Amendment at a redemption price of $100 per share. The sinking fund requirement shall be cumulative so that if on any such November 1 the sinking fund requirement shall not have been met, then such sinking fund requirement, to the extent not met, shall become an additional sinking fund requirement for the next succeeding November 1 on which such redemption may be effected. (2) The Corporation shall have the non- cumulative option, on any sinking fund date as provided in subparagraph (e)(1) hereof, to redeem at a redemption price of $100 per share, an additional number of shares equal to 5% of the total number of shares classified as 9% Cumulative Preferred Stock in these Articles of Amendment. No redemption made pursuant to this subparagraph (e)(2) shall be deemed to fulfill any sinking fund requirement established pursuant to subparagraph (e)(1). (3) The Corporation shall be entitled, at its election, to credit against the sinking fund requirement due on November 1 of any year pursuant to subparagraph (e)(1) shares of such series theretofore purchased or otherwise acquired by the Corporation and not previously credited against any sinking fund requirement. (f) The shares of such series shall not have any rights to convert the same into and/or purchase stock of any other series or class or any other securities, or any special rights other than those specified herein. DIVISION G 7.80% Cumulative Preferred Stock 500,000 shares of Cumulative Preferred Stock are designated "7.80% Cumulative Preferred Stock." The description and terms of the shares of such series, and the respects in which they shall vary from other shares of Cumulative Preferred Stock, are as follows: (a) The distinctive serial designation of such series shall be "7.80% Cumulative Preferred Stock". (b) The annual dividend rate for such series shall be 7.80% per share per annum, which dividend shall be calculated, per share, at such percentage multiplied by $100, and the date from which dividends on all shares of said series issued prior to the record date for the dividend payable May 1, 1992, shall be cumulative, shall be the date of initial issuance of the shares of such series. (c) The regular redemption price for such series shall be $107.80 per share on or prior to March 31, 1997 and thereafter shall be as follows: Regular Redemption Price Redemption Date (Dates Inclusive) Per Share April 1, 1997 to March 31, 1998 $105.20 April 1, 1998 to March 31, 1999 104.68 April 1, 1999 to March 31, 2000 104.16 April 1, 2000 to March 31, 2001 103.64 April 1, 2001 to March 31, 2002 103.12 April 1, 2002 to March 31, 2003 102.60 April 1, 2003 to March 31, 2004 102.08 April 1, 2004 to March 31, 2005 101.56 April 1, 2005 to March 31, 2006 101.04 April 1, 2006 to March 31, 2007 100.52 and thereafter the regular redemption price per share shall be $100 per share, plus an amount in each case equal to accrued unpaid dividends to the date of redemption; provided, however, that no share of such series shall be redeemed prior to April 1, 1997 if such redemption is for the purpose or in anticipation of refunding such share, directly or indirectly, through the incurring of debt, or through the issuance of shares of capital stock ranking equally with or prior to the shares of said series as to dividends or assets, if such debt has an effective interest cost to the Corporation (computed in accordance with generally accepted financial practice), or such shares of capital stock have an effective dividend cost to the Corporation (so computed), of less than 7.88% per annum. (d) The preferential amounts to which the holders of shares of such series shall be entitled upon any liquidation, dissolution or winding up of the Corporation shall be the regular redemption price in effect at the date of any voluntary liquidation, dissolution or winding up of the Corporation; or $100 per share, in the event of any involuntary liquidation, dissolution or winding up of the Corporation. (e)(1) A sinking fund shall be established for the retirement of the shares of such series. So long as there shall remain outstanding any shares of such series, the Corporation shall, to the extent permitted by law, on May 1 in each year commencing with the year 1998, redeem as and for a sinking fund requirement, out of funds legally available therefor, a number of shares equal to 5% of the total number of shares initially classified as 7.80% Cumulative Preferred Stock in these Articles of Amendment at a sinking fund redemption price of $100 per share plus accrued unpaid dividends to the date of redemption. The sinking fund requirement shall be cumulative so that if on any such May 1 the sinking fund requirement shall not have been met, then such sinking fund requirement, to the extent not met, shall become an additional sinking fund requirement for the next succeeding May 1 on which such redemption may be effected. (2) The Corporation shall have the non-cumulative option, on any sinking fund date as provided in subparagraph (e)(1) hereof, to redeem at a sinking fund redemption price of $100 per share, an additional number of shares equal to not more than 5% of the total number of shares initially classified as 7.80% Cumulative Preferred Stock in these Articles of Amendment. No redemption made pursuant to this subparagraph (e)(2) shall be deemed to fulfill any sinking fund requirement established pursuant to subparagraph (e)(1). (3) The Corporation shall be entitled, at its election, to credit against the sinking fund requirement due on May 1 of any year pursuant to subparagraph (e)(1) shares of such series theretofore purchased or otherwise acquired by the Corporation and not previously credited against any such sinking fund requirement. (f) The shares of such series shall not have any rights to convert the same into and/or purchase stock of any other series or class or any other securities, or any special rights other than those specified herein. DIVISION H 5.92% Cumulative Preferred Stock 600,000 shares of Cumulative Preferred Stock are designated "5.92% Cumulative Preferred Stock." The description and terms of the shares of such series, and the respects in which they shall vary from other shares of Cumulative Preferred Stock, are as follows: (a) The distinctive serial designation of such series shall be "5.92% Cumulative Preferred Stock". (b) The annual dividend rate for such series shall be 5.92% per share per annum, which dividend shall be calculated, per share, at such percentage multiplied by $100, and the date from which dividends on all shares of said series issued prior to the record date for the dividend payable February 1, 1994, shall be cumulative, shall be the date of initial issuance of the shares of such series. (c) Such series shall not be subject to redemption prior to October 1, 2003; the regular redemption price for shares of such series shall be $100 per share on or after October 1, 2003, plus an amount equal to accrued and unpaid dividends to the date of redemption. (d) The preferential amounts to which the holders of shares of such series shall be entitled upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation shall be $100 per share, plus accrued and unpaid dividends. (e)(1) A sinking fund shall be established for the retirement of the shares of such series. So long as there shall remain outstanding any shares of such series, the Corporation shall, to the extent not prohibited by law, on November 1, 2003, and on each November 1 thereafter to and including November 1, 2007, redeem as and for a sinking fund requirement, a number of shares equal to 5% of the total number of shares initially classified as 5.92% Cumulative Preferred Stock in these Articles of Amendment at a sinking fund redemption price of $100 per share plus accrued unpaid dividends to the date of redemption. The remaining shares of such series outstanding on November 1, 2008 will be redeemed as a final sinking fund requirement, to the extent not prohibited by law, on such date at a sinking fund redemption price of $100 per share plus accrued and unpaid dividends to the date of redemption. The sinking fund requirement shall be cumulative so that if on any such November 1 the sinking fund requirement shall not have been met, then such sinking fund requirement, to the extent not met, shall become an additional sinking fund requirement for the next succeeding November 1 on which such redemption may be effected. (2) The Corporation shall be entitled, at its election, to credit against the sinking fund requirement due on November 1 of any year pursuant to subparagraph (e)(1) shares of such series theretofore purchased or otherwise acquired by the Corporation and not previously credited against any such sinking fund requirement. (f) The shares of such series shall not have any rights to convert the same into and/or purchase stock of any other series or class or any other securities, or any special rights other than those specified herein. DIVISION I 5.90% Cumulative Preferred Stock 500,000 shares of Cumulative Preferred Stock are designated "5.90% Cumulative Preferred Stock." The description and terms of the shares of such series, and the respects in which they shall vary from other shares of Cumulative Preferred Stock, are as follows: (a) The distinctive serial designation of such series shall be "5.90% Cumulative Preferred Stock". (b) The annual dividend rate for such series shall be 5.90% per share per annum, which dividend shall be calculated, per share, at such percentage multiplied by $100, and the date from which dividends on all shares of said series issued prior to the record date for the dividend payable February 1, 1994, shall be cumulative, shall be the date of initial issuance of the shares of such series. (c) Such series shall not be subject to redemption prior to November 1, 2003; the regular redemption price for shares of such series shall be $100 per share on or after November 1, 2003, plus an amount equal to accrued and unpaid dividends to the date of redemption. (d) The preferential amounts to which the holders of shares of such series shall be entitled upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation shall be $100 per share, plus accrued and unpaid dividends. (e)(1) A sinking fund shall be established for the retirement of the shares of such series. So long as there shall remain outstanding any shares of such series, the Corporation shall, to the extent not prohibited by law, on November 1, 2003, and on each November 1 thereafter to and including November 1, 2007, redeem as and for a sinking fund requirement, a number of shares equal to 5% of the total number of shares initially classified as 5.90% Cumulative Preferred Stock in these Articles of Amendment at a sinking fund redemption price of $100 per share plus accrued unpaid dividends to the date of redemption. The remaining shares of such series outstanding on November 1, 2008 will be redeemed as a final sinking fund requirement, to the extent not prohibited by law, on such date at a sinking fund redemption price of $100 per share plus accrued and unpaid dividends to the date of redemption. The sinking fund requirement shall be cumulative so that if on any such November 1 the sinking fund requirement shall not have been met, then such sinking fund requirement, to the extent not met, shall become an additional sinking fund requirement for the next succeeding November 1 on which such redemption may be effected. (2) The Corporation shall be entitled, at its election, to credit against the sinking fund requirement due on November 1 of any year pursuant to subparagraph (e)(1) shares of such series theretofore purchased or otherwise acquired by the Corporation and not previously credited against any such sinking fund requirement. (f) The shares of such series shall not have any rights to convert the same into and/or purchase stock of any other series or class or any other securities, or any special rights other than those specified herein. EX-4 4 EXHIBIT 4(B) INDENTURES SUPPLEMENTAL Indenture Supplemental TO Mortgage and Deed of Trust (Dated as of December 1, 1940) Executed by APPALACHIAN POWER COMPANY formerly Appalachian Electric Power Company TO BANKERS TRUST COMPANY, As Trustee Dated as of October 1, 1993 $30,000,000 First Mortgage Bonds, Designated Secured Medium Term Notes, 7.15% Series due November 1, 2023 $30,000,000 First Mortgage Bonds, Designated Secured Medium Term Notes, 6.00% Series due November 1, 2003 TABLE OF CONTENTS PAGE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 RECITALS Execution of Mortgage. . . . . . . . . . . . . . . . . . 1 Execution of supplemental indentures . . . . . . . . . . 1 Termination of Individual Trustee. . . . . . . . . . . . 1 Provision for issuance of bonds in one or more series. . 1 Right to execute supplemental indenture. . . . . . . . . 2 First Mortgage Bonds heretofore issued . . . . . . . . . 2 Issue of new First Mortgage Bonds of the 51st Series . . 3 Issue of new First Mortgage Bonds of the 52nd Series . . 3 Third 1993 Supplemental Indenture . . . . . . . . . . . . 3 Compliance with legal requirements . . . . . . . . . . . 4 GRANTING CLAUSES. . . . . . . . . . . . . . . . . . . . . . . 4 DESCRIPTION OF PROPERTY . . . . . . . . . . . . . . . . . . . 4 APPURTENANCES, ETC. . . . . . . . . . . . . . . . . . . . . . 4 HABENDUM. . . . . . . . . . . . . . . . . . . . . . . . . . . 5 PRIOR LEASEHOLD ENCUMBRANCES. . . . . . . . . . . . . . . . . 5 GRANT IN TRUST. . . . . . . . . . . . . . . . . . . . . . . . 6 SECTION 1. Supplement to Original Indenture by adding Section 20XX . . . . . . . . . . . . . . . . . 6 SECTION 2. Supplement to Original Indenture by adding Section 20YY . . . . . . . . . . . . . . . . . 9 SECTION 3. Initial Issuance of the Bonds of the 51st Series. 12 SECTION 4. Initial Issuance of the Bonds of the 52nd Series. 12 SECTION 5. Provision for record date for meetings of Bondholders . . . . . . . . . . . . . . . . 12 SECTION 6. Original Indenture and Third 1993 Supplemental Indenture same instrument. . . . . . . . . . . 12 SECTION 7. Limitation of rights. . . . . . . . . . . . . . . 13 SECTION 8. Execution in counterparts . . . . . . . . . . . . 13 TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . 13 SIGNATURES AND SEALS. . . . . . . . . . . . . . . . . . . . . 13 ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . . . . . 15 SCHEDULE I. . . . . . . . . . . . . . . . . . . . . . . . . . I-1 SCHEDULE II. . . . . . . . . . . . . . . . . . . . . . . . . II-1 SUPPLEMENTAL INDENTURE, dated as of the first day of October in the year One Thousand Nine Hundred and Ninety-three, made and entered into by and between APPALACHIAN POWER COMPANY, a corporation of the Commonwealth of Virginia, the corporate title of which was, prior to April 17, 1958, APPALACHIAN ELECTRIC POWER COMPANY (hereinafter sometimes called the "Company"), a transmitting utility (as such term is defined in Section 46-9- 105(1)(n) of the West Virginia Code), party of the first part, and BANKERS TRUST COMPANY, a corporation of the State of New York (hereinafter sometimes called the "Corporate Trustee" or "Trustee"), as Trustee, party of the second part. WHEREAS, the Company has heretofore executed and delivered its Mortgage and Deed of Trust (hereinafter sometimes referred to as the "Mortgage"), dated as of December 1, 1940, to the Trustee for the security of all bonds of the Company outstanding thereunder, and by said Mortgage conveyed to the Trustee, upon certain trusts, terms and conditions, and with and subject to certain provisos and covenants therein contained, all and singular the property, rights and franchises which the Company then owned or should thereafter acquire, excepting any property expressly excepted by the terms of the Mortgage; and WHEREAS, the Company has heretofore executed and delivered to the Trustee supplements and indentures supplemental to the Mortgage, dated as of December 1, 1943, December 2, 1946, December 1, 1947, March 1, 1950, June 1, 1951, October 1, 1952, December 1, 1953, March 1, 1957, May 1, 1958, October 2, 1961, April 1, 1962, June 1, 1965, September 2, 1968, December 1, 1968, October 1, 1969, June 1, 1970, October 1, 1970, September 1, 1971, February 1, 1972, December 1, 1972, July 1, 1973, March 1, 1974, April 1, 1975, May 1, 1975, December 1, 1975, April 1, 1976, September 1, 1976, November 1, 1977, May 1, 1979, August 1, 1979, February 1, 1980, November 1, 1980, April 1, 1982, October 1, 1983, February 1, 1987, September 1, 1987, November 1, 1989, December 1, 1990, August 1, 1991, February 1, 1992, May 1, 1992, August 1, 1992, November 15, 1992, April 15, 1993 and May 15, 1993 (hereinafter referred to as the "Second 1993 Supplemental Indenture"), respectively, amending and supplementing the Mortgage in certain respects (the Mortgage, as so amended and supplemented, being hereinafter called the "Original Indenture") and conveying to the Trustee, upon certain trusts, terms and conditions, and with and subject to certain provisos and covenants therein contained, certain property rights and property therein described; and WHEREAS, effective October 7, 1988, pursuant to Section 115 of the Original Indenture, the Individual Trustee resigned and all powers of the Individual Trustee then terminated, as did the Individual Trustee's right, title or interest in and to the trust estate, and without appointment of a new trustee as successor to the Individual Trustee, all the right, title and powers of the Trustee thereupon devolved upon the Corporate Trustee and its successors alone; and WHEREAS, the Original Indenture provides that bonds issued thereunder may be issued in one or more series and further provides that, with respect to each series, the rate or rates of interest, the date or dates of maturity, the dates for the payment of interest, the terms and rates of optional redemption, and other terms and conditions not inconsistent with the Original Indenture may be established, prior to the issue of bonds of such series, by an indenture supplemental to the Original Indenture; and WHEREAS, Section 132 of the Original Indenture provides that any power, privilege or right expressly or impliedly reserved to or in any way conferred upon the Company by any provision of the Original Indenture, whether such power, privilege or right is in any way restricted or is unrestricted, may be in whole or in part waived or surrendered or subjected to any restriction if at the time unrestricted or to additional restriction if already restricted, and that the Company may enter into any further covenants, limitations or restrictions for the benefit of any one or more series of bonds issued under the Original Indenture and provide that a breach thereof shall be equivalent to a default under the Original Indenture, or the Company may cure any ambiguity or correct or supplement any defective or inconsistent provisions contained in the Original Indenture or in any indenture supplemental to the Original Indenture, by an instrument in writing, executed and acknowledged, and that the Trustee is authorized to join with the Company in the execution of any such instrument or instruments; and WHEREAS, the Company has heretofore issued, in accordance with the provisions of the Mortgage, as amended and supplemented as of the respective dates thereof, bonds of the series (which are outstanding), entitled and designated as hereinafter set forth, in the respective original aggregate principal amounts indicated: Series Amount First Mortgage Bonds, 7-1/2% Series due 1998. . . $45,000,000 First Mortgage Bonds, 8-1/2% Series due 1999. . . 60,000,000 First Mortgage Bonds, 7.00% Series due 1999. . . 30,000,000 First Mortgage Bonds, 7-5/8% Series due 2002. . . 50,000,000 First Mortgage Bonds, 7.95% Series due 2002. . . 60,000,000 First Mortgage Bonds, 7.38% Series due 2002. . . 50,000,000 First Mortgage Bonds, 7.40% Series due 2002. . . 30,000,000 First Mortgage Bonds, 7-1/2% Series due 2002. . . 70,000,000 First Mortgage Bonds, 8-1/8% Series due 2003. . . 50,000,000 First Mortgage Bonds, 6.65% Series due 2003. . . 40,000,000 First Mortgage Bonds, 6.85% Series due 2003. . . 30,000,000 First Mortgage Bonds, 8-3/4% Series due 2017. . . 100,000,000 First Mortgage Bonds, 9-1/8% Series due 2019. . . 50,000,000 First Mortgage Bonds, 9-7/8% Series due 2020. . . 50,000,000 First Mortgage Bonds, 9.35% Series due 2021. . . 50,000,000 First Mortgage Bonds, 8.75% Series due 2022. . . 50,000,000 First Mortgage Bonds, 8.70% Series due 2022. . . 40,000,000 First Mortgage Bonds, 8.43% Series due 2022. . . 50,000,000 First Mortgage Bonds, 8.50% Series due 2022. . . 70,000,000 First Mortgage Bonds, 7.80% Series due 2023. . . 40,000,000 First Mortgage Bonds, 7.90% Series due 2023. . . 30,000,000 and WHEREAS, the Company, by appropriate corporate action in conformity with the terms of the Original Indenture, has duly determined to create a series of bonds under the Original Indenture to be designated as "First Mortgage Bonds, Designated Secured Medium Term Notes, 7.15% Series due November 1, 2023" (hereinafter sometimes referred to as the "bonds of the 51st Series"); and WHEREAS, each of the bonds of the 51st Series is to be substantially in the form set forth in Schedule I to this Supplemental Indenture (hereinafter sometimes referred to as the "Third 1993 Supplemental Indenture"); and WHEREAS, the Company, by appropriate corporate action in conformity with the terms of the Original Indenture, has duly determined to create a series of bonds under the Original Indenture to be designated as "First Mortgage Bonds, Designated Secured Medium Term Notes, 6.00% Series due November 1, 2003" (hereinafter sometimes referred to as the "bonds of the 52nd Series"); and WHEREAS, each of the bonds of the 52nd Series is to be substantially in the form set forth in Schedule II to the Third 1993 Supplemental Indenture; and WHEREAS, the Company, in the exercise of the powers and authorities conferred upon and reserved to it under and by virtue of the provisions of the Original Indenture, and pursuant to resolutions of its Board of Directors, has duly resolved and determined to make, execute and deliver to the Trustee a supplemental indenture, in the form hereof, for the purposes herein provided; and WHEREAS, all conditions and requirements necessary to make this Third 1993 Supplemental Indenture a valid, binding and legal instrument in accordance with its terms, have been done, performed and fulfilled, and the execution and delivery thereof have been in all respects duly authorized; NOW, THEREFORE, THIS INDENTURE WITNESSETH: That Appalachian Power Company, in consideration of the premises and of the purchase and acceptance of the bonds by the holders thereof and of the sum of One Dollar ($1.00) and other good and valuable consideration paid to it by the Trustee at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, and in order to secure the payment of both the principal of and interest and premium, if any, on the bonds from time to time issued under and secured by the Original Indenture and this Third 1993 Supplemental Indenture, according to their tenor and effect, and the performance of all the provisions of the Original Indenture and this Third 1993 Supplemental Indenture (including any further indenture or indentures supplemental to the Original Indenture and any modification or alteration made as in the Original Indenture provided) and of said bonds, has granted, bargained, sold, released, conveyed, transferred, mortgaged, pledged, set over and confirmed, and by these presents does grant, bargain, sell, release, convey, assign, transfer, mortgage, pledge, set over and confirm unto Bankers Trust Company, as Trustee, and to its respective successor or successors in the trust hereby created, and to its and their assigns, all the following described properties of the Company, that is to say: All property, real, personal and mixed, tangible and intangible, and all franchises owned by the Company on the date of the execution hereof, acquired since the execution of the Second 1993 Supplemental Indenture (except any hereinafter expressly excepted from the lien and operation of this Third 1993 Supplemental Indenture). TOGETHER WITH all and singular the tenements, hereditaments and appurtenances belonging or in anywise appertaining to the aforesaid property or any part thereof, with the reversion and reversions, remainder and remainders and (subject to the provisions of Section 63 of the Original Indenture) the tolls, rents, revenues, issues, earnings, income, product and profits thereof and all the estate, right, title and interest and claim whatsoever, at law as well as in equity, which the Company now has or may hereafter acquire in and to the aforesaid property and franchises and every part and parcel thereof. Provided that, in addition to the reservations and exceptions herein elsewhere contained, the following are not and are not intended to be now or hereafter granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over or confirmed hereunder and are hereby expressly excepted from the lien and operation of the Original Indenture and this Third 1993 Supplemental Indenture, viz.: (1) cash, shares of stock, and obligations (including bonds, notes and other securities) not hereinafter or in the Original Indenture specifically pledged, deposited or delivered hereunder or thereunder or hereinafter or therein covenanted so to be; (2) any goods, wares, merchandise, equipment, materials or supplies acquired for the purpose of sale or resale in the usual course of business or for consumption in the operation of any properties of the Company and automobiles and trucks; (3) all judgments, accounts, and choses in action, the proceeds of which the Company is not obligated as hereinafter