Commission
|
Registrant,
State of Incorporation,
|
I.R.S.
Employer
|
||
File Number
|
Address of Principal Executive Offices, and
Telephone Number
|
Identification No.
|
||
1-3525
|
AMERICAN
ELECTRIC POWER COMPANY, INC. (A New York Corporation)
|
13-4922640
|
||
1-3457
|
APPALACHIAN
POWER COMPANY (A Virginia Corporation)
|
54-0124790
|
||
1-2680
|
COLUMBUS
SOUTHERN POWER COMPANY (An Ohio Corporation)
|
31-4154203
|
||
1-3570
|
INDIANA
MICHIGAN POWER COMPANY (An Indiana Corporation)
|
35-0410455
|
||
1-6543
|
OHIO
POWER COMPANY (An Ohio Corporation)
|
31-4271000
|
||
0-343
|
PUBLIC
SERVICE COMPANY OF OKLAHOMA (An Oklahoma Corporation)
|
73-0410895
|
||
1-3146
|
SOUTHWESTERN
ELECTRIC POWER COMPANY (A Delaware Corporation)
|
72-0323455
|
||
All
Registrants
|
1
Riverside Plaza, Columbus, Ohio 43215-2373
|
|||
Telephone
(614) 716-1000
|
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
___
|
Indicate
by check mark whether American Electric Power Company, Inc. is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of ‘large
accelerated filer,’ ‘accelerated filer’ and ‘smaller reporting company’ in
Rule 12b-2 of the Exchange Act.
|
Large
accelerated filer X
Accelerated
filer
Non-accelerated
filer Smaller
reporting company
|
Indicate
by check mark whether Appalachian Power Company, Columbus Southern Power
Company, Indiana Michigan Power Company, Ohio Power Company, Public
Service Company of Oklahoma and Southwestern Electric Power Company, are
large accelerated filers, accelerated filers, non-accelerated filers or
smaller reporting companies. See the definitions of ‘large
accelerated filer,’ ‘accelerated filer’ and ‘smaller reporting company’ in
Rule 12b-2 of the Exchange Act.
|
|
Large
accelerated filer Accelerated
filer
Non-accelerated
filer X
Smaller
reporting company
|
|
Indicate
by check mark whether the registrants are shell companies (as defined in
Rule 12b-2 of the Exchange Act)
|
|
Yes
|
No X
|
Number
of shares of common stock outstanding of the registrants at
April
30, 2008
|
|||
American
Electric Power Company, Inc.
|
401,591,005
|
||
($6.50
par value)
|
|||
Appalachian
Power Company
|
13,499,500
|
||
(no
par value)
|
|||
Columbus
Southern Power Company
|
16,410,426
|
||
(no
par value)
|
|||
Indiana
Michigan Power Company
|
1,400,000
|
||
(no
par value)
|
|||
Ohio
Power Company
|
27,952,473
|
||
(no
par value)
|
|||
Public
Service Company of Oklahoma
|
9,013,000
|
||
($15
par value)
|
|||
Southwestern
Electric Power Company
|
7,536,640
|
||
($18
par value)
|
Glossary
of Terms
|
|
|||
Forward-Looking
Information
|
|
|||
Part
I. FINANCIAL INFORMATION
|
||||
Items
1, 2 and 3 - Financial Statements, Management’s Financial Discussion and
Analysis and Quantitative and Qualitative Disclosures About Risk
Management Activities:
|
||||
American
Electric Power Company, Inc. and Subsidiary Companies:
|
||||
Management’s
Financial Discussion and Analysis of Results of Operations
|
|
|||
Quantitative
and Qualitative Disclosures About Risk Management
Activities
|
||||
Condensed
Consolidated Financial Statements
|
||||
Index
to Condensed Notes to Condensed Consolidated Financial
Statements
|
||||
Appalachian
Power Company and Subsidiaries:
|
||||
Management’s
Financial Discussion and Analysis
|
||||
Quantitative
and Qualitative Disclosures About Risk Management
Activities
|
||||
Condensed
Consolidated Financial Statements
|
||||
Index
to Condensed Notes to Condensed Financial Statements of Registrant
Subsidiaries
|
|
|||
Columbus
Southern Power Company and Subsidiaries:
|
||||
Management’s
Narrative Financial Discussion and Analysis
|
|
|||
Quantitative
and Qualitative Disclosures About Risk Management
Activities
|
|
|||
Condensed
Consolidated Financial Statements
|
|
|||
Index
to Condensed Notes to Condensed Financial Statements of Registrant
Subsidiaries
|
|
|||
Indiana
Michigan Power Company and Subsidiaries:
|
||||
Management’s
Narrative Financial Discussion and Analysis
|
|
|||
Quantitative
and Qualitative Disclosures About Risk Management
Activities
|
|
|||
Condensed
Consolidated Financial Statements
|
|
|||
Index
to Condensed Notes to Condensed Financial Statements of Registrant
Subsidiaries
|
|
|||
Ohio
Power Company Consolidated:
|
|||
Management’s
Financial Discussion and Analysis
|
|
||
Quantitative
and Qualitative Disclosures About Risk Management
Activities
|
|
||
Condensed
Consolidated Financial Statements
|
|
||
Index
to Condensed Notes to Condensed Financial Statements of Registrant
Subsidiaries
|
|
||
Public
Service Company of Oklahoma:
|
|||
Management’s
Narrative Financial Discussion and Analysis
|
|
||
Quantitative
and Qualitative Disclosures About Risk Management
Activities
|
|
||
Condensed
Financial Statements
|
|
||
Index
to Condensed Notes to Condensed Financial Statements of Registrant
Subsidiaries
|
|
||
Southwestern
Electric Power Company Consolidated:
|
|||
Management’s
Financial Discussion and Analysis
|
|
||
Quantitative
and Qualitative Disclosures About Risk Management
Activities
|
|
||
Condensed
Consolidated Financial Statements
|
|
||
Index
to Condensed Notes to Condensed Financial Statements of Registrant
Subsidiaries
|
|
Condensed
Notes to Condensed Financial Statements of Registrant
Subsidiaries
|
|
|||||||
Combined
Management’s Discussion and Analysis of Registrant
Subsidiaries
|
|
|||||||
Controls
and Procedures
|
|
|||||||
Part
II. OTHER INFORMATION
|
||||||||
Item
1.
|
Legal
Proceedings
|
|
||||||
Item
1A.
|
Risk
Factors
|
|
||||||
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
|
||||||
Item
5.
|
Other
Information
|
|
||||||
Item
6.
|
Exhibits:
|
|
||||||
Exhibit
12
|
||||||||
Exhibit
31(a)
|
||||||||
Exhibit
31(b)
|
||||||||
Exhibit
32(a)
|
||||||||
Exhibit
32(b)
|
||||||||
SIGNATURE
|
|
This
combined Form 10-Q is separately filed by American Electric Power Company,
Inc., Appalachian Power Company, Columbus Southern Power Company, Indiana
Michigan Power Company, Ohio Power Company, Public Service Company of
Oklahoma and Southwestern Electric Power Company. Information
contained herein relating to any individual registrant is filed by such
registrant on its own behalf. Each registrant makes no representation as
to information relating to the other
registrants.
|
Term
|
Meaning
|
AEGCo
|
AEP
Generating Company, an AEP electric utility subsidiary.
|
|
AEP
or Parent
|
American
Electric Power Company, Inc.
|
|
AEP
Consolidated
|
AEP
and its majority owned consolidated subsidiaries and consolidated
affiliates.
|
|
AEP
Credit
|
AEP
Credit, Inc., a subsidiary of AEP which factors accounts receivable and
accrued utility revenues for affiliated electric utility
companies.
|
|
AEP
East companies
|
APCo,
CSPCo, I&M, KPCo and OPCo.
|
|
AEP
Power Pool
|
Members
are APCo, CSPCo, I&M, KPCo and OPCo. The Pool shares the
generation, cost of generation and resultant wholesale off-system sales of
the member companies.
|
|
AEPSC
|
American
Electric Power Service Corporation, a service subsidiary providing
management and professional services to AEP and its
subsidiaries.
|
|
AEP
System or the System
|
American
Electric Power System, an integrated electric utility system, owned and
operated by AEP’s electric utility subsidiaries.
|
|
AEP
West companies
|
PSO,
SWEPCo, TCC and TNC.
|
|
AFUDC
|
Allowance
for Funds Used During Construction.
|
|
ALJ
|
Administrative
Law Judge.
|
|
AOCI
|
Accumulated
Other Comprehensive Income.
|
|
APCo
|
Appalachian
Power Company, an AEP electric utility subsidiary.
|
|
APSC
|
Arkansas
Public Service Commission.
|
|
CAA
|
Clean
Air Act.
|
|
CO2
|
Carbon
Dioxide.
|
|
CSPCo
|
Columbus
Southern Power Company, an AEP electric utility
subsidiary.
|
|
CSW
|
Central
and South West Corporation, a subsidiary of AEP (Effective January 21,
2003, the legal name of Central and South West Corporation was changed to
AEP Utilities, Inc.).
|
|
CTC
|
Competition
Transition Charge.
|
|
CWIP
|
Construction
Work in Progress.
|
|
DOJ
|
United
States Department of Justice.
|
|
E&R
|
Environmental
compliance and transmission and distribution system
reliability.
|
|
EaR
|
Earnings
at Risk, a method to quantify risk exposure.
|
|
EITF
|
Financial
Accounting Standards Board’s Emerging Issues Task
Force.
|
|
EITF
06-10
|
EITF
Issue No. 06-10 “Accounting for Collateral Assignment Split-Dollar Life
Insurance Arrangements.”
|
|
ERCOT
|
Electric
Reliability Council of Texas.
|
|
FASB
|
Financial
Accounting Standards Board.
|
|
Federal
EPA
|
United
States Environmental Protection Agency.
|
|
FERC
|
Federal
Energy Regulatory Commission.
|
|
FIN
|
FASB
Interpretation No.
|
|
FIN
46R
|
FIN
46R, “Consolidation of Variable Interest Entities.”
|
|
FIN
48
|
FIN
48, “Accounting for Uncertainty in Income Taxes” and FASB Staff Position
FIN 48-1 “Definition of Settlement in FASB
Interpretation No. 48.”
|
|
GAAP
|
Accounting
Principles Generally Accepted in the United States of
America.
|
|
HPL
|
Houston
Pipeline Company, a former AEP
subsidiary.
|
IGCC
|
Integrated
Gasification Combined Cycle, technology that turns coal into a
cleaner-burning gas.
|
|
IRS
|
Internal
Revenue Service.
|
|
IURC
|
Indiana
Utility Regulatory Commission.
|
|
I&M
|
Indiana
Michigan Power Company, an AEP electric utility
subsidiary.
|
|
JMG
|
JMG
Funding LP.
|
|
KPCo
|
Kentucky
Power Company, an AEP electric utility subsidiary.
|
|
KPSC
|
Kentucky
Public Service Commission.
|
|
kV
|
Kilovolt.
|
|
KWH
|
Kilowatthour.
|
|
LPSC
|
Louisiana
Public Service Commission.
|
|
MISO
|
Midwest
Independent Transmission System Operator.
|
|
MTM
|
Mark-to-Market.
|
|
MW
|
Megawatt.
|
|
MWH
|
Megawatthour.
|
|
NOx
|
Nitrogen
oxide.
|
|
Nonutility
Money Pool
|
AEP
System’s Nonutility Money Pool.
|
|
NSR
|
New
Source Review.
|
|
NYMEX
|
New
York Mercantile Exchange.
|
|
OCC
|
Corporation
Commission of the State of Oklahoma.
|
|
OPCo
|
Ohio
Power Company, an AEP electric utility subsidiary.
|
|
OPEB
|
Other
Postretirement Benefit Plans.
|
|
OTC
|
Over
the counter.
|
|
PATH
|
Potomac
Appalachian Transmission Highline, LLC and its subsidiaries, a joint
venture with Allegheny Energy Inc. formed to own and operate electric
transmission facilities in PJM.
|
|
PJM
|
Pennsylvania
– New Jersey – Maryland regional transmission
organization.
|
|
PSO
|
Public
Service Company of Oklahoma, an AEP electric utility
subsidiary.
|
|
PUCO
|
Public
Utilities Commission of Ohio.
|
|
PUCT
|
Public
Utility Commission of Texas.
|
|
Registrant
Subsidiaries
|
AEP
subsidiaries which are SEC registrants; APCo, CSPCo, I&M, OPCo, PSO
and SWEPCo.
|
|
REP
|
Texas
Retail Electric Provider.
|
|
Risk
Management Contracts
|
Trading
and nontrading derivatives, including those derivatives designated as cash
flow and fair value hedges.
|
|
Rockport
Plant
|
A
generating plant, consisting of two 1,300 MW coal-fired generating units
near Rockport, Indiana, owned by AEGCo and I&M.
|
|
RSP
|
Rate
Stabilization Plan.
|
|
RTO
|
Regional
Transmission Organization.
|
|
S&P
|
Standard
and Poor’s.
|
|
SCR
|
Selective
Catalytic Reduction.
|
|
SEC
|
United
States Securities and Exchange Commission.
|
|
SECA
|
Seams
Elimination Cost Allocation.
|
|
SFAS
|
Statement
of Financial Accounting Standards issued by the Financial Accounting
Standards Board.
|
|
SFAS
71
|
Statement
of Financial Accounting Standards No. 71, “Accounting for the Effects of
Certain Types of Regulation.”
|
SFAS
109
|
Statement
of Financial Accounting Standards No. 109, “Accounting for Income
Taxes.”
|
|
SFAS
133
|
Statement
of Financial Accounting Standards No. 133, “Accounting for Derivative
Instruments and Hedging Activities.”
|
|
SFAS
157
|
Statement
of Financial Accounting Standards No. 157, “Fair Value
Measurements.”
|
|
SIA
|
System
Integration Agreement.
|
|
SNF
|
Spent
Nuclear Fuel.
|
|
SO2
|
Sulfur
Dioxide.
|
|
SPP
|
Southwest
Power Pool.
|
|
Stall
Unit
|
J.
Lamar Stall Unit at Arsenal Hill Plant.
|
|
Sweeny
|
Sweeny
Cogeneration Limited Partnership, owner and operator of a four unit, 480
MW gas-fired generation facility, owned 50% by AEP. AEP’s 50%
interest in Sweeny was sold in October 2007.
|
|
SWEPCo
|
Southwestern
Electric Power Company, an AEP electric utility
subsidiary.
|
|
TCC
|
AEP
Texas Central Company, an AEP electric utility
subsidiary.
|
|
TEM
|
SUEZ
Energy Marketing NA, Inc. (formerly known as Tractebel Energy Marketing,
Inc.).
|
|
Texas
Restructuring Legislation
|
Legislation
enacted in 1999 to restructure the electric utility industry in
Texas.
|
|
TNC
|
AEP
Texas North Company, an AEP electric utility
subsidiary.
|
|
True-up
Proceeding
|
A
filing made under the Texas Restructuring Legislation to finalize the
amount of stranded costs and other true-up items and the recovery of such
amounts.
|
|
Turk
Plant
|
John
W. Turk, Jr. Plant.
|
|
Utility
Money Pool
|
AEP
System’s Utility Money Pool.
|
|
VaR
|
Value
at Risk, a method to quantify risk exposure.
|
|
Virginia
SCC
|
Virginia
State Corporation Commission.
|
|
WPCo
|
Wheeling
Power Company, an AEP electric distribution subsidiary.
|
|
WVPSC
|
Public
Service Commission of West
Virginia.
|
·
|
Electric
load and customer growth.
|
·
|
Weather
conditions, including storms.
|
·
|
Available
sources and costs of, and transportation for, fuels and the
creditworthiness and performance of fuel suppliers and
transporters.
|
·
|
Availability
of generating capacity and the performance of our generating
plants.
|
·
|
Our
ability to recover regulatory assets and stranded costs in connection with
deregulation.
|
·
|
Our
ability to recover increases in fuel and other energy costs through
regulated or competitive electric rates.
|
·
|
Our
ability to build or acquire generating capacity (including our ability to
obtain any necessary regulatory approvals and permits) when needed at
acceptable prices and terms and to recover those costs through applicable
rate cases or competitive rates.
|
·
|
New
legislation, litigation and government regulation including requirements
for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or
particulate matter and other substances.
|
·
|
Timing
and resolution of pending and future rate cases, negotiations and other
regulatory decisions (including rate or other recovery of new investments
in generation, distribution and transmission service and environmental
compliance).
|
·
|
Resolution
of litigation (including disputes arising from the bankruptcy of Enron
Corp. and related matters).
|
·
|
Our
ability to constrain operation and maintenance costs.
|
·
|
The
economic climate and growth in our service territory and changes in market
demand and demographic patterns.
|
·
|
Inflationary
and interest rate trends.
|
·
|
Volatility
in the financial markets, particularly developments affecting the
availability of capital on reasonable terms and developments impairing our
ability to refinance existing debt at attractive rates.
|
·
|
Our
ability to develop and execute a strategy based on a view regarding prices
of electricity, natural gas and other energy-related
commodities.
|
·
|
Changes
in the creditworthiness of the counterparties with whom we have
contractual arrangements, including participants in the energy trading
market.
|
·
|
Actions
of rating agencies, including changes in the ratings of
debt.
|
·
|
Volatility
and changes in markets for electricity, natural gas, coal, nuclear fuel
and other energy-related commodities.
|
·
|
Changes
in utility regulation, including the potential for new legislation in Ohio
and the allocation of costs within RTOs.
|
·
|
Accounting
pronouncements periodically issued by accounting standard-setting
bodies.
|
·
|
The
impact of volatility in the capital markets on the value of the
investments held by our pension, other postretirement benefit plans and
nuclear decommissioning trust.
|
·
|
Prices
for power that we generate and sell at wholesale.
|
·
|
Changes
in technology, particularly with respect to new, developing or alternative
sources of generation.
|
·
|
Other
risks and unforeseen events, including wars, the effects of terrorism
(including increased security costs), embargoes and other catastrophic
events.
|
The
registrants expressly disclaim any obligation to update any
forward-looking information.
|
·
|
In
February 2008, APCo and WPCo filed for an increase of approximately $156
million including a $135 million increase in the Expanded Net Energy Cost
recovery mechanism, a $17 million increase in construction cost surcharges
and $4 million of reliability expenditures, to all become effective July
2008.
|
·
|
In
February 2008, the FERC approved a PATH request for a transmission formula
rate and ordered that the formula rates go into effect in March
2008. Settlement negotiations began and motions for rehearing
were filed by intervening parties in March 2008. PATH requested
an incentive return of 14.3% on its equity investment using a 50/50 debt
to equity ratio, the recovery of deferred pre-operating, pre-construction
costs and the recovery of construction financing costs through the
inclusion of CWIP in rate base with a true-up to actual for these
costs.
|
·
|
In
March 2008, the OCC approved a settlement for recovery of 2007 Oklahoma
ice storm costs, subject to an audit of December ice storm costs to be
filed in July 2008. As a result, PSO recorded an $81 million
regulatory asset for actual ice storm maintenance expenses and related
carrying costs less $9 million of amortization expense to offset
recognition of deferred gains from sales of SO2
emission allowances.
|
·
|
In
March 2008, PSO and all other parties signed a settlement agreement that
provides for recovery of $11 million of pre-construction costs related to
PSO’s Red Rock Generating Facility. PSO filed the settlement
with the OCC for approval. A hearing on the settlement is
scheduled for May 2008. As a result of the settlement, PSO
wrote-off $10 million of its remaining unrecoverable deferred
pre-construction costs/cancellation fees in the first quarter of
2008.
|
·
|
In
March 2008, the WVPSC granted APCo a Certificate of Public Convenience and
Necessity and recovery of pre-construction and construction financing
costs related to the planned construction of the IGCC plant in West
Virginia. Various intervenors filed petitions with the WVPSC to
reconsider the order. In April 2008, the Virginia SCC denied
APCo’s request for approval of the plant and to recover pre-construction
and construction financing costs. In April 2008, APCo filed a
petition for reconsideration in Virginia.
|
·
|
In
March 2008, the LPSC approved the application to construct the Turk
Plant. In January 2008, a Texas ALJ recommended that SWEPCo’s
application be denied and subsequently, in March 2008, the PUCT
voted to reopen the record and conduct additional
hearings. SWEPCo expects a decision from the PUCT in the last
half of 2008.
|
·
|
In
March 2008, APCo filed a notice with the Virginia SCC that it plans to
file a general base rate case no sooner than May 2008. APCo
will also file for recovery of $46 million of incremental E&R
costs.
|
·
|
In
April 2008, the LPSC approved a settlement agreement between SWEPCo and
the LPSC staff that established a formula rate plan with a three-year
term. Beginning August 2008, rates shall be established to
allow SWEPCo to earn an adjusted return on common equity of
10.565%.
|
·
|
In
April 2008, the Ohio legislature passed legislation which allows utilities
to set prices by filing an Electric Security Plan along with the ability
to simultaneously file a Market Rate Option. The PUCO would
have authority to approve or modify the utility’s request to set
prices. Both alternatives would involve earnings tests
monitored by the PUCO. The legislation still must be signed by
the Ohio governor and will become law 90 days after the Governor’s
signature.
|
·
|
Generation
of electricity for sale to U.S. retail and wholesale
customers.
|
·
|
Electricity
transmission and distribution in the
U.S.
|
·
|
Barging
operations that annually transport approximately 35 million tons of coal
and dry bulk commodities primarily on the Ohio, Illinois and Lower
Mississippi Rivers. Approximately 39% of the barging is for the
transportation of agricultural products, 30% for coal, 14% for steel and
17% for other commodities.
|
·
|
Wind
farms and marketing and risk management activities primarily in
ERCOT.
|
Three
Months Ended
March
31,
|
||||||||
2008
|
2007
|
|||||||
(in
millions)
|
||||||||
Utility
Operations
|
$ | 410 | $ | 253 | ||||
MEMCO
Operations
|
7 | 15 | ||||||
Generation
and Marketing
|
1 | (1 | ) | |||||
All
Other (a)
|
155 | 4 | ||||||
Net
Income
|
$ | 573 | $ | 271 |
(a)
|
All
Other includes:
|
|
·
|
Parent's
guarantee revenue received from affiliates, investment income, interest
income and interest expense and other nonallocated
costs.
|
|
·
|
Forward
natural gas contracts that were not sold with our natural gas pipeline and
storage operations in 2004 and 2005. These contracts are
financial derivatives which will gradually liquidate and completely expire
in 2011.
|
|
·
|
The
first quarter 2008 settlement of a purchase power and sale agreement with
TEM related to the Plaquemine Cogeneration Facility which was sold in the
fourth quarter of 2006.
|
|
·
|
Revenue
sharing related to the Plaquemine Cogeneration
Facility.
|
Three
Months Ended
|
||||||||
March
31,
|
||||||||
2008
|
2007
|
|||||||
(in
millions)
|
||||||||
Revenues
|
$ | 3,294 | $ | 3,033 | ||||
Fuel
and Purchased Power
|
1,213 | 1,119 | ||||||
Gross
Margin
|
2,081 | 1,914 | ||||||
Depreciation
and Amortization
|
355 | 383 | ||||||
Other
Operating Expenses
|
941 | 991 | ||||||
Operating
Income
|
785 | 540 | ||||||
Other
Income, Net
|
42 | 18 | ||||||
Interest
Charges and Preferred Stock Dividend Requirements
|
210 | 179 | ||||||
Income
Tax Expense
|
207 | 126 | ||||||
Net
Income
|
$ | 410 | $ | 253 |
2008
|
2007
|
|||||||
Energy
Summary
|
(in
millions of KWH)
|
|||||||
Retail:
|
||||||||
Residential
|
14,500 | 14,139 | ||||||
Commercial
|
9,547 | 9,359 | ||||||
Industrial
|
14,350 | 13,565 | ||||||
Miscellaneous
|
609 | 614 | ||||||
Total
Retail
|
39,006 | 37,677 | ||||||
Wholesale
|
11,666 | 8,778 | ||||||
Texas
Wires – Energy Delivered to Customers Served by
TNC
and TCC in ERCOT
|
5,823 | 5,831 | ||||||
Total
KWHs
|
56,495 | 52,286 |
2008
|
2007
|
|||||||||||||||||||||||||
Weather
Summary
|
(in
degree days)
|
|||||||||||||||||||||||||
Eastern
Region
|
||||||||||||||||||||||||||
Actual
– Heating (a)
|
1,824
|
1,816
|
||||||||||||||||||||||||
Normal
– Heating (b)
|
1,767
|
1,792
|
||||||||||||||||||||||||
Actual
– Cooling (c)
|
-
|
14
|
||||||||||||||||||||||||
Normal
– Cooling (b)
|
3
|
3
|
||||||||||||||||||||||||
Western Region
(d)
|
||||||||||||||||||||||||||
Actual
– Heating (a)
|
949
|
902
|
||||||||||||||||||||||||
Normal
– Heating (b)
|
931
|
959
|
||||||||||||||||||||||||
Actual
– Cooling (c)
|
26
|
56
|
||||||||||||||||||||||||
Normal
– Cooling (b)
|
20
|
18
|
(a)
|
Eastern
region and western region heating degree days are calculated on a 55
degree temperature base.
|
(b)
|
Normal
Heating/Cooling represents the thirty-year average of degree
days.
|
(c)
|
Eastern
region and western region cooling degree days are calculated on a 65
degree temperature base.
|
(d)
|
Western
region statistics represent PSO/SWEPCo customer base
only.
|
First
Quarter of 2007
|
$ | 253 | ||||||
Changes
in Gross Margin:
|
||||||||
Retail
Margins
|
114 | |||||||
Off-system
Sales
|
40 | |||||||
Transmission
Revenues
|
8 | |||||||
Other
Revenues
|
5 | |||||||
Total
Change in Gross Margin
|
167 | |||||||
Changes
in Operating Expenses and Other:
|
||||||||
Other
Operation and Maintenance
|
81 | |||||||
Gain
on Dispositions of Assets, Net
|
(21 | ) | ||||||
Depreciation
and Amortization
|
28 | |||||||
Taxes
Other Than Income Taxes
|
(10 | ) | ||||||
Carrying
Costs Income
|
10 | |||||||
Interest
Income
|
11 | |||||||
Other
Income, Net
|
3 | |||||||
Interest
and Other Charges
|
(31 | ) | ||||||
Total
Change in Operating Expenses and Other
|
71 | |||||||
Income
Tax Expense
|
(81 | ) | ||||||
First
Quarter of 2008
|
$ | 410 |
·
|
Retail
Margins increased $114 million primarily due to the
following:
|
|
·
|
A
$44 million increase related to RSP rate increases implemented in our Ohio
jurisdictions with PUCO approval, a $14 million increase related to
recovery of E&R costs in Virginia and construction financing costs in
West Virginia, a $9 million increase in base rates in Texas and an $8
million increase in base rates in Oklahoma.
|
|
·
|
A
$58 million increase related to an OPCo coal contract amendment which
reduced future deliveries to OPCo in exchange for consideration
received.
|
|
·
|
A
$23 million increase related to increased residential and commercial usage
and customer growth.
|
|
·
|
A
$21 million increase related to increased usage by Ormet, an industrial
customer in Ohio. See “Ormet” section of Note
3.
|
|
These
increases were partially offset by:
|
||
·
|
A
$55 million decrease related to increased fuel, consumable and allowance
costs in Ohio.
|
|
·
|
Margins
from Off-system Sales increased $40 million primarily due to higher east
physical off-system sales margins mostly due to higher volumes and
stronger prices, partially offset by lower trading
margins.
|
·
|
Other
Operation and Maintenance expenses decreased $81 million primarily due to
a deferral of storm restoration costs of $80 million in Oklahoma as a
result of a rate settlement to recover 2007 storm restoration costs
partially offset by an increase in generation expenses from base
operations and the write-off of $10 million of unrecoverable
pre-construction costs for PSO’s canceled Red Rock Generating
Facility.
|
·
|
Gain
on Disposition of Assets, Net decreased $21 million due to the cessation
of the earnings sharing agreement with Centrica from the sale of our Texas
REPs in 2002. In 2007, we received the final earnings sharing
payment of $20 million.
