Effects of Regulation

12 Months Ended

Dec. 31, 2012

Effects of Regulation

4. EFFECTS OF REGULATION

Regulatory assets are comprised of the following items:

				December 31,				Remaining
				2012		2011		Recovery Period
Current Regulatory Assets				(in millions)
Under-recovered Fuel Costs - earns a return				$	86	$	56	1 year
Under-recovered Fuel Costs - does not earn a return					2		9	1 year
Total Current Regulatory Assets				$	88	$	65
Noncurrent Regulatory Assets
Regulatory assets not yet being recovered pending future
	proceedings to determine the recovery method and timing:
	Regulatory Assets Currently Earning a Return
		Storm Related Costs		$	23	$	24
		Economic Development Rider			13		13
		Other Regulatory Assets Not Yet Being Recovered			1		-
	Regulatory Assets Currently Not Earning a Return
		Storm Related Costs			172		10
		Virginia Environmental Rate Adjustment Clause			29		18
		Mountaineer Carbon Capture and Storage Product Validation Facility			14		14
		Litigation Settlement			11		11
		Deferred Wind Power Costs			5		38
		Special Rate Mechanism for Century Aluminum			-		13
		Other Regulatory Assets Not Yet Being Recovered			36		14
Total Regulatory Assets Not Yet Being Recovered					304		155
Regulatory assets being recovered:
	Regulatory Assets Currently Earning a Return
		Ohio Fuel Adjustment Clause			519		521	6 years
		West Virginia Expanded Net Energy Charge			273		327	(a)
		Ohio Deferred Asset Recovery Rider			152		173	6 years
		Unamortized Loss on Reacquired Debt			82		92	31 years
		Ohio Capacity Deferral			66		-	6 years
		Transmission Cost Recovery Rider			49		28	3 years
		Meter Replacement Costs			47		39	10 years
		Storm Related Costs			36		65	6 years
		RTO Formation/Integration Costs			15		18	7 years
		Red Rock Generating Facility			10		10	44 years
		Economic Development Rider			5		12	1 year
		Capacity Auction True-Up			-		692
		Other Regulatory Assets Being Recovered			10		15	various
	Regulatory Assets Currently Not Earning a Return
		Pension and OPEB Funded Status			1,896		2,308	12 years
		Income Taxes, Net			1,353		1,237	44 years
		Postemployment Benefits			45		47	5 years
		Virginia Transmission Rate Adjustment Clause			33		20	2 years
		Cook Nuclear Plant Refueling Outage Levelization			27		41	3 years
		Storm Related Costs			27		35	6 years
		West Virginia Expanded Net Energy Charge			26		32	(a)
		Distribution Decoupling			16		-	2 years
		Deferred Restructuring Costs			15		18	6 years
		Deferred PJM Fees			14		22	2 years
		Vegetation Management			13		11	1 year
		Peak Demand Reduction/Energy Efficiency			12		8	1 year
		Asset Retirement Obligation			9		14	8 years
		Virginia Environmental Rate Adjustment Clause			8		24	1 year
		Unrealized Loss on Forward Commitments			8		16	2 years
		Restructuring Transition Costs			5		8	4 years
		Other Regulatory Assets Being Recovered			31		38	various
Total Regulatory Assets Being Recovered					4,802		5,871
Total Noncurrent Regulatory Assets				$	5,106	$	6,026
(a)			Request for securitization is pending from the WVPSC to recover $422 million as securitized transition assets from ratepayers over the securitization bond period.