provided or as provided in the Original Indenture to deposit with the Trustee hereunder and thereunder; provided, however, that the property and rights expressly excepted from the lien and operation of the Original Indenture and this Third 1993 Supplemental Indenture in the above subdivisions (2) and (3) shall (to the extent permitted by law) cease to be so excepted, in the event that the Trustee or a receiver or trustee shall enter upon and take possession of the mortgaged and pledged property in the manner provided in Article XIV of the Original Indenture by reason of the occurrence of a completed default, as defined in said Article XIV. TO HAVE AND TO HOLD all such properties, real, personal and mixed, granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over or confirmed by the Company as aforesaid, or intended so to be, unto the Trustee and its successors in the trust; SUBJECT, HOWEVER, to the reservations, exceptions, conditions, limitations and restrictions contained in the several deeds, leases, servitudes, franchises and contracts or other instruments through which the Company acquired and/or claims title to and/or enjoys the use of the aforesaid properties; and subject also to encumbrances of the character defined in Section 6 of the Original Indenture as "excepted encumbrances" in so far as the same may attach to any of the property embraced herein. Inasmuch as the Company holds certain of said lands, rights of way and other property under leases, power agreements and other contracts which provide that the Company's interest therein shall not be mortgaged without the consent of the respective lessors or other parties to said agreements and contracts, and such lessors and parties have either given such consent or have waived the requirement of such consent, it is hereby expressly agreed and made a condition upon which this Third 1993 Supplemental Indenture is executed and delivered, that the lien of this Third 1993 Supplemental Indenture and the estate, rights and remedies of the Trustee hereunder, and the rights and remedies of the holders of the bonds secured hereby and by the Original Indenture in so far as they may affect such lands, rights of way and other property now held or to be hereafter acquired by the Company under such leases, contracts or agreements, shall be subject and subordinate in all respects to the rights and remedies of the respective lessors or other parties thereto. And it is hereby expressly covenanted and agreed as follows: (a) That the rights of the Trustee hereunder, and of every person or corporation whatsoever claiming by reason of this Third 1993 Supplemental Indenture any right, title or interest, legal or equitable, in the property covered by any such lease, power agreement or other contract, are and at all times hereafter shall be subject in the same manner and degree as the rights of the Company might or would at all times be subject, had this Third 1993 Supplemental Indenture not been made, to all terms, provisions, conditions, covenants, stipulations, and agreements, and to all exceptions, reservations, limitations, restrictions, and forfeitures contained in any such lease, power agreement or other contract; (b) That any right, claim, condition or forfeiture which might at any time be asserted against the party in possession under the provisions of any such lease, power agreement or other contract, had this Third 1993 Supplemental Indenture not been made, may be asserted with the same force and effect against any and all persons or corporations at any time claiming any right, title or interest in any such property under or by reason of this Third 1993 Supplemental Indenture or of any bond hereby and by the Original Indenture secured; and (c) That such consent or waiver of the requirement of such consent given by the lessor under any such lease or party to any such power agreement or other contract is intended and shall be construed to be solely for the purpose of permitting the Company to mortgage its property generally without violating the express covenant contained in such lease, power agreement or other contract, and that such consent or waiver of the requirement of such consent confers upon the Trustee hereunder and the holders of bonds secured hereby and by the Original Indenture no rights in addition to such as they would have had, respectively, if such consent or waiver of the requirement of such consent had not been given. IN TRUST NEVERTHELESS, upon the terms and trusts in the Original Indenture and this Third 1993 Supplemental Indenture set forth, for the equal and pro rata benefit and security of those who shall hold the bonds and coupons issued and to be issued hereunder and under the Original Indenture, in accordance with the terms of the Original Indenture and of this Third 1993 Supplemental Indenture, without preference, priority or distinction as to lien of any of said bonds or coupons over any other thereof by reason of priority in the time of issuance or negotiation thereof, or otherwise howsoever, subject, however, to the conditions, provisions and covenants set forth in the Original Indenture and in this Third 1993 Supplemental Indenture. AND THIS INDENTURE FURTHER WITNESSETH: That in further consideration of the premises and for the considerations aforesaid, the Company, for itself and it successors and assigns, hereby covenants and agrees to and with the Trustee, and its successor or successors in such trust, under the Original Indenture, as follows: Section 1. The Original Indenture is hereby supplemented by adding immediately after Section 20WW, a new Section 20XX, as follows: SECTION 20XX. The Company hereby creates a fifty-first series of bonds to be issued under and secured by this Indenture, to be designated and to be distinguished from the bonds of all other series by the title "First Mortgage Bonds, Designated Secured Medium Term Notes, 7.15% Series due November 1, 2023" (herein sometimes referred to as the "bonds of the 51st Series"). The form of the bonds of the 51st Series shall be substantially as set forth in Schedule I to the Third 1993 Supplemental Indenture. Bonds of the 51st Series shall mature on the date specified in their title. Unless otherwise determined by the Company, the bonds of the 51st Series shall be issued in fully registered form without coupons in denominations of $1,000 and in integral multiples thereof; the principal of and premium (if any) and interest on each said bond to be payable at the office or agency of the Company in the Borough of Manhattan, The City of New York, in lawful money of the United States of America, provided that at the option of the Company interest may be mailed to registered owners of the bonds at their respective addresses that appear on the register thereof; and the rate of interest shall be the rate per annum specified in the title thereof, payable semi- annually on the first days of May and November of each year (commencing November 1, 1993) and on their maturity date. The person in whose name any bond of the 51st Series is registered at the close of business on any record date (as hereinbelow defined) with respect to any regular semi-annual interest payment date (other than interest payable upon redemption or maturity) shall be entitled to receive the interest payable on such interest payment date notwithstanding the cancellation of such bond of the 51st Series upon any registration of transfer or exchange thereof (including any exchange effected as an incident to a partial redemption thereof) subsequent to the record date and prior to such interest payment date, except, if and to the extent that the Company shall default in the payment of the interest due on such interest payment date, then the registered owners of bonds of the 51st Series on such record date shall have no further right to or claim in respect of such defaulted interest as such registered owners on such record date, and the persons entitled to receive payment of any defaulted interest thereafter payable or paid on any bonds of the 51st Series shall be the registered owners of such bonds of the 51st Series (or any bond or bonds issued, directly or after intermediate transactions upon transfer or exchange or in substitution thereof) on the date of payment of such defaulted interest. Interest payable upon redemption or maturity shall be payable to the person to whom the principal is paid. The term "record date" as used in this Section 20XX, and in the form of the bonds of the 51st Series, with respect to any regular semi-annual interest payment date (other than interest payable upon redemption or maturity) applicable to the bonds of the 51st Series, shall mean the April 15 next preceding a May 1 interest payment date or the October 15 next preceding a November 1 interest payment date, as the case may be, or, if such April 15 or October 15 is not a Business Day (as defined hereinbelow), the next preceding Business Day. The term "Business Day" with respect to any bond of the 51st Series shall mean any day, other than a Saturday or Sunday, which is not a day on which banking institutions or trust companies in The City of New York, New York or the city in which is located any office or agency maintained for the payment of principal of or premium, if any, or interest on such bond of the 51st Series are authorized or required by law, regulation or executive order to remain closed. Every registered bond of the 51st Series shall be dated the date of authentication ("Issue Date") and shall bear interest computed on the basis of a 360-day year consisting of twelve 30-day months from its Issue Date or from the latest semi-annual interest payment date to which interest has been paid on the bonds of the 51st Series preceding the Issue Date, unless such Issue Date be an interest payment date to which interest is being paid on the bonds of the 51st Series, in which case it shall bear interest from its Issue Date or unless the Issue Date be the record date for the interest payment date first following the date of original issuance of bonds of the 51st Series (the "Original Issue Date"), or a date prior to such record date, then from the Original Issue Date; provided that, so long as there is no existing default in the payment of interest on said bonds, the owner of any bond authenticated by the Corporate Trustee between the record date for any regular semi-annual interest payment date and such interest payment date shall not be entitled to the payment of the interest due on such interest payment date (other than interest payable upon redemption or maturity) and shall have no claim against the Company with respect thereto; provided further, that, if and to the extent the Company shall default in the payment of the interest due on such interest payment date, then any such bond shall bear interest from the May 1 or November 1, as the case may be, next preceding its Issue Date, to which interest has been paid or, if the Company shall be in default with respect to the interest payment date first following the Original Issue Date, then from the Original Issue Date. If any semi-annual interest payment date, redemption date, or the maturity date is not a Business Day, payment of amounts due on such date may be made on the next succeeding Business Day, and, if such payment is made or duly provided for on such Business Day, no interest shall accrue on such amounts for the period from and after such interest payment date, redemption date or the maturity date, as the case may be, to such Business Day. Notwithstanding the provisions of Section 14 of this Indenture, the bonds of the 51st Series shall be executed on behalf of the Company by its Chairman of the Board, by its President or by one of its Vice Presidents or by one of its officers designated by the Board of Directors of the Company for such purpose, whose signature may be a facsimile, and its corporate seal shall be thereunto affixed or printed thereon and attested by its Secretary or one of its Assistant Secretaries, and the provisions of the penultimate sentence of said Section 14 shall be applicable to such bonds of the 51st Series. The bonds of the 51st Series are redeemable in accordance with Article XII of the Original Indenture and as further set forth in the form of bond contained in Schedule I to this Third 1993 Supplemental Indenture. The Company shall not be required to make transfers or exchanges of bonds of the 51st Series for a period of fifteen days next preceding any selection of bonds of the 51st Series to be redeemed or to make transfers or exchanges of any bonds of the 51st Series designated in whole or in part for redemption. Notwithstanding the provisions of Section 12 of this Indenture, the Company shall not be required to make transfers or exchanges of bonds of the 51st Series for a period of fifteen days next preceding any interest payment date. Registered bonds of the 51st Series shall be transferable upon presentation and surrender thereof, for cancellation, at the office or agency of the Company in the Borough of Manhattan, The City of New York, and at such other office or agency of the Company as the Company may from time to time designate, by the registered owners thereof, in person or by duly authorized attorney, in the manner and upon payment, if required by the Company, of the charges prescribed in this Indenture. In the manner and upon payment, if required by the Company, of the charges prescribed in this Indenture, registered bonds of the 51st Series may be exchanged for a like aggregate principal amount of registered bonds of the 51st Series of other authorized denominations, upon presentation and surrender thereof, for cancellation, at the office or agency of the Company in the Borough of Manhattan, The City of New York, or at such other office or agency of the Company as the Company may from time to time designate. Section 2. The Original Indenture is hereby supplemented by adding immediately after Section 20XX, a new Section 20YY, as follows: SECTION 20YY. The Company hereby creates a fifty- second series of bonds to be issued under and secured by this Indenture, to be designated and to be distinguished from the bonds of all other series by the title "First Mortgage Bonds, Designated Secured Medium Term Notes, 6.00% Series due November 1, 2003" (herein sometimes referred to as the "bonds of the 52nd Series"). The form of the bonds of the 52nd Series shall be substantially as set forth in Schedule II to the Third 1993 Supplemental Indenture. Bonds of the 52nd Series shall mature on the date specified in their title. Unless otherwise determined by the Company, the bonds of the 52nd Series shall be issued in fully registered form without coupons in denominations of $1,000 and in integral multiples thereof; the principal of and premium (if any) and interest on each said bond to be payable at the office or agency of the Company in the Borough of Manhattan, The City of New York, in lawful money of the United States of America, provided that at the option of the Company interest may be mailed to registered owners of the bonds at their respective addresses that appear on the register thereof; and the rate of interest shall be the rate per annum specified in the title thereof, payable semi- annually on the first days of May and November of each year (commencing November 1, 1993) and on their maturity date. The person in whose name any bond of the 52nd Series is registered at the close of business on any record date (as hereinbelow defined) with respect to any regular semi-annual interest payment date (other than interest payable upon redemption or maturity) shall be entitled to receive the interest payable on such interest payment date notwithstanding the cancellation of such bond of the 52nd Series upon any registration of transfer or exchange thereof (including any exchange effected as an incident to a partial redemption thereof) subsequent to the record date and prior to such interest payment date, except, if and to the extent that the Company shall default in the payment of the interest due on such interest payment date, then the registered owners of bonds of the 52nd Series on such record date shall have no further right to or claim in respect of such defaulted interest as such registered owners on such record date, and the persons entitled to receive payment of any defaulted interest thereafter payable or paid on any bonds of the 52nd Series shall be the registered owners of such bonds of the 52nd Series (or any bond or bonds issued, directly or after intermediate transactions upon transfer or exchange or in substitution thereof) on the date of payment of such defaulted interest. Interest payable upon redemption or maturity shall be payable to the person to whom the principal is paid. The term "record date" as used in this Section 20YY, and in the form of the bonds of the 52nd Series, with respect to any regular semi-annual interest payment date (other than interest payable upon redemption or maturity) applicable to the bonds of the 52nd Series, shall mean the April 15 next preceding a May 1 interest payment date or the October 15 next preceding a November 1 interest payment date, as the case may be, or, if such April 15 or October 15 is not a Business Day (as defined hereinbelow), the next preceding Business Day. The term "Business Day" with respect to any bond of the 52nd Series shall mean any day, other than a Saturday or Sunday, which is not a day on which banking institutions or trust companies in The City of New York, New York or the city in which is located any office or agency maintained for the payment of principal of or premium, if any, or interest on such bond of the 52nd Series are authorized or required by law, regulation or executive order to remain closed. Every registered bond of the 52nd Series shall be dated the date of authentication ("Issue Date") and shall bear interest computed on the basis of a 360-day year consisting of twelve 30-day months from its Issue Date or from the latest semi-annual interest payment date to which interest has been paid on the bonds of the 52nd Series preceding the Issue Date, unless such Issue Date be an interest payment date to which interest is being paid on the bonds of the 52nd Series, in which case it shall bear interest from its Issue Date or unless the Issue Date be the record date for the interest payment date first following the date of original issuance of bonds of the 52nd Series (the "Original Issue Date"), or a date prior to such record date, then from the Original Issue Date; provided that, so long as there is no existing default in the payment of interest on said bonds, the owner of any bond authenticated by the Corporate Trustee between the record date for any regular semi-annual interest payment date and such interest payment date shall not be entitled to the payment of the interest due on such interest payment date (other than interest payable upon redemption or maturity) and shall have no claim against the Company with respect thereto; provided further, that, if and to the extent the Company shall default in the payment of the interest due on such interest payment date, then any such bond shall bear interest from the May 1 or November 1, as the case may be, next preceding its Issue Date, to which interest has been paid or, if the Company shall be in default with respect to the interest payment date first following the Original Issue Date, then from the Original Issue Date. If any semi-annual interest payment date, redemption date, or the maturity date is not a Business Day, payment of amounts due on such date may be made on the next succeeding Business Day, and, if such payment is made or duly provided for on such Business Day, no interest shall accrue on such amounts for the period from and after such interest payment date, redemption date or the maturity date, as the case may be, to such Business Day. Notwithstanding the provisions of Section 14 of this Indenture, the bonds of the 52nd Series shall be executed on behalf of the Company by its Chairman of the Board, by its President or by one of its Vice Presidents or by one of its officers designated by the Board of Directors of the Company for such purpose, whose signature may be a facsimile, and its corporate seal shall be thereunto affixed or printed thereon and attested by its Secretary or one of its Assistant Secretaries, and the provisions of the penultimate sentence of said Section 14 shall be applicable to such bonds of the 52nd Series. The bonds of the 52nd Series are redeemable in accordance with Article XII of the Original Indenture and as further set forth in the form of bond contained in Schedule II to this Third 1993 Supplemental Indenture. The Company shall not be required to make transfers or exchanges of bonds of the 52nd Series for a period of fifteen days next preceding any selection of bonds of the 52nd Series to be redeemed or to make transfers or exchanges of any bonds of the 52nd Series designated in whole or in part for redemption. Notwithstanding the provisions of Section 12 of this Indenture, the Company shall not be required to make transfers or exchanges of bonds of the 52nd Series for a period of fifteen days next preceding any interest payment date. Registered bonds of the 52nd Series shall be transferable upon presentation and surrender thereof, for cancellation, at the office or agency of the Company in the Borough of Manhattan, The City of New York, and at such other office or agency of the Company as the Company may from time to time designate, by the registered owners thereof, in person or by duly authorized attorney, in the manner and upon payment, if required by the Company, of the charges prescribed in this Indenture. In the manner and upon payment, if required by the Company, of the charges prescribed in this Indenture, registered bonds of the 52nd Series may be exchanged for a like aggregate principal amount of registered bonds of the 52nd Series of other authorized denominations, upon presentation and surrender thereof, for cancellation, at the office or agency of the Company in the Borough of Manhattan, The City of New York, or at such other office or agency of the Company as the Company may from time to time designate. Section 3. Initial Issuance of the Bonds of the 51st Series: In accordance with and upon compliance with such provisions of the Original Indenture as shall be selected for such purpose by the officers of the Company duly authorized to take such action, bonds of the 51st Series in an aggregate principal amount not exceeding $30,000,000, shall forthwith be executed by the Company and delivered to the Trustee and shall be authenticated by the Trustee and delivered to or upon the order of the Company (without awaiting the filing and recording of this Third 1993 Supplemental Indenture except to the extent required by subdivision (10) of Section 29 of the Original Indenture). Section 4. Initial Issuance of the Bonds of the 52nd Series: In accordance with and upon compliance with such provisions of the Original Indenture as shall be selected for such purpose by the officers of the Company duly authorized to take such action, bonds of the 52nd Series in an aggregate principal amount not exceeding $30,000,000, shall forthwith be executed by the Company and delivered to the Trustee and shall be authenticated by the Trustee and delivered to or upon the order of the Company (without awaiting the filing and recording of this Third 1993 Supplemental Indenture except to the extent required by subdivision (10) of Section 29 of the Original Indenture). Section 5. At any meeting of bondholders held as provided for in Article XX of the Original Indenture at which owners of bonds of the 51st Series or bonds of the 52nd Series, are entitled to vote, all owners of bonds of the 51st Series or bonds of the 52nd Series at the time of such meeting shall be entitled to vote thereat; provided, however, that the Trustee may, and upon request of the Company or of a majority of the bondowners of the 51st Series or the 52nd Series, shall, fix a day not exceeding ninety days preceding the date for which the meeting is called as a record date for the determination of owners of bonds of the 51st Series or of the 52nd Series, as the case may be, entitled to notice of and to vote at such meeting and any adjournment thereof and only such registered owners who shall have been such registered owners on the date so fixed, and who are entitled to vote such bonds of the 51st Series or the 52nd Series at the meeting, shall be entitled to receive notice of such meeting. Section 6. As supplemented by this Third 1993 Supplemental Indenture, the Original Indenture is in all respects ratified and confirmed and the Original Indenture and this Third 1993 Supplemental Indenture shall be read, taken and construed as one and the same instrument. The bonds of the 51st Series and the bonds of the 52nd Series are the original debt secured by this Third 1993 Supplemental Indenture and the Original Indenture, and this Third 1993 Supplemental Indenture and the Original Indenture shall be, and shall be deemed to be, the original lien instrument securing the bonds of the 51st Series and the bonds of the 52nd Series. Section 7. Nothing contained in this Third 1993 Supplemental Indenture shall, or shall be construed to, confer upon any person other than the owners of bonds issued under the Original Indenture and this Third 1993 Supplemental Indenture, the Company and the Trustee, any right to avail themselves of any benefit of any provision of the Original Indenture or of this Third 1993 Supplemental Indenture. Section 8. This Third 1993 Supplemental Indenture may be simultaneously executed in several counterparts and all such counterparts executed and