|
·
|
Depreciation
and Amortization expense decreased $28 million primarily due to lower
commission-approved depreciation rates in Indiana, Michigan, Virginia,
Oklahoma and Texas and lower Ohio regulatory asset amortization, partially
offset by higher depreciable property balances.
|
·
|
Taxes
Other Than Income Taxes increased $10 million primarily due to higher
property taxes related to property additions.
|
·
|
Carrying
Costs Income increased $10 million primarily due to increased carrying
cost income on cost deferrals in Virginia and Oklahoma.
|
·
|
Interest
and Other Charges increased $31 million primarily due to additional debt
issued in 2007 and higher interest rates on variable rate
debt.
|
·
|
Income
Tax Expense increased $81 million due to an increase in pretax
income.
|
March
31, 2008
|
December
31, 2007
|
|||||||||||||||
($
in millions)
|
||||||||||||||||
Long-term
Debt, including amounts due within one year
|
$ | 15,636 | 58.8 | % | $ | 14,994 | 58.1 | % | ||||||||
Short-term
Debt
|
409 | 1.5 | 660 | 2.6 | ||||||||||||
Total
Debt
|
16,045 | 60.3 | 15,654 | 60.7 | ||||||||||||
Common
Equity
|
10,489 | 39.5 | 10,079 | 39.1 | ||||||||||||
Preferred
Stock
|
61 | 0.2 | 61 | 0.2 | ||||||||||||
Total
Debt and Equity Capitalization
|
$ | 26,595 | 100.0 | % | $ | 25,794 | 100.0 | % |
Amount
|
Maturity
|
||||||
(in
millions)
|
|||||||
Commercial
Paper Backup:
|
|||||||
Revolving
Credit Facility
|
$
|
1,500
|
March
2011
|
||||
Revolving
Credit Facility
|
1,500
|
April
2012
|
|||||
Total
|
3,000
|
||||||
Cash
and Cash Equivalents
|
155
|
||||||
Total
Liquidity Sources
|
3,155
|
||||||
Less:
AEP Commercial Paper Outstanding
|
409
|
||||||
Letters
of Credit Drawn
|
57
|
||||||
Net
Available Liquidity
|
$
|
2,689
|
Moody’s
|
S&P
|
Fitch
|
||||||||||||||||||||||
AEP
Short Term Debt
|
P-2
|
A-2
|
F-2
|
|||||||||||||||||||||
AEP
Senior Unsecured Debt
|
Baa2
|
BBB
|
BBB
|
Three
Months Ended
|
||||||||
March
31,
|
||||||||
2008
|
2007
|
|||||||
(in
millions)
|
||||||||
Cash
and Cash Equivalents at Beginning of Period
|
$ | 178 | $ | 301 | ||||
Net
Cash Flows from Operating Activities
|
628 | 351 | ||||||
Net
Cash Flows Used for Investing Activities
|
(894 | ) | (628 | ) | ||||
Net
Cash Flows from Financing Activities
|
243 | 235 | ||||||
Net
Decrease in Cash and Cash Equivalents
|
(23 | ) | (42 | ) | ||||
Cash
and Cash Equivalents at End of Period
|
$ | 155 | $ | 259 |
Three
Months Ended
|
||||||||
March
31,
|
||||||||
2008
|
2007
|
|||||||
(in
millions)
|
||||||||
Net
Income
|
$ | 573 | $ | 271 | ||||
Depreciation
and Amortization
|
363 | 391 | ||||||
Other
|
(308 | ) | (311 | ) | ||||
Net
Cash Flows from Operating Activities
|
$ | 628 | $ | 351 |
Three
Months Ended
|
||||||||
March
31,
|
||||||||
2008
|
2007
|
|||||||
(in
millions)
|
||||||||
Construction
Expenditures
|
$ | (778 | ) | $ | (907 | ) | ||
Proceeds
from Sales of Assets
|
18 | 68 | ||||||
Other
|
(134 | ) | 211 | |||||
Net
Cash Flows Used for Investing Activities
|
$ | (894 | ) | $ | (628 | ) |
Three
Months Ended
|
||||||||
March
31,
|
||||||||
2008
|
2007
|
|||||||
(in
millions)
|
||||||||
Issuance
of Common Stock
|
$ | 45 | $ | 54 | ||||
Issuance/Retirement
of Debt, Net
|
376 | 355 | ||||||
Dividends
Paid on Common Stock
|
(165 | ) | (155 | ) | ||||
Other
|
(13 | ) | (19 | ) | ||||
Net
Cash Flows from Financing Activities
|
$ | 243 | $ | 235 |
March
31,
2008
|
December
31,
2007
|
|||||||
(in
millions)
|
||||||||
AEP
Credit Accounts Receivable Purchase Commitments
|
$ | 502 | $ | 507 | ||||
Rockport
Plant Unit 2 Future Minimum Lease Payments
|
2,216 | 2,216 | ||||||
Railcars
Maximum Potential Loss From Lease Agreement
|
30 | 30 |
Commercial
|
||||||||||||||||||||
Total
|
Nominal
|
Operation
|
||||||||||||||||||
Operating
|
Project
|
Projected
|
MW
|
Date
|
||||||||||||||||
Company
|
Name
|
Location
|
Cost
(a)
|
CWIP
(b)
|
Fuel
Type
|
Plant
Type
|
Capacity
|
(Projected)
|
||||||||||||
(in
millions)
|
(in
millions)
|
|||||||||||||||||||
PSO
|
Southwestern
|
(c)
|
Oklahoma
|
$
|
58
|
$ |
-
|
Gas
|
Simple-cycle
|
170
|
2008
|
|||||||||
PSO
|
Riverside
|
Oklahoma
|
59
|
|
57
|
Gas
|
Simple-cycle
|
170
|
2008
|
|||||||||||
AEGCo
|
Dresden
|
(d)
|
Ohio
|
305
|
(d)
|
101
|
Gas
|
Combined-cycle
|
580
|
2010
|
||||||||||
SWEPCo
|
Stall
|
Louisiana
|
378
|
76
|
Gas
|
Combined-cycle
|
500
|
2010
|
||||||||||||
SWEPCo
|
Turk
|
(e)
|
Arkansas
|
1,522
|
(e)
|
313
|
Coal
|
Ultra-supercritical
|
600
|
(e)
|
2012
|
|||||||||
APCo
|
Mountaineer
|
West
Virginia
|
2,230
|
-
|
Coal
|
IGCC
|
629
|
2012
|
||||||||||||
CSPCo/OPCo
|
Great
Bend
|
Ohio
|
2,700
|
(f)
|
-
|
Coal
|
IGCC
|
629
|
2017
|
(a)
|
Amount
excludes AFUDC.
|
(b)
|
Amount
includes AFUDC.
|
(c)
|
Southwestern
Units were placed in service on February 29, 2008.
|
(d)
|
In
September 2007, AEGCo purchased the partially completed Dresden plant from
Dresden Energy LLC, a subsidiary of Dominion Resources, Inc., for $85
million, which is included in the “Total Projected Cost” section
above.
|
(e)
|
SWEPCo
plans to own approximately 73%, or 440 MW, totaling $1,110 million in
capital investment. The increase in the cost estimate relates
to cost escalations due to the delay in receipt of permits and
approvals. See “Turk Plant” section below.
|
(f)
|
Cost
estimates, updated to reflect cost escalations due to revised commercial
operation date of 2017, are not yet filed with the PUCO. See
“Ohio IGCC Plant” section of Note
3.
|
·
|
Requirements
under CAA to reduce emissions of SO2,
NOx,
particulate matter (PM) and mercury from fossil fuel-fired power plants;
and
|
·
|
Requirements
under the Clean Water Act (CWA) to reduce the impacts of water intake
structures on aquatic species at certain of our power
plants.
|
Utility
Operations
|
Generation
and
Marketing
|
All
Other
|
Sub-Total
MTM
Risk Management Contracts
|
MTM
of
Cash Flow and Fair Value Hedges
|
Collateral
Deposits
|
Total
|
||||||||||||||||||||||
Current
Assets
|
$ | 411 | $ | 215 | $ | 95 | $ | 721 | $ | 25 | $ | (48 | ) | $ | 698 | |||||||||||||
Noncurrent
Assets
|
199 | 101 | 71 | 371 | 8 | (37 | ) | 342 | ||||||||||||||||||||
Total
Assets
|
610 | 316 | 166 | 1,092 | 33 | (85 | ) | 1,040 | ||||||||||||||||||||
Current
Liabilities
|
(365 | ) | (231 | ) | (96 | ) | (692 | ) | (82 | ) | 94 | (680 | ) | |||||||||||||||
Noncurrent
Liabilities
|
(104 | ) | (43 | ) | (77 | ) | (224 | ) | (3 | ) | 6 | (221 | ) | |||||||||||||||
Total
Liabilities
|
(469 | ) | (274 | ) | (173 | ) | (916 | ) | (85 | ) | 100 | (901 | ) | |||||||||||||||
Total MTM Derivative Contract
Net
Assets (Liabilities)
|
$ | 141 | $ | 42 | $ | (7 | ) | $ | 176 | $ | (52 | ) | 15 | $ | 139 |
Utility
Operations
|
Generation
and
Marketing
|
All
Other
|
Total
|
|||||||||||||
Total
MTM Risk Management Contract Net Assets
(Liabilities) at December 31, 2007
|
$ | 156 | $ | 43 | $ | (8 | ) | $ | 191 | |||||||
(Gain)
Loss from Contracts Realized/Settled
During
the Period and Entered in a Prior Period
|
(28 | ) | 1 | - | (27 | ) | ||||||||||
Fair
Value of New Contracts at Inception When Entered
During
the Period (a)
|
1 | - | - | 1 | ||||||||||||
Changes
in Fair Value Due to Valuation Methodology
Changes
on Forward Contracts (b)
|
4 | 2 | 1 | 7 | ||||||||||||
Changes
in Fair Value Due to Market Fluctuations During
the
Period (c)
|
3 | (4 | ) | - | (1 | ) | ||||||||||
Changes
in Fair Value Allocated to Regulated Jurisdictions
(d)
|
5 | - | - | 5 | ||||||||||||
Total
MTM Risk Management Contract Net
Assets
(Liabilities) at March 31, 2008
|
$ | 141 | $ | 42 | $ | (7 | ) | $ | 176 | |||||||
Net
Cash Flow and Fair Value Hedge Contracts
|
(52 | ) | ||||||||||||||
Collateral
Deposits
|
15 | |||||||||||||||
Ending
Net Risk Management Assets at March 31, 2008
|
$ | 139 |
(a)
|
Reflects
fair value on long-term contracts which are typically with customers that
seek fixed pricing to limit their risk against fluctuating energy
prices. The contract prices are valued against market curves
associated with the delivery location and delivery
term.
|
(b)
|
Represents
the impact of applying AEP’s credit risk when measuring the fair value of
derivative liabilities according to SFAS 157.
|
(c)
|
Market
fluctuations are attributable to various factors such as supply/demand,
weather, storage, etc.
|
(d)
|
“Change
in Fair Value Allocated to Regulated Jurisdictions” relates to the net
gains (losses) of those contracts that are not reflected on the Condensed
Consolidated Statements of Income. These net gains (losses) are
recorded as regulatory assets/liabilities for those subsidiaries that
operate in regulated jurisdictions.
|
Remainder
2008
|
2009
|
2010
|
2011
|
2012
|
After
2012
(f)
|
Total
|
||||||||||||||||||||||
Utility
Operations:
|
||||||||||||||||||||||||||||
Level
1 (a)
|
$ | (6 | ) | $ | (3 | ) | $ | - | $ | - | $ | - | $ | - | (9 | ) | ||||||||||||
Level
2 (b)
|
28 | 43 | 29 | 2 | 1 | - | 103 | |||||||||||||||||||||
Level
3 (c)
|
- | 4 | (7 | ) | - | - | - | (3 | ) | |||||||||||||||||||
Total
|
22 | 44 | 22 | 2 | 1 | - | 91 | |||||||||||||||||||||
Generation
and Marketing:
|
||||||||||||||||||||||||||||
Level
1 (a)
|
(21 | ) | 5 | - | - | - | - | (16 | ) | |||||||||||||||||||
Level
2 (b)
|
4 | (6 | ) | 2 | 3 | 3 | - | 6 | ||||||||||||||||||||
Level
3 (c)
|
- | 1 | 9 | 9 | 8 | 25 | 52 | |||||||||||||||||||||
Total
|
(17 | ) | - | 11 | 12 | 11 | 25 | 42 | ||||||||||||||||||||
All
Other:
|
||||||||||||||||||||||||||||
Level
1 (a)
|
- | - | - | - | - | - | - | |||||||||||||||||||||
Level
2 (b)
|
(1 | ) | (4 | ) | (4 | ) | 2 | - | - | (7 | ) | |||||||||||||||||
Level
3 (c)
|
- | - | - | - | - | - | - | |||||||||||||||||||||
Total
|
(1 | ) | (4 | ) | (4 | ) | 2 | - | - | (7 | ) | |||||||||||||||||
Total:
|
||||||||||||||||||||||||||||
Level
1 (a)
|
(27 | ) | 2 | - | - | - | - | (25 | ) | |||||||||||||||||||
Level
2 (b)
|
31 | 33 | 27 | 7 | 4 | - | 102 | |||||||||||||||||||||
Level
3 (c) (d)
|
- | 5 | 2 | 9 | 8 | 25 | 49 | |||||||||||||||||||||
Total
|
$ | 4 | $ | 40 | $ | 29 | $ | 16 | $ | 12 | $ | 25 | $ | 126 |
Dedesignated
Risk Management Contracts (e)
|
11
|
14
|
14
|
6
|
5
|
-
|
50
|
|||||||||||||||
Total
MTM Risk Management Contract Net Assets
|
$
|
15
|
$
|
54
|
$
|
43
|
$
|
22
|
$
|
17
|
$
|
25
|
$
|
176
|
(a)
|
Level
1 inputs are quoted prices (unadjusted) in active markets for identical
assets or liabilities that the reporting entity has the ability to access
at the measurement date. Level 1 inputs primarily consist of
exchange traded contracts that exhibit sufficient frequency and volume to
provide pricing information on an ongoing basis.
|
(b)
|
Level
2 inputs are inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly or
indirectly. If the asset or liability has a specified
(contractual) term, a Level 2 input must be observable for substantially
the full term of the asset or liability. Level 2 inputs
primarily consist of OTC broker quotes in moderately active or less active
markets, exchange traded contracts where there was not sufficient market
activity to warrant inclusion in Level 1, and OTC broker quotes that are
corroborated by the same or similar transactions that have occurred in the
market.
|
(c)
|
Level
3 inputs are unobservable inputs for the asset or
liability. Unobservable inputs shall be used to measure fair
value to the extent that the observable inputs are not available, thereby
allowing for situations in which there is little, if any, market activity
for the asset or liability at the measurement date. Level 3
inputs primarily consist of unobservable market data or are valued based
on models and/or assumptions.
|
(d)
|
A
significant portion of the total volumetric position within the
consolidated level 3 balance has been economically
hedged.
|
(e)
|
Dedesignated
Risk Management Contracts are contracts that were originally MTM but were
subsequently elected as normal under SFAS 133. At the time of
the normal election the MTM value was frozen and no longer fair
valued. This will be amortized within Utility Operations
Revenues over the remaining life of the contract.
|
(f)
|
There
is mark-to-market value of $25 million in individual periods beyond
2012. $8 million of this mark-to-market value is in 2013, $8
million is in 2014, $3 million is in 2015, $3 million is in 2016 and $3
million is in 2017.
|
Commodity
|
Transaction
Class
|
Market/Region
|
Tenor
|
|||
(in
Months)
|
||||||
Natural
Gas
|
Futures
|
NYMEX
/ Henry Hub
|
60
|
|||
Physical
Forwards
|
Gulf
Coast, Texas
|
21
|
||||
Swaps
|
Gas
East, Mid-Continent, Gulf Coast, Texas
|
21
|
||||
Exchange
Option Volatility
|
NYMEX
/ Henry Hub
|
12
|
||||
Power
|
Futures
|
Power
East – PJM
|
36
|
|||
Physical
Forwards
|
Power
East – Cinergy
|
45
|
||||
Physical
Forwards
|
Power
East – PJM West
|
57
|
||||
Physical
Forwards
|
Power
East – AEP Dayton (PJM)
|
57
|
||||
Physical
Forwards
|
Power
East – ERCOT
|
33
|
||||
Physical
Forwards
|
Power
East – Entergy
|
33
|
||||
Physical
Forwards
|
Power
West – PV, NP15, SP15, MidC, Mead
|
57
|
||||
Peak
Power Volatility (Options)
|
Cinergy,
PJM
|
12
|
||||
Emissions
|
Credits
|
SO2,
NOx
|
45
|
|||
Coal
|
Physical
Forwards
|
PRB,
NYMEX, CSX
|
33
|
Power
|
Interest
Rate and
Foreign
Currency
|
Total
|
||||||||||
Beginning
Balance in AOCI, December 31, 2007
|
$ | (1 | ) | $ | (25 | ) | $ | (26 | ) | |||
Changes
in Fair Value
|
(26 | ) | (6 | ) | (32 | ) | ||||||
Reclassifications
from AOCI for
Cash
Flow Hedges Settled
|
2 | - | 2 | |||||||||
Ending
Balance in AOCI, March 31, 2008
|
$ | (25 | ) | $ | (31 | ) | $ | (56 | ) | |||
After
Tax Portion Expected to be Reclassified to
Earnings During Next 12 Months
|
$ | (31 | ) | $ | (6 | ) | $ | (37 | ) |
Counterparty
Credit Quality
|
Exposure
Before Credit Collateral
|
Credit
Collateral
|
Net
Exposure
|
Number
of Counterparties >10% of
Net
Exposure
|
Net
Exposure of Counterparties >10%
|
|||||||||||||||
Investment
Grade
|
$ | 659 | $ | 75 | $ | 584 | 1 | $ | 93 | |||||||||||
Split
Rating
|
15 | - | 15 | 4 | 14 | |||||||||||||||
Noninvestment
Grade
|
100 | 47 | 53 | 1 | 48 | |||||||||||||||
No
External Ratings:
|
||||||||||||||||||||
Internal
Investment Grade
|
125 | - | 125 | 3 | 95 | |||||||||||||||
Internal
Noninvestment Grade
|
47 | 3 | 44 | 2 | 42 | |||||||||||||||
Total
as of March 31, 2008
|
$ | 946 | $ | 125 | $ | 821 | 11 | $ | 292 | |||||||||||
Total
as of December 31, 2007
|
$ | 673 | $ | 42 | $ | 631 | 6 | $ | 74 |
Remainder
|
|||||
2008
|
2009
|
2010
|
|||
Estimated
Plant Output Hedged
|
89%
|
89%
|
91%
|
Three
Months Ended
March
31, 2008
|
Twelve
Months Ended
December
31, 2007
|
||||||||||||||||
(in
millions)
|
(in
millions)
|
||||||||||||||||
End
|
High
|
Average
|
Low
|
End
|
High
|
Average
|
Low
|
||||||||||
$2
|
$2
|
$1
|
$1
|
$1
|
$6
|
$2
|
$1
|
2008
|
2007
|
|||||||
REVENUES
|
||||||||
Utility
Operations
|
$ | 3,010 | $ | 2,886 | ||||
Other
|
457 | 283 | ||||||
TOTAL
|
3,467 | 3,169 | ||||||
EXPENSES
|
||||||||
Fuel
and Other Consumables Used for Electric Generation
|
980 | 886 | ||||||
Purchased
Energy for Resale
|
263 | 246 | ||||||
Other
Operation and Maintenance
|
878 | 938 | ||||||
Gain
on Disposition of Assets, Net
|
(3 | ) | (23 | ) | ||||
Asset
Impairments and Other Related Items
|
(255 | ) | - | |||||
Depreciation
and Amortization
|
363 | 391 | ||||||
Taxes
Other Than Income Taxes
|
198 | 186 | ||||||
TOTAL
|
2,424 | 2,624 | ||||||
OPERATING
INCOME
|
1,043 | 545 | ||||||
Interest
and Investment Income
|
16 | 23 | ||||||
Carrying
Costs Income
|
17 | 8 | ||||||
Allowance
For Equity Funds Used During Construction
|
10 | 8 | ||||||
INTEREST
AND OTHER CHARGES
|
||||||||
Interest
Expense
|
220 | 186 | ||||||
Preferred
Stock Dividend Requirements of Subsidiaries
|
1 | 1 | ||||||
TOTAL
|
221 | 187 | ||||||
INCOME
BEFORE INCOME TAX EXPENSE, MINORITY
INTEREST
EXPENSE AND EQUITY EARNINGS
|
865 | 397 | ||||||
Income
Tax Expense
|
293 | 130 | ||||||
Minority
Interest Expense
|
1 | 1 | ||||||
Equity
Earnings of Unconsolidated Subsidiaries
|
2 | 5 | ||||||
NET
INCOME
|
$ | 573 | $ | 271 | ||||
WEIGHTED
AVERAGE NUMBER OF BASIC SHARES OUTSTANDING
|
400,797,993 | 397,314,642 | ||||||
BASIC
EARNINGS PER SHARE
|
$ | 1.43 | $ | 0.68 | ||||
WEIGHTED
AVERAGE NUMBER OF DILUTED SHARES OUTSTANDING
|
402,072,098 | 398,552,113 | ||||||
DILUTED
EARNINGS PER SHARE
|
$ | 1.43 | $ | 0.68 | ||||
CASH
DIVIDENDS PAID PER SHARE
|
$ | 0.41 | $ | 0.39 |
2008
|
2007
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
and Cash Equivalents
|
$ | 155 | $ | 178 | ||||
Other
Temporary Investments
|
339 | 365 | ||||||
Accounts
Receivable:
|
||||||||
Customers
|
662 | 730 | ||||||
Accrued Unbilled Revenues
|
343 | 379 | ||||||
Miscellaneous
|
88 | 60 | ||||||
Allowance for Uncollectible Accounts
|
(43 | ) | (52 | ) | ||||
Total Accounts Receivable
|
1,050 | 1,117 | ||||||
Fuel,
Materials and Supplies
|
947 | 967 | ||||||
Risk
Management Assets
|
698 | 271 | ||||||
Margin
Deposits
|
51 | 47 | ||||||
Prepayments
and Other
|
121 | 81 | ||||||
TOTAL
|
3,361 | 3,026 | ||||||
PROPERTY,
PLANT AND EQUIPMENT
|
||||||||
Electric:
|
||||||||
Production
|
20,502 | 20,233 | ||||||
Transmission
|
7,498 | 7,392 | ||||||
Distribution
|
12,217 | 12,056 | ||||||
Other
(including coal mining and nuclear fuel)
|
3,472 | 3,445 | ||||||
Construction
Work in Progress
|
3,001 | 3,019 | ||||||
Total
|
46,690 | 46,145 | ||||||
Accumulated
Depreciation and Amortization
|
16,319 | 16,275 | ||||||
TOTAL
- NET
|
30,371 | 29,870 | ||||||
OTHER
NONCURRENT ASSETS
|
||||||||
Regulatory
Assets
|
2,224 | 2,199 | ||||||
Securitized
Transition Assets
|
2,109 | 2,108 | ||||||
Spent
Nuclear Fuel and Decommissioning Trusts
|
1,324 | 1,347 | ||||||
Goodwill
|
76 | 76 | ||||||
Long-term
Risk Management Assets
|
342 | 319 | ||||||
Employee
Benefits and Pension Assets
|
484 | 486 | ||||||
Deferred
Charges and Other
|
1,026 | 888 | ||||||
TOTAL
|
7,585 | 7,423 | ||||||
TOTAL
ASSETS
|
$ | 41,317 | $ | 40,319 |
2008
|
2007
|
|||||||||||||||||||||||||||||
CURRENT
LIABILITIES
|
(in
millions)
|
|||||||||||||||||||||||||||||
Accounts
Payable
|
$
|
1,176
|
$
|
1,324
|
||||||||||||||||||||||||||
Short-term
Debt
|
409
|
660
|
||||||||||||||||||||||||||||
Long-term
Debt Due Within One Year
|
931
|
792
|
||||||||||||||||||||||||||||
Risk
Management Liabilities
|
680
|
240
|
||||||||||||||||||||||||||||
Customer
Deposits
|
308
|
301
|
||||||||||||||||||||||||||||
Accrued
Taxes
|
743
|
601
|
||||||||||||||||||||||||||||
Accrued
Interest
|
196
|
235
|
||||||||||||||||||||||||||||
Other
|
729
|
1,008
|
||||||||||||||||||||||||||||
TOTAL
|
5,172
|
5,161
|
||||||||||||||||||||||||||||
NONCURRENT
LIABILITIES
|
||||||||||||||||||||||||||||||
Long-term
Debt
|
14,705
|
14,202
|
||||||||||||||||||||||||||||
Long-term
Risk Management Liabilities
|
221
|
188
|
||||||||||||||||||||||||||||
Deferred
Income Taxes
|
4,854
|
4,730
|
||||||||||||||||||||||||||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
2,883
|
2,952
|
||||||||||||||||||||||||||||
Asset
Retirement Obligations
|
1,071
|
1,075
|
||||||||||||||||||||||||||||
Employee
Benefits and Pension Obligations
|
703
|
712
|
||||||||||||||||||||||||||||
Deferred
Gain on Sale and Leaseback – Rockport Plant Unit 2
|
136
|
139
|
||||||||||||||||||||||||||||
Deferred
Credits and Other
|
1,022
|
1,020
|
||||||||||||||||||||||||||||
TOTAL
|
25,595
|
25,018
|
||||||||||||||||||||||||||||
TOTAL
LIABILITIES
|
30,767
|
30,179
|
||||||||||||||||||||||||||||
Cumulative
Preferred Stock Not Subject to Mandatory Redemption
|
61
|
61
|
||||||||||||||||||||||||||||
Commitments
and Contingencies (Note 4)
|
||||||||||||||||||||||||||||||
COMMON
SHAREHOLDERS’ EQUITY
|
||||||||||||||||||||||||||||||
Common
Stock Par Value $6.50 Per Share:
|
||||||||||||||||||||||||||||||
2008
|
2007
|
|||||||||||||||||||||||||||||
Shares
Authorized
|
600,000,000
|
600,000,000
|
||||||||||||||||||||||||||||
Shares
Issued
|
423,005,402
|
421,926,696
|
||||||||||||||||||||||||||||
(21,499,992
shares were held in treasury at March 31, 2008 and December 31, 2007,
respectively)
|
2,750
|
2,743
|
||||||||||||||||||||||||||||
Paid-in
Capital
|
4,391
|
4,352
|
||||||||||||||||||||||||||||
Retained
Earnings
|
3,535
|
3,138
|
||||||||||||||||||||||||||||
Accumulated
Other Comprehensive Income (Loss)
|
(187
|
)
|
(154
|
)
|
||||||||||||||||||||||||||
TOTAL
|
10,489
|
10,079
|
||||||||||||||||||||||||||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
41,317
|
$
|
40,319
|
2008
|
2007
|
|||||||
OPERATING
ACTIVITIES
|
||||||||
Net
Income
|
$ | 573 | $ | 271 | ||||
Adjustments
to Reconcile Net Income to Net Cash Flows from Operating
Activities:
|
||||||||
Depreciation
and Amortization
|
363 | 391 | ||||||
Deferred
Income Taxes
|
111 | 5 | ||||||
Deferred
Investment Tax Credits
|
(5 | ) | (6 | ) | ||||
Carrying
Costs Income
|
(17 | ) | (8 | ) | ||||
Allowance
for Equity Funds Used During Construction
|
(10 | ) | (8 | ) | ||||
Mark-to-Market
of Risk Management Contracts
|
(26 | ) | 21 | |||||
Amortization
of Nuclear Fuel
|
22 | 16 | ||||||
Deferred
Property Taxes
|
(64 | ) | (67 | ) | ||||
Fuel
Over/Under-Recovery, Net
|
(57 | ) | (62 | ) | ||||
Gain
on Sales of Assets and Equity Investments, Net
|
(3 | ) | (23 | ) | ||||
Change
in Other Noncurrent Assets
|
(119 | ) | 52 | |||||
Change
in Other Noncurrent Liabilities
|
(66 | ) | 16 | |||||
Changes
in Certain Components of Working Capital:
|
||||||||
Accounts Receivable, Net
|
61 | (29 | ) | |||||
Fuel, Materials and Supplies
|
20 | (3 | ) | |||||
Margin Deposits
|
(4 | ) | 19 | |||||
Accounts Payable
|
(7 | ) | (31 | ) | ||||
Customer Deposits
|
6 | (8 | ) | |||||
Accrued Taxes
|
149 | 32 | ||||||
Accrued Interest
|
(44 | ) | 25 | |||||
Other Current Assets
|
(21 | ) | (40 | ) | ||||
Other Current Liabilities
|
(234 | ) | (212 | ) | ||||
Net
Cash Flows from Operating Activities
|
628 | 351 | ||||||
INVESTING
ACTIVITIES
|
||||||||
Construction
Expenditures
|
(778 | ) | (907 | ) | ||||
Change
in Other Temporary Investments, Net
|
(26 | ) | (20 | ) | ||||
Purchases
of Investment Securities
|
(491 | ) | (3,693 | ) | ||||
Sales
of Investment Securities
|
500 | 3,929 | ||||||
Proceeds
from Sales of Assets
|
18 | 68 | ||||||
Other
|
(117 | ) | (5 | ) | ||||
Net
Cash Flows Used for Investing Activities
|
(894 | ) | (628 | ) | ||||
FINANCING
ACTIVITIES
|
||||||||
Issuance
of Common Stock
|
45 | 54 | ||||||
Change
in Short-term Debt, Net
|
(251 | ) | 157 | |||||
Issuance
of Long-term Debt
|
916 | 247 | ||||||
Retirement
of Long-term Debt
|
(289 | ) | (49 | ) | ||||
Dividends
Paid on Common Stock
|
(165 | ) | (155 | ) | ||||
Other
|
(13 | ) | (19 | ) | ||||
Net
Cash Flows from Financing Activities
|
243 | 235 | ||||||
Net
Decrease in Cash and Cash Equivalents
|
(23 | ) | (42 | ) | ||||
Cash
and Cash Equivalents at Beginning of Period
|
178 | 301 | ||||||
Cash
and Cash Equivalents at End of Period
|
$ | 155 | $ | 259 | ||||
SUPPLEMENTARY
INFORMATION
|
||||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$ | 252 | $ | 152 | ||||
Net
Cash Paid for Income Taxes
|
36 | 66 | ||||||
Noncash
Acquisitions Under Capital Leases
|
19 | 11 | ||||||
Noncash
Acquisition of Land/Mineral Rights
|
42 | - | ||||||
Construction
Expenditures Included in Accounts Payable at March 31,
|
284 | 323 |
See
Condensed Notes to Condensed Consolidated Financial
Statements.