Regulatory liabilities are comprised of the following items:

				December 31,				Remaining
				2012		2011		Refund Period
Current Regulatory Liabilities				(in millions)
Over-recovered Fuel Costs - pays a return				$	25	$	5	1 year
Over-recovered Fuel Costs - does not pay a return					22		3	1 year
Total Current Regulatory Liabilities				$	47	$	8
Noncurrent Regulatory Liabilities and
Deferred Investment Tax Credits
Regulatory liabilities not yet being paid:
	Regulatory Liabilities Currently Paying a Return
		Louisiana Refundable Construction Financing Costs		$	96	$	53
		Other Regulatory Liabilities Not Yet Being Paid			4		5
	Regulatory Liabilities Currently Not Paying a Return
		Other Regulatory Liabilities Not Yet Being Paid			9		8
Total Regulatory Liabilities Not Yet Being Paid					109		66
Regulatory liabilities being paid:
	Regulatory Liabilities Currently Paying a Return
		Asset Removal Costs			2,511		2,270	(a)
		Advanced Metering Infrastructure Surcharge			83		78	8 years
		Deferred Investment Tax Credits			23		27	48 years
		Excess Earnings			12		13	41 years
		Other Regulatory Liabilities Being Paid			1		4	various
	Regulatory Liabilities Currently Not Paying a Return
		Excess Asset Retirement Obligations for
			Nuclear Decommissioning Liability		436		377	(b)
		Deferred Investment Tax Credits			136		144	50 years
		Over-recovery of Transition Charges			57		41	15 years
		Unrealized Gain on Forward Commitments			46		41	5 years
		Spent Nuclear Fuel Liability			43		43	(b)
		Peak Demand Reduction/Energy Efficiency			31		40	2 years
		Deferred State Income Tax Coal Credits			29		29	10 years
		Other Regulatory Liabilities Being Paid			27		22	various
Total Regulatory Liabilities Being Paid					3,435		3,129
Total Noncurrent Regulatory Liabilities and
	Deferred Investment Tax Credits			$	3,544	$	3,195
(a)			Relieved as removal costs are incurred.
(b)			Relieved when plant is decommissioned.

Appalachian Power Co [Member]

Effects of Regulation

3. EFFECTS OF REGULATION

Regulatory assets and liabilities are comprised of the following items:

					APCo					I&M
									Remaining					Remaining
					December 31,				Recovery	December 31,				Recovery
Regulatory Assets:					2012		2011		Period	2012		2011		Period
					(in thousands)					(in thousands)
Current Regulatory Assets
Under-recovered Fuel Costs - earns a return					$	74,906	$	41,105	1 year	$	3,029	$	-	1 year
Under-recovered Fuel Costs - does not earn a return						-		-			1,647		8,876	1 year
Total Current Regulatory Assets					$	74,906	$	41,105		$	4,676	$	8,876
Noncurrent Regulatory Assets
Regulatory assets not yet being recovered pending
	future proceedings to determine the recovery
	method and timing:
	Regulatory Assets Currently Not Earning a Return
		Storm Related Costs			$	94,458	$	-		$	-	$	-
		Virginia Environmental Rate Adjustment Clause				29,320		17,950			-		-
		Mountaineer Carbon Capture and Storage
			Product Validation Facility			14,155		14,155			-		-
		Dresden Plant Operating Costs				8,758		-			-		-
		Deferred Wind Power Costs				5,143		38,192			-		-
		Transmission Agreement Phase-In				2,992		1,925			-		-
		Mountaineer Carbon Capture and Storage
			Commercial Scale Facility			1,287		1,335			1,380		1,680
		Special Rate Mechanism for Century Aluminum				-		12,811			-		-
		Litigation Settlement				-		-			11,098		10,803
		Other Regulatory Assets Not Yet Being Recovered				1,447		1,010			786		-
Total Regulatory Assets Not Yet Being Recovered						157,560		87,378			13,264		12,483
Regulatory assets being recovered:
	Regulatory Assets Currently Earning a Return
		West Virginia Expanded Net Energy Charge				272,783		326,766	(a)		-		-
		Storm Related Costs				21,371		25,225	6 years		-		-
		Unamortized Loss on Reacquired Debt				12,969		13,592	30 years		15,871		17,355	20 years
		RTO Formation/Integration Costs				4,370		5,194	7 years		3,229		3,858	7 years
		Customer Choice Implementation Costs				-		-			1,493		4,680	1 year
	Regulatory Assets Currently Not Earning a Return
		Income Taxes, Net				525,549		512,025	26 years		222,252		188,749	36 years
		Pension and OPEB Funded Status				312,645		362,322	12 years		220,797		291,392	12 years
		Virginia Transmission Rate Adjustment Clause				32,992		19,553	2 years		-		-
		West Virginia Expanded Net Energy Charge				25,932		31,979	(a)		-		-
		Postemployment Benefits				22,663		22,645	5 years		8,897		9,137	5 years
		Storm Related Costs				13,712		16,324	6 years		-		-
		Deferred Restructuring Costs				10,531		12,537	6 years		3,688		4,952	3 years
		Asset Retirement Obligation				8,489		10,524	5 years		808		3,396	8 years
		Virginia Environmental Rate Adjustment Clause				8,347		23,844	1 year		-		-
		Virginia Generation Rate Adjustment Clause				3,469		-	1 year		-		-
		Deferred Wind Power Costs				915		6,284	1 year		-		-
		Virginia Environmental and Reliability Costs				560		3,838	1 year		-		-
		Cook Nuclear Plant Refueling Outage Levelization				-		-			26,652		40,551	3 years
		Deferred PJM Fees				-		-			13,998		21,746	2 years
		River Transportation Division Expenses				-		-			4,576		1,899	1 year
		Peak Demand Reduction/Energy Efficiency				-		-			2,608		1,387	1 year
		Other Regulatory Assets Being Recovered				847		1,163	various		1,886		1,394	various
Total Regulatory Assets Being Recovered						1,278,144		1,393,815			526,755		590,496
Total Noncurrent Regulatory Assets					$	1,435,704	$	1,481,193		$	540,019	$	602,979
(a)				Request for securitization is pending from the WVPSC to recover $422 million as securitized transition assets from ratepayers over the securitization bond period.