delivered, each as an original, shall constitute one and the same instrument. IN WITNESS WHEREOF, APPALACHIAN POWER COMPANY, party of the first part, has caused this instrument to be signed in its name and behalf by its President, a Vice President or an Assistant Treasurer, and its corporate seal to be hereunto affixed and attested by its Secretary or an Assistant Secretary, and BANKERS TRUST COMPANY, party of the second part, in token of its acceptance hereof, has caused this instrument to be signed in its name and behalf by a Vice President or an Assistant Vice President and its corporate seal to be hereunto affixed and attested by its Secretary or an Assistant Secretary. Executed and delivered as of the date and year first above written. APPALACHIAN POWER COMPANY [SEAL] By: /s/ B. M. Barber B. M. Barber Assistant Treasurer Attest: /s/ Jeffrey D. Cross Jeffrey D. Cross Assistant Secretary In the presence of: /s/ A. B. Graf A. B. Graf /s/ A. A. Pena A. A. Pena BANKERS TRUST COMPANY [SEAL] By /s/ Robert Caporale Robert Caporale Vice President Attest: /s/ Shikha Dombek Shikha Dombek Assistant Secretary Executed by BANKERS TRUST COMPANY in the presence of: /s/ M. Lisa Morrone M. Lisa Morrone /s/ Scott Thiel Scott Thiel STATE OF NEW YORK ) ) SS: COUNTY OF NEW YORK ) On this 29th day of September, 1993, personally appeared before me, a Notary Public within and for said County in the State aforesaid, B. M. BARBER and JEFFREY D. CROSS, to me known and known to me to be respectively an Assistant Treasurer and Assistant Secretary of APPALACHIAN POWER COMPANY, one of the corporations named in and which executed the foregoing instrument, who severally acknowledged that they did sign and seal said instrument as such Assistant Treasurer and Assistant Secretary for and on behalf of said corporation and that the same is their free act and deed as such Assistant Treasurer and Assistant Secretary, respectively, and the free and corporate act and deed of said corporation. In Witness Whereof, I have hereunto set my hand and notarial seal this 29th day of September, 1993. [Notarial Seal] /s/ Patricia M. Carillo PATRICIA M. CARILLO Notary Public, State of New York No. 41-4747732 Qualified in Queens County Certificate filed in New York County Commission expires May 31, 1995 STATE OF NEW YORK ) ) SS: COUNTY OF NEW YORK ) I, PATRICIA M. CARILLO, a Notary Public, duly qualified, commissioned and sworn, and acting in and for the County and State aforesaid, hereby certify that on this 1st day of October, 1993: ROBERT CAPORALE AND SHIKHA DOMBEK, whose names are signed to the writing above, bearing a date as of the 1st day of October, 1993, as Vice President and Assistant Secretary, respectively, of BANKERS TRUST COMPANY, have this day acknowledged the same before me in my County aforesaid. ROBERT CAPORALE, who signed the writing above and hereto annexed for BANKERS TRUST COMPANY, a corporation, bearing a date as of the 1st day of October, 1993, has this day in my said County before me acknowledged the said writing to be the act and deed of said corporation. Before me appeared ROBERT CAPORALE and SHIKHA DOMBEK to me personally known, who, being by me duly sworn, did say that they are Vice President and Assistant Secretary, respectively, of BANKERS TRUST COMPANY, and that the seal affixed to said instrument is the corporate seal of said corporation, and that said instrument was signed and sealed in behalf of said corporation, by authority of its Board of Directors and said ROBERT CAPORALE acknowledged said instrument to be the free act and deed of said corporation. SHIKHA DOMBEK personally came before me this day and acknowledged that she is an Assistant Secretary of BANKERS TRUST COMPANY, a corporation, and that by authority duly given and as the act of the corporation, the foregoing instrument was signed in its name by an Assistant Secretary, sealed with its corporate seal, and attested by herself as an Assistant Secretary. IN WITNESS WHEREOF, I have hereunto set my hand and official notarial seal, in the County and State of New York, this 1st day of October, 1993. /s/ Patricia M. Carillo PATRICIA M. CARILLO Notary Public, State of New York No. 41-4747732 Qualified in Queens County Certificate filed in New York County Commission expires May 31, 1995 [SEAL] The foregoing instrument was prepared by Jeffrey D. Cross, 1 Riverside Plaza, Columbus, Ohio 43215. SCHEDULE I APPALACHIAN POWER COMPANY FIRST MORTGAGE BOND, DESIGNATED SECURED MEDIUM TERM NOTE, 7.15% SERIES DUE NOVEMBER 1, 2023 Bond No. Original Issue Date: October 12, 1993 Principal Amount: Semi-annual Interest Payment Dates: May 1 and November 1 Record Dates: April 15 and October 15 CUSIP No: 03774B AQ6 APPALACHIAN POWER COMPANY, a corporation of the Commonwealth of Virginia (hereinafter called the "Company"), for value received, hereby promises to pay to ____________, or registered assigns, the Principal Amount set forth above on the maturity date specified in the title of this bond in lawful money of the United States of America, at the office or agency of the Company in the Borough of Manhattan, The City of New York, and to pay to the registered owner hereof interest on said sum from the date of authentication of this bond (herein called the "Issue Date") or latest semi-annual interest payment date to which interest has been paid on the bonds of this series preceding the Issue Date, unless the Issue Date be an interest payment date to which interest is being paid, in which case from the Issue Date or unless the Issue Date be the record date for the interest payment date first following the Original Issue Date set forth above or a date prior to such record date, then from the Original Issue Date (or, if the Issue Date is between the record date for any interest payment date and such interest payment date, then from such interest payment date, provided, however, that if and to the extent that the Company shall default in the payment of the interest due on such interest payment date, then from the next preceding semi-annual interest payment date to which interest has been paid on the bonds of this series, or if such interest payment date is the interest payment date first following the Original Issue Date set forth above, then from the Original Issue Date), until the principal hereof shall have become due and payable, at the rate per annum specified in the title of this bond, payable on May 1 and November 1 of each year (commencing November 1, 1993) and on the maturity date specified in the title of this bond; provided that, at the option of the Company, such interest may be paid by check, mailed to the registered owner of this bond at such owner's address appearing on the register hereof. This bond is one of a duly authorized issue of bonds of the Company, issuable in series, and is one of a series known as its First Mortgage Bonds, of the series designated in its title, all bonds of all series issued and to be issued under and equally secured (except in so far as any sinking fund, established in accordance with the provisions of the Mortgage hereinafter mentioned, may afford additional security for the bonds of any particular series and except as provided in Section 73 of the Mortgage) by a Mortgage and Deed of Trust (herein, together with all indentures supplemental thereto, called the Mortgage), dated as of December 1, 1940, executed by APPALACHIAN ELECTRIC POWER COMPANY (the corporate title of which was changed to APPALACHIAN POWER COMPANY) to BANKERS TRUST COMPANY, as Trustee, to which Mortgage reference is made for a description of the property mortgaged and pledged, the nature and extent of the security, the rights of the holders of the bonds and of the Trustee in respect thereof, the duties and immunities of the Trustee, and the terms and conditions upon which the bonds are secured. With the consent of the Company and to the extent permitted by and as provided in the Mortgage, the rights and obligations of the Company and/or of the holders of the bonds and/or coupons and/or the terms and provisions of the Mortgage and/or of any instruments supplemental thereto may be modified or altered by affirmative vote of the holders of at least seventy-five per centum (75%) in principal amount of the bonds affected by such modification or alteration, then outstanding under the Mortgage (excluding bonds disqualified from voting by reason of the Company's interest therein as provided in the Mortgage); provided that, without the consent of the owner hereof no such modification or alteration shall permit the extension of the maturity of the principal of or interest on this bond or the reduction in the rate of interest hereon or any other modification in the terms of payment of such principal or interest or the creation of a lien on the mortgaged and pledged property ranking prior to or on a parity with the lien of the Mortgage or the deprivation of the owner hereof of a lien upon such property or reduce the above percentage. As provided in said Mortgage, said bonds may be for various principal sums and are issuable in series, which may mature at different times, may bear interest at different rates and may otherwise vary as therein provided, and this bond is one of a series entitled "First Mortgage Bonds, Designated Secured Medium Term Notes, 7.15% Series due November 1, 2023 (herein called "bonds of the 51st Series") created by an Indenture Supplemental to Mortgage and Deed of Trust dated as of October 1, 1993 (the "Third 1993 Supplemental Indenture"), as provided for in said Mortgage. The interest payable on any May 1 or November 1 (other than interest payable upon redemption or maturity) will, subject to certain exceptions provided in said Third 1993 Supplemental Indenture, be paid to the person in whose name this bond is registered at the close of business on the record date, which shall be the April 15 or October 15, as the case may be, next preceding such interest payment date, or, if such April 15 or October 15 is not a Business Day (as hereinbelow defined), the next preceding Business Day. Interest payable upon redemption or maturity shall be payable to the person to whom the principal is paid. The term "Business Day" means any day, other than a Saturday or Sunday, which is not a day on which banking institutions or trust companies in The City of New York, New York or the city in which is located any office or agency maintained for the payment of principal or premium, if any, or interest on bonds of the 51st Series are authorized or required by law, regulation or executive order to remain closed. If any semi-annual interest payment date, redemption date or the maturity date is not a Business Day, payment of amounts due on such date may be made on the next succeeding Business Day, and, if such payment is made or duly provided for on such Business Day, no interest shall accrue on such amounts for the period from and after such interest payment date, redemption date or the maturity date, as the case may be, to such Business Day. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner hereof for the purpose of receiving payment of or on account of principal or (subject to the provisions hereof) interest hereon and for all other purposes and the Company and the Trustee shall not be affected by any notice to the contrary. The Company shall not be required to make transfers or exchanges of bonds of the 51st Series for a period of fifteen days next preceding any interest payment date, or next preceding any selection of bonds of the 51st Series to be redeemed, and the Company shall not be required to make transfers or exchanges of any bonds of the 51st Series designated for redemption in whole or in part. Any or all of the bonds of the 51st Series may be redeemed by the Company on or after November 1, 1998, at its option, or by operation of various provisions of the Mortgage, in whole at any time or in part from time to time upon not less than thirty but not more than ninety days' previous notice given by mail to the registered owners of the bonds to be redeemed, all as provided in the Mortgage, (a) if redeemed otherwise than by the use or application of cash deposited pursuant to Section 40 of the Mortgage and otherwise than by the use of proceeds of released property or the proceeds of insurance, at an amount equal to a percentage of the principal amount thereof determined as set forth in Annex A hereto under the heading "Regular Redemption Price" together in each case with accrued interest to the date fixed for redemption, or (b) if redeemed by the use or application of cash deposited pursuant to Section 40 of the Mortgage or by the use of proceeds of released property or the proceeds of insurance, at an amount equal to 100% of the principal amount thereof together in each case with accrued interest to the date fixed for redemption. The principal hereof may be declared or may become due prior to the express date of the maturity hereof on the conditions, in the manner and at the time set forth in the Mortgage, upon the occurrence of a completed default as in the Mortgage provided. This bond is transferable as prescribed in the Mortgage by the registered owner hereof in person, or by his duly authorized attorney, at the office or agency of the Company in the Borough of Manhattan, The City of New York, and at such other office or agency of the Company as the Company may designate, upon surrender and cancellation of this bond and upon payment, if the Company shall require it, of the transfer charges prescribed in the Mortgage, and, thereupon, a new registered bond or bonds of authorized denominations of the same series for a like principal amount will be issued to the transferee in exchange herefor as provided in the Mortgage. In the manner and upon payment, if the Company shall require it, of the charges prescribed in the Mortgage, registered bonds of the 51st Series may be exchanged for a like aggregate principal amount of registered bonds of other authorized denominations of the same series, upon presentation and surrender thereof, for cancellation, at the office or agency of the Company in the Borough of Manhattan, The City of New York, or at such other office or agency of the Company as the Company may from time to time designate. No recourse shall be had for the payment of the principal of or interest on this bond against any incorporator or any past, present or future stockholder, officer or director, as such, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, under any rule of law, statute or constitution or by the enforcement of any assessment or otherwise, all such liability of incorporators, stockholders, officers and directors, as such, being waived and released by the holder or owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Mortgage. This bond shall not become valid or obligatory for any purpose until BANKERS TRUST COMPANY, the Trustee under the Mortgage, or its successor thereunder, shall have signed the form of Authentication Certificate endorsed hereon. In Witness Whereof, Appalachian Power Company has caused this bond to be executed in its name by the signature of its Chairman of the Board, its President or one of its Vice Presidents and its corporate seal, or a facsimile thereof, to be impressed or imprinted hereon and attested by the signature of its Secretary or one of its Assistant Secretaries. Dated: APPALACHIAN POWER COMPANY By________________________ Vice President (SEAL) Attest:___________________ Assistant Secretary TRUSTEE'S AUTHENTICATION CERTIFICATE This bond is one of the bonds, of the series herein designated, described in the within-mentioned Mortgage. BANKERS TRUST COMPANY, as Trustee, By______________________________ Authorized Officer ANNEX A TO FIRST MORTGAGE BOND, DESIGNATED SECURED MEDIUM TERM NOTE, 7.15% SERIES DUE NOVEMBER 1, 2023 (If redeemed during the twelve months Regular beginning November 1) Redemption Year Price 1998 105.37% 1999 105.01 2000 104.65 2001 104.29 2002 103.94 2003 103.58 2004 103.22 2005 102.86 2006 102.51 2007 102.15 2008 101.79 2009 101.43 2010 101.08 2011 100.72 2012 100.36 2013 100.00 2014 100.00 2015 100.00 2016 100.00 2017 100.00 2018 100.00 2019 100.00 2020 100.00 2021 100.00 2022 100.00 FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto (PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE) _______________________________________ ________________________________________________________________ ________________________________________________________________ (PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ________________________________________________________________ ASSIGNEE) the within Bond and all rights thereunder, hereby ________________________________________________________________ irrevocably constituting and appointing such person attorney to ________________________________________________________________ transfer such Bond on the books of the Issuer, with full power of ________________________________________________________________ substitution in the premises. Dated: ______________________ ____________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. SCHEDULE II APPALACHIAN POWER COMPANY FIRST MORTGAGE BOND, DESIGNATED SECURED MEDIUM TERM NOTE, 6.00% SERIES DUE NOVEMBER 1, 2003 Bond No. Original Issue Date: October 12, 1993 Principal Amount: Semi-annual Interest Payment Dates: May 1 and November 1 Record Dates: April 15 and October 15 CUSIP No: 03774B AP8 APPALACHIAN POWER COMPANY, a corporation of the Commonwealth of Virginia (hereinafter called the "Company"), for value received, hereby promises to pay to ____________, or registered assigns, the Principal Amount set forth above on the maturity date specified in the title of this bond in lawful money of the United States of America, at the office or agency of the Company in the Borough of Manhattan, The City of New York, and to pay to the registered owner hereof interest on said sum from the date of authentication of this bond (herein called the "Issue Date") or latest semi-annual interest payment date to which interest has been paid on the bonds of this series preceding the Issue Date, unless the Issue Date be an interest payment date to which interest is being paid, in which case from the Issue Date or unless the Issue Date be the record date for the interest payment date first following the Original Issue Date set forth above or a date prior to such record date, then from the Original Issue Date (or, if the Issue Date is between the record date for any interest payment date and such interest payment date, then from such interest payment date, provided, however, that if and to the extent that the Company shall default in the payment of the interest due on such interest payment date, then from the next preceding semi-annual interest payment date to which interest has been paid on the bonds of this series, or if such interest payment date is the interest payment date first following the Original Issue Date set forth above, then from the Original Issue Date), until the principal hereof shall have become due and payable, at the rate per annum specified in the title of this bond, payable on May 1 and November 1 of each year (commencing November 1, 1993) and on the maturity date specified in the title of this bond; provided that, at the option of the Company, such interest may be paid by check, mailed to the registered owner of this bond at such owner's address appearing on the register hereof. This bond is one of a duly authorized issue of bonds of the Company, issuable in series, and is one of a series known as its First Mortgage Bonds, of the series designated in its title, all bonds of all series issued and to be issued under and equally secured (except in so far as any sinking fund, established in accordance with the provisions of the Mortgage hereinafter mentioned, may afford additional security for the bonds of any particular series and except as provided in Section 73 of the Mortgage) by a Mortgage and Deed of Trust (herein, together with all indentures supplemental thereto, called the Mortgage), dated as of December 1, 1940, executed by APPALACHIAN ELECTRIC POWER COMPANY (the corporate title of which was changed to APPALACHIAN POWER COMPANY) to BANKERS TRUST COMPANY, as Trustee, to which Mortgage reference is made for a description of the property mortgaged and pledged, the nature and extent of the security, the rights of the holders of the bonds and of the Trustee in respect thereof, the duties and immunities of the Trustee, and the terms and conditions upon which the bonds are secured. With the consent of the Company and to the extent permitted by and as provided in the Mortgage, the rights and obligations of the Company and/or of the holders of the bonds and/or coupons and/or the terms and provisions of the Mortgage and/or of any instruments supplemental thereto may be modified or altered by affirmative vote of the holders of at least seventy-five per centum (75%) in principal amount of the bonds affected by such modification or alteration, then outstanding under the Mortgage (excluding bonds disqualified from voting by reason of the Company's interest therein as provided in the Mortgage); provided that, without the consent of the owner hereof no such modification or alteration shall permit the extension of the maturity of the principal of or interest on this bond or the reduction in the rate of interest hereon or any other modification in the terms of payment of such principal or interest or the creation of a lien on the mortgaged and pledged property ranking prior to or on a parity with the lien of the Mortgage or the deprivation of the owner hereof of a lien upon such property or reduce the above percentage. As provided in said Mortgage, said bonds may be for various principal sums and are issuable in series, which may mature at different times, may bear interest at different rates and may otherwise vary as therein provided, and this bond is one of a series entitled "First Mortgage Bonds, Designated Secured Medium Term Notes, 6.00% Series due November 1, 2003 (herein called "bonds of the 52nd Series") created by an Indenture Supplemental to Mortgage and Deed of Trust dated as of October 1, 1993 (the "Third 1993 Supplemental Indenture"), as provided for in said Mortgage. The interest payable on any May 1 or November 1 (other than interest payable upon redemption or maturity) will, subject to certain exceptions provided in said Third 1993 Supplemental Indenture, be paid to the person in whose name this bond is registered at the close of business on the record date, which shall be the April 15 or October 15, as the case may be, next preceding such interest payment date, or, if such April 15 or October 15 is not a Business Day (as hereinbelow defined), the next preceding Business Day. Interest payable upon redemption or maturity shall be payable to the person to whom the principal is paid. The term "Business Day" means any day, other than a Saturday or Sunday, which is not a day on which banking institutions or trust companies in The City of New York, New York or the city in which is located any office or agency maintained for the payment of principal or premium, if any, or interest on bonds of the 52nd Series are authorized or required by law, regulation or executive order to remain closed. If any semi-annual interest payment date, redemption date or the maturity date is not a Business Day, payment of amounts due on such date may be made on the next succeeding Business Day, and, if such payment is made or duly provided for on such Business Day, no interest shall accrue on such amounts for the period from and after such interest payment date, redemption date or the maturity date, as the case may be, to such Business Day. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner hereof for the purpose of receiving payment of or on account of principal or (subject to the provisions hereof) interest hereon and for all other purposes and the Company and the Trustee shall not be affected by any notice to the contrary. The Company shall not be required to make transfers or exchanges of bonds of the 52nd Series for a period of fifteen days next preceding any interest payment date, or next preceding any selection of bonds of the 52nd Series to be redeemed, and the Company shall not be required to make transfers or exchanges of any bonds of the 52nd Series designated for redemption in whole or in part. Any or all of the bonds of the 52nd Series may be redeemed by the Company on or after November 1, 1998, at its option, or by operation of various provisions of the Mortgage, in whole at any time or in part from time to time upon not less than thirty but not more than ninety days' previous notice given by mail to the registered owners of the bonds to be redeemed, all as provided in the Mortgage, (a) if redeemed otherwise than by the use or application of cash deposited pursuant to Section 40 of the Mortgage and otherwise than by the use of proceeds of released property or the proceeds of insurance, at an amount equal to a percentage of the principal amount thereof determined as set forth in Annex A hereto under the heading "Regular Redemption Price" together in each case with accrued interest to the date fixed for redemption, or (b) if redeemed by the use or application of cash deposited pursuant to Section 40 of the Mortgage or by the use of proceeds of released property or the proceeds of insurance, at an amount equal to 100% of the principal amount thereof together in each case with accrued interest to the date fixed for redemption. The principal hereof may be declared or may become due prior to the express date of the maturity hereof on the conditions, in the manner and at the time set forth in the Mortgage, upon the occurrence of a completed default as in the Mortgage provided. This bond is transferable as prescribed in the Mortgage by the registered owner hereof in person, or by his duly authorized attorney, at the office or agency of the Company in the Borough of Manhattan, The City of New York, and at such other office or agency of the Company as the Company may designate, upon surrender and cancellation of this bond and upon payment, if the Company shall require it, of the transfer charges prescribed in the Mortgage, and, thereupon, a new registered bond or bonds of authorized denominations of the same series for a like principal amount will be issued to the transferee in exchange herefor as provided in the Mortgage. In the manner and upon payment, if the Company shall require it, of the charges prescribed in the Mortgage, registered bonds of the 52nd Series may be exchanged for a like aggregate principal amount of registered bonds of other authorized denominations of the same series, upon presentation and surrender thereof, for cancellation, at the office or agency of the Company in the Borough of Manhattan, The City of New York, or at such other office or agency of the Company as the Company may from time to time designate. No recourse shall be had for the payment of the principal of or interest on this bond against any incorporator or any past, present or future stockholder, officer or director, as such, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, under any rule of law, statute or constitution or by the enforcement of any assessment or otherwise, all such liability of incorporators, stockholders, officers and directors, as such, being waived and released by the holder or owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Mortgage. This bond shall not become valid or obligatory for any purpose until BANKERS TRUST COMPANY, the Trustee under the Mortgage, or its successor thereunder, shall have signed the form of Authentication Certificate endorsed hereon. In Witness Whereof, Appalachian Power Company has caused this bond to be executed in its name by the signature of its Chairman of the Board, its President or one of its Vice Presidents and its corporate seal, or a facsimile thereof, to be impressed or imprinted hereon and attested by the signature of its Secretary or one of its Assistant Secretaries. Dated: APPALACHIAN POWER COMPANY By________________________ Vice President (SEAL) Attest:___________________ Assistant Secretary TRUSTEE'S AUTHENTICATION CERTIFICATE This bond is one of the bonds, of the series herein designated, described in the within-mentioned Mortgage. BANKERS TRUST COMPANY, as Trustee, By______________________________ Authorized Officer ANNEX A TO FIRST MORTGAGE BOND, DESIGNATED SECURED MEDIUM TERM NOTE, 6.00% SERIES DUE NOVEMBER 1, 2003 (If redeemed during the twelve months Regular beginning November 1) Redemption Year Price 1998............ 101.72% 1999............ 100.86 2000............ 100.00 2001............ 100.00 2002............ 100.00 FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto (PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE) _______________________________________ ________________________________________________________________ ________________________________________________________________ (PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ________________________________________________________________ ASSIGNEE) the within Bond and all rights thereunder, hereby ________________________________________________________________ irrevocably constituting and appointing such person attorney to ________________________________________________________________ transfer such Bond on the books of the Issuer, with full power of ________________________________________________________________ substitution in the premises. Dated: ______________________ ____________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. Indenture Supplemental TO Mortgage and Deed of Trust (Dated as of December 1, 1940) Executed by APPALACHIAN POWER COMPANY formerly Appalachian Electric Power Company TO BANKERS TRUST COMPANY, As Trustee Dated as of November 1, 1993 $50,000,000 First Mortgage Bonds, Designated Secured Medium Term Notes, 7.125% Series due May 1, 2024 TABLE OF CONTENTS PAGE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 RECITALS Execution of Mortgage. . . . . . . . . . . . . . . . . . 1 Execution of supplemental indentures . . . . . . . . . . 1 Termination of Individual Trustee. . . . . . . . . . . . 1 Provision for issuance of bonds in one or more series. . 1 Right to execute supplemental indenture. . . . . . . . . 2 First Mortgage Bonds heretofore issued . . . . . . . . . 2 Issue of new First Mortgage Bonds of the 53rd Series . . 3 Fourth 1993 Supplemental Indenture. . . . . . . . . . . . 3 Compliance with legal requirements . . . . . . . . . . . 4 GRANTING CLAUSES. . . . . . . . . . . . . . . . . . . . . . . 4 DESCRIPTION OF PROPERTY . . . . . . . . . . . . . . . . . . . 4 APPURTENANCES, ETC. . . . . . . . . . . . . . . . . . . . . . 4 HABENDUM. . . . . . . . . . . . . . . . . . . . . . . . . . . 5 PRIOR LEASEHOLD ENCUMBRANCES. . . . . . . . . . . . . . . . . 5 GRANT IN TRUST. . . . . . . . . . . . . . . . . . . . . . . . 6 SECTION 1. Supplement to Original Indenture by adding Section 20ZZ . . . . . . . . . . . . . . . . . 6 SECTION 2. Initial Issuance of the Bonds of the 53rd Series. 9 SECTION 3. Provision for record date for meetings of Bondholders . . . . . . . . . . . . . . . . 9 SECTION 4. Original Indenture and Fourth 1993 Supplemental Indenture same instrument. . . . . . . . . . . 9 SECTION 5. Limitation of rights. . . . . . . . . . . . . . . 9 SECTION 6. Execution in counterparts . . . . . . . . . . . . 9 TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . 10 SIGNATURES AND SEALS. . . . . . . . . . . . . . . . . . . . . 10 ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . . . . . 12 SCHEDULE I. . . . . . . . . . . . . . . . . . . . . . . . . . I-1 SUPPLEMENTAL INDENTURE, dated as of the first day of November in the year One Thousand Nine Hundred and Ninety-three, made and entered into by and between APPALACHIAN POWER COMPANY, a corporation of the Commonwealth of Virginia, the corporate title of which was, prior to April 17, 1958, APPALACHIAN ELECTRIC POWER COMPANY (hereinafter sometimes called the "Company"), a transmitting utility (as such term is defined in Section 46-9- 105(1)(n) of the West Virginia Code), party of the first part, and BANKERS TRUST COMPANY, a corporation of the State of New York (hereinafter sometimes called the "Corporate Trustee" or "Trustee"), as Trustee, party of the second part. WHEREAS, the Company has heretofore executed and delivered its Mortgage and Deed of Trust (hereinafter sometimes referred to as the "Mortgage"), dated as of December 1, 1940, to the Trustee for the security of all bonds of the Company outstanding thereunder, and by said Mortgage conveyed to the Trustee, upon certain trusts, terms and conditions, and with and subject to certain provisos and covenants therein contained, all and singular the property, rights and franchises which the Company then owned or should thereafter acquire, excepting any property expressly excepted by the terms of the Mortgage; and WHEREAS, the Company has heretofore executed and delivered to the Trustee supplements and indentures supplemental to the Mortgage, dated as of December 1, 1943, December 2, 1946, December 1, 1947, March 1, 1950, June 1, 1951, October 1, 1952, December 1, 1953, March 1, 1957, May 1, 1958, October 2, 1961, April 1, 1962, June 1, 1965, September 2, 1968, December 1, 1968, October 1, 1969, June 1, 1970, October 1, 1970, September 1, 1971, February 1, 1972, December 1, 1972, July 1, 1973, March 1, 1974, April 1, 1975, May 1, 1975, December 1, 1975, April 1, 1976, September 1, 1976, November 1, 1977, May 1, 1979, August 1, 1979, February 1, 1980, November 1, 1980, April 1, 1982, October 1, 1983, February 1, 1987, September 1, 1987, November 1, 1989, December 1, 1990, August 1, 1991, February 1, 1992, May 1, 1992, August 1, 1992, November 15, 1992, April 15, 1993, May 15, 1993 and October 1, 1993 (hereinafter referred to as the "Third 1993 Supplemental Indenture"), respectively, amending and supplementing the Mortgage in certain respects (the Mortgage, as so amended and supplemented, being hereinafter called the "Original Indenture") and conveying to the Trustee, upon certain trusts, terms and conditions, and with and subject to certain provisos and covenants therein contained, certain property rights and property therein described; and WHEREAS, effective October 7, 1988, pursuant to Section 115 of the Original Indenture, the Individual Trustee resigned and all powers of the Individual Trustee then terminated, as did the Individual Trustee's right, title or interest in and to the trust estate, and without appointment of a new trustee as successor to the Individual Trustee, all the right, title and powers of the Trustee thereupon devolved upon the Corporate Trustee and its successors alone; and WHEREAS, the Original Indenture provides that bonds issued thereunder may be issued in one or more series and further provides that, with respect to each series, the rate or rates of interest, the date or dates of maturity, the dates for the payment of interest, the terms and rates of optional redemption, and other terms and conditions not inconsistent with the Original Indenture may be established, prior to the issue of bonds of such series, by an indenture supplemental to the Original Indenture; and WHEREAS, Section 132 of the Original Indenture provides that any power, privilege or right expressly or impliedly reserved to or in any way conferred upon the Company by any provision of the Original Indenture, whether such power, privilege or right is in any way restricted or is unrestricted, may be in whole or in part waived or surrendered or subjected to any restriction if at the time unrestricted or to additional restriction if already restricted, and that the Company may enter into any further covenants, limitations or restrictions for the benefit of any one or more series of bonds issued under the Original Indenture and provide that a breach thereof shall be equivalent to a default under the Original Indenture, or the Company may cure any ambiguity or correct or supplement any defective or inconsistent provisions contained in the Original Indenture or in any indenture supplemental to the Original Indenture, by an instrument in writing, executed and acknowledged, and that the Trustee is authorized to join with the Company in the execution of any such instrument or instruments; and WHEREAS, the Company has heretofore issued, in accordance with the provisions of the Mortgage, as amended and supplemented as of the respective dates thereof, bonds of the series (which are outstanding), entitled and designated as hereinafter set forth, in the respective original aggregate principal amounts indicated: Series Amount First Mortgage Bonds, 7-1/2% Series due 1998. . . $45,000,000 First Mortgage Bonds, 7.00% Series due 1999. . . 30,000,000 First Mortgage Bonds, 7-5/8% Series due 2002. . . 50,000,000 First Mortgage Bonds, 7.95% Series due 2002. . . 60,000,000 First Mortgage Bonds, 7.38% Series due 2002. . . 50,000,000 First Mortgage Bonds, 7.40% Series due 2002. . . 30,000,000 First Mortgage Bonds, 7-1/2% Series due 2002. . . 70,000,000 First Mortgage Bonds, 8-1/8% Series due 2003. . . 50,000,000 First Mortgage Bonds, 6.65% Series due 2003. . . 40,000,000 First Mortgage Bonds, 6.85% Series due 2003. . . 30,000,000 First Mortgage Bonds, 6.00% Series due 2003. . . 30,000,000 First Mortgage Bonds, 8-3/4% Series due 2017. . . 100,000,000 First Mortgage Bonds, 9-1/8% Series due 2019. . . 50,000,000 First Mortgage Bonds, 9-7/8% Series due 2020. . . 50,000,000 First Mortgage Bonds, 9.35% Series due 2021. . . 50,000,000 First Mortgage Bonds, 8.75% Series due 2022. . . 50,000,000 First Mortgage Bonds, 8.70% Series due 2022. . . 40,000,000 First Mortgage Bonds, 8.43% Series due 2022. . . 50,000,000 First Mortgage Bonds, 8.50% Series due 2022. . . 70,000,000 First Mortgage Bonds, 7.80% Series due 2023. . . 40,000,000 First Mortgage Bonds, 7.90% Series due 2023. . . 30,000,000 First Mortgage Bonds, 7.15% Series due 2023. . . 30,000,000 and WHEREAS, the Company, by appropriate corporate action in conformity with the terms of the Original Indenture, has duly determined to create a series of bonds under the Original Indenture to be designated as "First Mortgage Bonds, Designated Secured Medium Term Notes, 7.125% Series due May 1, 2024" (hereinafter sometimes referred to as the "bonds of the 53rd Series"); and WHEREAS, each of the bonds of the 53rd Series is to be substantially in the form set forth in Schedule I to this Supplemental Indenture (hereinafter sometimes referred to as the "Fourth 1993 Supplemental Indenture"); and WHEREAS, the Company, in the exercise of the powers and authorities conferred upon and reserved to it under and by virtue of the provisions of the Original Indenture, and pursuant to resolutions of its Board of Directors, has duly resolved and determined to make, execute and deliver to the Trustee a supplemental indenture, in the form hereof, for the purposes herein provided; and WHEREAS, all conditions and requirements necessary to make this Fourth 1993 Supplemental Indenture a valid, binding and legal instrument in accordance with its terms, have been done, performed and fulfilled, and the execution and delivery thereof have been in all respects duly authorized; NOW, THEREFORE, THIS INDENTURE WITNESSETH: That Appalachian Power Company, in consideration of the premises and of the purchase and acceptance of the bonds by the holders thereof and of the sum of One Dollar ($1.00) and other good and valuable consideration paid to it by the Trustee at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, and in order to secure the payment of both the principal of and interest and premium, if any, on the bonds from time to time issued under and secured by the Original Indenture and this Fourth 1993 Supplemental Indenture, according to their tenor and effect, and the performance of all the provisions of the Original Indenture and this Fourth 1993 Supplemental Indenture (including any further indenture or indentures supplemental to the Original Indenture and any modification or alteration made as in the Original Indenture provided) and of said bonds, has granted, bargained, sold, released, conveyed, transferred, mortgaged, pledged, set over and confirmed, and by these presents does grant, bargain, sell, release, convey, assign, transfer, mortgage, pledge, set over and confirm unto Bankers Trust Company, as Trustee, and to its respective successor or successors in the trust hereby created, and to its and their assigns, all the following described properties of the Company, that is to say: All property, real, personal and mixed, tangible and intangible, and all franchises owned by the Company on the date of the execution hereof, acquired since the execution of the Third 1993 Supplemental Indenture (except any hereinafter expressly excepted from the lien and operation of this Fourth 1993 Supplemental Indenture). TOGETHER WITH all and singular the tenements, hereditaments and appurtenances belonging or in anywise appertaining to the aforesaid property or any part thereof, with the reversion and reversions, remainder and remainders and (subject to the provisions of Section 63 of the Original Indenture) the tolls, rents, revenues, issues, earnings, income, product and profits thereof and all the estate, right, title and interest and claim whatsoever, at law as well as in equity, which the Company now has or may hereafter acquire in and to the aforesaid property and franchises and every part and parcel thereof. Provided that, in addition to the reservations and exceptions herein elsewhere contained, the following are not and are not intended to be now or hereafter granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over or confirmed hereunder and are hereby expressly excepted from the lien and operation of the Original Indenture and this Fourth 1993 Supplemental Indenture, viz.: (1) cash, shares of stock, and obligations (including bonds, notes and other securities) not hereinafter or in the Original Indenture specifically pledged, deposited or delivered hereunder or thereunder or hereinafter or therein covenanted so to be; (2) any goods, wares, merchandise, equipment, materials or supplies acquired for the purpose of sale or resale in the usual course of business or for consumption in the operation of any properties of the Company and automobiles and trucks; (3) all judgments, accounts, and choses in action, the proceeds of which the Company is not obligated as hereinafter provided or as provided in the Original Indenture to deposit with the Trustee hereunder and thereunder; provided, however, that the property and rights expressly excepted from the lien and operation of the Original Indenture and this Fourth 1993 Supplemental Indenture in the above subdivisions (2) and (3) shall (to the extent permitted by law) cease to be so excepted, in the event that the Trustee or a receiver or trustee shall enter upon and take possession of the mortgaged and pledged property in the manner provided in Article XIV of the Original Indenture by reason of the occurrence of a completed default, as defined in said Article XIV. TO HAVE AND TO HOLD all such properties, real, personal and mixed, granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over or confirmed by the Company as aforesaid, or intended so to be, unto the Trustee and its successors in the trust; SUBJECT, HOWEVER, to the reservations, exceptions, conditions, limitations and restrictions contained in the several deeds, leases, servitudes, franchises and contracts or other instruments through which the Company acquired and/or claims title to and/or enjoys the use of the aforesaid properties; and subject also to encumbrances of the character defined in Section 6 of the Original Indenture as "excepted encumbrances" in so far as the same may attach to any of the property embraced herein. Inasmuch as the Company holds certain of said lands, rights of way and other property under leases, power agreements and other contracts which provide that the Company's interest therein shall not be mortgaged without the consent of the respective lessors or other parties to said agreements and contracts, and such lessors and parties have either given such consent or have waived the requirement of such consent, it is hereby expressly agreed and made a condition upon which this Fourth 1993 Supplemental Indenture is executed and delivered, that the lien of this Fourth 1993 Supplemental Indenture and the estate, rights and remedies of the Trustee hereunder, and the rights and remedies of the holders of the bonds secured hereby and by the Original Indenture in so far as they may affect such lands, rights of way and other property now held or to be hereafter acquired by the Company under such leases, contracts or agreements, shall be subject and subordinate in all respects to the rights and remedies of the respective lessors or other parties thereto. And it is hereby expressly covenanted and agreed as follows: (a) That the rights of the Trustee hereunder, and of every person or corporation whatsoever claiming by reason of this Fourth 1993 Supplemental Indenture any right, title or interest, legal or equitable, in the property covered by any such lease, power agreement or other contract, are and at all times hereafter shall be subject in the same manner and degree as the rights of the Company might or would at all times be subject, had this Fourth 1993 Supplemental Indenture not been made, to all terms, provisions, conditions, covenants, stipulations, and agreements, and to all exceptions, reservations, limitations, restrictions, and forfeitures contained in any such lease, power agreement or other contract; (b) That any right, claim, condition or forfeiture which might at any time be asserted against the party in possession under the provisions of any such lease, power agreement or other contract, had this Fourth 1993 Supplemental Indenture not been made, may be asserted with the same force and effect against any and all persons or corporations at any time claiming any right, title or interest in any such property under or by reason of this Fourth 1993 Supplemental Indenture or of any bond hereby and by the Original Indenture secured; and (c) That such consent or waiver of the requirement of such consent given by the lessor under any such lease or party to any such power agreement or other contract is intended and shall be construed to be solely for the purpose of permitting the Company to mortgage its property generally without violating the express covenant contained in such lease, power agreement or other contract, and that such consent or waiver of the requirement of such consent confers upon the Trustee hereunder and the holders of bonds secured hereby and by the Original Indenture no rights in addition to such as they would have had, respectively, if such consent or waiver of the requirement of such consent had not been given. IN TRUST NEVERTHELESS, upon the terms and trusts in the Original Indenture and this Fourth 1993 Supplemental Indenture set forth, for the equal and pro rata benefit and security of those who shall hold the bonds and coupons issued and to be issued hereunder and under the Original Indenture, in accordance with the terms of the Original Indenture and of this Fourth 1993 Supplemental Indenture, without preference, priority or distinction as to lien of any of said bonds or coupons over any other thereof by reason of priority in the time of issuance or negotiation thereof, or otherwise howsoever, subject, however, to the conditions, provisions and covenants set forth in the Original Indenture and in this Fourth 1993 Supplemental Indenture. AND THIS INDENTURE FURTHER WITNESSETH: That in further consideration of the premises and for the considerations aforesaid, the Company, for itself and it successors and assigns, hereby covenants and agrees to and with the Trustee, and its successor or successors in such trust, under the Original Indenture, as follows: Section 9. The Original Indenture is hereby supplemented by adding immediately after Section 20YY, a new Section 20ZZ, as follows: SECTION 20ZZ. The Company hereby creates a fifty-third series of bonds to be issued under and secured by this Indenture, to be designated and to be distinguished from the bonds of all other series by the title "First Mortgage Bonds, Designated Secured Medium Term Notes, 7.125% Series due May 1, 2024" (herein sometimes referred to as the "bonds of the 53rd Series"). The form of the bonds of the 53rd Series shall be substantially as set forth in Schedule I to the Fourth 1993 Supplemental Indenture. Bonds of the 53rd Series shall mature on the date specified in their title. Unless otherwise determined by the Company, the bonds of the 53rd Series shall be issued in fully registered form without coupons in denominations of $1,000 and in integral multiples thereof; the principal of and premium (if any) and interest on each said bond to be payable at the office or agency of the Company in the Borough of Manhattan, The City of New York, in lawful money of the United States of America, provided that at the option of the Company interest may be mailed to registered owners of the bonds at their respective addresses that appear on the register thereof; and the rate of interest shall be the rate per annum specified in the title thereof, payable semi- annually on the first days of May and November of each year (commencing May 1, 1994) and on their maturity date. The person in whose name any bond of the 53rd Series is registered at the close of business on any record date (as hereinbelow defined) with respect to any regular semi-annual interest payment date (other than interest payable upon redemption or maturity) shall be entitled to receive the interest payable on such interest payment date notwithstanding the cancellation of such bond of the 53rd Series upon any registration of transfer or exchange thereof (including any exchange effected as an incident to a partial redemption thereof) subsequent to the record date and prior to such interest payment date, except, if and to the extent that the Company shall default in the payment of the interest due on such interest payment date, then the registered owners of bonds of the 53rd Series on such record date shall have no further right to or claim in respect of such defaulted interest as such registered owners on such record date, and the persons entitled to receive payment of any defaulted interest thereafter payable or paid on any bonds of the 53rd Series shall be the registered owners of such bonds of the 53rd Series (or any bond or bonds issued, directly or after intermediate transactions upon transfer or exchange or in substitution thereof) on the date of payment of such defaulted interest. Interest payable upon redemption or maturity shall be payable to the person to whom the principal is paid. The term "record date" as used in this Section 20ZZ, and in the form of the bonds of the 53rd Series, with respect to any regular semi-annual interest payment date (other than interest payable upon redemption or maturity) applicable to the bonds of the 53rd Series, shall mean the April 15 next preceding a May 1 interest payment date or the October 15 next preceding a November 1 interest payment date, as the case may be, or, if such April 15 or October 15 is not a Business Day (as defined hereinbelow), the next preceding Business Day. The term "Business Day" with respect