|
Common
Stock
|
||||||||||||||||||||||||
Shares
|
Amount
|
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other Comprehensive Income (Loss)
|
Total
|
|||||||||||||||||||
DECEMBER
31, 2006
|
418 | $ | 2,718 | $ | 4,221 | $ | 2,696 | $ | (223 | ) | $ | 9,412 | ||||||||||||
FIN
48 Adoption, Net of Tax
|
(17 | ) | (17 | ) | ||||||||||||||||||||
Issuance
of Common Stock
|
2 | 10 | 44 | 54 | ||||||||||||||||||||
Common
Stock Dividends
|
(155 | ) | (155 | ) | ||||||||||||||||||||
Other
|
5 | 5 | ||||||||||||||||||||||
TOTAL
|
9,299 | |||||||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||||||
Other
Comprehensive Loss, Net of
Tax:
|
||||||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $12
|
(22 | ) | (22 | ) | ||||||||||||||||||||
Securities
Available for Sale, Net of Tax
of
$4
|
(8 | ) | (8 | ) | ||||||||||||||||||||
NET
INCOME
|
271 | 271 | ||||||||||||||||||||||
TOTAL
COMPREHENSIVE
INCOME
|
241 | |||||||||||||||||||||||
MARCH
31, 2007
|
420 | $ | 2,728 | $ | 4,270 | $ | 2,795 | $ | (253 | ) | $ | 9,540 | ||||||||||||
DECEMBER
31, 2007
|
422 | $ | 2,743 | $ | 4,352 | $ | 3,138 | $ | (154 | ) | $ | 10,079 | ||||||||||||
EITF
06-10 Adoption, Net of Tax of $6
|
(10 | ) | (10 | ) | ||||||||||||||||||||
SFAS
157 Adoption, Net of Tax of $0
|
(1 | ) | (1 | ) | ||||||||||||||||||||
Issuance
of Common Stock
|
1 | 7 | 38 | 45 | ||||||||||||||||||||
Common
Stock Dividends
|
(165 | ) | (165 | ) | ||||||||||||||||||||
Other
|
1 | 1 | ||||||||||||||||||||||
TOTAL
|
9,949 | |||||||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||||||
Other
Comprehensive Income (Loss),
Net of Tax:
|
||||||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $17
|
(30 | ) | (30 | ) | ||||||||||||||||||||
Securities
Available for Sale, Net of Tax
of
$3
|
(6 | ) | (6 | ) | ||||||||||||||||||||
Amortization
of Pension and OPEB
Deferred
Costs, Net of Tax of $2
|
3 | 3 | ||||||||||||||||||||||
NET
INCOME
|
573 | 573 | ||||||||||||||||||||||
TOTAL
COMPREHENSIVE
INCOME
|
540 | |||||||||||||||||||||||
MARCH
31, 2008
|
423 | $ | 2,750 | $ | 4,391 | $ | 3,535 | $ | (187 | ) | $ | 10,489 |
1.
|
Significant
Accounting Matters
|
2.
|
New
Accounting Pronouncements
|
3.
|
Rate
Matters
|
4.
|
Commitments,
Guarantees and Contingencies
|
5.
|
Acquisitions
and Dispositions
|
6.
|
Benefit
Plans
|
7.
|
Business
Segments
|
8.
|
Income
Taxes
|
9.
|
Financing
Activities
|
1.
|
SIGNIFICANT ACCOUNTING
MATTERS
|
Three
Months Ended March 31,
|
||||||||||||||||
2008
|
2007
|
|||||||||||||||
(in
millions, except per share data)
|
||||||||||||||||
$/share
|
$/share
|
|||||||||||||||
Earnings
Applicable to Common Stock
|
$ | 573 | $ | 271 | ||||||||||||
Average
Number of Basic Shares Outstanding
|
400.8 | $ | 1.43 | 397.3 | $ | 0.68 | ||||||||||
Average
Dilutive Effect of:
|
||||||||||||||||
Performance
Share Units
|
0.9 | - | 0.6 | - | ||||||||||||
Stock
Options
|
0.2 | - | 0.5 | - | ||||||||||||
Restricted
Stock Units
|
0.1 | - | 0.1 | - | ||||||||||||
Restricted
Shares
|
0.1 | - | 0.1 | - | ||||||||||||
Average
Number of Diluted Shares Outstanding
|
402.1 | $ | 1.43 | 398.6 | $ | 0.68 |
Three
Months Ended March 31,
|
||||||||
2008
|
2007
|
|||||||
Related
Party Transactions
|
(in
millions)
|
|||||||
AEP
Consolidated Revenues – Utility Operations:
|
||||||||
Power
Pool Purchases – Ohio Valley Electric Corporation (43.47%
owned)
|
$ | (13 | ) | $ | - | |||
AEP
Consolidated Revenues – Other:
|
||||||||
Ohio
Valley Electric Corporation – Barging and Other Transportation
Services
(43.47% Owned)
|
9 | 9 | ||||||
AEP
Consolidated Expenses – Purchased Energy for Resale:
|
||||||||
Ohio
Valley Electric Corporation (43.47% Owned)
|
63 | 49 | ||||||
Sweeny
Cogeneration Limited Partnership (a)
|
- | 30 |
(a)
|
In
October 2007, we sold our 50% ownership in the Sweeny Cogeneration Limited
Partnership.
|
2.
|
NEW ACCOUNTING
PRONOUNCEMENTS
|
Assets
and Liabilities Measured at Fair Value on a Recurring Basis as of March
31, 2008
|
||||||||||||||||||||
Level
1
|
Level
2
|
Level
3
|
Other
|
Total
|
||||||||||||||||
Assets:
|
(in
millions)
|
|||||||||||||||||||
Cash
and Cash Equivalents (a)
|
$ | 109 | $ | - | $ | - | $ | 46 | $ | 155 | ||||||||||
Other
Temporary Investments:
|
||||||||||||||||||||
Cash
and Cash Equivalents (b)
|
$ | 147 | $ | - | $ | - | $ | 32 | $ | 179 | ||||||||||
Debt
Securities
|
120 | - | 22 | - | 142 | |||||||||||||||
Equity
Securities
|
18 | - | - | - | 18 | |||||||||||||||
Total Other Temporary
Investments
|
$ | 285 | $ | - | $ | 22 | $ | 32 | $ | 339 | ||||||||||
Risk
Management Assets:
|
||||||||||||||||||||
Risk
Management Contracts (c)
|
$ | 206 | $ | 3,201 | $ | 116 | $ | (2,566 | ) | $ | 957 | |||||||||
Cash
Flow and Fair Value Hedges (c)
|
- | 46 | - | (13 | ) | 33 | ||||||||||||||
Dedesignated
Risk Management Contracts (d)
|
- | - | - | 50 | 50 | |||||||||||||||
Total
Risk Management Assets
|
$ | 206 | $ | 3,247 | $ | 116 | $ | (2,529 | ) | $ | 1,040 | |||||||||
Spent
Nuclear Fuel and Decommissioning Trusts:
|
||||||||||||||||||||
Cash
and Cash Equivalents (e)
|
$ | - | $ | 13 | $ | - | $ | 10 | $ | 23 | ||||||||||
Debt
Securities
|
343 | 492 | - | - | 835 | |||||||||||||||
Equity
Securities
|
466 | - | - | - | 466 | |||||||||||||||
Total Spent Nuclear Fuel and
Decommissioning
Trusts
|
$ | 809 | $ | 505 | $ | - | $ | 10 | $ | 1,324 | ||||||||||
Investments
in Debt Securities – Noncurrent (f)
|
$ | - | $ | - | $ | 17 | $ | - | $ | 17 | ||||||||||
Total
Assets
|
$ | 1,409 | $ | 3,752 | $ | 155 | $ | (2,441 | ) | $ | 2,875 | |||||||||
Liabilities:
|
||||||||||||||||||||
Risk
Management Liabilities:
|
||||||||||||||||||||
Risk
Management Contracts (c)
|
$ | 231 | $ | 3,099 | $ | 67 | $ | (2,581 | ) | $ | 816 | |||||||||
Cash
Flow and Fair Value Hedges (c)
|
5 | 93 | - | (13 | ) | 85 | ||||||||||||||
Total
Risk Management Liabilities
|
$ | 236 | $ | 3,192 | $ | 67 | $ | (2,594 | ) | $ | 901 | |||||||||
Long-term
Debt (g)
|
$ | - | $ | 50 | $ | - | $ | - | $ | 50 | ||||||||||
Total
Liabilities
|
$ | 236 | $ | 3,242 | $ | 67 | $ | (2,594 | ) | $ | 951 |
(a)
|
Amounts
in “Other” column primarily represent cash deposits in bank accounts with
financial institutions. Level 1 amounts primarily represent
investments in money market funds.
|
(b)
|
Amounts
in “Other” column primarily represent cash deposits with third
parties. Level 1 amounts primarily represent investments in
money market funds.
|
(c)
|
Amounts
in “Other” column primarily represent counterparty netting of risk
management contracts and associated cash collateral under FASB Staff
Position FIN 39-1.
|
(d)
|
“Dedesignated
Risk Management Contracts” are contracts that were originally MTM but were
subsequently elected as normal under SFAS 133. At the time of
the normal election the MTM value was frozen and no longer fair
valued. This will be amortized into Utility Operations Revenues
over the remaining life of the contract.
|
(e)
|
Amounts
in “Other” column primarily represent deposits-in-transit and accrued
interest receivables to/from financial institutions. Level 2
amounts primarily represent investments in money market
funds.
|
(f)
|
“Investments
in Debt Securities – Noncurrent” represent investments in auction-rate
securities where redemption has not been publicly noticed by the issuer
and are included in Deferred Charges and Other on the accompanying
Condensed Consolidated Balance Sheets.
|
(g)
|
Amount
represents the fair valued portion of long-term debt designated as a fair
value hedge.
|
Net
Risk Management Assets (Liabilities)
|
Other
Temporary Investments
|
Investments
in Debt Securities
|
||||||||||
(in
millions)
|
||||||||||||
Balance
as of January 1, 2008
|
$ | 49 | $ | - | $ | - | ||||||
Realized
(Gain) Loss Included in Earnings (or Changes in Net Assets)
(a)
|
(3 | ) | - | - | ||||||||
Unrealized
Gain (Loss) Included in Earnings (or Changes in Net
Assets)
Relating to Assets Still Held at the Reporting Date (a)
|
5 | - | - | |||||||||
Realized
and Unrealized Gains (Losses) Included in Other Comprehensive
Income
|
- | - | - | |||||||||
Purchases,
Issuances and Settlements
|
- | (96 | ) | - | ||||||||
Transfers
in and/or out of Level 3 (b)
|
(5 | ) | 118 | 17 | ||||||||
Changes
in Fair Value Allocated to Regulated Jurisdictions (c)
|
3 | - | - | |||||||||
Balance
as of March 31, 2008
|
$ | 49 | $ | 22 | $ | 17 |
(a)
|
Included
in revenues on our Condensed Consolidated Statement of Income for the
Three Months Ended March 31, 2008.
|
(b)
|
“Transfers
in and/or out of Level 3” represent existing assets or liabilities that
were either previously categorized as a higher level for which the inputs
to the model became unobservable or assets and liabilities that were
previously classified as level 3 for which the lowest significant input
became observable during the period.
|
(c)
|
“Changes
in Fair Value Allocated to Regulated Jurisdictions” relates to the net
gains (losses) of those contracts that are not reflected on the Condensed
Consolidated Statements of Income. These net gains (losses) are
recorded as regulatory assets/liabilities for those subsidiaries that
operate in regulated jurisdictions.
|
Balance
Sheet
Line
Description
|
As
Reported for
the
December 2007 10-K
|
FIN
39-1
Reclassification
|
As
Reported for
the
March
2008
10-Q
|
|||||||||
Current
Assets:
|
(in
millions)
|
|||||||||||
Risk
Management Assets
|
$ | 286 | $ | (15 | ) | $ | 271 | |||||
Margin
Deposits
|
58 | (11 | ) | 47 | ||||||||
Long-term
Risk Management Assets
|
340 | (21 | ) | 319 | ||||||||
Current
Liabilities:
|
||||||||||||
Risk
Management Liabilities
|
250 | (10 | ) | 240 | ||||||||
Customer
Deposits
|
337 | (36 | ) | 301 | ||||||||
Long-term
Risk Management Liabilities
|
189 | (1 | ) | 188 |
3.
|
RATE
MATTERS
|
·
|
The
PUCT ruling that TCC did not comply with the Texas Restructuring
Legislation and PUCT rules regarding the required auction of 15% of its
Texas jurisdictional installed capacity, which led to a significant
disallowance of capacity auction true-up revenues.
|
·
|
The
PUCT ruling that TCC acted in a manner that was commercially unreasonable,
because TCC failed to determine a minimum price at which it would reject
bids for the sale of its nuclear generating plant and TCC bundled
out-of-the-money gas units with the sale of its coal unit, which led to
the disallowance of a significant portion of TCC’s net stranded generation
plant costs.
|
·
|
The
two federal matters regarding the allocation of off-system sales related
to fuel recoveries and a potential tax normalization
violation.
|
4.
|
COMMITMENTS,
GUARANTEES AND CONTINGENCIES
|
5.
|
ACQUISITIONS AND
DISPOSITIONS
|
Other
|
||||||||||||||||
Postretirement
|
||||||||||||||||
Pension
Plans
|
Benefit
Plans
|
|||||||||||||||
Three
Months Ended March 31,
|
Three
Months Ended March 31,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
(in
millions)
|
||||||||||||||||
Service
Cost
|
$ | 25 | $ | 24 | $ | 10 | $ | 10 | ||||||||
Interest
Cost
|
63 | 59 | 28 | 26 | ||||||||||||
Expected
Return on Plan Assets
|
(84 | ) | (85 | ) | (28 | ) | (26 | ) | ||||||||
Amortization
of Transition Obligation
|
- | - | 7 | 7 | ||||||||||||
Amortization
of Net Actuarial Loss
|
9 | 15 | 3 | 3 | ||||||||||||
Net
Periodic Benefit Cost
|
$ | 13 | $ | 13 | $ | 20 | $ | 20 |
7.
|
BUSINESS
SEGMENTS
|
·
|
Generation
of electricity for sale to U.S. retail and wholesale
customers.
|
·
|
Electricity
transmission and distribution in the
U.S.
|
·
|
Barging
operations that annually transport approximately 35 million tons of coal
and dry bulk commodities primarily on the Ohio, Illinois and lower
Mississippi Rivers. Approximately 39% of the barging is for
transportation of agricultural products, 30% for coal, 14% for steel and
17% for other commodities.
|
·
|
Wind
farms and marketing and risk management activities primarily in
ERCOT.
|
·
|
Parent’s
guarantee revenue received from affiliates, investment income, interest
income and interest expense and other nonallocated
costs.
|
·
|
Forward
natural gas contracts that were not sold with our natural gas pipeline and
storage operations in 2004 and 2005. These contracts are
financial derivatives which will gradually liquidate and completely expire
in 2011.
|
·
|
The
first quarter 2008 cash settlement of a purchase power and sale agreement
with TEM related to the Plaquemine Cogeneration Facility which was sold in
the fourth quarter of 2006.
|
·
|
Revenue
sharing related to the Plaquemine Cogeneration
Facility.
|
Nonutility
Operations
|
||||||||||||||||||||||||
Utility
Operations
|
MEMCO
Operations
|
Generation
and
Marketing
|
All
Other (a)
|
Reconciling
Adjustments
|
Consolidated
|
|||||||||||||||||||
(in
millions)
|
||||||||||||||||||||||||
Three
Months Ended March 31, 2008
|
||||||||||||||||||||||||
Revenues
from:
|
||||||||||||||||||||||||
External
Customers
|
$ | 3,010 | (d) | $ | 138 | $ | 271 | $ | 48 | $ | - | $ | 3,467 | |||||||||||
Other
Operating Segments
|
284 | (d) | 4 | (212 | ) | (43 | ) | (33 | ) | - | ||||||||||||||
Total
Revenues
|
$ | 3,294 | $ | 142 | $ | 59 | $ | 5 | $ | (33 | ) | $ | 3,467 | |||||||||||
Net
Income
|
$ | 410 | $ | 7 | $ | 1 | $ | 155 | $ | - | $ | 573 |
Nonutility
Operations
|
||||||||||||||||||||||||
Utility
Operations
|
MEMCO
Operations
|
Generation
and
Marketing
|
All
Other (a)
|
Reconciling
Adjustments
|
Consolidated
|
|||||||||||||||||||
(in
millions)
|
||||||||||||||||||||||||
Three
Months Ended March 31, 2007
|
||||||||||||||||||||||||
Revenues
from:
|
||||||||||||||||||||||||
External
Customers
|
$ | 2,886 | (d) | $ | 117 | $ | 115 | $ | 51 | $ | - | $ | 3,169 | |||||||||||
Other
Operating Segments
|
147 | (d) | 3 | (73 | ) | (45 | ) | (32 | ) | - | ||||||||||||||
Total
Revenues
|
$ | 3,033 | $ | 120 | $ | 42 | $ | 6 | $ | (32 | ) | $ | 3,169 | |||||||||||
Net
Income (Loss)
|
$ | 253 | $ | 15 | $ | (1 | ) | $ | 4 | $ | - | $ | 271 |
Nonutility
Operations
|
||||||||||||||||||||||||
Utility
Operations
|
MEMCO
Operations
|
Generation
and
Marketing
|
All
Other (a)
|
Reconciling
Adjustments
(c)
|
Consolidated
|
|||||||||||||||||||
(in
millions)
|
||||||||||||||||||||||||
March
31, 2008
|
||||||||||||||||||||||||
Total
Property, Plant and Equipment
|
$ | 46,055 | $ | 265 | $ | 575 | $ | 40 | $ | (245 | ) | $ | 46,690 | |||||||||||
Accumulated
Depreciation and
Amortization
|
16,144 | 63 | 119 | 8 | (15 | ) | 16,319 | |||||||||||||||||
Total
Property, Plant and
Equipment –
Net
|
$ | 29,911 | $ | 202 | $ | 456 | $ | 32 | $ | (230 | ) | $ | 30,371 | |||||||||||
Total
Assets
|
$ | 40,287 | $ | 340 | $ | 902 | $ | 12,707 | $ | (12,919 | )(b) | $ | 41,317 |
Nonutility
Operations
|
||||||||||||||||||||||||
Utility
Operations
|
MEMCO
Operations
|
Generation
and
Marketing
|
All
Other (a)
|
Reconciling
Adjustments
(c)
|
Consolidated
|
|||||||||||||||||||
December
31, 2007
|
(in
millions)
|
|||||||||||||||||||||||
Total
Property, Plant and Equipment
|
$ | 45,514 | $ | 263 | $ | 567 | $ | 38 | $ | (237 | ) | $ | 46,145 | |||||||||||
Accumulated
Depreciation and
Amortization
|
16,107 | 61 | 112 | 7 | (12 | ) | 16,275 | |||||||||||||||||
Total
Property, Plant and Equipment
– Net
|
$ | 29,407 | $ | 202 | $ | 455 | $ | 31 | $ | (225 | ) | $ | 29,870 | |||||||||||
Total
Assets
|
$ | 39,298 | $ | 340 | $ | 697 | $ | 12,117 | $ | (12,133 | )(b) | $ | 40,319 |
(a)
|
All
Other includes:
|
|
·
|
The
first quarter 2008 cash settlement of a purchase power and sale agreement
with TEM related to the Plaquemine Cogeneration Facility which was sold in
the fourth quarter of 2006. The cash settlement of $255 million
($163 million, net of tax) is included in Net Income.
|
|
·
|
Parent’s
guarantee revenue received from affiliates, investment income, interest
income and interest expense and other nonallocated costs, which netted to
a $7 million after-tax loss for the first quarter of
2008.
|
|
·
|
Revenue
sharing related to the Plaquemine Cogeneration
Facility.
|
|
·
|
Forward
natural gas contracts that were not sold with our natural gas pipeline and
storage operations in 2004 and 2005. These contracts are
financial derivatives which will gradually liquidate and completely expire
in 2011.
|
|
(b)
|
Reconciling
Adjustments for Total Assets primarily include the elimination of
intercompany advances to affiliates and intercompany accounts receivable
along with the elimination of AEP’s investments in subsidiary
companies.
|
|
(c)
|
Includes
eliminations due to an intercompany capital lease.
|
|
(d)
|
PSO
and SWEPCo transferred certain existing ERCOT energy marketing contracts
to AEPEP (Generation and Marketing segment) and entered into intercompany
financial and physical purchase and sales agreements with
AEPEP. As a result, we reported third-party net purchases for
these energy marketing contracts as a reduction of Revenues from External
Customers for the Utility Operations segment. This is offset by
the Utility Operations segment’s related sales to AEPEP in Revenues from
Other Operating Segments of $212 million. The Generation and
Marketing segment reports purchases related to these contracts as a
reduction to Revenues from Other Operating
segments.
|
8. INCOME
TAXES
|
9. FINANCING
ACTIVITIES
|
March
31,
|
December
31,
|
|||||||
Type
of Debt
|
2008
|
2007
|
||||||
(in
millions)
|
||||||||
Senior
Unsecured Notes
|
$ | 10,349 | $ | 9,905 | ||||
Pollution
Control Bonds
|
2,216 | 2,190 | ||||||
First
Mortgage Bonds
|
- | 19 | ||||||
Notes
Payable
|
264 | 311 | ||||||
Securitization
Bonds
|
2,183 | 2,257 | ||||||
Junior
Subordinated Debentures
|
315 | - | ||||||
Notes
Payable To Trust
|
113 | 113 | ||||||
Spent
Nuclear Fuel Obligation (a)
|
261 | 259 | ||||||
Other
Long-term Debt
|
3 | 2 | ||||||
Unamortized
Discount (net)
|
(68 | ) | (62 | ) | ||||
Total
Long-term Debt Outstanding
|
15,636 | 14,994 | ||||||
Less
Portion Due Within One Year
|
716 | 792 | ||||||
Long-term
Portion
|
$ | 14,920 | $ | 14,202 |
(a)
|
Pursuant
to the Nuclear Waste Policy Act of 1982, I&M (a nuclear licensee) has
an obligation to the United States Department of Energy for spent nuclear
fuel disposal. The obligation includes a one-time fee for
nuclear fuel consumed prior to April 7, 1983. Trust fund assets
related to this obligation of $289 million and $285 million at March 31,
2008 and December 31, 2007, respectively, are included in Spent Nuclear
Fuel and Decommissioning Trusts on our Condensed Consolidated Balance
Sheets.
|
Company
|
Type
of Debt
|
Principal
Amount
|
Interest
Rate
|
Due
Date
|
||||||
(in
millions)
|
(%)
|
|||||||||
Issuances:
|
||||||||||
AEP
|
Junior
Subordinated Debentures
|
$
|
315
|
8.75
|
2063
|
|||||
APCo
|
Senior
Unsecured Notes
|
500
|
7.00
|
2038
|
||||||
Non-Registrant:
|
||||||||||
TCC
|
Pollution
Control Bonds
|
120
|
5.125
|
2030
|
||||||
Total
Issuances
|
$
|
935
|
(a)
|
Other
than the possible dividend restrictions of the AEP Junior Subordinated
Debentures, the above borrowing arrangements does not contain
guarantees, collateral or dividend
restrictions.
|
|
(a)
|
Amount
indicated on statement of cash flows of $916 million is net of issuance
costs and premium or discount.
|
Company
|
Type
of Debt
|
Principal
Amount Paid
|
Interest
Rate
|
Due
Date
|
||||||
(in
millions)
|
(%)
|
|||||||||
Retirements
and Principal Payments:
|
||||||||||
CSPCo
|
Senior
Unsecured Notes
|
$
|
52
|
6.51
|
2008
|
|||||
I&M
|
Pollution
Control Bonds
|
45
|
Variable
|
2009
|
||||||
I&M
|
Pollution
Control Bonds
|
50
|
Variable
|
2025
|
||||||
OPCo
|
Notes
Payable
|
1
|
6.81
|
2008
|
||||||
OPCo
|
Notes
Payable
|
6
|
6.27
|
2009
|
||||||
SWEPCo
|
Notes
Payable
|
1
|
4.47
|
2011
|
||||||
SWEPCo
|
Notes
Payable
|
1
|
Variable
|
2008
|
||||||
Non-Registrant:
|
||||||||||
AEP
Subsidiaries
|
Notes
Payable
|
2
|
Variable
|
2017
|
||||||
AEGCo
|
Senior
Unsecured Notes
|
4
|
6.33
|
2037
|
||||||
AEPSC
|
Mortgage
Notes
|
34
|
9.60
|
2008
|
||||||
TCC
|
Securitization
Bonds
|
29
|
5.01
|
2008
|
||||||
TCC
|
Securitization
Bonds
|
45
|
4.98
|
2010
|
||||||
TCC
|
First
Mortgage Bonds
|
19
|
7.125
|
2008
|
||||||
Total
Retirements and Principal Payments
|
$
|
289
|
March
31, 2008
|
December
31, 2007
|
|||||||||||
Outstanding
Amount
|
Interest
Rate
(a)
|
Outstanding
Amount
|
Interest
Rate
(a)
|
|||||||||
Type
of Debt
|
(in
thousands)
|
(in
thousands)
|
||||||||||
Commercial
Paper – AEP
|
$
|
408,959
|
3.66
|
%
|
$
|
659,135
|
5.54
|
%
|
||||
Commercial
Paper – JMG (b)
|
-
|
-
|
701
|
5.35
|
%
|
|||||||
Line
of Credit – Sabine Mining Company (c)
|
-
|
-
|
285
|
5.25
|
%
|
|||||||
Total
|
$
|
408,959
|
$
|
660,121
|
(a)
|
Weighted
average rate.