					APCo					I&M
									Remaining					Remaining
					December 31,				Refund	December 31,				Refund
Regulatory Liabilities:					2012		2011		Period	2012		2011		Period
					(in thousands)					(in thousands)
Current Regulatory Liabilities
Over-recovered Fuel Costs - pays a return					$	-	$	-		$	-	$	25
Total Current Regulatory Liabilities					$	-	$	-		$	-	$	25
Noncurrent Regulatory Liabilities and
Deferred Investment Tax Credits
Regulatory liabilities not yet being paid:
	Regulatory Liabilities Currently Paying a Return
		Other Regulatory Liabilities Not Yet Being Paid			$	-	$	-		$	-	$	318
	Regulatory Liabilities Currently Not Paying a Return
		Other Regulatory Liabilities Not Yet Being Paid				249		327			124		136
Total Regulatory Liabilities Not Yet Being Paid						249		327			124		454
Regulatory liabilities being paid:
	Regulatory Liabilities Currently Paying a Return
		Asset Removal Costs				552,590		526,885	(a)		381,116		362,134	(a)
		Deferred Investment Tax Credits				2,823		3,231	48 years		-		-
	Regulatory Liabilities Currently Not Paying a Return
		Deferred State Income Tax Coal Credits				29,296		28,727	10 years		-		-
		Unrealized Gain on Forward Commitments				21,433		15,597	5 years		19,872		21,785	5 years
		Deferred Investment Tax Credits				382		1,214	3 years		48,130		52,633	25 years
		Peak Demand Reduction/Energy Efficiency				907		811	1 year		11,080		11,078	1 year
		Excess Asset Retirement Obligations for Nuclear
			Decommissioning Liability			-		-			435,717		377,162	(b)
		Spent Nuclear Fuel Liability				-		-			42,898		42,603	(b)
		Off-system Sales Margin Sharing				-		-			7,611		5,892	1 year
		Indiana Clean Coal Technology Rider				-		-			774		1,242	1 year
		Other Regulatory Liabilities Being Paid				-		-			970		219	various
Total Regulatory Liabilities Being Paid						607,431		576,465			948,168		874,748
Total Noncurrent Regulatory Liabilities and
	Deferred Investment Tax Credits				$	607,680	$	576,792		$	948,292	$	875,202
(a)				Relieved as removal costs are incurred.
(b)				Relieved when plant is decommissioned.