to any bond of the 53rd Series shall mean any day, other than a Saturday or Sunday, which is not a day on which banking institutions or trust companies in The City of New York, New York or the city in which is located any office or agency maintained for the payment of principal of or premium, if any, or interest on such bond of the 53rd Series are authorized or required by law, regulation or executive order to remain closed. Every registered bond of the 53rd Series shall be dated the date of authentication ("Issue Date") and shall bear interest computed on the basis of a 360-day year consisting of twelve 30-day months from its Issue Date or from the latest semi-annual interest payment date to which interest has been paid on the bonds of the 53rd Series preceding the Issue Date, unless such Issue Date be an interest payment date to which interest is being paid on the bonds of the 53rd Series, in which case it shall bear interest from its Issue Date or unless the Issue Date be the record date for the interest payment date first following the date of original issuance of bonds of the 53rd Series (the "Original Issue Date"), or a date prior to such record date, then from the Original Issue Date; provided that, so long as there is no existing default in the payment of interest on said bonds, the owner of any bond authenticated by the Corporate Trustee between the record date for any regular semi-annual interest payment date and such interest payment date shall not be entitled to the payment of the interest due on such interest payment date (other than interest payable upon redemption or maturity) and shall have no claim against the Company with respect thereto; provided further, that, if and to the extent the Company shall default in the payment of the interest due on such interest payment date, then any such bond shall bear interest from the May 1 or November 1, as the case may be, next preceding its Issue Date, to which interest has been paid or, if the Company shall be in default with respect to the interest payment date first following the Original Issue Date, then from the Original Issue Date. If any semi-annual interest payment date, redemption date, or the maturity date is not a Business Day, payment of amounts due on such date may be made on the next succeeding Business Day, and, if such payment is made or duly provided for on such Business Day, no interest shall accrue on such amounts for the period from and after such interest payment date, redemption date or the maturity date, as the case may be, to such Business Day. Notwithstanding the provisions of Section 14 of this Indenture, the bonds of the 53rd Series shall be executed on behalf of the Company by its Chairman of the Board, by its President or by one of its Vice Presidents or by one of its officers designated by the Board of Directors of the Company for such purpose, whose signature may be a facsimile, and its corporate seal shall be thereunto affixed or printed thereon and attested by its Secretary or one of its Assistant Secretaries, and the provisions of the penultimate sentence of said Section 14 shall be applicable to such bonds of the 53rd Series. The bonds of the 53rd Series are redeemable in accordance with Article XII of the Original Indenture and as further set forth in the form of bond contained in Schedule I to this Fourth 1993 Supplemental Indenture. The Company shall not be required to make transfers or exchanges of bonds of the 53rd Series for a period of fifteen days next preceding any selection of bonds of the 53rd Series to be redeemed or to make transfers or exchanges of any bonds of the 53rd Series designated in whole or in part for redemption. Notwithstanding the provisions of Section 12 of this Indenture, the Company shall not be required to make transfers or exchanges of bonds of the 53rd Series for a period of fifteen days next preceding any interest payment date. Registered bonds of the 53rd Series shall be transferable upon presentation and surrender thereof, for cancellation, at the office or agency of the Company in the Borough of Manhattan, The City of New York, and at such other office or agency of the Company as the Company may from time to time designate, by the registered owners thereof, in person or by duly authorized attorney, in the manner and upon payment, if required by the Company, of the charges prescribed in this Indenture. In the manner and upon payment, if required by the Company, of the charges prescribed in this Indenture, registered bonds of the 53rd Series may be exchanged for a like aggregate principal amount of registered bonds of the 53rd Series of other authorized denominations, upon presentation and surrender thereof, for cancellation, at the office or agency of the Company in the Borough of Manhattan, The City of New York, or at such other office or agency of the Company as the Company may from time to time designate. Section 10. Initial Issuance of the Bonds of the 53rd Series: In accordance with and upon compliance with such provisions of the Original Indenture as shall be selected for such purpose by the officers of the Company duly authorized to take such action, bonds of the 53rd Series, in an aggregate principal amount not exceeding $50,000,000, shall forthwith be executed by the Company and delivered to the Trustee and shall be authenticated by the Trustee and delivered to or upon the order of the Company (without awaiting the filing and recording of this Fourth 1993 Supplemental Indenture except to the extent required by subdivision (10) of Section 29 of the Original Indenture). Section 11. At any meeting of bondholders held as provided for in Article XX of the Original Indenture at which owners of bonds of the 53rd Series are entitled to vote, all owners of bonds of the 53rd Series at the time of such meeting shall be entitled to vote thereat; provided, however, that the Trustee may, and upon request of the Company or of a majority of the bondowners of the 53rd Series, shall, fix a day not exceeding ninety days preceding the date for which the meeting is called as a record date for the determination of owners of bonds of the 53rd Series, entitled to notice of and to vote at such meeting and any adjournment thereof and only such registered owners who shall have been such registered owners on the date so fixed, and who are entitled to vote such bonds of the 53rd Series at the meeting, shall be entitled to receive notice of such meeting. Section 12. As supplemented by this Fourth 1993 Supplemental Indenture, the Original Indenture is in all respects ratified and confirmed and the Original Indenture and this Fourth 1993 Supplemental Indenture shall be read, taken and construed as one and the same instrument. The bonds of the 53rd Series are the original debt secured by this Fourth 1993 Supplemental Indenture and the Original Indenture, and this Fourth 1993 Supplemental Indenture and the Original Indenture shall be, and shall be deemed to be, the original lien instrument securing the bonds of the 53rd Series. Section 13. Nothing contained in this Fourth 1993 Supplemental Indenture shall, or shall be construed to, confer upon any person other than the owners of bonds issued under the Original Indenture and this Fourth 1993 Supplemental Indenture, the Company and the Trustee, any right to avail themselves of any benefit of any provision of the Original Indenture or of this Fourth 1993 Supplemental Indenture. Section 14. This Fourth 1993 Supplemental Indenture may be simultaneously executed in several counterparts and all such counterparts executed and delivered, each as an original, shall constitute one and the same instrument. IN WITNESS WHEREOF, APPALACHIAN POWER COMPANY, party of the first part, has caused this instrument to be signed in its name and behalf by its President, a Vice President or an Assistant Treasurer, and its corporate seal to be hereunto affixed and attested by its Secretary or an Assistant Secretary, and BANKERS TRUST COMPANY, party of the second part, in token of its acceptance hereof, has caused this instrument to be signed in its name and behalf by a Vice President or an Assistant Vice President and its corporate seal to be hereunto affixed and attested by its Secretary, an Assistant Secretary or an Assistant Treasurer. Executed and delivered as of the date and year first above written. APPALACHIAN POWER COMPANY [SEAL] By: /s/ B. M. Barber B. M. Barber Assistant Treasurer Attest: /s/ Jeffrey D. Cross Jeffrey D. Cross Assistant Secretary In the presence of: /s/ T. G. Berkemeyer T. G. Berkemeyer /s/ A. A. Pena A. A. Pena BANKERS TRUST COMPANY [SEAL] By /s/ Kathleen Boyd Kathleen Boyd Vice President Attest: /s/ M. Lisa Morrone M. Lisa Morrone Assistant Treasurer Executed by BANKERS TRUST COMPANY in the presence of: /s/ S. Thiel S. Thiel /s/ John Florio John Florio STATE OF OHIO ) ) SS: COUNTY OF FRANKLIN ) On this 28th day of October, 1993, personally appeared before me, a Notary Public within and for said County in the State aforesaid, B. M. BARBER and JEFFREY D. CROSS, to me known and known to me to be respectively an Assistant Treasurer and Assistant Secretary of APPALACHIAN POWER COMPANY, one of the corporations named in and which executed the foregoing instrument, who severally acknowledged that they did sign and seal said instrument as such Assistant Treasurer and Assistant Secretary for and on behalf of said corporation and that the same is their free act and deed as such Assistant Treasurer and Assistant Secretary, respectively, and the free and corporate act and deed of said corporation. In Witness Whereof, I have hereunto set my hand and notarial seal this 28th day of October, 1993. [Notarial Seal] /s/ Mary M. Soltesz MARY M. SOLTESZ Notary Public, State of Ohio My Commission Expires July 13, 1994 STATE OF NEW YORK ) ) SS: COUNTY OF NEW YORK ) I, PATRICIA M. CARILLO, a Notary Public, duly qualified, commissioned and sworn, and acting in and for the County and State aforesaid, hereby certify that on this 29th day of October, 1993: KATHLEEN BOYD and M. LISA MORRONE, whose names are signed to the writing above, bearing a date as of the 1st day of November, 1993, as Vice President and Assistant Treasurer, respectively, of BANKERS TRUST COMPANY, have this day acknowledged the same before me in my County aforesaid. KATHLEEN BOYD, who signed the writing above and hereto annexed for BANKERS TRUST COMPANY, a corporation, bearing a date as of the 1st day of November, 1993, has this day in my said County before me acknowledged the said writing to be the act and deed of said corporation. Before me appeared KATHLEEN BOYD and M. LISA MORRONE to me personally known, who, being by me duly sworn, did say that they are Vice President and Assistant Treasurer, respectively, of BANKERS TRUST COMPANY, and that the seal affixed to said instrument is the corporate seal of said corporation, and that said instrument was signed and sealed in behalf of said corporation, by authority of its Board of Directors and said KATHLEEN BOYD acknowledged said instrument to be the free act and deed of said corporation. M. LISA MORRONE personally came before me this day and acknowledged that she is an Assistant Treasurer of BANKERS TRUST COMPANY, a corporation, and that by authority duly given and as the act of the corporation, the foregoing instrument was signed in its name by an Assistant Treasurer, sealed with its corporate seal, and attested by herself as an Assistant Treasurer. IN WITNESS WHEREOF, I have hereunto set my hand and official notarial seal, in the County and State of New York, this 29th day of October, 1993. /s/ Patricia M. Carillo PATRICIA M. CARILLO Notary Public, State of New York No. 41-4747732 Qualified in Queens County Certificate filed in New York County Commission expires May 31, 1995 [SEAL] The foregoing instrument was prepared by Jeffrey D. Cross, 1 Riverside Plaza, Columbus, Ohio 43215. SCHEDULE I APPALACHIAN POWER COMPANY FIRST MORTGAGE BOND, DESIGNATED SECURED MEDIUM TERM NOTE, 7.125% SERIES DUE MAY 1, 2024 Bond No. Original Issue Date: November 9, 1993 Principal Amount: Semi-annual Interest Payment Dates: May 1 and November 1 Record Dates: April 15 and October 15 CUSIP No: 03774B AR4 APPALACHIAN POWER COMPANY, a corporation of the Commonwealth of Virginia (hereinafter called the "Company"), for value received, hereby promises to pay to ____________, or registered assigns, the Principal Amount set forth above on the maturity date specified in the title of this bond in lawful money of the United States of America, at the office or agency of the Company in the Borough of Manhattan, The City of New York, and to pay to the registered owner hereof interest on said sum from the date of authentication of this bond (herein called the "Issue Date") or latest semi-annual interest payment date to which interest has been paid on the bonds of this series preceding the Issue Date, unless the Issue Date be an interest payment date to which interest is being paid, in which case from the Issue Date or unless the Issue Date be the record date for the interest payment date first following the Original Issue Date set forth above or a date prior to such record date, then from the Original Issue Date (or, if the Issue Date is between the record date for any interest payment date and such interest payment date, then from such interest payment date, provided, however, that if and to the extent that the Company shall default in the payment of the interest due on such interest payment date, then from the next preceding semi-annual interest payment date to which interest has been paid on the bonds of this series, or if such interest payment date is the interest payment date first following the Original Issue Date set forth above, then from the Original Issue Date), until the principal hereof shall have become due and payable, at the rate per annum specified in the title of this bond, payable on May 1 and November 1 of each year (commencing May 1, 1994) and on the maturity date specified in the title of this bond; provided that, at the option of the Company, such interest may be paid by check, mailed to the registered owner of this bond at such owner's address appearing on the register hereof. This bond is one of a duly authorized issue of bonds of the Company, issuable in series, and is one of a series known as its First Mortgage Bonds, of the series designated in its title, all bonds of all series issued and to be issued under and equally secured (except in so far as any sinking fund, established in accordance with the provisions of the Mortgage hereinafter mentioned, may afford additional security for the bonds of any particular series and except as provided in Section 73 of the Mortgage) by a Mortgage and Deed of Trust (herein, together with all indentures supplemental thereto, called the Mortgage), dated as of December 1, 1940, executed by APPALACHIAN ELECTRIC POWER COMPANY (the corporate title of which was changed to APPALACHIAN POWER COMPANY) to BANKERS TRUST COMPANY, as Trustee, to which Mortgage reference is made for a description of the property mortgaged and pledged, the nature and extent of the security, the rights of the holders of the bonds and of the Trustee in respect thereof, the duties and immunities of the Trustee, and the terms and conditions upon which the bonds are secured. With the consent of the Company and to the extent permitted by and as provided in the Mortgage, the rights and obligations of the Company and/or of the holders of the bonds and/or coupons and/or the terms and provisions of the Mortgage and/or of any instruments supplemental thereto may be modified or altered by affirmative vote of the holders of at least seventy-five per centum (75%) in principal amount of the bonds affected by such modification or alteration, then outstanding under the Mortgage (excluding bonds disqualified from voting by reason of the Company's interest therein as provided in the Mortgage); provided that, without the consent of the owner hereof no such modification or alteration shall permit the extension of the maturity of the principal of or interest on this bond or the reduction in the rate of interest hereon or any other modification in the terms of payment of such principal or interest or the creation of a lien on the mortgaged and pledged property ranking prior to or on a parity with the lien of the Mortgage or the deprivation of the owner hereof of a lien upon such property or reduce the above percentage. As provided in said Mortgage, said bonds may be for various principal sums and are issuable in series, which may mature at different times, may bear interest at different rates and may otherwise vary as therein provided, and this bond is one of a series entitled "First Mortgage Bonds, Designated Secured Medium Term Notes, 7.125% Series due May 1, 2024 (herein called "bonds of the 53rd Series") created by an Indenture Supplemental to Mortgage and Deed of Trust dated as of November 1, 1993 (the "Fourth 1993 Supplemental Indenture"), as provided for in said Mortgage. The interest payable on any May 1 or November 1 (other than interest payable upon redemption or maturity) will, subject to certain exceptions provided in said Fourth 1993 Supplemental Indenture, be paid to the person in whose name this bond is registered at the close of business on the record date, which shall be the April 15 or October 15, as the case may be, next preceding such interest payment date, or, if such April 15 or October 15 is not a Business Day (as hereinbelow defined), the next preceding Business Day. Interest payable upon redemption or maturity shall be payable to the person to whom the principal is paid. The term "Business Day" means any day, other than a Saturday or Sunday, which is not a day on which banking institutions or trust companies in The City of New York, New York or the city in which is located any office or agency maintained for the payment of principal or premium, if any, or interest on bonds of the 53rd Series are authorized or required by law, regulation or executive order to remain closed. If any semi-annual interest payment date, redemption date or the maturity date is not a Business Day, payment of amounts due on such date may be made on the next succeeding Business Day, and, if such payment is made or duly provided for on such Business Day, no interest shall accrue on such amounts for the period from and after such interest payment date, redemption date or the maturity date, as the case may be, to such Business Day. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner hereof for the purpose of receiving payment of or on account of principal or (subject to the provisions hereof) interest hereon and for all other purposes and the Company and the Trustee shall not be affected by any notice to the contrary. The Company shall not be required to make transfers or exchanges of bonds of the 53rd Series for a period of fifteen days next preceding any interest payment date, or next preceding any selection of bonds of the 53rd Series to be redeemed, and the Company shall not be required to make transfers or exchanges of any bonds of the 53rd Series designated for redemption in whole or in part. Any or all of the bonds of the 53rd Series may be redeemed by the Company on or after May 1, 2004, at its option, or by operation of various provisions of the Mortgage, in whole at any time or in part from time to time upon not less than thirty but not more than ninety days' previous notice given by mail to the registered owners of the bonds to be redeemed, all as provided in the Mortgage, (a) if redeemed otherwise than by the use or application of cash deposited pursuant to Section 40 of the Mortgage and otherwise than by the use of proceeds of released property or the proceeds of insurance, at an amount equal to a percentage of the principal amount thereof determined as set forth in Annex A hereto under the heading "Regular Redemption Price" together in each case with accrued interest to the date fixed for redemption, or (b) if redeemed by the use or application of cash deposited pursuant to Section 40 of the Mortgage or by the use of proceeds of released property or the proceeds of insurance, at an amount equal to 100% of the principal amount thereof together in each case with accrued interest to the date fixed for redemption. The principal hereof may be declared or may become due prior to the express date of the maturity hereof on the conditions, in the manner and at the time set forth in the Mortgage, upon the occurrence of a completed default as in the Mortgage provided. This bond is transferable as prescribed in the Mortgage by the registered owner hereof in person, or by his duly authorized attorney, at the office or agency of the Company in the Borough of Manhattan, The City of New York, and at such other office or agency of the Company as the Company may designate, upon surrender and cancellation of this bond and upon payment, if the Company shall require it, of the transfer charges prescribed in the Mortgage, and, thereupon, a new registered bond or bonds of authorized denominations of the same series for a like principal amount will be issued to the transferee in exchange herefor as provided in the Mortgage. In the manner and upon payment, if the Company shall require it, of the charges prescribed in the Mortgage, registered bonds of the 53rd Series may be exchanged for a like aggregate principal amount of registered bonds of other authorized denominations of the same series, upon presentation and surrender thereof, for cancellation, at the office or agency of the Company in the Borough of Manhattan, The City of New York, or at such other office or agency of the Company as the Company may from time to time designate. No recourse shall be had for the payment of the principal of or interest on this bond against any incorporator or any past, present or future stockholder, officer or director, as such, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, under any rule of law, statute or constitution or by the enforcement of any assessment or otherwise, all such liability of incorporators, stockholders, officers and directors, as such, being waived and released by the holder or owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Mortgage. This bond shall not become valid or obligatory for any purpose until BANKERS TRUST COMPANY, the Trustee under the Mortgage, or its successor thereunder, shall have signed the form of Authentication Certificate endorsed hereon. In Witness Whereof, Appalachian Power Company has caused this bond to be executed in its name by the signature of its Chairman of the Board, its President or one of its Vice Presidents and its corporate seal, or a facsimile thereof, to be impressed or imprinted hereon and attested by the signature of its Secretary or one of its Assistant Secretaries. Dated: APPALACHIAN POWER COMPANY By________________________ Vice President (SEAL) Attest:___________________ Assistant Secretary TRUSTEE'S AUTHENTICATION CERTIFICATE This bond is one of the bonds, of the series herein designated, described in the within-mentioned Mortgage. BANKERS TRUST COMPANY, as Trustee, By______________________________ Authorized Officer ANNEX A TO FIRST MORTGAGE BOND, DESIGNATED SECURED MEDIUM TERM NOTE, 7.125% SERIES DUE MAY 1, 2024 (If redeemed during the twelve months Regular beginning May 1) Redemption Year Price 2004 103.57% 2005 103.21 2006 102.85 2007 102.50 2008 102.14 2009 101.79 2010 101.43 2011 101.07 2012 100.72 2013 100.36 2014 100.00 2015 100.00 2016 100.00 2017 100.00 2018 100.00 2019 100.00 2020 100.00 2021 100.00 2022 100.00 2023 100.00 FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto (PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE) _______________________________________ ________________________________________________________________ ________________________________________________________________ (PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ________________________________________________________________ ASSIGNEE) the within Bond and all rights thereunder, hereby ________________________________________________________________ irrevocably constituting and appointing such person attorney to ________________________________________________________________ transfer such Bond on the books of the Issuer, with full power of ________________________________________________________________ substitution in the premises. Dated: ______________________ ____________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within Bond in every particular without alteration or enlargement or any change whatsoever. EX-12 5 EXHIBIT 12 RATIO OF EARNINGS EXHIBIT 12 APPALACHIAN POWER COMPANY Computation of Consolidated Ratio of Earnings to Fixed Charges (in thousands except ratio data)
Year Ended December 31, 1989 1990 1991 1992 1993 Fixed Charges: Interest on First Mortgage Bonds. . . . . . . . . . . . . . $69,236 $66,403 $ 72,800 $ 84,177 $ 80,472 Interest on Other Long-term Debt. . . . . . . . . . . . . . 19,520 19,637 18,282 17,986 16,846 Interest on Short-term Debt . . . . . . . . . . . . . . . . 802 1,633 3,089 1,792 1,615 Miscellaneous Interest Charges. . . . . . . . . . . . . . . 1,843 1,999 3,011 2,617 2,954 Estimated Interest Element in Lease Rentals . . . . . . . . 4,600 5,300 5,700 6,700 7,900 Total Fixed Charges. . . . . . . . . . . . . . . . . . $96,001 $94,972 $102,882 $113,272 $109,787 Earnings: Net Income. . . . . . . . . . . . . . . . . . . . . . . . . $156,347 $107,988 $140,419 $131,419 $125,132 Plus Federal Income Taxes . . . . . . . . . . . . . . . . . 66,841 41,194 47,227 46,017 51,681 Plus State Income Taxes . . . . . . . . . . . . . . . . . . 10,833 5,878 3,650 2,649 8,887 Plus Fixed Charges (as above) . . . . . . . . . . . . . . . 96,001 94,972 102,882 113,272 109,787 Total Earnings . . . . . . . . . . . . . . . . . . . . $330,022 $250,032 $294,178 $293,357 $295,487 Ratio of Earnings to Fixed Charges. . . . . . . . . . . . . . 3.43 2.63 2.85 2.58 2.69