|
(b)
|
This
commercial paper is specifically associated with the Gavin Scrubber and is
backed by a separate credit facility. This commercial paper
does not reduce available liquidity under AEP’s credit
facilities.
|
(c)
|
Sabine
Mining Company is consolidated under FIN 46R. This line of
credit does not reduce available liquidity under AEP’s credit
facilities.
|
First
Quarter of 2007
|
$ | 70 | ||||||
Changes
in Gross Margin:
|
||||||||
Retail
Margins
|
(20 | ) | ||||||
Off-system
Sales
|
16 | |||||||
Transmission
Revenues
|
1 | |||||||
Total
Change in Gross Margin
|
(3 | ) | ||||||
Changes
in Operating Expenses and Other:
|
||||||||
Other
Operation and Maintenance
|
(20 | ) | ||||||
Depreciation
and Amortization
|
(3 | ) | ||||||
Taxes
Other Than Income Taxes
|
(3 | ) | ||||||
Carrying
Costs Income
|
6 | |||||||
Other
Income
|
1 | |||||||
Interest
Expense
|
(12 | ) | ||||||
Total
Change in Operating Expenses and Other
|
(31 | ) | ||||||
Income
Tax Expense
|
19 | |||||||
First Quarter of 2008
|
$ | 55 |
·
|
Retail
Margins decreased $20 million primarily due to higher capacity settlement
expenses under the Interconnection Agreement and an increase in refunds to
customers of off-system sales margins. These decreases were
partially offset by an increase in the recovery of APCo’s environmental
and reliability costs and an increase in retail sales related to customer
usage.
|
·
|
Margins
from Off-system Sales increased $16 million primarily due to higher
physical sales margins partially offset by lower trading margins.
|
·
|
Other
Operation and Maintenance expenses increased $20 million primarily due to
a $9 million increase in steam generation expenses primarily for
maintenance at the Mountaineer Plant and an increase of $5 million in
distribution maintenance expenses resulting from Virginia and West
Virginia wind storm damage. In addition, operational expenses
increased by $8 million due to decreased Transmission Equalization
Agreement credits resulting from APCo’s peak demand set in February 2007
and increased employee-related expenses.
|
·
|
Depreciation
and Amortization expenses increased $3 million primarily due to the
amortization of carrying charges and depreciation expense that are being
collected through the Virginia E&R surcharges.
|
·
|
Taxes
Other Than Income Taxes increased $3 million primarily due to higher
franchise taxes which resulted from an amended tax return recognized in
2007.
|
·
|
Carrying
Costs Income increased $6 million related to carrying costs associated
with the Virginia E&R case.
|
·
|
Interest
Expense increased $12 million primarily due to an $8 million increase in
interest expense from long-term debt issuances and a $3 million decrease
in the debt component of AFUDC resulting from the reapplication of SFAS
71.
|
·
|
Income
Tax Expense decreased $19 million primarily due to a decrease in pretax
book income and state income taxes.
|
Moody’s
|
S&P
|
Fitch
|
|||
Senior
Unsecured Debt
|
Baa2
|
BBB
|
BBB+
|
2008
|
2007
|
|||||||
(in
thousands)
|
||||||||
Cash
and Cash Equivalents at Beginning of Period
|
$ | 2,195 | $ | 2,318 | ||||
Cash
Flows From (Used For):
|
||||||||
Operating
Activities
|
118,832 | 176,029 | ||||||
Investing
Activities
|
(409,179 | ) | (200,894 | ) | ||||
Financing
Activities
|
290,804 | 24,534 | ||||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
457 | (331 | ) | |||||
Cash
and Cash Equivalents at End of Period
|
$ | 2,652 | $ | 1,987 |
Principal
Amount
|
Interest
|
Due
|
|||||
Type
of Debt
|
Rate
|
Date
|
|||||
(in
thousands)
|
(%)
|
||||||
Senior
Unsecured Debt
|
$
|
500,000
|
7.000
|
2038
|
MTM
Risk Management Contracts
|
Cash
Flow &
Fair
Value Hedges
|
DETM
Assignment (a)
|
Collateral
Deposits
|
Total
|
||||||||||||||||
Current
Assets
|
$ | 139,911 | $ | 5,003 | $ | - | $ | (3,346 | ) | $ | 141,568 | |||||||||
Noncurrent
Assets
|
77,550 | 852 | - | (4,827 | ) | 73,575 | ||||||||||||||
Total
MTM Derivative Contract Assets
|
217,461 | 5,855 | - | (8,173 | ) | 215,143 | ||||||||||||||
Current
Liabilities
|
(129,250 | ) | (23,448 | ) | (3,734 | ) | 11,797 | (144,635 | ) | |||||||||||
Noncurrent
Liabilities
|
(48,108 | ) | (54 | ) | (4,306 | ) | 554 | (51,914 | ) | |||||||||||
Total
MTM Derivative Contract Liabilities
|
(177,358 | ) | (23,502 | ) | (8,040 | ) | 12,351 | (196,549 | ) | |||||||||||
Total
MTM Derivative Contract Net Assets (Liabilities)
|
$ | 40,103 | $ | (17,647 | ) | $ | (8,040 | ) | $ | 4,178 | $ | 18,594 |
(a)
|
See
“Natural Gas Contracts with DETM” section of Note 16 of the 2007 Annual
Report.
|
Total
MTM Risk Management Contract Net Assets at December 31,
2007
|
$
|
45,870
|
||
(Gain)
Loss from Contracts Realized/Settled During the Period and Entered in a
Prior Period
|
(8,194
|
)
|
||
Fair
Value of New Contracts at Inception When Entered During the Period
(a)
|
-
|
|||
Net
Option Premiums Paid/(Received) for Unexercised or Unexpired Option
Contracts Entered During the Period
|
-
|
|||
Change
in Fair Value Due to Valuation Methodology Changes on Forward Contracts
(b)
|
864
|
|||
Changes
in Fair Value Due to Market Fluctuations During the Period
(c)
|
(204
|
)
|
||
Changes
in Fair Value Allocated to Regulated Jurisdictions (d)
|
1,767
|
|||
Total
MTM Risk Management Contract Net Assets
|
40,103
|
|||
Net
Cash Flow & Fair Value Hedge Contracts
|
(17,647
|
)
|
||
DETM
Assignment (e)
|
(8,040
|
)
|
||
Collateral
Deposits
|
4,178
|
|||
Ending
Net Risk Management Assets at March 31, 2008
|
$
|
18,594
|
(a)
|
Reflects
fair value on long-term contracts which are typically with customers that
seek fixed pricing to limit their risk against fluctuating energy
prices. Inception value is only recorded if observable market
data can be obtained for valuation inputs for the entire contract
term. The contract prices are valued against market curves
associated with the delivery location and delivery
term.
|
(b)
|
Represents
the impact of applying AEP’s credit risk when measuring the fair value of
derivative liabilities according to SFAS 157.
|
(c)
|
Market
fluctuations are attributable to various factors such as supply/demand,
weather, storage, etc.
|
(d)
|
“Changes
in Fair Value Allocated to Regulated Jurisdictions” relates to the net
gains (losses) of those contracts that are not reflected in the Condensed
Consolidated Statements of Income. These net gains (losses) are
recorded as regulatory assets/ liabilities for those subsidiaries that
operate in regulated jurisdictions.
|
(e)
|
See
“Natural Gas Contracts with DETM” section of Note 16 of the 2007 Annual
Report.
|
Remainder
2008
|
2009
|
2010
|
2011
|
2012
|
After
2012
|
Total
|
||||||||||||||||||||||
Level
1 (a)
|
$ | (3,547 | ) | $ | (893 | ) | $ | (20 | ) | $ | - | $ | - | $ | - | $ | (4,460 | ) | ||||||||||
Level
2 (b)
|
6,543 | 12,561 | 9,182 | 637 | 470 | - | 29,393 | |||||||||||||||||||||
Level
3 (c)
|
25 | 1,152 | (2,090 | ) | (19 | ) | (11 | ) | - | (943 | ) | |||||||||||||||||
Total
|
$ | 3,021 | $ | 12,820 | $ | 7,072 | $ | 618 | $ | 459 | $ | - | $ | 23,990 |
Dedesignated Risk Management
Contracts
(d)
|
3,577 | 4,602 | 4,565 | 1,778 | 1,591 | - | 16,113 | |||||||||||||||||||||
Total
MTM Risk Management Contract Net Assets
|
$ | 6,598 | $ | 17,422 | $ | 11,637 | $ | 2,396 | $ | 2,050 | $ | - | $ | 40,103 |
(a)
|
Level
1 inputs are quoted prices (unadjusted) in active markets for identical
assets or liabilities that the reporting entity has the ability to access
at the measurement date. Level 1 inputs primarily consist of
exchange traded contracts that exhibit sufficient frequency and volume to
provide pricing information on an ongoing basis.
|
(b)
|
Level
2 inputs are inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly or
indirectly. If the asset or liability has a specified
(contractual) term, a Level 2 input must be observable for substantially
the full term of the asset or liability. Level 2 inputs
primarily consist of OTC broker quotes in moderately active or less active
markets, exchange traded contracts where there was not sufficient market
activity to warrant inclusion in Level 1, and OTC broker quotes that are
corroborated by the same or similar transactions that have occurred in the
market.
|
(c)
|
Level
3 inputs are unobservable inputs for the asset or
liability. Unobservable inputs shall be used to measure fair
value to the extent that the observable inputs are not available, thereby
allowing for situations in which there is little, if any, market activity
for the asset or liability at the measurement date. Level 3
inputs primarily consist of unobservable market data or are valued based
on models and/or assumptions.
|
(d)
|
Dedesignated
Risk Management Contracts are contracts that were originally MTM but were
subsequently elected as normal under SFAS 133. At the time of
the normal election the MTM value was frozen and no longer fair
valued. This will be amortized into Revenues over the remaining
life of the contract.
|
Power
|
Interest
Rate
|
Foreign
Currency
|
Total
|
|||||||||||||
Beginning
Balance in AOCI December 31, 2007
|
$
|
783
|
$
|
(6,602
|
)
|
$
|
(125
|
)
|
$
|
(5,944
|
)
|
|||||
Changes
in Fair Value
|
(11,413
|
)
|
(3,105
|
)
|
206
|
(14,312
|
)
|
|||||||||
Reclassifications
from AOCI for Cash Flow Hedges Settled
|
110
|
387
|
2
|
499
|
||||||||||||
Ending
Balance in AOCI March 31, 2008
|
$
|
(10,520
|
)
|
$
|
(9,320
|
)
|
$
|
83
|
$
|
(19,757
|
)
|
Three
Months Ended
March
31, 2008
|
Twelve
Months Ended
December
31, 2007
|
|||||||||||||||||||||
(in
thousands)
|
(in
thousands)
|
|||||||||||||||||||||
End
|
High
|
Average
|
Low
|
End
|
High
|
Average
|
Low
|
|||||||||||||||
$566
|
$709 | $356 | $161 | $455 | $2,328 | $569 | $117 |
2008
|
2007
|
|||||||
REVENUES
|
||||||||
Electric
Generation, Transmission and Distribution
|
$ | 641,457 | $ | 601,546 | ||||
Sales
to AEP Affiliates
|
90,090 | 61,545 | ||||||
Other
|
3,480 | 2,637 | ||||||
TOTAL
|
735,027 | 665,728 | ||||||
EXPENSES
|
||||||||
Fuel
and Other Consumables Used for Electric Generation
|
173,830 | 171,186 | ||||||
Purchased
Electricity for Resale
|
43,199 | 35,950 | ||||||
Purchased
Electricity from AEP Affiliates
|
189,595 | 127,601 | ||||||
Other
Operation
|
75,531 | 67,629 | ||||||
Maintenance
|
57,844 | 45,753 | ||||||
Depreciation
and Amortization
|
62,572 | 59,160 | ||||||
Taxes
Other Than Income Taxes
|
23,991 | 21,275 | ||||||
TOTAL
|
626,562 | 528,554 | ||||||
OPERATING
INCOME
|
108,465 | 137,174 | ||||||
Other
Income (Expense):
|
||||||||
Interest
Income
|
2,769 | 639 | ||||||
Carrying
Costs Income
|
9,586 | 3,166 | ||||||
Allowance
for Equity Funds Used During Construction
|
1,496 | 2,777 | ||||||
Interest
Expense
|
(44,140 | ) | (31,823 | ) | ||||
INCOME
BEFORE INCOME TAX EXPENSE
|
78,176 | 111,933 | ||||||
Income
Tax Expense
|
22,863 | 41,706 | ||||||
NET
INCOME
|
55,313 | 70,227 | ||||||
Preferred
Stock Dividend Requirements including Capital Stock Expense
|
238 | 238 | ||||||
EARNINGS
APPLICABLE TO COMMON STOCK
|
$ | 55,075 | $ | 69,989 |
Common
Stock
|
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other Comprehensive Income (Loss)
|
Total
|
||||||||||||||||
DECEMBER
31, 2006
|
$ | 260,458 | $ | 1,024,994 | $ | 805,513 | $ | (54,791 | ) | $ | 2,036,174 | |||||||||
FIN
48 Adoption, Net of Tax
|
(2,685 | ) | (2,685 | ) | ||||||||||||||||
Common
Stock Dividends
|
(15,000 | ) | (15,000 | ) | ||||||||||||||||
Preferred
Stock Dividends
|
(200 | ) | (200 | ) | ||||||||||||||||
Capital
Stock Expense
|
38 | (38 | ) | - | ||||||||||||||||
TOTAL
|
2,018,289 | |||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other
Comprehensive Loss, Net of Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $4,030
|
(7,484 | ) | (7,484 | ) | ||||||||||||||||
NET
INCOME
|
70,227 | 70,227 | ||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
62,743 | |||||||||||||||||||
MARCH
31, 2007
|
$ | 260,458 | $ | 1,025,032 | $ | 857,817 | $ | (62,275 | ) | $ | 2,081,032 | |||||||||
DECEMBER
31, 2007
|
$ | 260,458 | $ | 1,025,149 | $ | 831,612 | $ | (35,187 | ) | $ | 2,082,032 | |||||||||
EITF
06-10 Adoption, Net of Tax of $1,175
|
(2,181 | ) | (2,181 | ) | ||||||||||||||||
SFAS
157 Adoption, Net of Tax of $154
|
(286 | ) | (286 | ) | ||||||||||||||||
Capital
Contribution from Parent
|
75,000 | 75,000 | ||||||||||||||||||
Preferred
Stock Dividends
|
(200 | ) | (200 | ) | ||||||||||||||||
Capital
Stock Expense
|
39 | (38 | ) | 1 | ||||||||||||||||
TOTAL
|
2,154,366 | |||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other
Comprehensive Income (Loss),
Net
of Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of
$7,438
|
(13,813 | ) | (13,813 | ) | ||||||||||||||||
Amortization
of Pension and OPEB Deferred
Costs, Net of Tax of $449
|
833 | 833 | ||||||||||||||||||
NET
INCOME
|
55,313 | 55,313 | ||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
42,333 | |||||||||||||||||||
MARCH
31, 2008
|
$ | 260,458 | $ | 1,100,188 | $ | 884,220 | $ | (48,167 | ) | $ | 2,196,699 |
2008
|
2007
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
and Cash Equivalents
|
$ | 2,652 | $ | 2,195 | ||||
Advances
to Affiliates
|
261,823 | - | ||||||
Accounts
Receivable:
|
||||||||
Customers
|
165,994 | 176,834 | ||||||
Affiliated Companies
|
85,530 | 113,582 | ||||||
Accrued Unbilled Revenues
|
30,578 | 38,397 | ||||||
Miscellaneous
|
1,736 | 2,823 | ||||||
Allowance for Uncollectible Accounts
|
(5,861 | ) | (13,948 | ) | ||||
Total Accounts Receivable
|
277,977 | 317,688 | ||||||
Fuel
|
61,287 | 82,203 | ||||||
Materials
and Supplies
|
77,159 | 76,685 | ||||||
Risk
Management Assets
|
141,568 | 62,955 | ||||||
Prepayments
and Other
|
24,396 | 16,369 | ||||||
TOTAL
|
846,862 | 558,095 | ||||||
PROPERTY,
PLANT AND EQUIPMENT
|
||||||||
Electric:
|
||||||||
Production
|
3,623,812 | 3,625,788 | ||||||
Transmission
|
1,677,426 | 1,675,081 | ||||||
Distribution
|
2,400,382 | 2,372,687 | ||||||
Other
|
356,552 | 351,827 | ||||||
Construction
Work in Progress
|
779,850 | 713,063 | ||||||
Total
|
8,838,022 | 8,738,446 | ||||||
Accumulated
Depreciation and Amortization
|
2,610,635 | 2,591,833 | ||||||
TOTAL
- NET
|
6,227,387 | 6,146,613 | ||||||
OTHER
NONCURRENT ASSETS
|
||||||||
Regulatory
Assets
|
666,207 | 652,739 | ||||||
Long-term
Risk Management Assets
|
73,575 | 72,366 | ||||||
Deferred
Charges and Other
|
205,816 | 191,871 | ||||||
TOTAL
|
945,598 | 916,976 | ||||||
TOTAL
ASSETS
|
$ | 8,019,847 | $ | 7,621,684 |
2008
|
2007
|
|||||||
CURRENT
LIABILITIES
|
(in
thousands)
|
|||||||
Advances
from Affiliates
|
$ | - | $ | 275,257 | ||||
Accounts
Payable:
|
||||||||
General
|
226,940 | 241,871 | ||||||
Affiliated Companies
|
102,784 | 106,852 | ||||||
Long-term
Debt Due Within One Year – Nonaffiliated
|
287,229 | 239,732 | ||||||
Risk
Management Liabilities
|
144,635 | 51,708 | ||||||
Customer
Deposits
|
48,828 | 45,920 | ||||||
Accrued
Taxes
|
53,966 | 58,519 | ||||||
Accrued
Interest
|
53,051 | 41,699 | ||||||
Other
|
88,254 | 139,476 | ||||||
TOTAL
|
1,005,687 | 1,201,034 | ||||||
NONCURRENT
LIABILITIES
|
||||||||
Long-term
Debt – Nonaffiliated
|
2,952,929 | 2,507,567 | ||||||
Long-term
Debt – Affiliated
|
100,000 | 100,000 | ||||||
Long-term
Risk Management Liabilities
|
51,914 | 47,357 | ||||||
Deferred
Income Taxes
|
973,047 | 948,891 | ||||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
505,872 | 505,556 | ||||||
Deferred
Credits and Other
|
215,947 | 211,495 | ||||||
TOTAL
|
4,799,709 | 4,320,866 | ||||||
TOTAL
LIABILITIES
|
5,805,396 | 5,521,900 | ||||||
Cumulative
Preferred Stock Not Subject to Mandatory Redemption
|
17,752 | 17,752 | ||||||
Commitments
and Contingencies (Note 4)
|
||||||||
COMMON
SHAREHOLDER’S EQUITY
|
||||||||
Common
Stock – No Par Value:
|
||||||||
Authorized – 30,000,000 Shares
|
||||||||
Outstanding – 13,499,500 Shares
|
260,458 | 260,458 | ||||||
Paid-in
Capital
|
1,100,188 | 1,025,149 | ||||||
Retained
Earnings
|
884,220 | 831,612 | ||||||
Accumulated
Other Comprehensive Income (Loss)
|
(48,167 | ) | (35,187 | ) | ||||
TOTAL
|
2,196,699 | 2,082,032 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$ | 8,019,847 | $ | 7,621,684 |
2008
|
2007
|
|||||||
OPERATING
ACTIVITIES
|
||||||||
Net
Income
|
$ | 55,313 | $ | 70,227 | ||||
Adjustments
to Reconcile Net Income to Net Cash Flows from Operating
Activities:
|
||||||||
Depreciation
and Amortization
|
62,572 | 59,160 | ||||||
Deferred
Income Taxes
|
25,066 | (3,901 | ) | |||||
Carrying
Costs Income
|
(9,586 | ) | (3,166 | ) | ||||
Allowance
for Equity Funds Used During Construction
|
(1,496 | ) | (2,777 | ) | ||||
Mark-to-Market
of Risk Management Contracts
|
(1,658 | ) | (3,255 | ) | ||||
Change
in Other Noncurrent Assets
|
(13,102 | ) | (9,970 | ) | ||||
Change
in Other Noncurrent Liabilities
|
(5,555 | ) | 30,172 | |||||
Changes
in Certain Components of Working Capital:
|
||||||||
Accounts Receivable, Net
|
32,344 | 8,849 | ||||||
Fuel, Materials and Supplies
|
20,442 | (1,034 | ) | |||||
Accounts Payable
|
4,235 | (19,891 | ) | |||||
Accrued Taxes, Net
|
(2,942 | ) | 29,539 | |||||
Accrued Interest
|
11,351 | 21,608 | ||||||
Fuel Over/Under Recovery, Net
|
(26,584 | ) | 12,987 | |||||
Other Current Assets
|
(6,690 | ) | 2,074 | |||||
Other Current Liabilities
|
(24,878 | ) | (14,593 | ) | ||||
Net
Cash Flows from Operating Activities
|
118,832 | 176,029 | ||||||
INVESTING
ACTIVITIES
|
||||||||
Construction
Expenditures
|
(158,722 | ) | (202,007 | ) | ||||
Change
in Other Cash Deposits, Net
|
- | (29 | ) | |||||
Change
in Advances to Affiliates, Net
|
(261,823 | ) | - | |||||
Proceeds
from Sales of Assets
|
11,366 | 1,142 | ||||||
Net
Cash Flows Used for Investing Activities
|
(409,179 | ) | (200,894 | ) | ||||
FINANCING
ACTIVITIES
|
||||||||
Capital
Contribution from Parent
|
75,000 | - | ||||||
Issuance
of Long-term Debt – Nonaffiliated
|
492,325 | - | ||||||
Change
in Advances from Affiliates, Net
|
(275,257 | ) | 47,885 | |||||
Retirement
of Long-term Debt – Nonaffiliated
|
(3 | ) | (3 | ) | ||||
Principal
Payments for Capital Lease Obligations
|
(1,061 | ) | (1,112 | ) | ||||
Amortization
of Funds From Amended Coal Contract
|
- | (7,036 | ) | |||||
Dividends
Paid on Common Stock
|
- | (15,000 | ) | |||||
Dividends
Paid on Cumulative Preferred Stock
|
(200 | ) | (200 | ) | ||||
Net
Cash Flows from Financing Activities
|
290,804 | 24,534 | ||||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
457 | (331 | ) | |||||
Cash
and Cash Equivalents at Beginning of Period
|
2,195 | 2,318 | ||||||
Cash
and Cash Equivalents at End of Period
|
$ | 2,652 | $ | 1,987 |
SUPPLEMENTARY
INFORMATION
|
||||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$ | 35,527 | $ | 7,084 | ||||
Net
Cash Paid for Income Taxes
|
338 | 7,775 | ||||||
Noncash
Acquisitions Under Capital Leases
|
478 | 444 | ||||||
Construction
Expenditures Included in Accounts Payable at March 31,
|
83,766 | 113,021 |
Footnote
Reference
|
|
Significant
Accounting Matters
|
Note
1
|
New
Accounting Pronouncements
|
Note
2
|
Rate
Matters
|
Note
3
|
Commitments,
Guarantees and Contingencies
|
Note
4
|
Benefit
Plans
|
Note
6
|
Business
Segments
|
Note
7
|
Income
Taxes
|
Note
8
|
Financing
Activities
|
Note
9
|
First
Quarter of 2007
|
$ | 47 | ||||||
Changes
in Gross Margin:
|
||||||||
Retail
Margins
|
52 | |||||||
Off-system
Sales
|
10 | |||||||
Transmission
Revenues
|
1 | |||||||
Total
Change in Gross Margin
|
63 | |||||||
Changes
in Operating Expenses and Other:
|
||||||||
Other
Operation and Maintenance
|
(13 | ) | ||||||
Depreciation
and Amortization
|
2 | |||||||
Taxes
Other Than Income Taxes
|
(4 | ) | ||||||
Interest
Expense
|
(4 | ) | ||||||
Other
|
3 | |||||||
Total
Change in Operating Expenses and Other
|
(16 | ) | ||||||
Income
Tax Expense
|
(18 | ) | ||||||
First
Quarter of 2008
|
$ | 76 |
·
|
Retail
Margins increased $52 million primarily due to:
|
|
·
|
A
$32 million increase in rate revenues related to CSPCo’s RSP (see “Ohio
Rate Matters” section of Note 3).
|
|
·
|
A
$32 million decrease in capacity settlement charges due to recent plant
acquisitions and changes in relative peak demands of AEP Power Pool
members under the Interconnection Agreement.
|
|
·
|
An
$11 million increase in industrial revenue due to increased usage by
Ormet, a major industrial customer.
|
|
These
increases were partially offset by:
|
||
·
|
A
$14 million decrease in fuel margins.
|
|
·
|
Margins
from Off-system Sales increased $10 million primarily due to higher
physical sales margins and higher trading
margins.
|
·
|
Other
Operation and Maintenance expenses increased $13 million primarily due
to:
|
|
·
|
An
$8 million increase in expenses related to CSPCo’s Unit Power Agreement
for AEGCo’s Lawrenceburg Plant which began in May 2007.
|
|
·
|
A
$3 million increase in boiler plant maintenance expenses primarily related
to work performed at the Conesville and Stuart Plants.
|
|
·
|
Depreciation
and Amortization decreased $2 million primarily due to the amortization of
IGCC pre-construction costs, which ended in the second quarter of
2007. The amortization of IGCC pre-construction costs was
offset by a corresponding increase in Retail Margins in
2007.
|
|
·
|
Taxes
Other Than Income Taxes increased $4 million due to increases in property
taxes, state excise taxes and gross receipt taxes.
|
|
·
|
Interest
Expense increased $4 million primarily due to increases in long-term
borrowings and short-term borrowings from the Utility Money Pool and a
reduction in the debt component of AFUDC.
|
|
·
|
Income
Tax Expense increased $18 million primarily due to an increase in pretax
book income.