Indiana Michigan Power Co [Member]

Effects of Regulation

3. EFFECTS OF REGULATION

Regulatory assets and liabilities are comprised of the following items:

					APCo					I&M
									Remaining					Remaining
					December 31,				Recovery	December 31,				Recovery
Regulatory Assets:					2012		2011		Period	2012		2011		Period
					(in thousands)					(in thousands)
Current Regulatory Assets
Under-recovered Fuel Costs - earns a return					$	74,906	$	41,105	1 year	$	3,029	$	-	1 year
Under-recovered Fuel Costs - does not earn a return						-		-			1,647		8,876	1 year
Total Current Regulatory Assets					$	74,906	$	41,105		$	4,676	$	8,876
Noncurrent Regulatory Assets
Regulatory assets not yet being recovered pending
	future proceedings to determine the recovery
	method and timing:
	Regulatory Assets Currently Not Earning a Return
		Storm Related Costs			$	94,458	$	-		$	-	$	-
		Virginia Environmental Rate Adjustment Clause				29,320		17,950			-		-
		Mountaineer Carbon Capture and Storage
			Product Validation Facility			14,155		14,155			-		-
		Dresden Plant Operating Costs				8,758		-			-		-
		Deferred Wind Power Costs				5,143		38,192			-		-
		Transmission Agreement Phase-In				2,992		1,925			-		-
		Mountaineer Carbon Capture and Storage
			Commercial Scale Facility			1,287		1,335			1,380		1,680
		Special Rate Mechanism for Century Aluminum				-		12,811			-		-
		Litigation Settlement				-		-			11,098		10,803
		Other Regulatory Assets Not Yet Being Recovered				1,447		1,010			786		-
Total Regulatory Assets Not Yet Being Recovered						157,560		87,378			13,264		12,483
Regulatory assets being recovered:
	Regulatory Assets Currently Earning a Return
		West Virginia Expanded Net Energy Charge				272,783		326,766	(a)		-		-
		Storm Related Costs				21,371		25,225	6 years		-		-
		Unamortized Loss on Reacquired Debt				12,969		13,592	30 years		15,871		17,355	20 years
		RTO Formation/Integration Costs				4,370		5,194	7 years		3,229		3,858	7 years
		Customer Choice Implementation Costs				-		-			1,493		4,680	1 year
	Regulatory Assets Currently Not Earning a Return
		Income Taxes, Net				525,549		512,025	26 years		222,252		188,749	36 years
		Pension and OPEB Funded Status				312,645		362,322	12 years		220,797		291,392	12 years
		Virginia Transmission Rate Adjustment Clause				32,992		19,553	2 years		-		-
		West Virginia Expanded Net Energy Charge				25,932		31,979	(a)		-		-
		Postemployment Benefits				22,663		22,645	5 years		8,897		9,137	5 years
		Storm Related Costs				13,712		16,324	6 years		-		-
		Deferred Restructuring Costs				10,531		12,537	6 years		3,688		4,952	3 years
		Asset Retirement Obligation				8,489		10,524	5 years		808		3,396	8 years
		Virginia Environmental Rate Adjustment Clause				8,347		23,844	1 year		-		-
		Virginia Generation Rate Adjustment Clause				3,469		-	1 year		-		-
		Deferred Wind Power Costs				915		6,284	1 year		-		-
		Virginia Environmental and Reliability Costs				560		3,838	1 year		-		-
		Cook Nuclear Plant Refueling Outage Levelization				-		-			26,652		40,551	3 years
		Deferred PJM Fees				-		-			13,998		21,746	2 years
		River Transportation Division Expenses				-		-			4,576		1,899	1 year
		Peak Demand Reduction/Energy Efficiency				-		-			2,608		1,387	1 year
		Other Regulatory Assets Being Recovered				847		1,163	various		1,886		1,394	various
Total Regulatory Assets Being Recovered						1,278,144		1,393,815			526,755		590,496
Total Noncurrent Regulatory Assets					$	1,435,704	$	1,481,193		$	540,019	$	602,979
(a)				Request for securitization is pending from the WVPSC to recover $422 million as securitized transition assets from ratepayers over the securitization bond period.