EX-13 6 EXHIBIT 13 ANNUAL REPORT PORTIONS Selected Consolidated Financial Data
Year Ended December 31, 1993 1992 1991 1990 1989 (in thousands) INCOME STATEMENTS DATA: Operating Revenues $1,519,104 $1,410,778 $1,378,706 $1,468,694 $1,462,354 Operating Expenses 1,289,764 1,176,882 1,143,626 1,269,548 1,217,787 Operating Income 229,340 233,896 235,080 199,146 244,567 Nonoperating Income (Loss) (3,353) 3,036 1,132 (2,492) 2,787 Income Before Interest Charges 225,987 236,932 236,212 196,654 247,354 Interest Charges 100,855 105,513 95,793 88,666 91,007 Net Income 125,132 131,419 140,419 107,988 156,347 Preferred Stock Dividend Requirements 16,540 16,596 13,861 14,285 14,712 Earnings Applicable to Common Stock $ 108,592 $ 114,823 $ 126,558 $ 93,703 $ 141,635 December 31, 1993 1992 1991 1990 1989 (in thousands) BALANCE SHEETS DATA: Electric Utility Plant $4,193,700 $4,038,735 $3,884,833 $3,720,515 $3,608,943 Accumulated Depreciation and Amortization 1,550,855 1,477,078 1,405,074 1,328,309 1,274,975 Net Electric Utility Plant $2,642,845 $2,561,657 $2,479,759 $2,392,206 $2,333,968 Regulatory Assets (a) $442,527 $122,111 $88,130 $80,087 $75,677 Total Assets $3,428,367 $3,094,091 $2,972,581 $2,825,522 $2,770,808 Common Stock and Paid-in Capital $ 755,292 $ 741,509 $ 742,107 $ 742,106 $ 742,104 Retained Earnings 227,816 229,920 220,933 198,051 219,904 Total Common Shareowner's Equity $ 983,108 $ 971,429 $ 963,040 $ 940,157 $ 962,008 Cumulative Preferred Stock: Not Subject to Mandatory Redemption $ 55,000 $ 105,000 $ 105,000 $ 105,000 $ 105,000 Subject to Mandatory Redemption (b) 160,537 108,509 65,662 69,675 73,685 Total Cumulative Preferred Stock $ 215,537 $ 213,509 $ 170,662 $ 174,675 $ 178,685 Long-term Debt (b) $1,215,168 $1,200,272 $1,100,626 $1,051,057 $1,001,377 Obligations Under Capital Leases (b) $ 29,973 $ 24,269 $ 19,801 $ 14,360 $ 14,150 Total Capitalization and Liabilities $3,428,367 $3,094,091 $2,972,581 $2,825,522 $2,770,808 (a) Effective January 1, 1993 a new accounting standard Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, was adopted resulting in an increase in regulatory assets. (See Note 1 of Notes to Consolidated Financial Statements). (b) Including portion due within one year. /TABLE MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Net Income Net income decreased by $6.3 million in 1993 to $125.1 million principally due to an increase in other operation and maintenance expenses due to a change in accounting method for postretirement benefits other than pensions from pay-as-you-go to accrual accounting in accordance with a new accounting standard, planned generating unit repair and inspection outages, and storm damage expenditures. Net income decreased by $9 million in 1992 to $131.4 million principally due to an increase in interest expense as a result of the issuance of additional long-term debt in the first quarter of 1992. Outlook The electric utility industry is expected to undergo significant changes for the remainder of the decade because of increasing competition in the generation and sale of electricity and increasing energy flows resulting from open transmission access. Although management believes that the Company is well positioned, as a low cost producer, to compete; efforts continue to further reduce costs and increase effectiveness. The Company faces additional challenges from compliance with the Clean Air Act Amendments of 1990 and other environmental concerns and costs that could affect its financial performance and possibly its ability to meet its financial obligations and commitments. While management believes the Company is equipped to meet these challenges, the ability to obtain favorable rate- making treatment to recover on a timely basis its costs of service is critical to future financial performance. Future results of operations will be affected by several factors, including the continued economic health of our service territory, the weather, competition for wholesale sales and the rate-making policies of the Company's regulators. Many of these factors are not generally within management's direct control yet every effort will be made to work with regulators, government officials, and current and prospective customers to positively influence these critical factors and to take advantage of the opportunities increased competition will bring. Revenues and Sales Increase Operating revenues increased 8% in 1993 and 2% in 1992 and can be analyzed as follows: Increase (Decrease) From Previous Year (dollars in millions) 1993 1992 Amount % Amount % Retail: Price variance $ 1.3 $ (5.0) Volume variance 36.4 18.0 Power Supply Costs 35.0 39.2 72.7 6.4 52.2 4.8 Wholesale: Price variance 5.1 2.3 Volume variance 36.9 (27.4) Power Supply Costs (6.0) 4.8 36.0 14.3 (20.3) (7.4) Other Operating Revenues (.4) .2 Total $108.3 7.7 $ 32.1 2.3 The increase in 1993 retail revenues was primarily due to a return to normal weather, increased recoveries of deferred power supply costs, and a May 1993 Virginia retail rate increase being collected subject to refund. Retail revenues increased in 1992 primarily due to increased recoveries of deferred power supply costs and increased energy sales to residential and industrial customers predominantly from growth in the number of customers. In 1993 wholesale revenues increased 14% due to a 15% increase in sales as the Company's share of short-term wholesale sales made by the AEP System Power Pool (Power Pool) increased reflecting the decreased availability of unaffiliated generating units and the return to normal hot summer weather. The decrease in 1992 wholesale revenues resulted largely from a decline in short-term Power Pool sales to unaffiliated utilities caused by a sluggish economy, especially as it affected the service territories of neighboring utilities, and unseasonably mild weather in 1992 and a hotter than normal spring in 1991. Efforts to improve short-term wholesale sales are affected by the highly competitive nature of the short-term energy market and other factors, such as unaffiliated generating plant availability, the weather and the economy, that are not generally within management's control. Future results of operations will be affected by the ability to make cost-effective wholesale sales or, if such sales are reduced, the ability to raise retail rates in a timely manner. Operating Expenses Increase Operating expenses increased 10% in 1993 and 3% in 1992. Changes in the components of operating expenses were as follows: Increase (Decrease) From Previous Year (dollars in millions) 1993 1992 Amount % Amount % Fuel $ 30.9 8.8 $ 43.2 14.0 Purchased Power 28.1 10.0 (18.7) (6.2) Other Operation 18.2 10.8 4.5 2.7 Maintenance 15.2 14.5 (7.7) (6.9) Depreciation and Amortization 5.8 4.9 5.1 4.6 Taxes Other Than Federal Income Taxes 7.4 7.0 10.4 10.9 Federal Income Taxes 7.3 15.4 (3.5) (6.8) Total $112.9 9.6 $ 33.3 2.9 Fuel expense increased in 1993 primarily due to the operation of the power supply cost recovery mechanism as previously deferred fuel costs were expensed concurrent with their recovery. The resulting increase in expense was partially offset by reduced coal-fired generation due to planned power plant maintenance. The increase in fuel expense in 1992 reflects a 12% increase in net generation and an increase in the average cost of fuel burned. The increase in purchased power expense in 1993 was due to increased energy purchases from the Power Pool as a result of increased sales levels and power plant maintenance outages. In 1992 the decrease in purchased power expense resulted from a reduction in Power Pool energy charges offset, in part, by increased Power Pool capacity charges. Higher generation levels in 1992, which enabled the Company to meet its retail customer demand without purchasing energy from the Power Pool, and lower wholesale demand caused the decrease in Power Pool energy charges. Power Pool capacity charges increased due to an increase in the Company's prior twelve-month peak demand relative to the total peak demand of all Power Pool members. The Power Pool allocates capacity costs to its members based on their relative peak demands. In 1993 a change in accounting method for postretirement benefits other than pensions from pay-as-you-go to accrual accounting in accordance with a new accounting standard was the principal reason other operation expense increased. Maintenance expense increased in 1993 principally due to planned generating unit repair and inspection outages as well as storm damage ex- penses from a March 1993 blizzard and June 1993 windstorm. Maintenance expense declined in 1992 principally due to decreased storm damage. An increase in taxable income caused the 1993 increase in taxes other than federal income taxes. In 1992 the increase in taxes other than federal income taxes was primarily due to higher generation levels, which resulted in increased business and occupation taxes on generation in West Virginia, and the effect of favorable adjustments in 1991 related to prior years' West Virginia business and occupation tax accruals. Federal income taxes attributable to operations increased in 1993 primarily due to changes in certain book/tax differences accounted for on a flow-through basis and an increase in pre-tax operating income. The 1992 reduction in federal income taxes was primarily caused by a decrease in pre-tax operating income offset in part by the effect of favorable accrual adjustments recorded in 1991 for the settlement of Internal Revenue Service (IRS) audits of prior years' federal income tax returns. Nonoperating Income Nonoperating income decreased in 1993 and increased in 1992 principally because of interest income recorded in 1992 on tax refunds received from the IRS in connection with the settlement of audits of prior years' tax returns. Interest Charges Interest charges decreased in 1993 after increasing in 1992 and 1991. The retirement and the refinancing at lower interest rates of $274 million of debt reduced interest charges in 1993. Interest charges increased in 1992 largely due to the issuance of long-term debt to repay lower-rate short-term debt. Management intends to continue, where possible, to refinance higher cost securities to take advantage of favorable market interest rates. Regulatory Assets and Deferred Tax Liabilities Increase The Company prospectively adopted a new accounting standard for income taxes on January 1, 1993. The new standard required, among other things, that regulated entities record deferred tax liabilities on temporary differences previously flowed-through for rate-making and book accounting. Where rate-making provides for flow-through treatment, corresponding regulatory assets were recorded resulting in a significant increase in total assets and liabilities. Construction Spending Total plant and property additions increased to $201 million in 1993 from $198 million in 1992. Management estimates construction expenditures for the next three years to be $627 million including expenditures necessary to meet the requirements of the Clean Air Act Amendments of 1990. Approximately 66% of the construction expenditures for the next three years will be financed internally with the remainder financed externally. Capital Resources The Company generally issues short-term debt to provide for interim financing of capital expenditures that exceed internally generated funds. Periodic reductions of outstanding short-term debt are made through issuance of long-term debt, preferred stock and through equity capital contributions by the parent company, American Electric Power Co. Inc. (AEP Co., Inc.). In 1993 short-term borrowings decreased by $40 million. At December 31, 1993, the Company had outstanding unused short-term lines of credit of $537 million shared with other American Electric Power (AEP) System companies. Regulatory provisions limit short-term debt borrowing to $200 million; however, the Company may request that this limit be raised. The Company received or has requested regulatory approval to issue up to $125 million of long-term debt to retire short-term debt, refinance higher cost and maturing long-term debt, refund cumulative preferred stock and fund construction expenditures. Unless the Company meets certain earnings or coverage tests, additional long-term debt or preferred stock cannot be issued. In order to issue certain long-term debt (without refunding existing debt), the Company must have pre-tax earnings equal to at least two times the annual interest charges on long-term debt after giving effect to the issuance of the new debt. Generally, issuance of additional preferred stock requires an after-tax gross income at least equal to one and one-half times annual interest and preferred stock dividend requirements after giving effect to the issuance of the new preferred stock. The Company presently exceeds these minimum coverage requirements. At December 31, 1993, the long-term debt and preferred stock coverage ratios were 3.62 and 2.04, respectively. Recently a major credit rating agency reevaluated the credit worthiness of companies in the electric utility industry based on perceived risk from deregulation, increased competition, reduced load growth, escalating nuclear plant costs and environmental concerns. The agency lowered its ratings outlook for approximately one-third of the companies but not for Appalachian Power which was regarded by the agency as being relatively well positioned to meet future competitive challenges. Competition As discussed earlier, the short-term wholesale energy market has been extremely competitive since 1990. With the passage of the Energy Policy Act of 1992, which provides for greater ease of transmission access and reduces certain regulatory restrictions for independent power producers (IPPs), competition is expected to continue to increase in the long-term wholesale market and in the construction of new generating capacity. For example, IPPs are no longer required to find an industrial host to utilize the steam by- product from the generation of electricity to build a generating unit and avoid regulation under the Public Utility Holding Company Act of 1935 (1935 Act). The Energy Policy Act also exempts IPPs from requirements under the 1935 Act which, among other things, permit IPPs to use greater amounts of lower cost debt which may reduce overall cost of capital. Thus IPPs may have a competitive advantage. Although the Energy Policy Act specifically prohibits FERC from ordering retail transmission access, the states can do so and many believe that the next logical step will be the extension of competi- tion for existing industrial customers which will present both opportunities and challenges for the Company. In connection with a recent wholesale power supply dispute, the FERC in an initial order interpreted an existing agreement and ruled that the municipal customers had the right to reduce their power requirements from the Company and commence taking power from an unaffiliated company with the energy being transmitted through the AEP System. The Company disagrees with this finding and is seeking rehearing of the Commission's order. The Company is closely monitoring and participating in developments at the FERC related to the encouragement of competition in the wholesale market. Although the effect of one decision is not significant to revenues and earnings, it is indicative of the potential for competition for existing customers. Although management believes that the Company is well positioned to compete in this evolving competitive market because of its technical skills and expertise and its position as a low cost producer, we intend to continue to examine ways to improve the Company's competitive position. Efforts to improve operations and reduce costs will continue in order to maintain and enhance our position as a low cost producer. Although the Company may have opportunities to improve its investment value through open transmission access and other provisions of the Energy Policy Act of 1992, there is risk and uncertainty, especially for retail ratepayers and the Company's shareholder, regarding reliability of future transmission service and fair compensation for use of the Company's extensive high voltage transmission facilities. Management's goal is to ensure that, to the extent the Company's facilities are used by others, there is fair and appropriate compensation. Environmental Concerns and Cost Pressures Clean Air Act The Clean Air Act Amendments of 1990 (CAAA) require, among other things, substantial reductions in sulfur dioxide and nitrogen oxides emitted from electric generating plants. As a Power Pool member with insufficient generating capacity in relation to the Pool, the Company will share in the AEP System's compliance costs. The AEP System compliance plan reflects various methods of compliance. The cornerstone of the least-cost strategy is the installation of scrubbers at the two-unit 2,600 megawatt Gavin Plant owned by an affiliate Power Pool member, Ohio Power Company. The Gavin Plant is responsible for about 25% of the AEP System's total sulfur dioxide emissions. The scrubbers will be leased from an unaffiliated company and are to be completed by early 1995. Management intends to seek recovery through increased rates of the costs of compliance with the CAAA. While there can be no assurance that regulators will provide for recovery of all such costs on a timely basis, every effort is being made to work with the state commissions to obtain timely recovery of the compliance cost. Compliance with the CAAA will have an adverse effect on results of operations and financial condition if costs are not recovered from customers. West Virginia Rate Freeze On October 28, 1993, the West Virginia Public Service Commission approved, with certain modifications, a settlement agreement among the parties to the annual Expanded Net Energy Cost (ENEC) proceeding. The approved agreement temporarily suspends for a three-year period the annual ENEC recovery proceedings as of November 1, 1993, with the understanding that the parties will be free to take whatever position they wish in the 1996 ENEC proceed- ings. Deferred accounting as normally provided for in the ENEC will not be used for new ENEC variances incurred from November 1, 1993 through October 31, 1996. The Company agreed not to file for an increase in either base or ENEC rates prior to January 1, 1996 with certain exceptions as provided for in the agreement. The approved settlement agreement further provided for an annual $8 million reduction in ENEC rates effective November 1, 1993. The ENEC actual deferred underrecovery balance on October 31, 1993 of $13.3 million will be collected through a component of the post-October 31, 1993 ENEC rates over the three-year period. The post-October 31, 1993 ENEC rates and the current base rates will be frozen for a three-year period ending October 31, 1996. The agreement also provides for a net decrease in West Virginia depreciation expense of $4.3 million annually (with no change to base rates) effective November 1, 1995. The Company also agreed to invest at least $90 million in distribution facilities in West Virginia between October 13, 1993 and October 31, 1996. Global Warming Concern about global climate change, or "the greenhouse effect" has been the focus of intensive debate within the United States and around the world. Much of the uncertainty about what effects greenhouse gas concentrations will have on the global climate results from a myriad of factors that affect climate. Based on the terms of a 1992 United Nations treaty that pledged the United States to reduce greenhouse gas emissions, the Clinton Administration developed a voluntary plan to reduce by the year 2000 greenhouse gas emis- sions to 1990 levels. The AEP System supports the plan and will work with the U. S. Department of Energy and other electric utility companies to formu- late a cost effective framework for limiting future greenhouse gas emissions. The AEP System strongly supports a policy of proactive environmental stewardship, whereby actions are taken that make economic and environmental sense on their own merits, irrespective of the uncertain threat of global climate change. To reduce emissions, we support energy conservation programs, development of more efficient generation and end use technologies, and forest management activities because they are cost effective and bring long-term benefits to our service area. Should significant new measures to control the burning of coal be enacted, they could affect the Company's competitiveness and, if not recovered from customers, adversely impact results of operations and financial condition. EMF The potential for electric and magnetic fields (EMF) from transmission and distribution facilities to adversely affect the public health is being exten- sively researched. The AEP System continues to support EMF research to help determine the extent, if any, to which EMF may adversely impact public health. Our concern is that new laws imposing EMF limits may be passed or new regulations promulgated without sufficient scientific study and evidence to support them. As long as there is uncertainty about EMF, management will have difficulty finding acceptable sites for our transmission facilities, which could hamper economic growth within the Company's service area. If the present energy delivery system must be changed because of EMF concerns, or if the courts conclude that EMF exposure harms individuals and that utilities are liable for damages, then results of operations and financial condition could be adversely affected, unless the resultant costs can be recovered from customers. Hazardous Material By-products from the generation of electricity include materials such as ash, slag and sludge. In addition, the Company's generating plants and transmission and distribution facilities have used asbestos, polychlorinated biphenyls (PCBs) and other hazardous and non-hazardous materials. Substantial costs to store and dispose of hazardous and non-hazardous materials have been and will continue to be incurred. Significant additional costs could be incurred to comply with new laws and regulations if enacted and to clean up disposal sites under existing legislation. The federal Comprehensive Environmental Response, Compensation, and Liability Act ("Superfund") addresses clean-up of hazardous substance disposal sites and authorizes the U.S. Environmental Protection Agency (EPA) to administer the clean-up programs. The Company has received an information request from the EPA regarding a site identified for cleanup under the Superfund. Presently, however, the Company is not a potentially responsible party at this or any other Superfund sites. Litigation The Company is involved in a number of legal proceedings and claims. While management is unable to predict the outcome of such litigation, it is not expected that the resolution of these matters will have a material adverse effect on financial condition. New Accounting Standards Two new accounting standards were issued in 1993 that the Company was required to adopt in 1994. The implementation of these new standards will not have a significant effect on results of operations or financial condition. Effects of Inflation Inflation affects the Company's cost of replacing utility plant and the cost of operating and maintaining its plant. The rate-making process limits the Company to recovery of the historical cost of assets resulting in economic losses when the effects of inflation are not recovered from custom- ers on a timely basis. However, economic gains that result from the repay- ment of long-term debt with inflated dollars partly offset such losses. INDEPENDENT AUDITORS' REPORT To the Shareowners and Board of Directors of Appalachian Power Company: We have audited the accompanying consolidated balance sheets of Appalachian Power Company and its subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of income, retained earnings, and cash flows for each of the three years in the period ended December 31, 1993. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Appalachian Power Company and its subsidiaries as of December 31, 1993 and 1992, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1993 in conformity with generally accepted accounting principles. As discussed in Notes 1 and 6 in Notes to Consolidated Financial Statements, effective January 1, 1993, the Company changed its method of accounting for income taxes to conform with Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes," and its method of accounting for postretirement benefits other than pensions to conform with Statement of Financial Accounting Standards No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions." DELOITTE & TOUCHE Columbus, Ohio February 22, 1994 Consolidated Statements of Income