|
2008
|
2007
|
|||||||
REVENUES
|
||||||||
Electric
Generation, Transmission and Distribution
|
$ | 505,324 | $ | 423,466 | ||||
Sales
to AEP Affiliates
|
35,108 | 23,013 | ||||||
Other
|
1,217 | 1,433 | ||||||
TOTAL
|
541,649 | 447,912 | ||||||
EXPENSES
|
||||||||
Fuel
and Other Consumables Used for Electric Generation
|
85,127 | 75,862 | ||||||
Purchased
Electricity for Resale
|
42,186 | 31,311 | ||||||
Purchased
Electricity from AEP Affiliates
|
94,104 | 83,541 | ||||||
Other
Operation
|
73,066 | 61,159 | ||||||
Maintenance
|
23,231 | 22,564 | ||||||
Depreciation
and Amortization
|
48,602 | 50,297 | ||||||
Taxes
Other Than Income Taxes
|
44,556 | 40,582 | ||||||
TOTAL
|
410,872 | 365,316 | ||||||
OPERATING
INCOME
|
130,777 | 82,596 | ||||||
Other
Income (Expense):
|
||||||||
Interest
Income
|
2,339 | 422 | ||||||
Carrying
Costs Income
|
1,766 | 1,092 | ||||||
Allowance
for Equity Funds Used During Construction
|
855 | 772 | ||||||
Interest
Expense
|
(19,239 | ) | (15,281 | ) | ||||
INCOME
BEFORE INCOME TAX EXPENSE
|
116,498 | 69,601 | ||||||
Income
Tax Expense
|
40,345 | 22,620 | ||||||
NET INCOME | 76,153 | 46,981 | ||||||
Capital
Stock Expense
|
39 | 39 | ||||||
EARNINGS APPLICABLE TO COMMON STOCK | $ | 76,114 | $ | 46,942 |
Common
Stock
|
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other Comprehensive Income (Loss)
|
Total
|
||||||||||||||||
DECEMBER
31, 2006
|
$ | 41,026 | $ | 580,192 | $ | 456,787 | $ | (21,988 | ) | $ | 1,056,017 | |||||||||
FIN
48 Adoption, Net of Tax
|
(3,022 | ) | (3,022 | ) | ||||||||||||||||
Common
Stock Dividends
|
(20,000 | ) | (20,000 | ) | ||||||||||||||||
Capital
Stock Expense
|
39 | (39 | ) | - | ||||||||||||||||
TOTAL
|
1,032,995 | |||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other
Comprehensive Loss, Net of Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $2,841
|
(5,276 | ) | (5,276 | ) | ||||||||||||||||
NET
INCOME
|
46,981 | 46,981 | ||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
41,705 | |||||||||||||||||||
MARCH
31, 2007
|
$ | 41,026 | $ | 580,231 | $ | 480,707 | $ | (27,264 | ) | $ | 1,074,700 | |||||||||
DECEMBER
31, 2007
|
$ | 41,026 | $ | 580,349 | $ | 561,696 | $ | (18,794 | ) | $ | 1,164,277 | |||||||||
EITF
06-10 Adoption, Net of Tax of $589
|
(1,095 | ) | (1,095 | ) | ||||||||||||||||
SFAS
157 Adoption, Net of Tax of $170
|
(316 | ) | (316 | ) | ||||||||||||||||
Common
Stock Dividends
|
(37,500 | ) | (37,500 | ) | ||||||||||||||||
Capital
Stock Expense
|
39 | (39 | ) | - | ||||||||||||||||
TOTAL
|
1,125,366 | |||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other
Comprehensive Income (Loss), Net of Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $3,553
|
(6,598 | ) | (6,598 | ) | ||||||||||||||||
Amortization
of Pension and OPEB Deferred Costs, Net of
Tax of $152
|
283 | 283 | ||||||||||||||||||
NET
INCOME
|
76,153 | 76,153 | ||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
69,838 | |||||||||||||||||||
MARCH
31, 2008
|
$ | 41,026 | $ | 580,388 | $ | 598,899 | $ | (25,109 | ) | $ | 1,195,204 |
2008
|
2007
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
and Cash Equivalents
|
$ | 1,616 | $ | 1,389 | ||||
Other
Cash Deposits
|
53,760 | 53,760 | ||||||
Accounts
Receivable:
|
||||||||
Customers
|
68,611 | 57,268 | ||||||
Affiliated Companies
|
19,614 | 32,852 | ||||||
Accrued Unbilled Revenues
|
20,685 | 14,815 | ||||||
Miscellaneous
|
9,354 | 9,905 | ||||||
Allowance for Uncollectible Accounts
|
(2,604 | ) | (2,563 | ) | ||||
Total Accounts Receivable
|
115,660 | 112,277 | ||||||
Fuel
|
29,677 | 35,849 | ||||||
Materials
and Supplies
|
36,313 | 36,626 | ||||||
Emission
Allowances
|
14,594 | 16,811 | ||||||
Risk
Management Assets
|
78,080 | 33,558 | ||||||
Prepayments
and Other
|
14,369 | 9,960 | ||||||
TOTAL
|
344,069 | 300,230 | ||||||
PROPERTY,
PLANT AND EQUIPMENT
|
||||||||
Electric:
|
||||||||
Production
|
2,073,747 | 2,072,564 | ||||||
Transmission
|
553,853 | 510,107 | ||||||
Distribution
|
1,565,111 | 1,552,999 | ||||||
Other
|
202,962 | 198,476 | ||||||
Construction
Work in Progress
|
436,001 | 415,327 | ||||||
Total
|
4,831,674 | 4,749,473 | ||||||
Accumulated
Depreciation and Amortization
|
1,721,170 | 1,697,793 | ||||||
TOTAL
- NET
|
3,110,504 | 3,051,680 | ||||||
OTHER
NONCURRENT ASSETS
|
||||||||
Regulatory
Assets
|
227,062 | 235,883 | ||||||
Long-term
Risk Management Assets
|
43,808 | 41,852 | ||||||
Deferred
Charges and Other
|
163,218 | 181,563 | ||||||
TOTAL
|
434,088 | 459,298 | ||||||
TOTAL
ASSETS
|
$ | 3,888,661 | $ | 3,811,208 |
2008
|
2007
|
|||||||
CURRENT
LIABILITIES
|
(in
thousands)
|
|||||||
Advances
from Affiliates
|
$ | 163,999 | $ | 95,199 | ||||
Accounts
Payable:
|
||||||||
General
|
119,321 | 113,290 | ||||||
Affiliated
Companies
|
58,734 | 65,292 | ||||||
Long-term
Debt Due Within One Year – Nonaffiliated
|
108,550 | 112,000 | ||||||
Risk
Management Liabilities
|
81,151 | 28,237 | ||||||
Customer
Deposits
|
43,029 | 43,095 | ||||||
Accrued
Taxes
|
177,810 | 179,831 | ||||||
Other
|
65,117 | 96,892 | ||||||
TOTAL
|
817,711 | 733,836 | ||||||
NONCURRENT
LIABILITIES
|
||||||||
Long-term
Debt – Nonaffiliated
|
1,037,769 | 1,086,224 | ||||||
Long-term
Debt – Affiliated
|
100,000 | 100,000 | ||||||
Long-term
Risk Management Liabilities
|
30,982 | 27,419 | ||||||
Deferred
Income Taxes
|
446,119 | 437,306 | ||||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
162,382 | 165,635 | ||||||
Deferred
Credits and Other
|
98,494 | 96,511 | ||||||
TOTAL
|
1,875,746 | 1,913,095 | ||||||
TOTAL
LIABILITIES
|
2,693,457 | 2,646,931 | ||||||
Commitments
and Contingencies (Note 4)
|
||||||||
COMMON
SHAREHOLDER’S EQUITY
|
||||||||
Common
Stock – No Par Value:
|
||||||||
Authorized
– 24,000,000 Shares
|
||||||||
Outstanding
– 16,410,426 Shares
|
41,026 | 41,026 | ||||||
Paid-in
Capital
|
580,388 | 580,349 | ||||||
Retained
Earnings
|
598,899 | 561,696 | ||||||
Accumulated
Other Comprehensive Income (Loss)
|
(25,109 | ) | (18,794 | ) | ||||
TOTAL
|
1,195,204 | 1,164,277 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDER’S EQUITY
|
$ | 3,888,661 | $ | 3,811,208 |
2008
|
2007
|
|||||||
OPERATING
ACTIVITIES
|
||||||||
Net
Income
|
$ | 76,153 | $ | 46,981 | ||||
Adjustments
to Reconcile Net Income to Net Cash Flows from Operating
Activities:
|
||||||||
Depreciation
and Amortization
|
48,602 | 50,297 | ||||||
Deferred
Income Taxes
|
872 | (716 | ) | |||||
Allowance
for Equity Funds Used During Construction
|
(855 | ) | (772 | ) | ||||
Mark-to-Market
of Risk Management Contracts
|
(1,499 | ) | 1,936 | |||||
Deferred
Property Taxes
|
21,728 | 18,954 | ||||||
Change
in Other Noncurrent Assets
|
(11,440 | ) | (1,232 | ) | ||||
Change
in Other Noncurrent Liabilities
|
1,292 | (15,510 | ) | |||||
Changes
in Certain Components of Working Capital:
|
||||||||
Accounts Receivable, Net
|
(3,383 | ) | 19,839 | |||||
Fuel, Materials and Supplies
|
6,485 | 3,218 | ||||||
Accounts Payable
|
(6,756 | ) | (7,659 | ) | ||||
Accrued Taxes, Net
|
(2,001 | ) | (8,651 | ) | ||||
Other Current Assets
|
(2,211 | ) | 4,531 | |||||
Other Current Liabilities
|
(20,972 | ) | (4,515 | ) | ||||
Net
Cash Flows from Operating Activities
|
106,015 | 106,701 | ||||||
INVESTING
ACTIVITIES
|
||||||||
Construction
Expenditures
|
(84,513 | ) | (85,641 | ) | ||||
Change
in Advances to Affiliates, Net
|
- | (922 | ) | |||||
Other
|
150 | 169 | ||||||
Net
Cash Flows Used for Investing Activities
|
(84,363 | ) | (86,394 | ) | ||||
FINANCING
ACTIVITIES
|
||||||||
Change
in Advances from Affiliates, Net
|
68,800 | (696 | ) | |||||
Retirement
of Long-term Debt – Nonaffiliated
|
(52,000 | ) | - | |||||
Principal
Payments for Capital Lease Obligations
|
(725 | ) | (693 | ) | ||||
Dividends
Paid on Common Stock
|
(37,500 | ) | (20,000 | ) | ||||
Net
Cash Flows Used for Financing Activities
|
(21,425 | ) | (21,389 | ) | ||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
227 | (1,082 | ) | |||||
Cash
and Cash Equivalents at Beginning of Period
|
1,389 | 1,319 | ||||||
Cash
and Cash Equivalents at End of Period
|
$ | 1,616 | $ | 237 |
SUPPLEMENTARY
INFORMATION
|
||||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$
|
24,351
|
$
|
20,132
|
||||
Net
Cash Paid (Received) for Income Taxes
|
2,494
|
(2,907
|
)
|
|||||
Noncash
Acquisitions Under Capital Leases
|
355
|
275
|
||||||
Construction
Expenditures Included in Accounts Payable at March 31,
|
48,392
|
20,636
|
Footnote
Reference
|
|
Significant
Accounting Matters
|
Note
1
|
New
Accounting Pronouncements
|
Note
2
|
Rate
Matters
|
Note
3
|
Commitments,
Guarantees and Contingencies
|
Note
4
|
Acquisition
|
Note
5
|
Benefit
Plans
|
Note
6
|
Business
Segments
|
Note
7
|
Income
Taxes
|
Note
8
|
Financing
Activities
|
Note
9
|
First
Quarter of 2007
|
$ | 29 | ||||||
Changes
in Gross Margin:
|
||||||||
Retail
Margins
|
1 | |||||||
FERC
Municipals and Cooperatives
|
4 | |||||||
Off-system
Sales
|
9 | |||||||
Transmission
Revenues
|
(1 | ) | ||||||
Other
|
7 | |||||||
Total
Change in Gross Margin
|
20 | |||||||
Changes
in Operating Expenses and Other:
|
||||||||
Other
Operation and Maintenance
|
(8 | ) | ||||||
Depreciation
and Amortization
|
25 | |||||||
Taxes
Other Than Income Taxes
|
(2 | ) | ||||||
Other
Income
|
1 | |||||||
Total
Change in Operating Expenses and Other
|
16 | |||||||
Income
Tax Expense
|
(10 | ) | ||||||
First
Quarter of 2008
|
$ | 55 |
·
|
FERC
Municipals and Cooperatives margins increased $4 million due to higher
prices in 2008.
|
·
|
Margins
from Off-system Sales increased $9 million primarily due to higher
physical sales margins partially offset by lower trading
margins.
|
·
|
Other
revenues increased $7 million primarily due to increased River
Transportation Division (RTD) revenues for barging
services. RTD’s related expenses which offset the RTD revenue
increase are included in Other Operation on the Condensed Consolidated
Statements of Income resulting in a return approved under a regulatory
order impacting I&M’s earnings.
|
·
|
Other
Operation and Maintenance expenses increased $8 million primarily due to
higher operation and maintenance expenses for RTD caused by increased
barging activity.
|
·
|
Depreciation
and Amortization expense decreased $25 million primarily due to reduced
depreciation rates reflecting longer estimated lives for Cook and Tanners
Creek Plants. Depreciation rates were reduced for the Indiana
jurisdiction in June 2007 and the FERC and Michigan jurisdictions in
October 2007. See “Indiana Depreciation Study Filing” and
“Michigan Depreciation Study Filing” sections of Note 4 in the 2007 Annual
Report.
|
·
|
Income
Tax Expense increased $10 million primarily due to an increase in pretax
book income.
|
2008
|
2007
|
|||||||
REVENUES
|
||||||||
Electric
Generation, Transmission and Distribution
|
$ | 431,592 | $ | 405,164 | ||||
Sales
to AEP Affiliates
|
76,512 | 67,429 | ||||||
Other
– Affiliated
|
23,219 | 12,667 | ||||||
Other
– Nonaffiliated
|
5,826 | 7,609 | ||||||
TOTAL
|
537,149 | 492,869 | ||||||
EXPENSES
|
||||||||
Fuel
and Other Consumables Used for Electric Generation
|
101,241 | 96,117 | ||||||
Purchased
Electricity for Resale
|
21,483 | 17,940 | ||||||
Purchased
Electricity from AEP Affiliates
|
92,641 | 77,513 | ||||||
Other
Operation
|
120,366 | 120,733 | ||||||
Maintenance
|
51,221 | 42,430 | ||||||
Depreciation
and Amortization
|
31,722 | 56,307 | ||||||
Taxes
Other Than Income Taxes
|
19,902 | 17,994 | ||||||
TOTAL
|
438,576 | 429,034 | ||||||
OPERATING
INCOME
|
98,573 | 63,835 | ||||||
Other
Income (Expense):
|
||||||||
Interest
Income
|
829 | 588 | ||||||
Allowance
for Equity Funds Used During Construction
|
880 | 265 | ||||||
Interest
Expense
|
(19,202 | ) | (19,821 | ) | ||||
INCOME
BEFORE INCOME TAX EXPENSE
|
81,080 | 44,867 | ||||||
Income
Tax Expense
|
25,822 | 15,404 | ||||||
NET
INCOME
|
55,258 | 29,463 | ||||||
Preferred
Stock Dividend Requirements
|
85 | 85 | ||||||
EARNINGS
APPLICABLE TO COMMON STOCK
|
$ | 55,173 | $ | 29,378 |
Common
Stock
|
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other Comprehensive Income (Loss)
|
Total
|
||||||||||||||||
DECEMBER
31, 2006
|
$ | 56,584 | $ | 861,290 | $ | 386,616 | $ | (15,051 | ) | $ | 1,289,439 | |||||||||
FIN
48 Adoption, Net of Tax
|
327 | 327 | ||||||||||||||||||
Common
Stock Dividends
|
(10,000 | ) | (10,000 | ) | ||||||||||||||||
Preferred
Stock Dividends
|
(85 | ) | (85 | ) | ||||||||||||||||
TOTAL
|
1,279,681 | |||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other
Comprehensive Loss, Net of Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $2,850
|
(5,293 | ) | (5,293 | ) | ||||||||||||||||
NET
INCOME
|
29,463 | 29,463 | ||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
24,170 | |||||||||||||||||||
MARCH
31, 2007
|
$ | 56,584 | $ | 861,290 | $ | 406,321 | $ | (20,344 | ) | $ | 1,303,851 | |||||||||
DECEMBER
31, 2007
|
$ | 56,584 | $ | 861,291 | $ | 483,499 | $ | (15,675 | ) | $ | 1,385,699 | |||||||||
EITF
06-10 Adoption, Net of Tax of $753
|
(1,398 | ) | (1,398 | ) | ||||||||||||||||
Common
Stock Dividends
|
(18,750 | ) | (18,750 | ) | ||||||||||||||||
Preferred
Stock Dividends
|
(85 | ) | (85 | ) | ||||||||||||||||
TOTAL
|
1,365,466 | |||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other
Comprehensive Income (Loss),
Net of
Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $3,208
|
(5,958 | ) | (5,958 | ) | ||||||||||||||||
Amortization
of Pension and OPEB Deferred Costs, Net of
Tax of $59
|
110 | 110 | ||||||||||||||||||
NET
INCOME
|
55,258 | 55,258 | ||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
49,410 | |||||||||||||||||||
MARCH
31, 2008
|
$ | 56,584 | $ | 861,291 | $ | 518,524 | $ | (21,523 | ) | $ | 1,414,876 |
2008
|
2007
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
and Cash Equivalents
|
$ | 1,731 | $ | 1,139 | ||||
Accounts
Receivable:
|
||||||||
Customers
|
69,932 | 70,995 | ||||||
Affiliated Companies
|
61,930 | 92,018 | ||||||
Accrued Unbilled Revenues
|
19,501 | 16,207 | ||||||
Miscellaneous
|
1,783 | 1,335 | ||||||
Allowance for Uncollectible Accounts
|
(2,769 | ) | (2,711 | ) | ||||
Total Accounts Receivable
|
150,377 | 177,844 | ||||||
Fuel
|
50,379 | 61,342 | ||||||
Materials
and Supplies
|
142,240 | 141,384 | ||||||
Risk
Management Assets
|
73,579 | 32,365 | ||||||
Accrued
Tax Benefits
|
786 | 4,438 | ||||||
Prepayments
and Other
|
20,718 | 11,091 | ||||||
TOTAL
|
439,810 | 429,603 | ||||||
PROPERTY,
PLANT AND EQUIPMENT
|
||||||||
Electric:
|
||||||||
Production
|
3,488,509 | 3,529,524 | ||||||
Transmission
|
1,088,696 | 1,078,575 | ||||||
Distribution
|
1,211,073 | 1,196,397 | ||||||
Other
(including nuclear fuel and coal mining)
|
624,600 | 626,390 | ||||||
Construction
Work in Progress
|
134,279 | 122,296 | ||||||
Total
|
6,547,157 | 6,553,182 | ||||||
Accumulated
Depreciation, Depletion and Amortization
|
2,969,464 | 2,998,416 | ||||||
TOTAL
- NET
|
3,577,693 | 3,554,766 | ||||||
OTHER
NONCURRENT ASSETS
|
||||||||
Regulatory
Assets
|
252,438 | 246,435 | ||||||
Spent
Nuclear Fuel and Decommissioning Trusts
|
1,324,398 | 1,346,798 | ||||||
Long-term
Risk Management Assets
|
41,740 | 40,227 | ||||||
Deferred
Charges and Other
|
138,219 | 128,623 | ||||||
TOTAL
|
1,756,795 | 1,762,083 | ||||||
TOTAL
ASSETS
|
$ | 5,774,298 | $ | 5,746,452 |
2008
|
2007
|
|||||||
CURRENT
LIABILITIES
|
(in
thousands)
|
|||||||
Advances
from Affiliates
|
$ | 185,938 | $ | 45,064 | ||||
Accounts
Payable:
|
||||||||
General
|
91,756 | 184,435 | ||||||
Affiliated
Companies
|
58,556 | 61,749 | ||||||
Long-term
Debt Due Within One Year – Nonaffiliated
|
50,000 | 145,000 | ||||||
Risk
Management Liabilities
|
76,295 | 27,271 | ||||||
Customer
Deposits
|
27,146 | 26,445 | ||||||
Accrued
Taxes
|
97,369 | 60,995 | ||||||
Obligations
Under Capital Leases
|
43,749 | 43,382 | ||||||
Other
|
107,027 | 130,232 | ||||||
TOTAL
|
737,836 | 724,573 | ||||||
NONCURRENT
LIABILITIES
|
||||||||
Long-term
Debt – Nonaffiliated
|
1,424,713 | 1,422,427 | ||||||
Long-term
Risk Management Liabilities
|
29,587 | 26,348 | ||||||
Deferred
Income Taxes
|
336,058 | 321,716 | ||||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
755,477 | 789,346 | ||||||
Asset
Retirement Obligations
|
863,680 | 852,646 | ||||||
Deferred
Credits and Other
|
203,991 | 215,617 | ||||||
TOTAL
|
3,613,506 | 3,628,100 | ||||||
TOTAL
LIABILITIES
|
4,351,342 | 4,352,673 | ||||||
Cumulative
Preferred Stock Not Subject to Mandatory Redemption
|
8,080 | 8,080 | ||||||
Commitments
and Contingencies (Note 4)
|
||||||||
COMMON
SHAREHOLDER’S EQUITY
|
||||||||
Common
Stock – No Par Value:
|
||||||||
Authorized
– 2,500,000 Shares
|
||||||||
Outstanding
– 1,400,000 Shares
|
56,584 | 56,584 | ||||||
Paid-in
Capital
|
861,291 | 861,291 | ||||||
Retained
Earnings
|
518,524 | 483,499 | ||||||
Accumulated
Other Comprehensive Income (Loss)
|
(21,523 | ) | (15,675 | ) | ||||
TOTAL
|
1,414,876 | 1,385,699 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$ | 5,774,298 | $ | 5,746,452 |
2008
|
2007
|
|||||||
OPERATING
ACTIVITIES
|
||||||||
Net
Income
|
$ | 55,258 | $ | 29,463 | ||||
Adjustments
to Reconcile Net Income to Net Cash Flows from Operating
Activities:
|
||||||||
Depreciation
and Amortization
|
31,722 | 56,307 | ||||||
Deferred
Income Taxes
|
5,191 | (3,638 | ) | |||||
Amortization
(Deferral) of Incremental Nuclear Refueling Outage Expenses,
Net
|
(881 | ) | 12,191 | |||||
Allowance
for Equity Funds Used During Construction
|
(880 | ) | (265 | ) | ||||
Mark-to-Market
of Risk Management Contracts
|
(1,308 | ) | 2,316 | |||||
Amortization
of Nuclear Fuel
|
21,619 | 16,372 | ||||||
Deferred
Property Taxes
|
(11,412 | ) | (10,836 | ) | ||||
Change
in Other Noncurrent Assets
|
658 | 5,994 | ||||||
Change
in Other Noncurrent Liabilities
|
14,234 | (1,971 | ) | |||||
Changes
in Certain Components of Working Capital:
|
||||||||
Accounts Receivable, Net
|
27,467 | 38,789 | ||||||
Fuel, Materials and Supplies
|
10,107 | 14,985 | ||||||
Accounts Payable
|
408 | (38,233 | ) | |||||
Accrued Taxes, Net
|
40,026 | 39,525 | ||||||
Accrued Rent – Rockport Plant Unit 2
|
18,464 | 18,464 | ||||||
Other Current Assets
|
(6,718 | ) | 737 | |||||
Other Current Liabilities
|
(39,998 | ) | (35,427 | ) | ||||
Net
Cash Flows from Operating Activities
|
163,957 | 144,773 | ||||||
INVESTING
ACTIVITIES
|
||||||||
Construction
Expenditures
|
(67,945 | ) | (62,252 | ) | ||||
Purchases
of Investment Securities
|
(132,311 | ) | (204,874 | ) | ||||
Sales
of Investment Securities
|
113,951 | 183,927 | ||||||
Acquisitions
of Nuclear Fuel
|
(98,385 | ) | (5,366 | ) | ||||
Proceeds
from Sales of Assets and Other
|
2,815 | 248 | ||||||
Net
Cash Flows Used for Investing Activities
|
(181,875 | ) | (88,317 | ) | ||||
FINANCING
ACTIVITIES
|
||||||||
Change
in Advances from Affiliates, Net
|
140,874 | (45,414 | ) | |||||
Retirement
of Long-term Debt – Nonaffiliated
|
(95,000 | ) | - | |||||
Principal
Payments for Capital Lease Obligations
|
(8,529 | ) | (1,573 | ) | ||||
Dividends
Paid on Common Stock
|
(18,750 | ) | (10,000 | ) | ||||
Dividends
Paid on Cumulative Preferred Stock
|
(85 | ) | (85 | ) | ||||
Net
Cash Flows from (Used for) Financing Activities
|
18,510 | (57,072 | ) | |||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
592 | (616 | ) | |||||
Cash
and Cash Equivalents at Beginning of Period
|
1,139 | 1,369 | ||||||
Cash
and Cash Equivalents at End of Period
|
$ | 1,731 | $ | 753 |
SUPPLEMENTARY
INFORMATION
|
||||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$ | 20,216 | $ | 15,048 | ||||
Net
Cash Received for Income Taxes
|
(1,118 | ) | (2,768 | ) | ||||
Noncash
Acquisitions Under Capital Leases
|
2,023 | 369 | ||||||
Construction
Expenditures Included in Accounts Payable at March 31,
|
16,280 | 20,243 |
Footnote
Reference
|
|
Significant
Accounting Matters
|
Note
1
|
New
Accounting Pronouncements
|
Note
2
|
Rate
Matters
|
Note
3
|
Commitments,
Guarantees and Contingencies
|
Note
4
|
Benefit
Plans
|
Note
6
|
Business
Segments
|
Note
7
|
Income
Taxes
|
Note
8
|
Financing
Activities
|
Note
9
|
First
Quarter of 2007
|
$ | 79 | ||||||
Changes
in Gross Margin:
|
||||||||
Retail
Margins
|
41 | |||||||
Off-system
Sales
|
13 | |||||||
Other
|
7 | |||||||
Total
Change in Gross Margin
|
61 | |||||||
Changes
in Operating Expenses and Other:
|
||||||||
Other
Operation and Maintenance
|
24 | |||||||
Depreciation
and Amortization
|
16 | |||||||
Taxes
Other Than Income Taxes
|
(3 | ) | ||||||
Other
Income
|
2 | |||||||
Interest
Expense
|
(8 | ) | ||||||
Total
Change in Operating Expenses and Other
|
31 | |||||||
Income
Tax Expense
|
(33 | ) | ||||||
First
Quarter of 2008
|
$ | 138 |
·
|
Retail
Margins increased $41 million primarily due to the
following:
|
|
·
|
A
$58 million increase related to a coal contract amendment which reduced
future deliveries to OPCo in exchange for consideration
received.
|
|
·
|
An
$11 million increase related to new rates implemented as approved by the
PUCO in OPCo’s RSP.
|
|
·
|
A
$6 million increase primarily related to increased usage by Ormet, an
industrial customer. See “Ormet” section of Note
3.
|
|
These
increases were partially offset by:
|
||
·
|
A
$40 million decrease related to increased fuel, consumable and allowance
costs.
|
|
·
|
Margins
from Off-system Sales increased $13 million due to higher physical sales
margins and higher trading margins.
|
|
·
|
Other
revenues increased $7 million primarily due to increased gains on sales of
emission allowances.
|
·
|
Other
Operation and Maintenance expenses decreased $24 million primarily due to
the higher maintenance and removal costs for planned and forced outages at
the Gavin and Mitchell Plants in 2007.
|
|
·
|
Depreciation
and Amortization decreased $16 million primarily due
to:
|
|
·
|
An
$18 million decrease in amortization as a result of completion of
amortization of regulatory assets in December 2007.
|
|
·
|
A
$3 million decrease due to the amortization of IGCC pre-construction
costs, which ended in the second quarter of 2007. The
amortization of IGCC pre-construction costs was offset by a corresponding
increase in Retail Margins in 2007.
|
|
These
decreases were partially offset by:
|
||
·
|
A
$7 million increase in depreciation related to environmental improvements
placed in service at the Mitchell Plant during 2007.
|
|
·
|
Taxes
Other Than Income Taxes increased $3 million primarily due to increased
taxable property value.
|
|
·
|
Interest
Expense increased $8 million primarily due to the issuance of additional
long-term debt and a decrease in the debt component of AFUDC as a result
of Mitchell Plant environmental improvements placed in
service. These decreases were partially offset by a decrease in
interest expense related to OPCo's borrowing from the Utility Money Pool
as a result of reduced borrowings.
|
|
·
|
Income
Tax Expense increased $33 million primarily due to an increase in pretax
book income.