					APCo					I&M
									Remaining					Remaining
					December 31,				Refund	December 31,				Refund
Regulatory Liabilities:					2012		2011		Period	2012		2011		Period
					(in thousands)					(in thousands)
Current Regulatory Liabilities
Over-recovered Fuel Costs - pays a return					$	-	$	-		$	-	$	25
Total Current Regulatory Liabilities					$	-	$	-		$	-	$	25
Noncurrent Regulatory Liabilities and
Deferred Investment Tax Credits
Regulatory liabilities not yet being paid:
	Regulatory Liabilities Currently Paying a Return
		Other Regulatory Liabilities Not Yet Being Paid			$	-	$	-		$	-	$	318
	Regulatory Liabilities Currently Not Paying a Return
		Other Regulatory Liabilities Not Yet Being Paid				249		327			124		136
Total Regulatory Liabilities Not Yet Being Paid						249		327			124		454
Regulatory liabilities being paid:
	Regulatory Liabilities Currently Paying a Return
		Asset Removal Costs				552,590		526,885	(a)		381,116		362,134	(a)
		Deferred Investment Tax Credits				2,823		3,231	48 years		-		-
	Regulatory Liabilities Currently Not Paying a Return
		Deferred State Income Tax Coal Credits				29,296		28,727	10 years		-		-
		Unrealized Gain on Forward Commitments				21,433		15,597	5 years		19,872		21,785	5 years
		Deferred Investment Tax Credits				382		1,214	3 years		48,130		52,633	25 years
		Peak Demand Reduction/Energy Efficiency				907		811	1 year		11,080		11,078	1 year
		Excess Asset Retirement Obligations for Nuclear
			Decommissioning Liability			-		-			435,717		377,162	(b)
		Spent Nuclear Fuel Liability				-		-			42,898		42,603	(b)
		Off-system Sales Margin Sharing				-		-			7,611		5,892	1 year
		Indiana Clean Coal Technology Rider				-		-			774		1,242	1 year
		Other Regulatory Liabilities Being Paid				-		-			970		219	various
Total Regulatory Liabilities Being Paid						607,431		576,465			948,168		874,748
Total Noncurrent Regulatory Liabilities and
	Deferred Investment Tax Credits				$	607,680	$	576,792		$	948,292	$	875,202
(a)				Relieved as removal costs are incurred.
(b)				Relieved when plant is decommissioned.

Ohio Power Co [Member]

Effects of Regulation

3. EFFECTS OF REGULATION

Regulatory assets and liabilities are comprised of the following items:

			OPCo
							Remaining
			December 31,				Recovery
			2012		2011		Period
Regulatory Assets:			(in thousands)
Noncurrent Regulatory Assets
Regulatory assets not yet being recovered pending future proceedings to
	determine the recovery method and timing:
	Regulatory Assets Currently Earning a Return
		Economic Development Rider	$	13,213	$	12,572
	Regulatory Assets Currently Not Earning a Return
		Storm Related Costs		61,828		8,375
		Ormet Delayed Payment Arrangement		5,453		-
		Other Regulatory Assets Not Yet Being Recovered		30		-
Total Regulatory Assets Not Yet Being Recovered				80,524		20,947
Regulatory assets being recovered:
	Regulatory Assets Currently Earning a Return
		Ohio Fuel Adjustment Clause		518,595		506,607	6 years
		Ohio Deferred Asset Recovery Rider		152,039		173,274	6 years
		Ohio Capacity Deferral		65,818		-	6 years
		Transmission Cost Recovery Rider		49,391		28,404	3 years
		Unamortized Loss on Reacquired Debt		13,215		14,552	26 years
		RTO Formation/Integration Costs		6,594		7,836	7 years
		Economic Development Rider		5,488		11,738	1 year
	Regulatory Assets Currently Not Earning a Return
		Pension and OPEB Funded Status		309,685		389,712	12 years
		Income Taxes, Net		190,685		190,981	21 years
		Distribution Decoupling		16,198		-	2 years
		Postemployment Benefits		7,658		8,669	5 years
		Partnership with Ohio Contribution		2,405		3,400	3 years
		Distribution Investment Rider		1,304		-	1 year
		Unrealized Loss on Forward Commitments		810		9,930	1 year
		Enhanced Service Reliability Plan		557		4,454	1 year
Total Regulatory Assets Being Recovered				1,340,442		1,349,557
Total Noncurrent Regulatory Assets			$	1,420,966	$	1,370,504