Year Ended December 31, 1993 1992 1991 (in thousands) OPERATING REVENUES $1,519,104 $1,410,778 $1,378,706 OPERATING EXPENSES: Fuel 382,633 351,750 308,563 Purchased Power 310,307 282,166 300,877 Other Operation 186,471 168,226 163,749 Maintenance 119,754 104,581 112,324 Depreciation and Amortization 123,306 117,513 112,387 Taxes Other Than Federal Income Taxes 112,739 105,377 94,981 Federal Income Taxes 54,554 47,269 50,745 Total Operating Expenses 1,289,764 1,176,882 1,143,626 OPERATING INCOME 229,340 233,896 235,080 NONOPERATING INCOME (LOSS) (3,353) 3,036 1,132 INCOME BEFORE INTEREST CHARGES 225,987 236,932 236,212 INTEREST CHARGES 100,855 105,513 95,793 NET INCOME 125,132 131,419 140,419 PREFERRED STOCK DIVIDEND REQUIREMENTS 16,540 16,596 13,861 EARNINGS APPLICABLE TO COMMON STOCK $ 108,592 $ 114,823 $ 126,558 See Notes to Consolidated Financial Statements. /TABLE Consolidated Balance Sheets December 31, 1993 1992 (in thousands) ASSETS ELECTRIC UTILITY PLANT: Production $1,781,005 $1,751,708 Transmission 987,147 956,169 Distribution 1,225,436 1,153,799 General 140,942 131,654 Construction Work in Progress 59,170 45,405 Total Electric Utility Plant 4,193,700 4,038,735 Accumulated Depreciation and Amortization 1,550,855 1,477,078 NET ELECTRIC UTILITY PLANT 2,642,845 2,561,657 OTHER PROPERTY AND INVESTMENTS 51,551 65,345 CURRENT ASSETS: Cash and Cash Equivalents 4,626 9,501 Accounts Receivable: Customers 118,523 110,997 Affiliated Companies 9,565 13,708 Miscellaneous 4,118 4,123 Allowance for Uncollectible Accounts (1,344) (724) Fuel - at average cost 46,881 111,715 Materials and Supplies - at average cost 43,351 41,125 Accrued Utility Revenues 58,294 46,696 Prepayments 7,430 7,837 TOTAL CURRENT ASSETS 291,444 344,978 REGULATORY ASSETS: Amounts Due From Customers For Future Federal Income Taxes 320,160 - Other 122,367 122,111 TOTAL REGULATORY ASSETS 442,527 122,111 TOTAL $3,428,367 $3,094,091 See Notes to Consolidated Financial Statements. /TABLE
December 31, 1993 1992 (in thousands) CAPITALIZATION AND LIABILITIES CAPITALIZATION: Common Stock - No Par Value: Authorized - 30,000,000 Shares Outstanding - 13,499,500 Shares $ 260,458 $ 260,458 Paid-in Capital 494,834 481,051 Retained Earnings 227,816 229,920 Total Common Shareowner's Equity 983,108 971,429 Cumulative Preferred Stock: Not Subject to Mandatory Redemption 55,000 105,000 Subject to Mandatory Redemption 160,450 105,422 Long-term Debt 1,215,124 1,200,232 TOTAL CAPITALIZATION 2,413,682 2,382,083 OTHER NONCURRENT LIABILITIES 55,865 29,681 CURRENT LIABILITIES: Cumulative Preferred Stock Due Within One Year 87 3,087 Long-term Debt Due Within One Year 44 40 Short-term Debt 39,500 79,850 Accounts Payable: General 33,627 46,729 Affiliated Companies 34,531 41,447 Taxes Accrued 52,128 40,024 Customer Deposits 13,670 13,019 Interest Accrued 18,212 22,814 Other 71,128 47,255 TOTAL CURRENT LIABILITIES 262,927 294,265 DEFERRED FEDERAL INCOME TAXES 578,948 264,557 DEFERRED INVESTMENT TAX CREDITS 82,987 88,086 REGULATORY LIABILITIES AND DEFERRED CREDITS 33,958 35,419 COMMITMENTS AND CONTINGENCIES (Note 3) TOTAL $3,428,367 $3,094,091 /TABLE Consolidated Statements of Cash Flows
Year Ended December 31, 1993 1992 1991 (in thousands) OPERATING ACTIVITIES: Net Income $ 125,132 $ 131,419 $ 140,419 Adjustments for Noncash Items: Depreciation and Amortization 125,847 120,056 114,938 Deferred Federal Income Taxes (5,834) 29,132 22,377 Deferred Investment Tax Credits (5,468) (5,096) (5,448) Deferred Power Supply Costs (net) 22,100 (30,493) (25,033) Provision for Rate Refunds 18,654 (4,708) (1,178) Changes in Certain Current Assets and Liabilities: Accounts Receivable (net) (2,758) (8,906) (5,977) Fuel, Materials and Supplies 62,608 8,135 (44,496) Accrued Utility Revenues (11,598) (4,919) (1,364) Accounts Payable (20,018) (4,963) 3,921 Taxes Accrued 12,104 (14,419) 423 Other (net) 9,876 (23,713) (13,101) Net Cash Flows From Operating Activities 330,645 191,525 185,481 INVESTING ACTIVITIES: Construction Expenditures (189,767) (188,380) (187,195) Other 1,806 1,884 1,260 Net Cash Flows Used For Investing Activities (187,961) (186,496) (185,935) FINANCING ACTIVITIES: Capital Contributions from Parent Company 15,000 - - Issuance of Cumulative Preferred Stock 108,783 49,402 - Issuance of Long-term Debt 286,486 493,447 49,240 Retirement of Cumulative Preferred Stock (112,505) (7,153) (4,012) Retirement of Long-term Debt (277,704) (404,309) (160) Change in Short-term Debt (net) (40,350) (19,200) 73,925 Dividends Paid on Common Stock (110,696) (105,836) (103,676) Dividends Paid on Cumulative Preferred Stock (16,573) (15,330) (13,501) Net Cash Flows From (Used For) Financing Activities (147,559) (8,979) 1,816 Net Increase (Decrease) in Cash and Cash Equivalents (4,875) (3,950) 1,362 Cash and Cash Equivalents January 1 9,501 13,451 12,089 Cash and Cash Equivalents December 31 $ 4,626 $ 9,501 $ 13,451 See Notes to Consolidated Financial Statements. /TABLE Consolidated Statements of Retained Earnings
Year Ended December 31, 1993 1992 1991 (in thousands) Retained Earnings January 1 $229,920 $220,933 $198,051 Net Income 125,132 131,419 140,419 355,052 352,352 338,470 Deductions: Cash Dividends Declared: Common Stock 110,696 105,836 103,676 Cumulative Preferred Stock: 4-1/2% Series 1,350 1,350 1,350 4.50% Series 30 36 38 5.90% Series 713 - - 5.92% Series 1,066 - - 7.40% Series 1,850 1,850 1,850 7.80% Series 3,900 3,228 - 8.12% Series 1,962 2,436 2,436 8.52% Series 1,372 1,704 1,704 9% Series 3,746 5,333 5,400 $2.65 Series 22 193 617 Total Cash Dividends Declared 126,707 121,966 117,071 Other 529 466 466 Total Deductions 127,236 122,432 117,537 Retained Earnings December 31 $227,816 $229,920 $220,933 See Notes to Consolidated Financial Statements. /TABLE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES: Organization Appalachian Power Company (the Company or APCo) is a wholly-owned subsidiary of American Electric Power Company, Inc. (AEP Co., Inc.), a public utility holding company. The Company is engaged in the generation, purchase, transmission and distribution of electric power in southwestern Virginia and southern West Virginia. As a member of the American Electric Power (AEP) System Power Pool (Power Pool) and a signatory company to the AEP Transmission Equalization Agreement, APCo's facilities are operated in conjunction with the facilities of certain other AEP Co., Inc. owned utilities as an integrated utility system. The Company has five wholly-owned subsidiaries: Cedar Coal Co., Central Appalachian Coal Company and Southern Appalachian Coal Company (which were formerly engaged in coal mining and now lease their coal reserves to unaffiliated companies), Kanawha Valley Power Company (which owns and oper- ates hydroelectric generating units and sells electricity to APCo) and West Virginia Power Company (which is inactive). Regulation As a member of the AEP System, APCo is subject to the regulation of the Securities and Exchange Commission (SEC) under the Public Utility Holding Company Act of 1935 (1935 Act). Retail rates are approved by the Virginia State Corporation Commission (Virginia SCC) and the Public Service Commission of West Virginia (WVPSC). The Federal Energy Regulatory Commission (FERC) regulates wholesale rates. Principles of Consolidation The consolidated financial statements include APCo and its wholly-owned subsidiaries. Significant intercompany items were eliminated in consol- idation. Basis of Accounting As a rate-regulated entity, APCo's financial statements reflect the actions of the regulators that may result in the recognition of revenues and expenses in different time periods than enterprises that are not rate regulated. In accordance with Statement of Financial Accounting Standards (SFAS) No. 71, Accounting for the Effects of Certain Types of Regulation (SFAS 71), regulatory assets and liabilities are recorded to defer expenses or revenues reflecting such rate-making differences. Utility Plant Electric utility plant is stated at original cost and is generally subject to first mortgage liens. Additions, major replacements and betterments are added to the plant accounts. Retirements from the plant accounts and associated removal costs, net of salvage, are deducted from accumulated depreciation. The costs of labor, materials and overheads incurred to operate and maintain utility plant are included in operating expenses. Allowance for Funds Used During Construction (AFUDC) AFUDC is a noncash income item that is recovered over the service life of utility plant through depreciation and represents the estimated cost of borrowed and equity funds used to finance construction projects. In the Virginia jurisdiction, construction work in progress is included in rate base in lieu of recording AFUDC. The average rates used to accrue AFUDC in the West Virginia and FERC jurisdictions were 3.5%, 4% and 6% in 1993, 1992 and 1991, respectively, and the amounts of AFUDC accrued were $1 million in 1993, $1.1 million in 1992 and $1.4 million in 1991. Depreciation and Amortization Depreciation is provided on a straight-line basis over the estimated useful lives of utility plant and is calculated largely through the use of composite rates by functional class (i.e., production, transmission, distribution, etc.). Amounts to be used for demolition of plant are recov- ered through depreciation charges included in rates. Cash and Cash Equivalents Cash and cash equivalents include temporary cash investments with original maturities of three months or less. Operating Revenues Revenues include an accrual for electricity consumed but unbilled at month-end as well as billed revenues. Power Supply Costs and Fuel Costs The Company practices deferred accounting with respect to the over and under collection of certain power supply costs pursuant to the Virginia regulatory commission's fuel cost recovery mechanism. In the Virginia jurisdiction, changes in fuel costs and the fuel portion of purchased power costs are reviewed annually by the Virginia SCC. Until its temporary suspension on November 1, 1993, the Company practiced deferred accounting for the over and under collection of certain power supply costs pursuant to the West Virginia regulatory commission's Expanded Net Energy Cost (ENEC) recovery mechanism. See Note 2 for further discussion of this matter. Wholesale jurisdictional fuel cost changes are expensed and billed as incurred. Income Taxes Effective January 1, 1993, the Company adopted the liability method of accounting for income taxes as prescribed by SFAS 109, Accounting for Income Taxes. Under this standard, deferred federal income taxes are provided for all temporary differences between the book cost and tax basis of assets and liabilities which will result in a future tax consequence. In prior years deferred federal income taxes were provided for timing differences between book and taxable income except where flow-through accounting for certain differences was reflected in rates. Flow-through accounting is a method whereby federal income tax expense for a particular item is the same for accounting and rate-making as in the federal income tax return. As a result of the adoption of SFAS 109, significant additional deferred tax liabilities were recorded for items afforded flow-through treatment in rates. In accor- dance with SFAS 71, significant corresponding regulatory assets were also recorded to reflect the future recovery of additional taxes due when the temporary differences reverse. As a result of this change in accounting effective January 1, 1993, deferred federal income tax liabilities increased by $298.8 million and regulatory assets by $297.2 million and net income was reduced by $1.6 million. Investment tax credits utilized in prior years' federal income tax returns were deferred and are being amortized over the life of the related plant investment in accordance with rate-making treatment. Debt and Preferred Stock Gains and losses on reacquired debt are deferred and amortized over the term of the reacquired debt. If the debt is refinanced the reacquisition costs are deferred and amortized over the term of the replacement debt. Debt discount or premium and debt issuance expenses are amortized over the term of the related debt, with the amortization included in interest charges. Redemption premiums paid to reacquire preferred stock are deferred and amortized in accordance with rate-making treatment. The excess of par value over costs of preferred stock reacquired to meet sinking fund requirements is credited to paid-in capital. Other Property and Investments Other property and investments are generally stated at cost. Reclassifications Certain prior-period amounts were reclassified to conform with current- period presentation. 2. RATE MATTERS: Rates for Virginia retail customers were increased, subject to refund, on May 4, 1993 by $31.4 million annually. Hearings were held in July 1993 and a final Commission order is pending. On October 28, 1993, the WVPSC approved, with certain modifications, a settlement agreement among the parties to the annual Expanded Net Energy Cost (ENEC) proceeding. The approved agreement temporarily suspended the annual ENEC recovery proceedings, reduced ENEC rates by $8 million annually effective November 1, 1993, and froze current base rates and the reduced ENEC rate for a three-year period ending October 31, 1996. Deferral accounting will not be used for new ENEC cost variances incurred from November 1993 through October 1996. The ENEC actual under-recovery balance on October 31, 1993 of $13.3 million will be collected through a component of the revised ENEC rates over the three-year period ending October 31, 1996. The agreement also provides for a net decrease in West Virginia depreciation expense of $4.3 million annually (with no change to base rates) effective November 1, 1995. The Company also agreed to invest at least $90 million in distribution facilities in West Virginia between October 13, 1993 and October 31, 1996. Effective September 15, 1992 the FERC authorized the Company to implement, subject to refund, an $8.7 million annual rate increase. The Company is awaiting a final order from the FERC in this matter. 3. COMMITMENTS AND CONTINGENCIES: Construction and Other Commitments Although APCo has made certain construction commitments, no new generating capacity is expected to be constructed until the next century. The aggregate construction program expenditures for 1994-1996 are estimated to be $627 million. Long-term fuel supply contracts contain clauses for periodic adjustments. The Virginia jurisdiction has a fuel cost recovery mechanism that provides, with the regulators' review and approval, for deferred recovery of changes in the cost of fuel and the Company will seek after October 1996 in the West Virginia jurisdiction reinstatement of a similar fuel cost recovery mechanism. The contracts are for various terms, the longest of which extend to 2006, and contain various clauses that would release the Company from its obligation under certain force majeure conditions. Litigation The Company is involved in a number of legal proceedings and claims. While management is unable to predict the outcome of litigation, it is not expected that the resolution of these matters will have a material adverse effect on financial condition. Environmental Matters - Clean Air The Clean Air Act Amendments of 1990 require, among other things, significant reductions in sulfur dioxide and nitrogen oxides emitted from various existing AEP System generating plants. The law established a deadline of 1995 for Phase I reductions and 2000 for Phase II reductions as well as a permanent nationwide cap on sulfur dioxide emissions after 1999. The Company's plants are not affected by Phase I emissions requirements; however, the Company will incur a portion of the costs of Phase I compliance for the AEP System through the Power Pool (which is described in Note 5). The compliance plan for the AEP System's generating units affected by Phase I includes installation of flue gas desulfurization systems (scrubbers) at the two-unit 2,600-mw Gavin Plant owned by an affiliate, Ohio Power Company and fuel switching at other affected affiliated plants. The Company will incur additional costs to comply with Phase II requirements at its generating plants and those of affiliated Power Pool members. If the Company is unable to recover its share of the AEP System costs of compliance, it would have an adverse impact on results of operations and financial condition. Other Environmental Matters The Company and its subsidiaries are subject to regulation by federal, state and local authorities with respect to air and water quality and other environmental matters. The generation of electricity produces non-hazardous and hazardous by- products. Asbestos, polychlorinated biphenyls (PCBs) and other hazardous materials have been used in the generating plants and transmission/distribution facilities. Substantial costs to store and dispose of hazardous and non-hazardous materials have been incurred and will be incurred. Significant additional costs could be incurred in the future to meet the requirements of new laws and regulations, if enacted, and to clean up disposal sites under existing legislation. The Company has received an information request from the U.S. Environmental Protection Agency regarding a site identified for cleanup under the federal Comprehensive Environmental Response, Compensation, and Liability Act ("Superfund"). Presently, however, the Company is not a potentially responsible party at this or any other Superfund sites. Management has no knowledge of any material unrecorded cleanup costs. 4. COMMON SHAREOWNER'S EQUITY: The Company received from AEP a cash capital contribution of $15 million in 1993, which was credited to paid-in capital. In 1993 and 1992 charges to paid-in capital of $1,217,000 and $598,000, respectively, represented issuance expenses of cumulative preferred stock. There were no other material transactions affecting common stock and paid-in capital accounts in 1993, 1992 and 1991. Mortgage indentures, debentures, charter provisions and orders of regulatory authorities place various restrictions on the use of retained earnings for the payment of cash dividends on common stock. At December 31, 1993, approximately $37 million of retained earnings were restricted. To pay dividends out of paid-in capital, the Company needs regulatory approval. 5. RELATED PARTY TRANSACTIONS: Benefits and costs of the System's generating plants are shared by members of the Power Pool. Under terms of the System Interconnection Agreement, capacity charges and credits are designed to allocate the cost of the System's capacity among the Power Pool members based on their relative peak demands and generating reserves. Power Pool members are compensated for the out-of-pocket costs of energy delivered to the Power Pool and charged for energy received from the Power Pool. Operating revenues include $33.4 million in 1993, $22.2 million in 1992 and $27.5 million in 1991 for supplying energy to the Power Pool. Charges for Power Pool capacity and energy were included in purchased power expense as follows: Year Ended December 31, 1993 1992 1991 (in thousands) Capacity Charges $111,335 $112,113 $ 93,436 Energy Charges 182,205 152,585 179,992 Total $293,540 $264,698 $273,428 Power Pool members share in wholesale sales to unaffiliated utilities made by the Power Pool. The Company's share was included in operating revenues in the amount of $96.7 million in 1993, $76.1 million in 1992 and $104.4 million in 1991. In addition, the Power Pool purchases power from unaffiliated companies for immediate resale to other unaffiliated utilities. The Company's share of these purchases was included in purchased power expense and totaled $16.8 million in 1993, $17.5 million in 1992 and $27.4 million in 1991. Revenues from these transactions are included in the above Power Pool wholesale sales. Energy sold directly to Kingsport Power Company, an affiliated distribution utility that is not a member of the Power Pool, was included in operating revenues in the amounts of $61.8 million in 1993, $58.8 million in 1992 and $52.8 million in 1991. Purchased power expense includes energy bought from Ohio Valley Electric Corporation, an affiliated company that is not a member of the Power Pool, in the amounts of $7.8 million in 1993, $6.1 million in 1992 and $4.8 million in 1991. AEP System companies participate in a transmission equalization agreement. This agreement combines certain AEP System companies' investments in transmission facilities and shares the costs of ownership in proportion to the System companies' respective peak demands. Pursuant to the terms of the agreement, other operation expense includes $3.2 million, $8 million and $7 million for transmission services in 1993, 1992 and 1991, respectively. American Electric Power Service Corporation (AEPSC) provides certain managerial and professional services to AEP System companies. The costs of the services are determined by AEPSC on a direct-charge basis, to the extent practicable, and on reasonable bases of proration for indirect costs. The charges for services are made at cost and include no compensation for the use of equity capital, which is furnished to AEPSC by AEP Co., Inc. Billings from AEPSC are capitalized or expensed depending on the nature of the services rendered. AEPSC and its billings are subject to the regulation of the SEC under the 1935 Act. 6. BENEFIT PLANS: The Company and its subsidiaries participate with other companies in the AEP System pension plan, a trusteed, noncontributory defined benefit plan covering all employees meeting eligibility requirements. Benefits are based on service years and compensation levels. Effective January 1, 1992 employees may retire without reduction of benefits at age 62 and with reduced benefits as early as age 55. Pension costs are allocated by first charging each System company with its service cost and then allocating the remaining pension cost in proportion to its share of the projected benefit obligation. The funding policy is to make annual trust fund contributions equal to the net periodic pension cost up to the maximum amount deductible for federal income taxes, but not less than the minimum contribution required by law. Net pension costs for the years ended December 31, 1993, 1992 and 1991 were $5.1 million, $6.4 million and $2 million, respectively. An employee savings plan is offered which allows participants to contribute up to 16% of their salaries into three investment alternatives, including AEP common stock. The Company contributes an amount equal to one-half of the first 6% of the employees' contribution. The Company's contribution is invested in AEP common stock and totaled $3.9 million in 1993, $3.7 million in 1992 and $3.5 million in 1991. Certain other benefits are provided for retired employees under an AEP System other postretirement benefit plan. Substantially all employees are eligible for health care and life insurance benefits if they have at least 10 service years and, effective January 1, 1992, are age 55 at retirement. Prior to 1993, net costs of these benefits were recognized as an expense when paid and totaled $5.3 million in 1992 and 1991. SFAS 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, was adopted in January 1993. SFAS 106 requires the accrual of the present value liability for the cost of postretirement benefits other than pensions (OPEB) during the employee's service years. Prior service costs are being recognized as a transition obligation over 20 years in accordance with SFAS 106. OPEB costs are based on actuarially-determined stand alone costs for each System company. The funding policy is to contribute incremental amounts recovered through rates and cash generated by the corporate owned life insurance (COLI) program. The annual accrued costs for 1993 required by SFAS 106 for employees and retirees, which includes the recognition of one- twentieth of the prior service transition obligation, was $18.6 million. Current FERC rates being collected subject to refund reflect the higher level of OPEB costs. The Company received authority from the Virginia SCC to defer the increased OPEB costs which were not currently recovered in rates from January 1, 1993 to May 3, 1993. The deferral totaled $567,000. The Virginia jurisdiction rates being collected subject to refund since May 4, 1993, include recovery of the increased costs. The West Virginia jurisdictional share of the increased SFAS 106 costs is being expensed as the related liabilities are accrued reflecting the adequacy of current rate levels and the recent settlement agreement discussed in Note 2. To reduce the impact of adopting SFAS 106, management took several measures. First, a Voluntary Employees Beneficiary Association (VEBA) trust fund for OPEB benefits was established. A $6.2 million advance contribution was made to a trust fund in 1990, the maximum amount deductible for federal income tax purposes. In 1993, a $5.6 million contribution was made to the VEBA trust fund from amounts recovered from ratepayers. In addition, to help fund and reduce the future costs of OPEB benefits, a COLI program was imple- mented. The insurance policies have a substantial cash surrender value which is recorded, net of equally substantial policy loans, as other property and investments. The policies generated cash of $2.6 million in 1992 and $1.1 million in 1991 inclusive of related tax benefits which was contributed to the VEBA trust fund. In 1997 the premium will be fully paid and the cash generated by the policies should increase significantly. 7. FEDERAL INCOME TAXES: The details of federal income taxes as reported are as follows:
Year Ended December 31, 1993 1992 1991 (in thousands) Charged (Credited) to Operating Expenses (net): Current $61,988 $21,991 $31,122 Deferred (4,664) 27,808 22,406 Deferred Investment Tax Credits (2,770) (2,530) (2,783) Total 54,554 47,269 50,745 Charged (Credited) to Nonoperating Income (net): Current 995 (10) (824) Deferred (1,170) 1,324 (29) Deferred Investment Tax Credits (2,698) (2,566) (2,665) Total (2,873) (1,252) (3,518) Total Federal Income Taxes as Reported $51,681 $46,017 $47,227
The following is a reconciliation of the difference between the amount of federal income taxes computed by multiplying book income before federal income taxes by the statutory tax rate, and the amount of federal income taxes reported.