|
Moody’s
|
S&P
|
Fitch
|
||||
Senior
Unsecured Debt
|
A3 |
BBB
|
BBB+
|
2008
|
2007
|
|||||||
(in
thousands)
|
||||||||
Cash
and Cash Equivalents at Beginning of Period
|
$ | 6,666 | $ | 1,625 | ||||
Cash
Flows From (Used For):
|
||||||||
Operating
Activities
|
151,617 | 96,864 | ||||||
Investing
Activities
|
(140,253 | ) | (306,826 | ) | ||||
Financing
Activities
|
(14,413 | ) | 209,598 | |||||
Net
Decrease in Cash and Cash Equivalents
|
(3,049 | ) | (364 | ) | ||||
Cash
and Cash Equivalents at End of Period
|
$ | 3,617 | $ | 1,261 |
Type
of Debt
|
Principal
Amount
Paid
|
Interest
Rate
|
Due
Date
|
||||
(in
thousands)
|
(%)
|
||||||
Notes
Payable – Nonaffiliated
|
$ | 1,463 |
6.81
|
2008
|
|||
Notes
Payable – Nonaffiliated
|
6,000 | 6.27 |
2009
|
MTM
Risk Management Contracts
|
Cash
Flow &
Fair
Value Hedges
|
DETM
Assignment (a)
|
Collateral
Deposits
|
Total
|
||||||||||||||||
Current
Assets
|
$ | 113,255 | $ | 1,939 | $ | - | $ | (2,420 | ) | $ | 112,774 | |||||||||
Noncurrent
Assets
|
58,242 | 596 | - | (3,378 | ) | 55,460 | ||||||||||||||
Total
MTM Derivative Contract Assets
|
171,497 | 2,535 | - | (5,798 | ) | 168,234 | ||||||||||||||
Current
Liabilities
|
(107,058 | ) | (18,774 | ) | (2,613 | ) | 10,016 | (118,429 | ) | |||||||||||
Noncurrent
Liabilities
|
(35,767 | ) | (37 | ) | (3,013 | ) | 443 | (38,374 | ) | |||||||||||
Total
MTM Derivative Contract Liabilities
|
(142,825 | ) | (18,811 | ) | (5,626 | ) | 10,459 | (156,803 | ) | |||||||||||
Total
MTM Derivative Contract Net Assets (Liabilities)
|
$ | 28,672 | $ | (16,276 | ) | $ | (5,626 | ) | $ | 4,661 | $ | 11,431 |
(a)
|
See
“Natural Gas Contracts with DETM” section of Note 16 of the 2007 Annual
Report.
|
Total
MTM Risk Management Contract Net Assets at December 31,
2007
|
$
|
30,248
|
||
(Gain)
Loss from Contracts Realized/Settled During the Period and Entered in a
Prior Period
|
(6,055
|
)
|
||
Fair
Value of New Contracts at Inception When Entered During the Period
(a)
|
-
|
|||
Net
Option Premiums Paid/(Received) for Unexercised or Unexpired Option
Contracts Entered During the Period
|
(64
|
)
|
||
Change
in Fair Value Due to Valuation Methodology Changes on Forward Contracts
(b)
|
1,434
|
|||
Changes
in Fair Value Due to Market Fluctuations During the Period
(c)
|
451
|
|||
Changes
in Fair Value Allocated to Regulated Jurisdictions (d)
|
2,658
|
|||
Total
MTM Risk Management Contract Net Assets
|
28,672
|
|||
Net
Cash Flow & Fair Value Hedge Contracts
|
(16,276
|
)
|
||
DETM
Assignment (e)
|
(5,626
|
)
|
||
Collateral
Deposits
|
4,661
|
|||
Ending
Net Risk Management Assets at March 31, 2008
|
$
|
11,431
|
(a)
|
Reflects
fair value on long-term contracts which are typically with customers that
seek fixed pricing to limit their risk against fluctuating energy
prices. Inception value is only recorded if observable market
data can be obtained for valuation inputs for the entire contract
term. The contract prices are valued against market curves
associated with the delivery location and delivery
term.
|
(b)
|
Represents
the impact of applying AEP’s credit risk when measuring the fair value of
derivative liabilities according to SFAS 157.
|
(c)
|
Market
fluctuations are attributable to various factors such as supply/demand,
weather, storage, etc.
|
(d)
|
“Changes
in Fair Value Allocated to Regulated Jurisdictions” relates to the net
gains (losses) of those contracts that are not reflected in the Condensed
Consolidated Statements of Income. These net gains (losses) are
recorded as regulatory assets/ liabilities for those subsidiaries that
operate in regulated jurisdictions.
|
(e)
|
See
“Natural Gas Contracts with DETM” section of Note 16 of the 2007 Annual
Report.
|
Remainder
2008
|
2009
|
2010
|
2011
|
2012
|
After
2012
|
Total
|
||||||||||||||||||||||
Level
1 (a)
|
$ | (2,482 | ) | $ | (625 | ) | $ | (14 | ) | $ | - | $ | - | $ | - | $ | (3,121 | ) | ||||||||||
Level
2 (b)
|
3,427 | 10,392 | 6,762 | 446 | 329 | - | 21,356 | |||||||||||||||||||||
Level
3 (c)
|
(168 | ) | 809 | (1,457 | ) | (13 | ) | (8 | ) | - | (837 | ) | ||||||||||||||||
Total
|
$ | 777 | $ | 10,576 | $ | 5,291 | $ | 433 | $ | 321 | $ | - | $ | 17,398 |
Dedesignated
Risk Management Contracts (d)
|
2,503 | 3,220 | 3,194 | 1,244 | 1,113 | - | 11,274 | ||||||||||||||||||||
Total
MTM Risk Management
Contract
Net Assets
|
$ | 3,280 | $ | 13,796 | $ | 8,485 | $ | 1,677 | $ | 1,434 | $ | - | $ | 28,672 |
(a)
|
Level
1 inputs are quoted prices (unadjusted) in active markets for identical
assets or liabilities that the reporting entity has the ability to access
at the measurement date. Level 1 inputs primarily consist of
exchange traded contracts that exhibit sufficient frequency and volume to
provide pricing information on an ongoing basis.
|
(b)
|
Level
2 inputs are inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly or
indirectly. If the asset or liability has a specified
(contractual) term, a Level 2 input must be observable for substantially
the full term of the asset or liability. Level 2 inputs
primarily consist of OTC broker quotes in moderately active or less active
markets, exchange traded contracts where there was not sufficient market
activity to warrant inclusion in Level 1, and OTC broker quotes that are
corroborated by the same or similar transactions that have occurred in the
market.
|
(c)
|
Level
3 inputs are unobservable inputs for the asset or
liability. Unobservable inputs shall be used to measure fair
value to the extent that the observable inputs are not available, thereby
allowing for situations in which there is little, if any, market activity
for the asset or liability at the measurement date. Level 3
inputs primarily consist of unobservable market data or are valued based
on models and/or assumptions.
|
(d)
|
Dedesignated
Risk Management Contracts are contracts that were originally MTM but were
subsequently elected as normal under SFAS 133. At the time of
the normal election the MTM value was frozen and no longer fair
valued. This will be amortized into Revenues over the remaining
life of the contract.
|
Power
|
Interest
Rate
|
Foreign
Currency
|
Total
|
|||||||||||||
Beginning
Balance in AOCI December 31, 2007
|
$ | (756 | ) | $ | 2,167 | $ | (254 | ) | $ | 1,157 | ||||||
Changes
in Fair Value
|
(8,025 | ) | (1,097 | ) | 409 | (8,713 | ) | |||||||||
Reclassifications
from AOCI for Cash Flow Hedges Settled
|
338 | (203 | ) | (233 | ) | (98 | ) | |||||||||
Ending
Balance in AOCI March 31, 2008
|
$ | (8,443 | ) | $ | 867 | $ | (78 | ) | $ | (7,654 | ) |
Three
Months Ended March 31, 2008
|
Twelve
Months Ended December 31, 2007
|
|||||||||||||||||||||
(in
thousands)
|
(in
thousands)
|
|||||||||||||||||||||
End
|
High
|
Average
|
Low
|
End
|
High
|
Average
|
Low
|
|||||||||||||||
$652 | $780 | $342 | $132 | $325 | $2,054 | $490 | $90 |
2008
|
2007
|
|||||||
REVENUES
|
||||||||
Electric
Generation, Transmission and Distribution
|
$ | 555,478 | $ | 492,534 | ||||
Sales
to AEP Affiliates
|
236,848 | 178,894 | ||||||
Other
- Affiliated
|
5,299 | 4,038 | ||||||
Other
- Nonaffiliated
|
4,563 | 3,975 | ||||||
TOTAL
|
802,188 | 679,441 | ||||||
EXPENSES
|
||||||||
Fuel
and Other Consumables Used for Electric Generation
|
238,934 | 198,293 | ||||||
Purchased
Electricity for Resale
|
34,577 | 24,854 | ||||||
Purchased
Electricity from AEP Affiliates
|
32,516 | 20,966 | ||||||
Other
Operation
|
89,882 | 102,987 | ||||||
Maintenance
|
48,697 | 59,148 | ||||||
Depreciation
and Amortization
|
68,566 | 84,276 | ||||||
Taxes
Other Than Income Taxes
|
51,578 | 48,385 | ||||||
TOTAL
|
564,750 | 538,909 | ||||||
OPERATING
INCOME
|
237,438 | 140,532 | ||||||
Other
Income (Expense):
|
||||||||
Interest
Income
|
2,908 | 412 | ||||||
Carrying
Costs Income
|
4,229 | 3,541 | ||||||
Allowance
for Equity Funds Used During Construction
|
544 | 571 | ||||||
Interest
Expense
|
(34,382 | ) | (25,931 | ) | ||||
INCOME
BEFORE INCOME TAX EXPENSE
|
210,737 | 119,125 | ||||||
Income
Tax Expense
|
72,910 | 39,864 | ||||||
NET
INCOME
|
137,827 | 79,261 | ||||||
Preferred
Stock Dividend Requirements
|
183 | 183 | ||||||
EARNINGS
APPLICABLE TO COMMON STOCK
|
$ | 137,644 | $ | 79,078 |
Common
Stock
|
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other Comprehensive Income (Loss)
|
Total
|
||||||||||||||||
DECEMBER
31, 2006
|
$ | 321,201 | $ | 536,639 | $ | 1,207,265 | $ | (56,763 | ) | $ | 2,008,342 | |||||||||
FIN
48 Adoption, Net of Tax
|
(5,380 | ) | (5,380 | ) | ||||||||||||||||
Preferred
Stock Dividends
|
(183 | ) | (183 | ) | ||||||||||||||||
TOTAL
|
2,002,779 | |||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other
Comprehensive Loss, Net of Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $3,485
|
(6,471 | ) | (6,471 | ) | ||||||||||||||||
NET
INCOME
|
79,261 | 79,261 | ||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
72,790 | |||||||||||||||||||
MARCH
31, 2007
|
$ | 321,201 | $ | 536,639 | $ | 1,280,963 | $ | (63,234 | ) | $ | 2,075,569 | |||||||||
DECEMBER
31, 2007
|
$ | 321,201 | $ | 536,640 | $ | 1,469,717 | $ | (36,541 | ) | $ | 2,291,017 | |||||||||
EITF
06-10 Adoption, Net of Tax of $1,004
|
(1,864 | ) | (1,864 | ) | ||||||||||||||||
SFAS
157 Adoption, Net of Tax of $152
|
(282 | ) | (282 | ) | ||||||||||||||||
Preferred
Stock Dividends
|
(183 | ) | (183 | ) | ||||||||||||||||
TOTAL
|
2,288,688 | |||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other
Comprehensive Income (Loss),
Net
of Taxes:
|
||||||||||||||||||||
Cash Flow Hedges, Net of Tax of $4,745
|
(8,811 | ) | (8,811 | ) | ||||||||||||||||
Amortization of Pension and OPEB Deferred Costs, Net of
Tax of $379
|
703 | 703 | ||||||||||||||||||
NET
INCOME
|
137,827 | 137,827 | ||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
129,719 | |||||||||||||||||||
MARCH
31, 2008
|
$ | 321,201 | $ | 536,640 | $ | 1,605,215 | $ | (44,649 | ) | $ | 2,418,407 |
2008
|
2007
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
and Cash Equivalents
|
$ | 3,617 | $ | 6,666 | ||||
Accounts
Receivable:
|
||||||||
Customers
|
94,852 | 104,783 | ||||||
Affiliated Companies
|
121,141 | 119,560 | ||||||
Accrued Unbilled Revenues
|
36,275 | 26,819 | ||||||
Miscellaneous
|
22,113 | 1,578 | ||||||
Allowance for Uncollectible Accounts
|
(3,451 | ) | (3,396 | ) | ||||
Total Accounts Receivable
|
270,930 | 249,344 | ||||||
Fuel
|
96,984 | 92,874 | ||||||
Materials
and Supplies
|
108,467 | 108,447 | ||||||
Risk
Management Assets
|
112,774 | 44,236 | ||||||
Prepayments
and Other
|
31,207 | 18,300 | ||||||
TOTAL
|
623,979 | 519,867 | ||||||
PROPERTY,
PLANT AND EQUIPMENT
|
||||||||
Electric:
|
||||||||
Production
|
5,898,316 | 5,641,537 | ||||||
Transmission
|
1,073,766 | 1,068,387 | ||||||
Distribution
|
1,410,479 | 1,394,988 | ||||||
Other
|
370,583 | 318,805 | ||||||
Construction
Work in Progress
|
531,974 | 716,640 | ||||||
Total
|
9,285,118 | 9,140,357 | ||||||
Accumulated
Depreciation and Amortization
|
3,008,893 | 2,967,285 | ||||||
TOTAL
- NET
|
6,276,225 | 6,173,072 | ||||||
OTHER
NONCURRENT ASSETS
|
||||||||
Regulatory
Assets
|
322,170 | 323,105 | ||||||
Long-term
Risk Management Assets
|
55,460 | 49,586 | ||||||
Deferred
Charges and Other
|
254,286 | 272,799 | ||||||
TOTAL
|
631,916 | 645,490 | ||||||
TOTAL
ASSETS
|
$ | 7,532,120 | $ | 7,338,429 |
2008
|
2007
|
|||||||
CURRENT
LIABILITIES
|
(in
thousands)
|
|||||||
Advances
from Affiliates
|
$ | 87,408 | $ | 101,548 | ||||
Accounts
Payable:
|
||||||||
General
|
156,776 | 141,196 | ||||||
Affiliated Companies
|
112,964 | 137,389 | ||||||
Short-term
Debt – Nonaffiliated
|
- | 701 | ||||||
Long-term
Debt Due Within One Year – Nonaffiliated
|
137,225 | 55,188 | ||||||
Risk
Management Liabilities
|
118,429 | 40,548 | ||||||
Customer
Deposits
|
30,682 | 30,613 | ||||||
Accrued
Taxes
|
200,688 | 185,011 | ||||||
Accrued
Interest
|
37,532 | 41,880 | ||||||
Other
|
115,627 | 149,658 | ||||||
TOTAL
|
997,331 | 883,732 | ||||||
NONCURRENT
LIABILITIES
|
||||||||
Long-term
Debt – Nonaffiliated
|
2,505,088 | 2,594,410 | ||||||
Long-term
Debt – Affiliated
|
200,000 | 200,000 | ||||||
Long-term
Risk Management Liabilities
|
38,374 | 32,194 | ||||||
Deferred
Income Taxes
|
937,500 | 914,170 | ||||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
157,453 | 160,721 | ||||||
Deferred
Credits and Other
|
243,402 | 229,635 | ||||||
TOTAL
|
4,081,817 | 4,131,130 | ||||||
TOTAL
LIABILITIES
|
5,079,148 | 5,014,862 | ||||||
Minority
Interest
|
17,938 | 15,923 | ||||||
Cumulative
Preferred Stock Not Subject to Mandatory Redemption
|
16,627 | 16,627 | ||||||
Commitments
and Contingencies (Note 4)
|
||||||||
COMMON
SHAREHOLDER’S EQUITY
|
||||||||
Common
Stock – No Par Value:
|
||||||||
Authorized – 40,000,000 Shares
|
||||||||
Outstanding – 27,952,473 Shares
|
321,201 | 321,201 | ||||||
Paid-in
Capital
|
536,640 | 536,640 | ||||||
Retained
Earnings
|
1,605,215 | 1,469,717 | ||||||
Accumulated
Other Comprehensive Income (Loss)
|
(44,649 | ) | (36,541 | ) | ||||
TOTAL
|
2,418,407 | 2,291,017 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$ | 7,532,120 | $ | 7,338,429 |
2008
|
2007
|
|||||||
OPERATING
ACTIVITIES
|
||||||||
Net
Income
|
$ | 137,827 | $ | 79,261 | ||||
Adjustments
to Reconcile Net Income to Net Cash Flows from Operating
Activities:
|
||||||||
Depreciation
and Amortization
|
68,566 | 84,276 | ||||||
Deferred
Income Taxes
|
10,850 | 2,851 | ||||||
Carrying
Costs Income
|
(4,229 | ) | (3,541 | ) | ||||
Allowance
for Equity Funds Used During Construction
|
(544 | ) | (571 | ) | ||||
Mark-to-Market
of Risk Management Contracts
|
(5,035 | ) | 980 | |||||
Deferred
Property Taxes
|
20,574 | 17,920 | ||||||
Change
in Other Noncurrent Assets
|
(46,438 | ) | (3,835 | ) | ||||
Change
in Other Noncurrent Liabilities
|
7,412 | (4,434 | ) | |||||
Changes
in Certain Components of Working Capital:
|
||||||||
Accounts Receivable, Net
|
(21,586 | ) | (38,070 | ) | ||||
Fuel, Materials and Supplies
|
(4,130 | ) | (19,684 | ) | ||||
Accounts Payable
|
9,005 | (25,807 | ) | |||||
Customer Deposits
|
69 | 4,443 | ||||||
Accrued Taxes, Net
|
15,790 | 6,360 | ||||||
Accrued Interest
|
(4,348 | ) | (2,986 | ) | ||||
Other Current Assets
|
(13,020 | ) | (3,528 | ) | ||||
Other Current Liabilities
|
(19,146 | ) | 3,229 | |||||
Net
Cash Flows from Operating Activities
|
151,617 | 96,864 | ||||||
INVESTING
ACTIVITIES
|
||||||||
Construction
Expenditures
|
(142,257 | ) | (301,635 | ) | ||||
Change
in Other Cash Deposits, Net
|
- | (7,988 | ) | |||||
Proceeds
from Sales of Assets
|
2,004 | 2,797 | ||||||
Net
Cash Flows Used for Investing Activities
|
(140,253 | ) | (306,826 | ) | ||||
FINANCING
ACTIVITIES
|
||||||||
Change
in Short-term Debt, Net – Nonaffiliated
|
(701 | ) | 3,300 | |||||
Change
in Advances from Affiliates, Net
|
(14,140 | ) | 215,846 | |||||
Retirement
of Long-term Debt – Nonaffiliated
|
(7,463 | ) | (7,463 | ) | ||||
Funds
from Amended Coal Contact
|
10,000 | - | ||||||
Principal
Payments for Capital Lease Obligations
|
(1,926 | ) | (1,902 | ) | ||||
Dividends
Paid on Cumulative Preferred Stock
|
(183 | ) | (183 | ) | ||||
Net
Cash Flows from (Used for) Financing Activities
|
(14,413 | ) | 209,598 | |||||
Net
Decrease in Cash and Cash Equivalents
|
(3,049 | ) | (364 | ) | ||||
Cash
and Cash Equivalents at Beginning of Period
|
6,666 | 1,625 | ||||||
Cash
and Cash Equivalents at End of Period
|
$ | 3,617 | $ | 1,261 |
SUPPLEMENTARY
INFORMATION
|
||||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$ | 37,491 | $ | 29,646 | ||||
Net
Cash Paid (Received) for Income Taxes
|
10,850 | (8,899 | ) | |||||
Noncash
Acquisitions Under Capital Leases
|
687 | 608 | ||||||
Noncash
Acquisition of Coal Land Rights
|
41,600 | - | ||||||
Construction
Expenditures Included in Accounts Payable at March 31,
|
21,828 | 98,653 |
Footnote
Reference
|
|
Significant
Accounting Matters
|
Note
1
|
New
Accounting Pronouncements
|
Note
2
|
Rate
Matters
|
Note
3
|
Commitments,
Guarantees and Contingencies
|
Note
4
|
Benefit
Plans
|
Note
6
|
Business
Segments
|
Note
7
|
Income
Taxes
|
Note
8
|
Financing
Activities
|
Note
9
|
First
Quarter of 2007
|
$ | (20 | ) | |||||
Changes
in Gross Margin:
|
||||||||
Retail
and Off-system Sales Margins
|
14 | |||||||
Transmission
Revenues
|
1 | |||||||
Other
|
10 | |||||||
Total
Change in Gross Margin
|
25 | |||||||
Changes
in Operating Expenses and Other:
|
||||||||
Other
Operation and Maintenance
|
(7 | ) | ||||||
Deferral
of Ice Storm Costs
|
80 | |||||||
Depreciation
and Amortization
|
(4 | ) | ||||||
Taxes
Other Than Income Taxes
|
(1 | ) | ||||||
Other
Income
|
4 | |||||||
Interest
Expense
|
(4 | ) | ||||||
Total
Change in Operating Expenses and Other
|
68 | |||||||
Income
Tax Expense
|
(36 | ) | ||||||
First
Quarter of 2008
|
$ | 37 |
·
|
Retail
and Off-system Sales Margins increased $14 million primarily due
to:
|
|
·
|
A
$15 million increase in retail sales margins mainly due to base rate
adjustments during the year and a slight increase in KWH
sales.
|
|
This
increase was offset by:
|
||
·
|
A
$1 million decrease in off-system margins retained from a net decrease of
$3 million from lower physical margins and lower trading
margins.
|
|
·
|
Other
revenues increased $10 million primarily due to the recognition of the
sale of SO2
allowances. See “Oklahoma 2007 Ice Storms” section of Note
3.
|
·
|
Other
Operation and Maintenance expenses increased $7 million primarily due
to:
|
|
·
|
A
$10 million increase in production expenses primarily due to a write-off
of pre-construction costs related to the cancelled Red Rock Generating
Facility. See “Red Rock Generating Facility” section of Note
3.
|
|
·
|
An
$8 million increase due to amortization of the ice storm Regulatory
Asset. See “Oklahoma 2007 Ice Storms” section of Note
3.
|
|
·
|
A
$3 million increase in transmission expense primarily due to an increase
in transmission services from nonaffiliated utilities and SPP charges and
fees.
|
|
·
|
A
$2 million increase in distribution maintenance expense due to increased
vegetation management activities to enhance customer
reliability.
|
|
This
increase was partially offset by:
|
||
·
|
A
$17 million decrease due to the $21 million ice storm repair costs
expensed in the first quarter 2007 compared to the $4 million ice storm
repair costs expensed in the first quarter 2008.
|
|
·
|
Deferral
of Ice Storm Costs in 2008 of $80 million results from an OCC order
approving recovery of ice storm costs related to storms in January and
December 2007. See “Oklahoma 2007 Ice Storms” section of Note
3.
|
|
·
|
Depreciation
and Amortization expenses increased $4 million primarily due to the
amortization of regulatory assets related to the Lawton Settlement and the
ice storm regulatory asset.
|
|
·
|
Other
Income increased $4 million primarily due to an increase in carrying
charges related to the deferred ice storm costs and the Lawton
Settlement.
|
|
·
|
Interest
Expense increased $4 million primarily due to increased long-term
borrowings.
|
|
·
|
Income
Tax Expense increased $36 million primarily due to an increase in pretax
book income.