				OPCo
								Remaining
				December 31,				Refund
				2012		2011		Period
Regulatory Liabilities:				(in thousands)
Current Regulatory Liabilities
Over-recovered Fuel Costs - does not pay a return				$	14,848	$	-	1 year
Total Current Regulatory Liabilities				$	14,848	$	-
Noncurrent Regulatory Liabilities and Deferred Investment Tax Credits
Regulatory liabilities not yet being paid:
	Regulatory Liabilities Currently Paying a Return
		IGCC Preconstruction Costs		$	4,411	$	4,196
	Regulatory Liabilities Currently Not Paying a Return
		Other Regulatory Liabilities Not Yet Being Paid			216		216
Total Regulatory Liabilities Not Yet Being Paid					4,627		4,412
Regulatory liabilities being paid:
	Regulatory Liabilities Currently Paying a Return
		Asset Removal Costs			416,461		251,100	(a)
		Deferred Investment Tax Credits			322		549	9 years
		Economic Development Rider			-		2,428
		Transmission Cost Recovery Rider			-		542
	Regulatory Liabilities Currently Not Paying a Return
		Peak Demand Reduction/Energy Efficiency			12,596		19,124	2 years
		Deferred Investment Tax Credits			11,321		12,944	12 years
		Over-recovery of Costs Related to gridSMART®			3,501		7,504	2 years
		Low Income Customers/Economic Recovery			2,243		2,521	3 years
Total Regulatory Liabilities Being Paid					446,444		296,712
Total Noncurrent Regulatory Liabilities and
	Deferred Investment Tax Credits			$	451,071	$	301,124
(a)			Relieved as removal costs are incurred.

Public Service Co of Oklahoma [Member]

Effects of Regulation

3. EFFECTS OF REGULATION

Regulatory assets and liabilities are comprised of the following items:

				PSO					SWEPCo
								Remaining					Remaining
				December 31,				Recovery	December 31,				Recovery
				2012		2011		Period	2012		2011		Period
Regulatory Assets:				(in thousands)					(in thousands)
Current Regulatory Assets
Under-recovered Fuel Costs - earns a return				$	-	$	4,313		$	8,527	$	10,843	1 year
Total Current Regulatory Assets				$	-	$	4,313		$	8,527	$	10,843
Noncurrent Regulatory Assets
Regulatory assets not yet being recovered pending
	future proceedings to determine the recovery
	method and timing:
	Regulatory Assets Currently Not Earning a Return
		Rate Case Expense		$	-	$	-		$	4,517	$	-
		Mountaineer Carbon Capture and Storage
			Commercial Scale Facility		-		-			2,295		2,380
		Other Regulatory Assets Not Yet Being Recovered			423		-			2,188		1,699
Total Regulatory Assets Not Yet Being Recovered					423		-			9,000		4,079
Regulatory assets being recovered:
	Regulatory Assets Currently Earning a Return
		Storm Related Costs			14,172		38,659	1 year		337		965	1 year
		Unamortized Loss on Reacquired Debt			10,923		12,538	20 years		9,379		10,768	31 years
		Red Rock Generating Facility			9,954		10,180	44 years		-		-
		Acquisition of Valley Electric Membership
			Corporation (VEMCO)		-		-			6,443		8,789	3 years
	Regulatory Assets Currently Not Earning a Return
		Pension and OPEB Funded Status			133,404		178,295	12 years		143,226		176,587	12 years
		Vegetation Management			13,388		11,196	1 year		-		-
		Peak Demand Reduction/Energy Efficiency			6,248		4,394	1 year		1,467		1,284	1 year
		Unrealized Loss on Forward Commitments			5,347		1,706	1 year		427		4,684	1 year
		Deferral of Major Generation Overhauls			4,533		6,133	5 years		-		-
		Income Taxes, Net			3,785		2,923	34 years		230,220		178,826	40 years
		Rate Case Expense			-		216			1,168		3,602	1 year
		Dolet Hills Deferred Fuel			-		-			1,048		1,886	2 years
		Storm Related Costs			-		-			400		2,556	1 year
		Other Regulatory Assets Being Recovered			151		305	various		163		250	various
Total Regulatory Assets Being Recovered					201,905		266,545			394,278		390,197
Total Noncurrent Regulatory Assets				$	202,328	$	266,545		$	403,278	$	394,276