Year Ended December 31, 1993 1992 1991 (in thousands) Net Income $125,132 $131,419 $140,419 Federal Income Taxes 51,681 46,017 47,227 Pre-tax Book Income $176,813 $177,436 $187,646 Federal Income Taxes on Pre-tax Book Income at Statutory Rate (35% in 1993 and 34% in 1992 and 1991) $ 61,885 $ 60,328 $ 63,800 Increase (Decrease) in Federal Income Taxes Resulting From the Following Items: Depreciation 8,912 6,866 6,241 Corporate Owned Life Insurance (6,170) (6,181) (3,662) Removal Costs (4,742) (4,145) (3,186) Percentage Repair Allowance (3,444) (3,307) (2,510) Investment Tax Credits (net) (5,468) (5,495) (5,497) Other 708 (2,049) (7,959) Total Federal Income Taxes as Reported $ 51,681 $ 46,017 $ 47,227 Effective Federal Income Tax Rate 29.2% 25.9% 25.2%
The following are the principal components of federal income taxes as reported:
Year Ended December 31, 1993 1992 1991 (in thousands) Current: Federal Income Taxes $62,983 $22,380 $30,347 Investment Tax Credits - (399) (49) Total Current Federal Income Taxes 62,983 21,981 30,298 Deferred: Depreciation 12,584 9,930 10,944 Percentage Repair Allowance 1,200 3,225 1,890 Deferred Fuel Costs (7,393) 10,339 8,423 Provision for Revenue Refunds (6,416) 1,616 377 Other (5,809) 4,022 743 Total Deferred Federal Income Taxes (5,834) 29,132 22,377 Total Deferred Investment Tax Credits (5,468) (5,096) (5,448) Total Federal Income Taxes as Reported $51,681 $46,017 $47,227
The Company and its subsidiaries join in the filing of a consolidated federal income tax return with their affiliated companies in the AEP System. The allocation of the AEP System's current consolidated federal income tax to the System companies is in accordance with SEC rules under the 1935 Act. These rules permit the allocation of the benefit of current tax losses and investment tax credits utilized to the System companies giving rise to them in determining their current tax expense. The tax loss of the System parent company, AEP Co., Inc., is allocated to its subsidiaries with taxable income. With the exception of the loss of the parent company, the method of allocation approximates a separate return result for each company in the consolidated group. The AEP System settled with the Internal Revenue Service (IRS) all issues from the audits of the consolidated federal income tax returns for the years prior to 1988. Returns for the years 1988 through 1990 are presently being audited by the IRS. In the opinion of management, the final settlement of open years will not have a material effect on results of operations. The net deferred tax liability of $579 million at December 31, 1993 is composed of deferred tax assets of $98 million and deferred tax liabilities of $677 million. The significant temporary differences giving rise to the net deferred tax liability are: Deferred Tax Liability (in thousands) Property Related Temporary Differences $(463,249) Deferred Amounts Due From Customers For Future Federal Income Taxes (112,056) All Other (net) (3,643) Total Net Deferred Tax Liability $(578,948) 8. LEASES: Leases of property, plant and equipment are for periods up to 30 years and require payments of related property taxes, maintenance and operating costs. The majority of the leases have purchase or renewal options and will be renewed or replaced by other leases. Lease rentals are generally charged to operating expenses in accordance with rate-making treatment. The components of rentals are as follows: Year Ended December 31, 1993 1992 1991 (in thousands) Operating Leases $11,068 $11,526 $12,216 Amortization of Capital Leases 5,186 4,790 3,932 Interest on Capital Leases 4,165 2,886 1,581 Total Rental Payments $20,419 $19,202 $17,729 Properties under capital leases and related obligations recorded on the Consolidated Balance Sheets are as follows: December 31, 1993 1992 (in thousands) Electric Utility Plant: Production $ 7,559 $ 7,238 Transmission 34 34 General 42,204 36,987 Total Electric Utility Plant 49,797 44,259 Accumulated Amortization 19,824 20,034 Net Electric Utility Plant 29,973 24,225 Other Property - 106 Accumulated Amortization - 62 Net Other Property - 44 Net Properties under Capital Lease $29,973 $24,269 Obligations under Capital Leases $29,973 $24,269 Less Portion Due Within One Year 5,685 4,692 Noncurrent Liability $24,288 $19,577 Properties under operating leases and related obligations are not included in the Consolidated Balance Sheets. Future minimum lease rentals, consisted of the following at December 31, 1993: Non- cancelable Capital Operating Leases Leases (in thousands) 1994 $ 9,743 $ 7,695 1995 7,315 5,872 1996 4,915 5,226 1997 6,033 4,424 1998 3,026 3,123 Later Years 8,125 14,464 Total Future Minimum Lease Rentals 39,157 $40,804 Less Estimated Interest Element 9,184 Estimated Present Value of Future Minimum Lease Rentals $29,973 9. CUMULATIVE PREFERRED STOCK: The authorized shares of no par value cumulative preferred stock is 8,000,000 shares. The aggregate involuntary liquidation price for all shares of cumulative preferred stock may not exceed $300 million. The unissued shares of the cumulative preferred stock may or may not possess mandatory redemption characteristics upon issuance. The cumulative preferred stock is callable at the price indicated plus accrued dividends. The involuntary liquidation preference is $100 per share. A. Cumulative Preferred Stock Not Subject to Mandatory Redemption:
Call Price Shares Amount December 31, Number of Shares Redeemed Outstanding December 31, Series 1993 Year Ended December 31, December 31, 1993 1993 1992 1993 1992 1991 (in thousands) 4-1/2% $110.00 - - - 300,000 $30,000 $ 30,000 8.12% - 300,000 - - - - 30,000 7.40% 102.11 - - - 250,000 25,000 25,000 8.52% - 200,000 - - - - 20,000 $55,000 $105,000
B. Cumulative Preferred Stock Subject to Mandatory Redemption:
Call Price Shares Amount December 31, Number of Shares Redeemed Outstanding December 31, Series(a) 1993 Year Ended December 31, December 31, 1993 1993 1992 1993 1992 1991 (in thousands) 4.50% (b) $102.00 1,507 1,526 129 5,365 $ 537 $ 687 7.80% (c) 107.80 - - - 500,000 50,000 50,000 5.90% (d) (f) - 500,000 50,000 - 5.92% (e) (f) - 600,000 60,000 - 9% - 570,000 30,000 - - - 57,000 $2.65 - 32,900 160,000 160,000 - - 822 $160,537 $108,509 (a) The sinking fund provisions of series subject to mandatory redemption aggregate $87,000 in 1994, $150,000 in 1995, $150,000 in 1996, $87,000 in 1997 and $2,500,000 in 1998. Unless all sinking fund provisions have been made, no distribution may be made on the common stock. (b) A sinking fund for the 4.50% cumulative preferred stock requires the purchase or redemption of 1,500 shares at $100 a share on or before November 30, in each year. In anticipation of future sinking fund requirements, 635 shares have been reacquired as of December 31, 1993. (c) Commencing in 1998, a sinking fund for the 7.80% cumulative preferred stock will require the redemption of 25,000 shares at $100 a share on or before May 1, in each year. The Company has the non-cumulative option to redeem up to 25,000 additional shares on any sinking fund date at a redemption price of $100 per share. (d) Shares issued November 1993. Commencing in 2003 and continuing through the year 2007, a sinking fund for the 5.90% cumulative preferred stock will require the redemption of 25,000 shares each year and the redemption of the remaining outstanding shares on November 1, 2008, in each case at $100 per share. (e) Shares issued October 1993. Commencing in 2003 and continuing through the year 2007, a sinking fund for the 5.92% cumulative preferred stock will require the redemption of 30,000 shares each year and the redemption of the remaining shares outstanding on November 1, 2008, in each case at $100 per share. (f) Not callable until after 2002. /TABLE 10. LONG-TERM DEBT AND LINES OF CREDIT: Long-term debt by major category was outstanding as follows: December 31, 1993 1992 (in thousands) First Mortgage Bonds $ 974,310 $ 959,527 Sinking Fund Debentures 7,260 7,265 Installment Purchase Contracts 233,537 233,379 Other Long-term Debt 61 101 1,215,168 1,200,272 Less Portion Due Within One Year 44 40 Total $1,215,124 $1,200,232 First mortgage bonds outstanding were as follows: December 31, 1993 1992 (in thousands) % Rate Due 7-1/2 1998 - December 1 $ 45,000 $ 45,000 8-1/2 1999 - October 1 - 60,000 7.00 1999 - December 1 30,000 30,000 7-5/8 2002 - February 1 43,350 43,350 7.95 2002 - March 1 60,000 60,000 7.38 2002 - August 15 50,000 50,000 7-1/2 2002 - December 1 59,760 59,760 7.40 2002 - December 1 30,000 30,000 6.65 2003 - May 1 40,000 - 6.85 2003 - June 1 30,000 - 8-1/8 2003 - July 1 - 50,000 6.00 2003 - November 1 30,000 - 8-1/2 2004 - March 1 - 50,000 9-1/4 2007 - November 1 - 26,000 8-3/4 2017 - February 1 56,686 100,000 9-1/8 2019 - November 1 47,500 50,000 9-7/8 2020 - December 1 48,000 50,000 9.35 2021 - August 1 50,000 50,000 8.75 2022 - February 1 50,000 50,000 8.70 2022 - May 22 40,000 40,000 8.43 2022 - June 1 50,000 50,000 8.50 2022 - December 1 70,000 70,000 7.80 2023 - May 1 40,000 - 7.90 2023 - June 1 30,000 - 7.15 2023 - November 1 30,000 - 7.125 2024 - May 1 50,000 - Unamortized Discount (net) (5,986) (4,583) Total $974,310 $959,527 Certain indentures relating to the first mortgage bonds contain improvement, maintenance and replacement provisions requiring the deposit of cash or bonds with the trustee, or in lieu thereof, certification of unfunded property additions. Sinking fund debentures outstanding were as follows: December 31, 1993 1992 (in thousands) 6% due 1996 - March 1 $7,251 $7,251 Unamortized Premium 9 14 Total $7,260 $7,265 Prior to December 31, 1993 sufficient principal amounts of debentures had been reacquired in anticipation of all future sinking fund requirements. The Company may elect to redeem additional amounts of debentures up to $600,000 annually. Installment purchase contracts have been entered into, in connection with the issuance of pollution control revenue bonds by governmental authorities as follows: December 31, 1993 1992 (in thousands) % Rate Due Industrial Development Authority of Russell County, Virginia: 7-1/4% 1998 - November 1 $ 19,500 $ 19,500 7.70% 2007 - November 1 17,500 17,500 Putnam County, West Virginia: 6-3/4% 2007 - October 1 - 40,000 5.45% 2019 - June 1 40,000 - 6.60% 2019 - July 1 30,000 30,000 Mason County, West Virginia: 7-7/8% 2013 - November 1 10,000 10,000 7.40% 2014 - January 1 30,000 30,000 6.85% 2022 - June 1 40,000 40,000 6.60% 2022 - October 1 50,000 50,000 Unamortized Discount (3,463) (3,621) Total $233,537 $233,379 Under the terms of the installment purchase contracts, the Company is required to pay amounts sufficient to enable the payment of interest on and the principal (at stated maturities and upon mandatory redemptions) of related pollution control revenue bonds issued to finance the construction of pollution control facilities at certain plants. At December 31, 1993, annual long-term debt payments, excluding premium or discount, are as follows: Principal Amount (in thousands) 1994 $ 44 1995 17 1996 7,251 1997 - 1998 64,500 Later Years 1,152,796 Total $1,224,608 Short-term debt borrowings are limited by provisions of the 1935 Act to $200 million. Lines of credit are shared with other AEP System companies and at December 31, 1993 and 1992 were available in the amounts of $537 million and $521 million, respectively. Commitment fees of approximately 3/16 of 1% a year are paid to the banks to maintain the lines of credit. Outstanding short-term debt consisted of $3.4 million of notes payable and $36.1 million of commercial paper at December 31, 1993 and $4.3 million of notes payable and $75.6 million of commercial paper at December 31, 1992. 11. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts of cash and cash equivalents, accounts receivable, short-term debt and accounts payable approximate fair value because of the short-term maturity of these instruments. At December 31, 1993 and 1992 fair values for preferred stock subject to mandatory redemption were $163 million and $114 million and for long-term debt were $1,310 million and $1,239 million, respectively, and are based on quoted market prices for the same or similar issues and the current dividend or interest rates offered for instru- ments of the same remaining maturities. 12. SUPPLEMENTARY INFORMATION: Year Ended December 31, 1993 1992 1991 (in thousands) Taxes Other Than Federal Income Taxes include: West Virginia State Business and Occupation $ 39,068 $ 42,324 $33,021 Real and Personal Property 28,039 26,154 25,115 Virginia State Franchise 14,313 13,732 13,289 Payroll 8,997 8,560 8,690 State Income 8,887 2,649 3,650 Miscellaneous 13,435 11,958 11,216 Total $112,739 $105,377 $94,981 Cash was paid for: Interest (net of capitalized amounts) $103,387 $109,037 $92,795 Income Taxes $62,305 $41,811 $33,277 Noncash acquisitions under capital leases were $11,403 $9,736 $9,743 13. UNAUDITED QUARTERLY FINANCIAL INFORMATION: Quarterly Periods Operating Operating Net Ended Revenues Income Income 1993 March 31 $393,036 $67,747 $41,554 June 30 340,617 44,873 18,428 September 30 393,671 56,651 31,941 December 31 391,780 60,069 33,209 1992 March 31 378,499 68,148 42,277 June 30 317,900 45,751 19,152 September 30 343,264 53,134 27,025 December 31 371,115 66,863 42,965 EX-23 7 EXHIBIT 23 DELOITTE & TOUCHE Exhibit 23 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement No. 33-50229 of Appalachian Power Company on Form S-3 of our reports dated February 22, 1994, appearing in and incorporated by reference in this Annual Report on Form 10-K of Appalachian Power Company for the year ended December 31, 1993. /s/ Deloitte & Touche Deloitte & Touche Columbus, Ohio March 28, 1994 EX-24 8 EXHIBIT 24 POWER OF ATTORNEY Exhibit 24 POWER OF ATTORNEY APPALACHIAN POWER COMPANY Annual Report on Form lO-K for the Fiscal Year Ended December 31, 1993 The undersigned directors of APPALACHIAN POWER COMPANY, a Virginia corporation (the "Company"), do hereby constitute and appoint E. LINN DRAPER, JR., G. P. MALONEY, A. JOSEPH DOWD and P. J. DE MARIA, and each of them, their attorneys-in-fact and agents, to execute for them, and in their names, and in any and all of their capacities, the Annual Report of the Company on Form lO-K, pursuant to Section 13 of the Securities Exchange Act of 1934, for the fiscal year ended December 31, 1993, and any and all amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys- in-fact and agents, and each of them, full power and authority to do and perform every act and thing required or necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have signed these presents this 24th day of February, 1994. /s/ P. J. DeMaria /s/ Wm. J. Lhota P. J. DeMaria Wm. J. Lhota /s/ A. Joseph Dowd /s/ G. P. Maloney A. Joseph Dowd G. P. Maloney /s/ E. Linn Draper, Jr. /s/ James J. Markowsky E. Linn Draper, Jr. James J. Markowsky /s/ Luke M. Feck /s/ J. H. Vipperman Luke M. Feck J. H. Vipperman -----END PRIVACY-ENHANCED MESSAGE-----