|
2008
|
2007
|
|||||||
REVENUES
|
||||||||
Electric
Generation, Transmission and Distribution
|
$ | 318,880 | $ | 290,080 | ||||
Sales
to AEP Affiliates
|
15,935 | 24,593 | ||||||
Other
|
1,185 | 640 | ||||||
TOTAL
|
336,000 | 315,313 | ||||||
EXPENSES
|
||||||||
Fuel
and Other Consumables Used for Electric Generation
|
153,205 | 142,515 | ||||||
Purchased
Electricity for Resale
|
48,582 | 67,409 | ||||||
Purchased
Electricity from AEP Affiliates
|
17,269 | 13,484 | ||||||
Other
Operation
|
55,999 | 41,007 | ||||||
Maintenance
|
34,587 | 43,085 | ||||||
Deferral
of Ice Storm Costs
|
(79,902 | ) | - | |||||
Depreciation
and Amortization
|
26,167 | 22,706 | ||||||
Taxes
Other Than Income Taxes
|
10,952 | 10,294 | ||||||
TOTAL
|
266,859 | 340,500 | ||||||
OPERATING
INCOME (LOSS)
|
69,141 | (25,187 | ) | |||||
Other
Income (Expense):
|
||||||||
Other
Income
|
2,487 | 646 | ||||||
Carrying
Costs Income
|
1,634 | - | ||||||
Interest
Expense
|
(14,941 | ) | (11,383 | ) | ||||
INCOME
(LOSS) BEFORE INCOME TAX EXPENSE (CREDIT)
|
58,321 | (35,924 | ) | |||||
Income
Tax Expense (Credit)
|
20,922 | (15,498 | ) | |||||
NET
INCOME (LOSS)
|
37,399 | (20,426 | ) | |||||
Preferred
Stock Dividend Requirements
|
53 | 53 | ||||||
EARNINGS
(LOSS) APPLICABLE TO COMMON STOCK
|
$ | 37,346 | $ | (20,479 | ) |
Common
Stock
|
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other Comprehensive Income (Loss)
|
Total
|
||||||||||||||||
DECEMBER
31, 2006
|
$ | 157,230 | $ | 230,016 | $ | 199,262 | $ | (1,070 | ) | $ | 585,438 | |||||||||
FIN
48 Adoption, Net of Tax
|
(386 | ) | (386 | ) | ||||||||||||||||
Capital
Contribution from Parent
|
20,000 | 20,000 | ||||||||||||||||||
Preferred
Stock Dividends
|
(53 | ) | (53 | ) | ||||||||||||||||
TOTAL
|
604,999 | |||||||||||||||||||
COMPREHENSIVE
LOSS
|
||||||||||||||||||||
Other
Comprehensive Income, Net of Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $24
|
45 | 45 | ||||||||||||||||||
NET
LOSS
|
(20,426 | ) | (20,426 | ) | ||||||||||||||||
TOTAL
COMPREHENSIVE LOSS
|
(20,381 | ) | ||||||||||||||||||
MARCH
31, 2007
|
$ | 157,230 | $ | 250,016 | $ | 178,397 | $ | (1,025 | ) | $ | 584,618 | |||||||||
DECEMBER
31, 2007
|
$ | 157,230 | $ | 310,016 | $ | 174,539 | $ | (887 | ) | $ | 640,898 | |||||||||
EITF
06-10 Adoption, Net of Tax of $596
|
(1,107 | ) | (1,107 | ) | ||||||||||||||||
Preferred
Stock Dividends
|
(53 | ) | (53 | ) | ||||||||||||||||
TOTAL
|
639,738 | |||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other Comprehensive
Income, Net
of Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $24
|
45 | 45 | ||||||||||||||||||
NET
INCOME
|
37,399 | 37,399 | ||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
37,444 | |||||||||||||||||||
MARCH
31, 2008
|
$ | 157,230 | $ | 310,016 | $ | 210,778 | $ | (842 | ) | $ | 677,182 |
2008
|
2007
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
and Cash Equivalents
|
$ | 1,435 | $ | 1,370 | ||||
Advances
to Affiliates
|
- | 51,202 | ||||||
Accounts
Receivable:
|
||||||||
Customers
|
42,505 | 74,330 | ||||||
Affiliated Companies
|
94,257 | 59,835 | ||||||
Miscellaneous
|
14,450 | 10,315 | ||||||
Total Accounts Receivable
|
151,212 | 144,480 | ||||||
Fuel
|
23,348 | 19,394 | ||||||
Materials
and Supplies
|
48,823 | 47,691 | ||||||
Risk
Management Assets
|
99,625 | 33,308 | ||||||
Accrued
Tax Benefits
|
27,513 | 31,756 | ||||||
Margin
Deposits
|
1,844 | 8,980 | ||||||
Prepayments
and Other
|
18,297 | 18,137 | ||||||
TOTAL
|
372,097 | 356,318 | ||||||
PROPERTY,
PLANT AND EQUIPMENT
|
||||||||
Electric:
|
||||||||
Production
|
1,170,963 | 1,110,657 | ||||||
Transmission
|
579,163 | 569,746 | ||||||
Distribution
|
1,369,834 | 1,337,038 | ||||||
Other
|
245,669 | 241,722 | ||||||
Construction
Work in Progress
|
154,375 | 200,018 | ||||||
Total
|
3,520,004 | 3,459,181 | ||||||
Accumulated
Depreciation and Amortization
|
1,187,333 | 1,182,171 | ||||||
TOTAL
- NET
|
2,332,671 | 2,277,010 | ||||||
OTHER
NONCURRENT ASSETS
|
||||||||
Regulatory
Assets
|
197,860 | 158,731 | ||||||
Long-term
Risk Management Assets
|
5,784 | 3,358 | ||||||
Deferred
Charges and Other
|
75,678 | 48,454 | ||||||
TOTAL
|
279,322 | 210,543 | ||||||
TOTAL
ASSETS
|
$ | 2,984,090 | $ | 2,843,871 |
2008
|
2007
|
|||||||
CURRENT
LIABILITIES
|
(in
thousands)
|
|||||||
Advances
from Affiliates
|
$ | 62,159 | $ | - | ||||
Accounts
Payable:
|
||||||||
General
|
157,712 | 189,032 | ||||||
Affiliated
Companies
|
79,293 | 80,316 | ||||||
Long-term
Debt Due Within One Year – Nonaffiliated
|
33,700 | - | ||||||
Risk
Management Liabilities
|
82,378 | 27,118 | ||||||
Customer
Deposits
|
41,775 | 41,477 | ||||||
Accrued
Taxes
|
36,238 | 18,374 | ||||||
Regulatory
Liability for Over-Recovered Fuel Costs
|
16,269 | 11,697 | ||||||
Other
|
37,501 | 57,708 | ||||||
TOTAL
|
547,025 | 425,722 | ||||||
NONCURRENT
LIABILITIES
|
||||||||
Long-term
Debt – Nonaffiliated
|
884,677 | 918,316 | ||||||
Long-term
Risk Management Liabilities
|
4,382 | 2,808 | ||||||
Deferred
Income Taxes
|
495,817 | 456,497 | ||||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
314,622 | 338,788 | ||||||
Deferred
Credits and Other
|
55,123 | 55,580 | ||||||
TOTAL
|
1,754,621 | 1,771,989 | ||||||
TOTAL
LIABILITIES
|
2,301,646 | 2,197,711 | ||||||
Cumulative
Preferred Stock Not Subject to Mandatory Redemption
|
5,262 | 5,262 | ||||||
Commitments
and Contingencies (Note 4)
|
||||||||
COMMON
SHAREHOLDER’S EQUITY
|
||||||||
Common
Stock – $15 Par Value Per Share:
|
||||||||
Authorized – 11,000,000 Shares
|
||||||||
Issued – 10,482,000 Shares
|
||||||||
Outstanding – 9,013,000 Shares
|
157,230 | 157,230 | ||||||
Paid-in
Capital
|
310,016 | 310,016 | ||||||
Retained
Earnings
|
210,778 | 174,539 | ||||||
Accumulated
Other Comprehensive Income (Loss)
|
(842 | ) | (887 | ) | ||||
TOTAL
|
677,182 | 640,898 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$ | 2,984,090 | $ | 2,843,871 |
2008
|
2007
|
|||||||
OPERATING
ACTIVITIES
|
||||||||
Net
Income (Loss)
|
$ | 37,399 | $ | (20,426 | ) | |||
Adjustments
to Reconcile Net Income (Loss) to Net Cash Flows Used for
Operating Activities:
|
||||||||
Depreciation
and Amortization
|
26,167 | 22,706 | ||||||
Deferred
Income Taxes
|
37,899 | 1,039 | ||||||
Deferral
of Ice Storm Costs
|
(79,902 | ) | - | |||||
Allowance
for Equity Funds Used During Construction
|
(1,359 | ) | (646 | ) | ||||
Mark-to-Market
of Risk Management Contracts
|
(11,881 | ) | 4,732 | |||||
Deferred
Property Taxes
|
(26,694 | ) | (24,809 | ) | ||||
Change
in Other Noncurrent Assets
|
22,022 | 5,039 | ||||||
Change
in Other Noncurrent Liabilities
|
(20,541 | ) | (11,269 | ) | ||||
Changes
in Certain Components of Working Capital:
|
||||||||
Accounts Receivable, Net
|
(5,027 | ) | 16,116 | |||||
Fuel, Materials and Supplies
|
(5,086 | ) | (3,513 | ) | ||||
Accounts Payable
|
(25,698 | ) | 6,941 | |||||
Accrued Taxes, Net
|
22,107 | (4,378 | ) | |||||
Fuel Over/Under Recovery, Net
|
4,572 | 16,572 | ||||||
Other Current Assets
|
6,976 | 5,656 | ||||||
Other Current Liabilities
|
(20,759 | ) | (31,462 | ) | ||||
Net
Cash Flows Used for Operating Activities
|
(39,805 | ) | (17,702 | ) | ||||
INVESTING
ACTIVITIES
|
||||||||
Construction
Expenditures
|
(73,203 | ) | (61,301 | ) | ||||
Change
in Advances to Affiliates, Net
|
51,202 | - | ||||||
Other
|
148 | (12 | ) | |||||
Net
Cash Flows Used for Investing Activities
|
(21,853 | ) | (61,313 | ) | ||||
FINANCING
ACTIVITIES
|
||||||||
Capital
Contribution from Parent
|
- | 20,000 | ||||||
Change
in Advances from Affiliates, Net
|
62,159 | 59,371 | ||||||
Principal
Payments for Capital Lease Obligations
|
(383 | ) | (370 | ) | ||||
Dividends
Paid on Cumulative Preferred Stock
|
(53 | ) | (53 | ) | ||||
Net
Cash Flows from Financing Activities
|
61,723 | 78,948 | ||||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
65 | (67 | ) | |||||
Cash
and Cash Equivalents at Beginning of Period
|
1,370 | 1,651 | ||||||
Cash
and Cash Equivalents at End of Period
|
$ | 1,435 | $ | 1,584 |
SUPPLEMENTARY
INFORMATION
|
||||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$ | 12,380 | $ | 12,921 | ||||
Net
Cash Paid (Received) for Income Taxes
|
(19,408 | ) | 2,623 | |||||
Noncash
Acquisitions Under Capital Leases
|
135 | 283 | ||||||
Construction
Expenditures Included in Accounts Payable at March 31,
|
21,086 | 19,038 |
Footnote
Reference
|
|
Significant
Accounting Matters
|
Note
1
|
New
Accounting Pronouncements
|
Note
2
|
Rate
Matters
|
Note
3
|
Commitments,
Guarantees and Contingencies
|
Note
4
|
Benefit
Plans
|
Note
6
|
Business
Segments
|
Note
7
|
Income
Taxes
|
Note
8
|
Financing
Activities
|
Note
9
|
First
Quarter of 2007
|
$ | 10 | ||||||
Changes
in Gross Margin:
|
||||||||
Retail
and Off-system Sales Margins (a)
|
4 | |||||||
Transmission
Revenues
|
1 | |||||||
Other
|
(1 | ) | ||||||
Total
Change in Gross Margin
|
4 | |||||||
Changes
in Operating Expenses and Other:
|
||||||||
Other
Operation and Maintenance
|
(11 | ) | ||||||
Depreciation
and Amortization
|
(2 | ) | ||||||
Taxes
Other Than Income Taxes
|
(1 | ) | ||||||
Other
Income
|
2 | |||||||
Interest
Expense
|
(2 | ) | ||||||
Total
Change in Operating Expenses and Other
|
(14 | ) | ||||||
Income
Tax Expense
|
5 | |||||||
First
Quarter of 2008
|
$ | 5 |
(a)
|
Includes
firm wholesale sales to municipals and
cooperatives.
|
·
|
Retail
and Off-system Sales Margins increased $4 million primarily due
to:
|
|
·
|
A
$3 million increase in retail sales margins related to higher fuel
recovery with regards to wholesale customers.
|
|
·
|
A
$2 million increase from lower sharing of net realized off-system sales
margins.
|
|
·
|
Other
revenues decreased $1 million primarily due to a $6 million decrease in
gains on sales of emission allowances partially offset by a $5 million
increase in revenue from coal deliveries from SWEPCo’s mining subsidiary,
Dolet Hills Lignite Company, LLC, to outside
parties.
|
·
|
Other
Operation and Maintenance expenses increased $11 million primarily due
to:
|
|
·
|
A
$6 million increase in operating expenses from SWEPCo’s affiliated mining
operations.
|
|
·
|
A
$2 million increase in administrative and general expenses, primarily
associated with outside services and employee-related
expenses.
|
|
·
|
A
$1 million increase in Maintenance expenses from planned and forced
outages at the Welsh, Dolet Hills, Flint Creek, Knox Lee and Pirkey
Plants.
|
|
·
|
Depreciation
and Amortization increased $2 million primarily due to higher depreciable
asset balances.
|
|
·
|
Other
Income increased $2 million primarily due to an increase in the equity
component of AFUDC as a result of new generation projects at the Turk
Plant, Mattison Plant and Stall Unit.
|
|
·
|
Interest
Expense increased $2 million primarily due to higher interest of $3
million related to higher long-term debt partially offset by a $2 million
increase in the debt component of AFUDC due to new generation projects at
the Turk Plant, Mattison Plant and Stall Unit.
|
|
·
|
Income
Tax Expense decreased $5 million primarily due to a decrease in pretax
book income and state income taxes.
|
Moody’s
|
S&P
|
Fitch
|
||||
Senior
Unsecured Debt
|
Baa1
|
BBB
|
BBB+
|
2008
|
2007
|
|||||||
(in
thousands)
|
||||||||
Cash
and Cash Equivalents at Beginning of Period
|
$ | 1,742 | $ | 2,618 | ||||
Cash
Flows From (Used for):
|
||||||||
Operating
Activities
|
(4,102 | ) | 65,590 | |||||
Investing
Activities
|
(125,877 | ) | (120,639 | ) | ||||
Financing
Activities
|
134,140 | 54,331 | ||||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
4,161 | (718 | ) | |||||
Cash
and Cash Equivalents at End of Period
|
$ | 5,903 | $ | 1,900 |
Type
of Debt
|
Principal
Amount
Paid
|
Interest
Rate
|
Due
Date
|
||||
(in
thousands)
|
(%)
|
||||||
Notes
Payable – Nonaffiliated
|
$ | 1,101 | 4.47 |
2011
|
|||
Notes
Payable – Nonaffiliated
|
750 |
Variable
|
2008
|
MTM
Risk Management Contracts
|
Cash
Flow &
Fair
Value Hedges
|
DETM
Assignment (a)
|
Collateral
Deposits
|
Total
|
||||||||||||||||
Current
Assets
|
$ | 119,952 | $ | 160 | $ | - | $ | (1,132 | ) | $ | 118,980 | |||||||||
Noncurrent
Assets
|
7,125 | 75 | - | (26 | ) | 7,174 | ||||||||||||||
Total
MTM Derivative Contract Assets
|
127,077 | 235 | - | (1,158 | ) | 126,154 | ||||||||||||||
Current
Liabilities
|
(113,496 | ) | (6 | ) | (91 | ) | 15,096 | (98,497 | ) | |||||||||||
Noncurrent
Liabilities
|
(6,167 | ) | - | (105 | ) | 961 | (5,311 | ) | ||||||||||||
Total
MTM Derivative Contract Liabilities
|
(119,663 | ) | (6 | ) | (196 | ) | 16,057 | (103,808 | ) | |||||||||||
Total
MTM Derivative Contract Net Assets (Liabilities)
|
$ | 7,414 | $ | 229 | $ | (196 | ) | $ | 14,899 | $ | 22,346 |
(a)
|
See
“Natural Gas Contracts with DETM” section of Note 16 of the 2007 Annual
Report.
|
Total
MTM Risk Management Contract Net Assets at December 31,
2007
|
$
|
8,131
|
||
(Gain)
Loss from Contracts Realized/Settled During the Period and Entered in a
Prior Period
|
(1,643
|
)
|
||
Fair
Value of New Contracts at Inception When Entered During the Period
(a)
|
-
|
|||
Net
Option Premiums Paid/(Received) for Unexercised or Unexpired Option
Contracts Entered During the Period
|
-
|
|||
Change
in Fair Value Due to Valuation Methodology Changes on Forward Contracts
(b)
|
326
|
|||
Changes
in Fair Value Due to Market Fluctuations During the Period
(c)
|
(141
|
)
|
||
Changes
in Fair Value Allocated to Regulated Jurisdictions (d)
|
741
|
|||
Total
MTM Risk Management Contract Net Assets
|
7,414
|
|||
Net
Cash Flow & Fair Value Hedge Contracts
|
229
|
|||
DETM
Assignment (e)
|
(196
|
)
|
||
Collateral
Deposits
|
14,899
|
|||
Ending
Net Risk Management Assets at March 31, 2008
|
$
|
22,346
|
(a)
|
Reflects
fair value on long-term contracts which are typically with customers that
seek fixed pricing to limit their risk against fluctuating energy
prices. Inception value is only recorded if observable market
data can be obtained for valuation inputs for the entire contract
term. The contract prices are valued against market curves
associated with the delivery location and delivery
term.
|
(b)
|
Represents
the impact of applying AEP’s credit risk when measuring the fair value of
derivative liabilities according to SFAS 157.
|
(c)
|
Market
fluctuations are attributable to various factors such as supply/demand,
weather, storage, etc.
|
(d)
|
“Changes
in Fair Value Allocated to Regulated Jurisdictions” relates to the net
gains (losses) of those contracts that are not reflected in the Condensed
Consolidated Statements of Income. These net gains (losses) are
recorded as regulatory assets/ liabilities for those subsidiaries that
operate in regulated jurisdictions.
|
(e)
|
See
“Natural Gas Contracts with DETM” section of Note 16 of the 2007 Annual
Report.
|
Remainder
2008
|
2009
|
2010
|
2011
|
2012
|
After
2012
|
Total
|
||||||||||||||||||||||
Level
1 (a)
|
$ | 2,884 | $ | (283 | ) | $ | - | $ | - | $ | - | $ | - | $ | 2,601 | |||||||||||||
Level
2 (b)
|
3,168 | 1,551 | 143 | (14 | ) | - | - | 4,848 | ||||||||||||||||||||
Level
3 (c)
|
(38 | ) | 1 | 2 | - | - | - | (35 | ) | |||||||||||||||||||
Total
|
$ | 6,014 | $ | 1,269 | $ | 145 | $ | (14 | ) | $ | - | $ | - | $ | 7,414 |
(a)
|
Level
1 inputs are quoted prices (unadjusted) in active markets for identical
assets or liabilities that the reporting entity has the ability to access
at the measurement date. Level 1 inputs primarily consist of
exchange traded contracts that exhibit sufficient frequency and volume to
provide pricing information on an ongoing basis.
|
(b)
|
Level
2 inputs are inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly or
indirectly. If the asset or liability has a specified
(contractual) term, a Level 2 input must be observable for substantially
the full term of the asset or liability. Level 2 inputs
primarily consist of OTC broker quotes in moderately active or less active
markets, exchange traded contracts where there was not sufficient market
activity to warrant inclusion in Level 1, and OTC broker quotes that are
corroborated by the same or similar transactions that have occurred in the
market.
|
(c)
|
Level
3 inputs are unobservable inputs for the asset or
liability. Unobservable inputs shall be used to measure fair
value to the extent that the observable inputs are not available, thereby
allowing for situations in which there is little, if any, market activity
for the asset or liability at the measurement date. Level 3
inputs primarily consist of unobservable market data or are valued based
on models and/or assumptions.
|
Interest
Rate
|
Foreign
Currency
|
Total
|
||||||||||
Beginning
Balance in AOCI December 31, 2007
|
$ | (6,650 | ) | $ | 629 | $ | (6,021 | ) | ||||
Changes
in Fair Value
|
- | 68 | 68 | |||||||||
Reclassifications
from AOCI for Cash Flow Hedges
Settled
|
207 | (544 | ) | (337 | ) | |||||||
Ending
Balance in AOCI March 31, 2008
|
$ | (6,443 | ) | $ | 153 | $ | (6,290 | ) |
Three
Months Ended March 31, 2008
|
Twelve
Months Ended December 31, 2007
|
|||||||||||||||||||||
(in
thousands)
|
(in
thousands)
|
|||||||||||||||||||||
End
|
High
|
Average
|
Low
|
End
|
High
|
Average
|
Low
|
|||||||||||||||
$84
|
$143 |
$52
|
$11 | $17 | $245 | $75 | $7 |
2008
|
2007
|
|||||||
REVENUES
|
||||||||
Electric
Generation, Transmission and Distribution
|
$ | 325,901 | $ | 327,284 | ||||
Sales
to AEP Affiliates
|
13,592 | 16,415 | ||||||
Other
|
300 | 400 | ||||||
TOTAL
|
339,793 | 344,099 | ||||||
EXPENSES
|
||||||||
Fuel
and Other Consumables Used for Electric Generation
|
117,661 | 111,987 | ||||||
Purchased
Electricity for Resale
|
40,270 | 52,498 | ||||||
Purchased
Electricity from AEP Affiliates
|
20,440 | 22,917 | ||||||
Other
Operation
|
63,579 | 53,783 | ||||||
Maintenance
|
27,468 | 26,339 | ||||||
Depreciation
and Amortization
|
36,136 | 34,122 | ||||||
Taxes
Other Than Income Taxes
|
17,419 | 15,991 | ||||||
TOTAL
|
322,973 | 317,637 | ||||||
OPERATING
INCOME
|
16,820 | 26,462 | ||||||
Other
Income (Expense):
|
||||||||
Interest
Income
|
877 | 705 | ||||||
Allowance
for Equity Funds Used During Construction
|
3,063 | 1,391 | ||||||
Interest
Expense
|
(17,142 | ) | (15,490 | ) | ||||
INCOME
BEFORE INCOME TAX EXPENSE (CREDIT) AND MINORITY
INTEREST
EXPENSE
|
3,618 | 13,068 | ||||||
Income
Tax Expense (Credit)
|
(1,987 | ) | 2,621 | |||||
Minority
Interest Expense
|
995 | 842 | ||||||
NET
INCOME
|
4,610 | 9,605 | ||||||
Preferred
Stock Dividend Requirements
|
57 | 57 | ||||||
EARNINGS
APPLICABLE TO COMMON STOCK
|
$ | 4,553 | $ | 9,548 |
Common
Stock
|
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other Comprehensive Income (Loss)
|
Total
|
||||||||||||||||
DECEMBER
31, 2006
|
$ | 135,660 | $ | 245,003 | $ | 459,338 | $ | (18,799 | ) | $ | 821,202 | |||||||||
FIN
48 Adoption, Net of Tax
|
(1,642 | ) | (1,642 | ) | ||||||||||||||||
Preferred
Stock Dividends
|
(57 | ) | (57 | ) | ||||||||||||||||
TOTAL
|
819,503 | |||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other
Comprehensive Loss, Net of Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $39
|
(327 | ) | (327 | ) | ||||||||||||||||
NET
INCOME
|
9,605 | 9,605 | ||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
9,278 | |||||||||||||||||||
MARCH
31, 2007
|
$ | 135,660 | $ | 245,003 | $ | 467,244 | $ | (19,126 | ) | $ | 828,781 | |||||||||
DECEMBER
31, 2007
|
$ | 135,660 | $ | 330,003 | $ | 523,731 | $ | (16,439 | ) | $ | 972,955 | |||||||||
EITF
06-10 Adoption, Net of Tax of $622
|
(1,156 | ) | (1,156 | ) | ||||||||||||||||
SFAS
157 Adoption, Net of Tax of $6
|
10 | 10 | ||||||||||||||||||
Capital
Contribution from Parent
|
50,000 | 50,000 | ||||||||||||||||||
Preferred
Stock Dividends
|
(57 | ) | (57 | ) | ||||||||||||||||
TOTAL
|
1,021,752 | |||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other Comprehensive Income
(Loss), Net
of Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $145
|
(269 | ) | (269 | ) | ||||||||||||||||
Amortization
of Pension and OPEB Deferred Costs,
Net of Tax of $127
|
235 | 235 | ||||||||||||||||||
NET
INCOME
|
4,610 | 4,610 | ||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
4,576 | |||||||||||||||||||
MARCH
31, 2008
|
$ | 135,660 | $ | 380,003 | $ | 527,138 | $ | (16,473 | ) | $ | 1,026,328 |
2008
|
2007
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
and Cash Equivalents
|
$ | 5,903 | $ | 1,742 | ||||
Accounts
Receivable:
|
||||||||
Customers
|
56,777 | 91,379 | ||||||
Affiliated Companies
|
41,862 | 33,196 | ||||||
Miscellaneous
|
14,213 | 10,544 | ||||||
Allowance for Uncollectible Accounts
|
(45 | ) | (143 | ) | ||||
Total Accounts Receivable
|
112,807 | 134,976 | ||||||
Fuel
|
77,463 | 75,662 | ||||||
Materials
and Supplies
|
48,746 | 48,673 | ||||||
Risk
Management Assets
|
118,980 | 39,850 | ||||||
Regulatory
Asset for Under-Recovered Fuel Costs
|
22,868 | 5,859 | ||||||
Margin
Deposits
|
2,229 | 10,650 | ||||||
Prepayments
and Other
|
35,091 | 28,147 | ||||||
TOTAL
|
424,087 | 345,559 | ||||||
PROPERTY,
PLANT AND EQUIPMENT
|
||||||||
Electric:
|
||||||||
Production
|
1,743,766 | 1,743,198 | ||||||
Transmission
|
743,285 | 737,975 | ||||||
Distribution
|
1,331,547 | 1,312,746 | ||||||
Other
|
633,446 | 631,765 | ||||||
Construction
Work in Progress
|
546,248 | 451,228 | ||||||
Total
|
4,998,292 | 4,876,912 | ||||||
Accumulated
Depreciation and Amortization
|
1,952,226 | 1,939,044 | ||||||
TOTAL
- NET
|
3,046,066 | 2,937,868 | ||||||
OTHER
NONCURRENT ASSETS
|
||||||||
Regulatory
Assets
|
118,218 | 133,617 | ||||||
Long-term
Risk Management Assets
|
7,174 | 4,073 | ||||||
Deferred
Charges and Other
|
108,267 | 67,269 | ||||||
TOTAL
|
233,659 | 204,959 | ||||||
TOTAL
ASSETS
|
$ | 3,703,812 | $ | 3,488,386 |
2008
|
2007
|
|||||||
CURRENT
LIABILITIES
|
(in
thousands)
|
|||||||
Advances
from Affiliates
|
$ | 89,210 | $ | 1,565 | ||||
Accounts
Payable:
|
||||||||
General
|
148,373 | 152,305 | ||||||
Affiliated
Companies
|
67,172 | 51,767 | ||||||
Short-term
Debt – Nonaffiliated
|
- | 285 | ||||||
Long-term
Debt Due Within One Year – Nonaffiliated
|
5,156 | 5,906 | ||||||
Risk
Management Liabilities
|
98,497 | 32,629 | ||||||
Customer
Deposits
|
37,788 | 37,473 | ||||||
Accrued
Taxes
|
53,395 | 26,494 | ||||||
Regulatory
Liability for Over-Recovered Fuel Costs
|
- | 22,879 | ||||||
Other
|
72,623 | 76,554 | ||||||
TOTAL
|
572,214 | 407,857 | ||||||
NONCURRENT
LIABILITIES
|
||||||||
Long-term
Debt – Nonaffiliated
|
1,140,303 | 1,141,311 | ||||||
Long-term
Debt – Affiliated
|
50,000 | 50,000 | ||||||
Long-term
Risk Management Liabilities
|
5,311 | 3,334 | ||||||
Deferred
Income Taxes
|
367,814 | 361,806 | ||||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
327,117 | 334,014 | ||||||
Deferred
Credits and Other
|
208,291 | 210,725 | ||||||
TOTAL
|
2,098,836 | 2,101,190 | ||||||
TOTAL
LIABILITIES
|
2,671,050 | 2,509,047 | ||||||
Minority
Interest
|
1,737 | 1,687 | ||||||
Cumulative
Preferred Stock Not Subject to Mandatory Redemption
|
4,697 | 4,697 | ||||||
Commitments
and Contingencies (Note 4)
|
||||||||
COMMON
SHAREHOLDER’S EQUITY
|
||||||||
Common
Stock – Par Value – $18 Per Share:
|
||||||||
Authorized
– 7,600,000 Shares
|
||||||||
Outstanding
– 7,536,640 Shares
|
135,660 | 135,660 | ||||||
Paid-in
Capital
|
380,003 | 330,003 | ||||||
Retained
Earnings
|
527,138 | 523,731 | ||||||
Accumulated
Other Comprehensive Income (Loss)
|
(16,473 | ) | (16,439 | ) | ||||
TOTAL
|
1,026,328 | 972,955 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$ | 3,703,812 | $ | 3,488,386 |
2008
|
2007
|
|||||||
OPERATING
ACTIVITIES
|
||||||||
Net
Income
|
$ | 4,610 | $ | 9,605 | ||||
Adjustments
to Reconcile Net Income to Net Cash Flows from (Used for) Operating
Activities:
|
||||||||
Depreciation
and Amortization
|
36,136 | 34,122 | ||||||
Deferred
Income Taxes
|
3,804 | (6,677 | ) | |||||
Allowance
for Equity Funds Used During Construction
|
(3,063 | ) | (1,391 | ) | ||||
Mark-to-Market
of Risk Management Contracts
|
(14,231 | ) | 4,857 | |||||
Deferred
Property Taxes
|
(29,799 | ) | (28,815 | ) | ||||
Change
in Other Noncurrent Assets
|
6,589 | (1,807 | ) | |||||
Change
in Other Noncurrent Liabilities
|
(14,634 | ) | (178 | ) | ||||
Changes
in Certain Components of Working Capital:
|
||||||||
Accounts Receivable, Net
|
22,169 | 20,469 | ||||||
Fuel, Materials and Supplies
|
(1,874 | ) | (4,141 | ) | ||||
Accounts Payable
|
7,398 | 13,806 | ||||||
Accrued Taxes, Net
|
21,279 | 36,113 | ||||||
Fuel Over/Under Recovery, Net
|
(39,888 | ) | 4,212 | |||||
Other Current Assets
|
7,683 | 11,381 | ||||||
Other Current Liabilities
|
(10,281 | ) | (25,966 | ) | ||||
Net
Cash Flows from (Used for) Operating Activities
|
(4,102 | ) | 65,590 | |||||
INVESTING
ACTIVITIES
|
||||||||
Construction
Expenditures
|
(125,358 | ) | (107,613 | ) | ||||
Change
in Advances to Affiliates, Net
|
- | (8,959 | ) | |||||
Other
|
(519 | ) | (4,067 | ) | ||||
Net
Cash Flows Used for Investing Activities
|
(125,877 | ) | (120,639 | ) | ||||
FINANCING
ACTIVITIES
|
||||||||
Capital
Contribution from Parent
|
50,000 | - | ||||||
Issuance
of Long-term Debt – Nonaffiliated
|
- | 247,548 | ||||||
Change
in Short-term Debt, Net – Nonaffiliated
|
(285 | ) | 3,290 | |||||
Change
in Advances from Affiliates, Net
|
87,645 | (188,965 | ) | |||||
Retirement
of Long-term Debt – Nonaffiliated
|
(1,851 | ) | (6,395 | ) | ||||
Principal
Payments for Capital Lease Obligations
|
(1,312 | ) | (1,090 | ) | ||||
Dividends
Paid on Cumulative Preferred Stock
|
(57 | ) | (57 | ) | ||||
Net
Cash Flows from Financing Activities
|
134,140 | 54,331 | ||||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
4,161 | (718 | ) | |||||
Cash
and Cash Equivalents at Beginning of Period
|
1,742 | 2,618 | ||||||
Cash
and Cash Equivalents at End of Period
|
$ | 5,903 | $ | 1,900 |
SUPPLEMENTARY
INFORMATION
|
||||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$ | 14,049 | $ | 16,747 | ||||
Net
Cash Paid for Income Taxes
|
641 | 580 | ||||||
Noncash
Acquisitions Under Capital Leases
|
6,796 | 3,192 | ||||||
Construction
Expenditures Included in Accounts Payable at March 31,
|
63,973 | 32,460 |
Footnote
Reference
|
|
Significant
Accounting Matters
|
Note
1
|
New
Accounting Pronouncements
|
Note
2
|
Rate
Matters
|
Note
3
|
Commitments,
Guarantees and Contingencies
|
Note
4
|
Benefit
Plans
|
Note
6
|
Business
Segments
|
Note
7
|
Income
Taxes
|
Note
8
|
Financing
Activities
|
Note
9
|
The
condensed notes to condensed financial statements that follow are a
combined presentation for the Registrant Subsidiaries. The
following list indicates the registrants to which the footnotes
apply:
|
||
1.