				PSO					SWEPCo
								Remaining					Remaining
				December 31,				Refund	December 31,				Refund
				2012		2011		Period	2012		2011		Period
Regulatory Liabilities:				(in thousands)					(in thousands)
Current Regulatory Liabilities
Over-recovered Fuel Costs - pays a return				$	7,945	$	-	1 year	$	16,761	$	5,032	1 year
Total Current Regulatory Liabilities				$	7,945	$	-		$	16,761	$	5,032
Noncurrent Regulatory Liabilities and
Deferred Investment Tax Credits
Regulatory liabilities not yet being paid:
	Regulatory Liabilities Currently Paying a Return
		Louisiana Refundable Construction Financing Costs		$	-	$	-		$	96,094	$	52,594
	Regulatory Liabilities Currently Not Paying a Return
		Over-recovery of Costs Related to gridSMART®			3,964		4,232			-		-
		Storm Related Costs			3,207		2,248			-		-
		Other Regulatory Liabilities Not Yet Being Paid			1,613		-			-		806
Total Regulatory Liabilities Not Yet Being Paid					8,784		6,480			96,094		53,400
Regulatory liabilities being paid:
	Regulatory Liabilities Currently Paying a Return
		Asset Removal Costs			280,446		280,491	(a)		362,838		353,067	(a)
		Excess Earnings			-		-			2,975		3,047	41 years
		Other Regulatory Liabilities Being Paid			-		-			838		1,305	various
	Regulatory Liabilities Currently Not Paying a Return
		Deferred Investment Tax Credits			42,345		40,310	36 years		12,769		13,318	26 years
		Base Load Purchase Power Contract			8,484		-	1 year		-		-
		Peak Demand Reduction/Energy Efficiency			2,915		6,444	1 year		-		-
		Vegetation Management			-		-			130		3,158	1 year
		Other Regulatory Liabilities Being Paid			1,843		1,087	various		827		1,276	various
Total Regulatory Liabilities Being Paid					336,033		328,332			380,377		375,171
Total Noncurrent Regulatory Liabilities and
	Deferred Investment Tax Credits			$	344,817	$	334,812		$	476,471	$	428,571
(a)			Relieved as removal costs are incurred.

Southwestern Electric Power Co [Member]

Effects of Regulation

3. EFFECTS OF REGULATION

Regulatory assets and liabilities are comprised of the following items:

				PSO					SWEPCo
								Remaining					Remaining
				December 31,				Recovery	December 31,				Recovery
				2012		2011		Period	2012		2011		Period
Regulatory Assets:				(in thousands)					(in thousands)
Current Regulatory Assets
Under-recovered Fuel Costs - earns a return				$	-	$	4,313		$	8,527	$	10,843	1 year
Total Current Regulatory Assets				$	-	$	4,313		$	8,527	$	10,843
Noncurrent Regulatory Assets
Regulatory assets not yet being recovered pending
	future proceedings to determine the recovery
	method and timing:
	Regulatory Assets Currently Not Earning a Return
		Rate Case Expense		$	-	$	-		$	4,517	$	-
		Mountaineer Carbon Capture and Storage
			Commercial Scale Facility		-		-			2,295		2,380
		Other Regulatory Assets Not Yet Being Recovered			423		-			2,188		1,699
Total Regulatory Assets Not Yet Being Recovered					423		-			9,000		4,079
Regulatory assets being recovered:
	Regulatory Assets Currently Earning a Return
		Storm Related Costs			14,172		38,659	1 year		337		965	1 year
		Unamortized Loss on Reacquired Debt			10,923		12,538	20 years		9,379		10,768	31 years
		Red Rock Generating Facility			9,954		10,180	44 years		-		-
		Acquisition of Valley Electric Membership
			Corporation (VEMCO)		-		-			6,443		8,789	3 years
	Regulatory Assets Currently Not Earning a Return
		Pension and OPEB Funded Status			133,404		178,295	12 years		143,226		176,587	12 years
		Vegetation Management			13,388		11,196	1 year		-		-
		Peak Demand Reduction/Energy Efficiency			6,248		4,394	1 year		1,467		1,284	1 year
		Unrealized Loss on Forward Commitments			5,347		1,706	1 year		427		4,684	1 year
		Deferral of Major Generation Overhauls			4,533		6,133	5 years		-		-
		Income Taxes, Net			3,785		2,923	34 years		230,220		178,826	40 years
		Rate Case Expense			-		216			1,168		3,602	1 year
		Dolet Hills Deferred Fuel			-		-			1,048		1,886	2 years
		Storm Related Costs			-		-			400		2,556	1 year
		Other Regulatory Assets Being Recovered			151		305	various		163		250	various
Total Regulatory Assets Being Recovered					201,905		266,545			394,278		390,197
Total Noncurrent Regulatory Assets				$	202,328	$	266,545		$	403,278	$	394,276

				PSO					SWEPCo
								Remaining					Remaining
				December 31,				Refund	December 31,				Refund
				2012		2011		Period	2012		2011		Period
Regulatory Liabilities:				(in thousands)					(in thousands)
Current Regulatory Liabilities
Over-recovered Fuel Costs - pays a return				$	7,945	$	-	1 year	$	16,761	$	5,032	1 year
Total Current Regulatory Liabilities				$	7,945	$	-		$	16,761	$	5,032
Noncurrent Regulatory Liabilities and
Deferred Investment Tax Credits
Regulatory liabilities not yet being paid:
	Regulatory Liabilities Currently Paying a Return
		Louisiana Refundable Construction Financing Costs		$	-	$	-		$	96,094	$	52,594
	Regulatory Liabilities Currently Not Paying a Return
		Over-recovery of Costs Related to gridSMART®			3,964		4,232			-		-
		Storm Related Costs			3,207		2,248			-		-
		Other Regulatory Liabilities Not Yet Being Paid			1,613		-			-		806
Total Regulatory Liabilities Not Yet Being Paid					8,784		6,480			96,094		53,400
Regulatory liabilities being paid:
	Regulatory Liabilities Currently Paying a Return
		Asset Removal Costs			280,446		280,491	(a)		362,838		353,067	(a)
		Excess Earnings			-		-			2,975		3,047	41 years
		Other Regulatory Liabilities Being Paid			-		-			838		1,305	various
	Regulatory Liabilities Currently Not Paying a Return
		Deferred Investment Tax Credits			42,345		40,310	36 years		12,769		13,318	26 years
		Base Load Purchase Power Contract			8,484		-	1 year		-		-
		Peak Demand Reduction/Energy Efficiency			2,915		6,444	1 year		-		-
		Vegetation Management			-		-			130		3,158	1 year
		Other Regulatory Liabilities Being Paid			1,843		1,087	various		827		1,276	various
Total Regulatory Liabilities Being Paid					336,033		328,332			380,377		375,171
Total Noncurrent Regulatory Liabilities and
	Deferred Investment Tax Credits			$	344,817	$	334,812		$	476,471	$	428,571
(a)			Relieved as removal costs are incurred.