|
Significant
Accounting Matters
|
APCo,
CSPCo, I&M, OPCo, PSO, SWEPCo
|
2.
|
New
Accounting Pronouncements
|
APCo,
CSPCo, I&M, OPCo, PSO, SWEPCo
|
3.
|
Rate
Matters
|
APCo,
CSPCo, I&M, OPCo, PSO, SWEPCo
|
4.
|
Commitments,
Guarantees and Contingencies
|
APCo,
CSPCo, I&M, OPCo, PSO, SWEPCo
|
5.
|
Acquisition
|
CSPCo
|
6.
|
Benefit
Plans
|
APCo,
CSPCo, I&M, OPCo, PSO, SWEPCo
|
7.
|
Business
Segments
|
APCo,
CSPCo, I&M, OPCo, PSO, SWEPCo
|
8.
|
Income
Taxes
|
APCo,
CSPCo, I&M, OPCo, PSO, SWEPCo
|
9.
|
Financing
Activities
|
APCo,
CSPCo, I&M, OPCo, PSO,
SWEPCo
|
1.
|
SIGNIFICANT ACCOUNTING
MATTERS
|
2.
|
NEW ACCOUNTING
PRONOUNCEMENTS
|
APCo
|
||||||||||||||||||||
Level
1
|
Level
2
|
Level
3
|
Other
|
Total
|
||||||||||||||||
Assets:
|
(in
thousands)
|
|||||||||||||||||||
Risk
Management Assets:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 14,644 | $ | 658,242 | $ | 9,808 | $ | (489,519 | ) | $ | 193,175 | |||||||||
Cash
Flow and Fair Value Hedges (a)
|
- | 8,651 | - | (2,796 | ) | 5,855 | ||||||||||||||
Dedesignated
Risk Management Contracts (b)
|
- | - | - | 16,113 | 16,113 | |||||||||||||||
Total
Risk Management Assets
|
$ | 14,644 | $ | 666,893 | $ | 9,808 | $ | (476,202 | ) | $ | 215,143 | |||||||||
Liabilities:
|
||||||||||||||||||||
Risk
Management Liabilities:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 19,104 | $ | 628,849 | $ | 10,750 | $ | (493,696 | ) | $ | 165,007 | |||||||||
Cash
Flow and Fair Value Hedges (a)
|
- | 26,298 | - | (2,796 | ) | 23,502 | ||||||||||||||
DETM
Assignment (c)
|
- | - | - | 8,040 | 8,040 | |||||||||||||||
Total
Risk Management Liabilities
|
$ | 19,104 | $ | 655,147 | $ | 10,750 | $ | (488,452 | ) | $ | 196,549 | |||||||||
Long-term
Debt (e)
|
$ | - | $ | 49,714 | $ | - | $ | - | $ | 49,714 | ||||||||||
Total
Liabilities
|
$ | 19,104 | $ | 704,861 | $ | 10,750 | $ | (488,452 | ) | $ | 246,263 |
CSPCo
|
||||||||||||||||||||
Level
1
|
Level
2
|
Level
3
|
Other
|
Total
|
||||||||||||||||
Assets:
|
(in
thousands)
|
|||||||||||||||||||
Other
Cash Deposits (f)
|
$ | 52,589 | $ | - | $ | - | $ | 1,171 | $ | 53,760 | ||||||||||
Risk
Management Assets:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 8,794 | $ | 374,975 | $ | 5,874 | $ | (279,296 | ) | $ | 110,347 | |||||||||
Cash
Flow and Fair Value Hedges (a)
|
- | 3,544 | - | (1,679 | ) | 1,865 | ||||||||||||||
Dedesignated
Risk Management Contracts (b)
|
- | - | - | 9,676 | 9,676 | |||||||||||||||
Total
Risk Management Assets
|
$ | 8,794 | $ | 378,519 | $ | 5,874 | $ | (271,299 | ) | $ | 121,888 | |||||||||
Liabilities:
|
||||||||||||||||||||
Risk
Management Liabilities:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 11,473 | $ | 357,104 | $ | 6,426 | $ | (281,641 | ) | $ | 93,362 | |||||||||
Cash
Flow and Fair Value Hedges (b)
|
- | 15,621 | - | (1,679 | ) | 13,942 | ||||||||||||||
DETM
Assignment (c)
|
- | - | - | 4,829 | 4,829 | |||||||||||||||
Total
Risk Management Liabilities
|
$ | 11,473 | $ | 372,725 | $ | 6,426 | $ | (278,491 | ) | $ | 112,133 |
I&M
|
||||||||||||||||||||
Level
1
|
Level
2
|
Level
3
|
Other
|
Total
|
||||||||||||||||
Assets:
|
(in
thousands)
|
|||||||||||||||||||
Risk
Management Assets:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 8,449 | $ | 348,611 | $ | 5,627 | $ | (258,654 | ) | $ | 104,033 | |||||||||
Cash
Flow and Fair Value Hedges (a)
|
- | 3,617 | - | (1,627 | ) | 1,990 | ||||||||||||||
Dedesignated
Risk Management Contracts (b)
|
- | - | - | 9,296 | 9,296 | |||||||||||||||
Total
Risk Management Assets
|
$ | 8,449 | $ | 352,228 | $ | 5,627 | $ | (250,985 | ) | $ | 115,319 | |||||||||
Spent
Nuclear Fuel and Decommissioning Trusts:
|
||||||||||||||||||||
Cash
and Cash Equivalents (d)
|
$ | - | $ | 13,386 | $ | - | $ | 10,286 | $ | 23,672 | ||||||||||
Debt
Securities
|
343,078 | 491,865 | - | - | 834,943 | |||||||||||||||
Equity
Securities
|
465,783 | - | - | - | 465,783 | |||||||||||||||
Total Spent Nuclear Fuel and
Decommissioning Trusts
|
$ | 808,861 | $ | 505,251 | $ | - | $ | 10,286 | $ | 1,324,398 | ||||||||||
Total
Assets
|
$ | 817,310 | $ | 857,479 | $ | 5,627 | $ | (240,699 | ) | $ | 1,439,717 | |||||||||
Liabilities:
|
||||||||||||||||||||
Risk
Management Liabilities:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 11,022 | $ | 331,435 | $ | 6,146 | $ | (260,756 | ) | $ | 87,847 | |||||||||
Cash
Flow and Fair Value Hedges (a)
|
- | 15,022 | - | (1,627 | ) | 13,395 | ||||||||||||||
DETM
Assignment (c)
|
- | - | - | 4,640 | 4,640 | |||||||||||||||
Total
Risk Management Liabilities
|
$ | 11,022 | $ | 346,457 | $ | 6,146 | $ | (257,743 | ) | $ | 105,882 |
OPCo
|
||||||||||||||||||||
Level
1
|
Level
2
|
Level
3
|
Other
|
Total
|
||||||||||||||||
Assets:
|
(in
thousands)
|
|||||||||||||||||||
Risk
Management Assets:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 10,246 | $ | 585,650 | $ | 7,039 | $ | (448,510 | ) | $ | 154,425 | |||||||||
Cash
Flow and Fair Value Hedges (a)
|
- | 4,492 | - | (1,957 | ) | 2,535 | ||||||||||||||
Dedesignated
Risk Management Contracts (b)
|
- | - | - | 11,274 | 11,274 | |||||||||||||||
Total
Risk Management Assets
|
$ | 10,246 | $ | 590,142 | $ | 7,039 | $ | (439,193 | ) | $ | 168,234 | |||||||||
Liabilities:
|
||||||||||||||||||||
Risk
Management Liabilities:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 13,367 | $ | 564,294 | $ | 7,876 | $ | (453,171 | ) | $ | 132,366 | |||||||||
Cash
Flow and Fair Value Hedges (a)
|
- | 20,768 | - | (1,957 | ) | 18,811 | ||||||||||||||
DETM
Assignment (c)
|
- | - | - | 5,626 | 5,626 | |||||||||||||||
Total
Risk Management Liabilities
|
$ | 13,367 | $ | 585,062 | $ | 7,876 | $ | (449,502 | ) | $ | 156,803 |
PSO
|
||||||||||||||||||||
Level
1
|
Level
2
|
Level
3
|
Other
|
Total
|
||||||||||||||||
Assets:
|
(in
thousands)
|
|||||||||||||||||||
Risk
Management Assets:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 31,254 | $ | 429,634 | $ | 47 | $ | (355,526 | ) | $ | 105,409 | |||||||||
Cash
Flow and Fair Value Hedges (a)
|
- | - | - | - | - | |||||||||||||||
Total
Risk Management Assets
|
$ | 31,254 | $ | 429,634 | $ | 47 | $ | (355,526 | ) | $ | 105,409 | |||||||||
Liabilities:
|
||||||||||||||||||||
Risk
Management Liabilities:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 29,049 | $ | 425,533 | $ | 68 | $ | (368,056 | ) | $ | 86,594 | |||||||||
Cash
Flow and Fair Value Hedges (a)
|
- | - | - | - | - | |||||||||||||||
DETM
Assignment (c)
|
- | - | - | 166 | 166 | |||||||||||||||
Total
Risk Management Liabilities
|
$ | 29,049 | $ | 425,533 | $ | 68 | $ | (367,890 | ) | $ | 86,760 |
SWEPCo
|
||||||||||||||||||||
Level
1
|
Level
2
|
Level
3
|
Other
|
Total
|
||||||||||||||||
Assets:
|
(in
thousands)
|
|||||||||||||||||||
Risk
Management Assets:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 36,861 | $ | 516,029 | $ | 68 | $ | (427,039 | ) | $ | 125,919 | |||||||||
Cash
Flow and Fair Value Hedges (a)
|
- | 242 | - | (7 | ) | 235 | ||||||||||||||
Total
Risk Management Assets
|
$ | 36,861 | $ | 516,271 | $ | 68 | $ | (427,046 | ) | $ | 126,154 | |||||||||
Liabilities:
|
||||||||||||||||||||
Risk
Management Liabilities:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 34,260 | $ | 511,181 | $ | 103 | $ | (441,938 | ) | $ | 103,606 | |||||||||
Cash
Flow and Fair Value Hedges (a)
|
- | 13 | - | (7 | ) | 6 | ||||||||||||||
DETM
Assignment (c)
|
- | - | - | 196 | 196 | |||||||||||||||
Total
Risk Management Liabilities
|
$ | 34,260 | $ | 511,194 | $ | 103 | $ | (441,749 | ) | $ | 103,808 |
(a)
|
Amounts
in “Other” column primarily represent counterparty netting of risk
management contracts and associated cash collateral under FASB Staff
Position FIN 39-1.
|
(b)
|
“Dedesignated
Risk Management Contracts” are contracts that were originally MTM but were
subsequently elected as normal under SFAS 133. At the time of
the normal election the MTM value was frozen and no longer fair
valued. This will be amortized into Utility Operations Revenues
over the remaining life of the contract.
|
(c)
|
See
“Natural Gas Contracts with DETM” section of Note 16 in the 2007 Annual
Report.
|
(d)
|
Amounts
in “Other” column primarily represent deposits-in-transit and accrued
interest receivables to/from financial institutions. Level 2
amounts primarily represent investments in money market
funds.
|
(e)
|
Amount
represents the fair valued portion of long-term debt designated as a fair
value hedge.
|
(f)
|
Amounts
in “Other” column primarily represent cash deposits with third
parties. Level 1 amounts primarily represent investments in money
market funds.
|
Net
Risk Management Assets (Liabilities)
|
APCo
|
CSPCo
|
I&M
|
OPCo
|
PSO
|
SWEPCo
|
||||||||||||||||||
(in
thousands)
|
||||||||||||||||||||||||
Balance
as of January 1, 2008
|
$ | (697 | ) | $ | (263 | ) | $ | (280 | ) | $ | (1,607 | ) | $ | (243 | ) | $ | (408 | ) | ||||||
Realized
(Gain) Loss Included in Earnings
(or Changes
in Net Assets) (a)
|
(657 | ) | (414 | ) | (391 | ) | (176 | ) | 29 | 63 | ||||||||||||||
Unrealized
Gain (Loss) Included in Earnings
(or Changes in Net Assets) Relating to
Assets Still Held at the Reporting Date (a)
|
- | 721 | - | 1,639 | - | 106 | ||||||||||||||||||
Realized
and Unrealized Gains (Losses)
Included in Other Comprehensive Income
|
- | - | - | - | - | - | ||||||||||||||||||
Purchases,
Issuances and Settlements
|
- | - | - | - | - | - | ||||||||||||||||||
Transfers
in and/or out of Level 3 (b)
|
(1,026 | ) | (596 | ) | (572 | ) | (693 | ) | - | - | ||||||||||||||
Changes
in Fair Value Allocated to Regulated Jurisdictions
(c)
|
1,438 | - | 724 | - | 193 | 204 | ||||||||||||||||||
Balance
as of March 31, 2008
|
$ | (942 | ) | $ | (552 | ) | $ | (519 | ) | $ | (837 | ) | $ | (21 | ) | $ | (35 | ) |
(a)
|
Included
in revenues on the Condensed Statement of Income for the three months
ended March 31, 2008.
|
(b)
|
“Transfers
in and/or out of Level 3” represent existing assets or liabilities that
were either previously categorized as a higher level for which the inputs
to the model became unobservable or assets and liabilities that were
previously classified as level 3 for which the lowest significant input
became observable during the period.
|
(c)
|
“Changes
in Fair Value Allocated to Regulated Jurisdictions” relates to the net
gains (losses) of those contracts that are not reflected on the Condensed
Statements of Income. These net gains (losses) are recorded as
regulatory assets/liabilities for those subsidiaries that operate in
regulated jurisdictions.
|
Retained
|
|||||||
Earnings
|
Tax
|
||||||
Company
|
Reduction
|
Amount
|
|||||
(in
thousands)
|
|||||||
APCo
|
$ | 2,181 | $ | 1,175 | |||
CSPCo
|
1,095 | 589 | |||||
I&M
|
1,398 | 753 | |||||
OPCo
|
1,864 | 1,004 | |||||
PSO
|
1,107 | 596 | |||||
SWEPCo
|
1,156 | 622 |
APCo
|
||||||||||||
Balance
Sheet
Line
Description
|
As
Reported for
the
December 2007
10-K
|
FIN
39-1
Reclassification
|
As
Reported for
the
March 2008
10-Q
|
|||||||||
Current
Assets:
|
(in
thousands)
|
|||||||||||
Risk
Management Assets
|
$ | 64,707 | $ | (1,752 | ) | $ | 62,955 | |||||
Prepayments
and Other
|
19,675 | (3,306 | ) | 16,369 | ||||||||
Long-term
Risk Management Assets
|
74,954 | (2,588 | ) | 72,366 | ||||||||
Current
Liabilities:
|
||||||||||||
Risk
Management Liabilities
|
54,955 | (3,247 | ) | 51,708 | ||||||||
Customer
Deposits
|
50,260 | (4,340 | ) | 45,920 | ||||||||
Long-term
Risk Management Liabilities
|
47,416 | (59 | ) | 47,357 |
CSPCo
|
||||||||||||
Balance
Sheet
Line
Description
|
As
Reported for
the
December 2007
10-K
|
FIN
39-1
Reclassification
|
As
Reported for
the
March 2008
10-Q
|
|||||||||
Current
Assets:
|
(in
thousands)
|
|||||||||||
Risk
Management Assets
|
$ | 34,564 | $ | (1,006 | ) | $ | 33,558 | |||||
Prepayments
and Other
|
11,877 | (1,917 | ) | 9,960 | ||||||||
Long-term
Risk Management Assets
|
43,352 | (1,500 | ) | 41,852 | ||||||||
Current
Liabilities:
|
||||||||||||
Risk
Management Liabilities
|
30,118 | (1,881 | ) | 28,237 | ||||||||
Customer
Deposits
|
45,602 | (2,507 | ) | 43,095 | ||||||||
Long-term
Risk Management Liabilities
|
27,454 | (35 | ) | 27,419 |
I&M
|
||||||||||||
Balance
Sheet
Line
Description
|
As
Reported for
the
December 2007
10-K
|
FIN
39-1
Reclassification
|
As
Reported for
the
March 2008
10-Q
|
|||||||||
Current
Assets:
|
(in
thousands)
|
|||||||||||
Risk
Management Assets
|
$ | 33,334 | $ | (969 | ) | $ | 32,365 | |||||
Prepayments
and Other
|
12,932 | (1,841 | ) | 11,091 | ||||||||
Long-term
Risk Management Assets
|
41,668 | (1,441 | ) | 40,227 | ||||||||
Current
Liabilities:
|
||||||||||||
Risk
Management Liabilities
|
29,078 | (1,807 | ) | 27,271 | ||||||||
Customer
Deposits
|
28,855 | (2,410 | ) | 26,445 | ||||||||
Long-term
Risk Management Liabilities
|
26,382 | (34 | ) | 26,348 |
OPCo
|
||||||||||||
Balance
Sheet
Line
Description
|
As
Reported for
the
December 2007
10-K
|
FIN
39-1
Reclassification
|
As
Reported for
the
March 2008
10-Q
|
|||||||||
Current
Assets:
|
(in
thousands)
|
|||||||||||
Risk
Management Assets
|
$ | 45,490 | $ | (1,254 | ) | $ | 44,236 | |||||
Prepayments
and Other
|
20,532 | (2,232 | ) | 18,300 | ||||||||
Long-term
Risk Management Assets
|
51,334 | (1,748 | ) | 49,586 | ||||||||
Current
Liabilities:
|
||||||||||||
Risk
Management Liabilities
|
42,740 | (2,192 | ) | 40,548 | ||||||||
Customer
Deposits
|
33,615 | (3,002 | ) | 30,613 | ||||||||
Long-term
Risk Management Liabilities
|
32,234 | (40 | ) | 32,194 |
PSO
|
||||||||||||
Balance
Sheet
Line
Description
|
As
Reported for
the
December 2007
10-K
|
FIN
39-1
Reclassification
|
As
Reported for
the
March 2008
10-Q
|
|||||||||
Current
Assets:
|
(in
thousands)
|
|||||||||||
Risk
Management Assets
|
$ | 33,338 | $ | (30 | ) | $ | 33,308 | |||||
Margin
Deposits
|
9,119 | (139 | ) | 8,980 | ||||||||
Long-term
Risk Management Assets
|
3,376 | (18 | ) | 3,358 | ||||||||
Current
Liabilities:
|
||||||||||||
Risk
Management Liabilities
|
27,151 | (33 | ) | 27,118 | ||||||||
Customer
Deposits
|
41,525 | (48 | ) | 41,477 | ||||||||
Long-term
Risk Management Liabilities
|
2,914 | (106 | ) | 2,808 |
SWEPCo
|
||||||||||||
Balance
Sheet
Line
Description
|
As
Reported for
the
December 2007
10-K
|
FIN
39-1
Reclassification
|
As
Reported for
the
March 2008
10-Q
|
|||||||||
Current
Assets:
|
(in
thousands)
|
|||||||||||
Risk
Management Assets
|
$ | 39,893 | $ | (43 | ) | $ | 39,850 | |||||
Margin
Deposits
|
10,814 | (164 | ) | 10,650 | ||||||||
Long-term
Risk Management Assets
|
4,095 | (22 | ) | 4,073 | ||||||||
Current
Liabilities:
|
||||||||||||
Risk
Management Liabilities
|
32,668 | (39 | ) | 32,629 | ||||||||
Customer
Deposits
|
37,537 | (64 | ) | 37,473 | ||||||||
Long-term
Risk Management Liabilities
|
3,460 | (126 | ) | 3,334 |
March
31, 2008
|
||||||
Cash
Collateral
|
Cash
Collateral
|
|||||
Received
|
Paid
|
|||||
Netted
Against
|
Netted
Against
|
|||||
Risk
Management
|
Risk
Management
|
|||||
Assets
|
Liabilities
|
|||||
(in
thousands)
|
||||||
APCo
|
$ | 8,173 | $ | 12,351 | ||
CSPCo
|
4,900 | 7,245 | ||||
I&M
|
4,701 | 6,803 | ||||
OPCo
|
5,798 | 10,459 | ||||
PSO
|
977 | 13,507 | ||||
SWEPCo
|
1,158 | 16,057 |
3.
|
RATE
MATTERS
|
Company
|
(in
millions)
|
|||
APCo
|
$
|
70.2
|
||
CSPCo
|
38.8
|
|||
I&M
|
41.3
|
|||
OPCo
|
53.3
|
2007
|
2006
|
|||||||
Company
|
(in
millions)
|
|||||||
APCo
|
$ | 1.7 | $ | 12.0 | ||||
CSPCo
|
0.9 | 6.7 | ||||||
I&M
|
1.0 | 7.0 | ||||||
OPCo
|
1.3 | 9.1 |
4.
|
COMMITMENTS,
GUARANTEES AND CONTINGENCIES
|
Maximum
Potential Loss
|
||||
Company
|
(in
millions)
|
|||
APCo
|
$ | 9 | ||
CSPCo
|
4 | |||
I&M
|
6 | |||
OPCo
|
9 | |||
PSO
|
5 | |||
SWEPCo
|
6 |
5.
|
ACQUISITION
|
6.
|
BENEFIT
PLANS
|
Other
Postretirement
|
||||||||||||
Pension
Plans
|
Benefit
Plans
|
|||||||||||
Three
Months Ended March 31,
|
Three
Months Ended March 31,
|
|||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||
(in
millions)
|
||||||||||||
Service
Cost
|
$ | 25 | $ | 24 | $ | 10 | $ | 10 | ||||
Interest
Cost
|
63 | 59 | 28 | 26 | ||||||||
Expected
Return on Plan Assets
|
(84 | ) | (85 | ) | (28 | ) | (26 | ) | ||||
Amortization
of Transition Obligation
|
- | - | 7 | 7 | ||||||||
Amortization
of Net Actuarial Loss
|
9 | 15 | 3 | 3 | ||||||||
Net
Periodic Benefit Cost
|
$ | 13 | $ | 13 | $ | 20 | $ | 20 |
Other
Postretirement
|
|||||||||||||
Pension
Plans
|
Benefit
Plans
|
||||||||||||
Three
Months Ended March 31,
|
Three
Months Ended March 31,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Company
|
(in
thousands)
|
||||||||||||
APCo
|
$ | 835 | $ | 842 | $ | 3,699 | $ | 3,560 | |||||
CSPCo
|
(349 | ) | (257 | ) | 1,498 | 1,491 | |||||||
I&M
|
1,821 | 1,900 | 2,423 | 2,530 | |||||||||
OPCo
|
319 | 245 | 2,816 | 2,802 | |||||||||
PSO
|
508 | 424 | 1,387 | 1,431 | |||||||||
SWEPCo
|
935 | 746 | 1,376 | 1,419 |
7.
|
BUSINESS
SEGMENTS
|
8.
|
INCOME
TAXES
|
Company
|
Type
of Debt
|
Principal
Amount
|
Interest
Rate
|
Due
Date
|
|||||
(in
thousands)
|
(%)
|
||||||||
Issuances:
|
|||||||||
APCo
|
Senior
Unsecured Notes
|
$
|
500,000
|
7.00
|
2038
|
Company
|
Type
of Debt
|
Principal
Amount
Paid
|
Interest
Rate
|
Due
Date
|
|||||
(in
thousands)
|
(%)
|
||||||||
Retirements
and
Principal Payments:
|
|||||||||
APCo
|
Other
|
$
|
3
|
13.718
|
2026
|
||||
CSPCo
|
Senior
Unsecured Notes
|
52,000
|
6.51
|
2008
|
|||||
I&M
|
Pollution
Control Bonds
|
45,000
|
Variable
|
2009
|
|||||
I&M
|
Pollution
Control Bonds
|
50,000
|
Variable
|
2025
|
|||||
OPCo
|
Notes
Payable
|
1,463
|
6.81
|
2008
|
|||||
OPCo
|
Notes
Payable
|
6,000
|
6.27
|
2009
|
|||||
SWEPCo
|
Notes
Payable
|
1,101
|
4.47
|
2011
|
|||||
SWEPCo
|
Notes
Payable
|
750
|
Variable
|
2008
|
As
of March 31,
|
||||
2008
|
||||
(in
millions)
|
||||
APCo
|
$
|
213
|
||
CSPCo
|
193
|
|||
I&M
|
167
|
|||
OPCo
|
468
|
|||
PSO
|
34
|
|||
SWEPCo
|
176
|
Maximum
Borrowings
from
Utility Money Pool
|
Maximum
Loans
to
Utility
Money
Pool
|
Average
Borrowings
from
Utility Money Pool
|
Average
Loans
to
Utility
Money Pool
|
Loans
(Borrowings) to/from Utility Money Pool as of March 31,
2008
|
Authorized
Short-Term
Borrowing
Limit
|
|||||||||||||||||||
Company
|
(in
thousands)
|
|||||||||||||||||||||||
APCo
|
$ | 307,226 | $ | 269,987 | $ | 261,154 | $ | 264,528 | $ | 261,823 | $ | 600,000 | ||||||||||||
CSPCo
|
195,038 | - | 139,127 | - | (163,999 | ) | 350,000 | |||||||||||||||||
I&M
|
239,125 | - | 102,772 | - | (185,938 | ) | 500,000 | |||||||||||||||||
OPCo
|
201,263 | - | 102,902 | - | (87,408 | ) | 600,000 | |||||||||||||||||
PSO
|
62,159 | 59,384 | 20,089 | 30,664 | (62,159 | ) | 300,000 | |||||||||||||||||
SWEPCo
|
89,210 | - | 48,654 | - | (89,210 | ) | 350,000 |
Three
Months Ended March 31,
|
||||||
2008
|
2007
|
|||||
Maximum
Interest Rate
|
5.37 | % | 5.43 | % | ||
Minimum
Interest Rate
|
3.39 | % | 5.30 | % |
Average
Interest Rate for Funds
Borrowed
from the Utility Money
Pool
for the
Three
Months Ended March 31,
|
Average
Interest Rate for Funds
Loaned
to the Utility Money
Pool
for the
Three
Months Ended March 31,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Company
|
|||||||||||||
APCo
|
4.21 | % | 5.34 | % | 3.46 | % | - | % | |||||
CSPCo
|
4.01 | % | 5.35 | % | - | % | 5.33 | % | |||||
I&M
|
3.99 | % | 5.34 | % | - | % | - | % | |||||
OPCo
|
4.29 | % | 5.34 | % | - | % | - | % | |||||
PSO
|
3.51 | % | 5.34 | % | 4.57 | % | - | % | |||||
SWEPCo
|
4.00 | % | 5.35 | % | - | % | 5.34 | % |
March
31, 2008
|
December
31, 2007
|
||||||||||||
Type
of Debt
|
Outstanding
Amount
|
Interest
Rate
|
Outstanding
Amount
|
Interest
Rate
|
|||||||||
Company
|
(in
thousands)
|
(in
thousands)
|
|||||||||||
OPCo
|
Commercial
Paper – JMG
|
$
|
-
|
-
|
%
|
$
|
701
|
5.35
|
%
|
||||
SWEPCo
|
Line
of Credit – Sabine Mining Company
|
-
|
-
|
%
|
285
|
5.25
|
%
|
Commercial
|
|||||||||||||||||||||
Total
|
Nominal
|
Operation
|
|||||||||||||||||||
Operating
|
Project
|
Projected
|
MW
|
Date
|
|||||||||||||||||
Company
|
Name
|
Location
|
Cost
(a)
|
CWIP
(b)
|
Fuel
Type
|
Plant
Type
|
Capacity
|
(Projected)
|
|||||||||||||
(in
millions)
|
(in
millions)
|
||||||||||||||||||||
PSO
|
Southwestern
|
(c)
|
Oklahoma
|
$ |
58
|
$ |
-
|
Gas
|
Simple-cycle
|
170
|
2008
|
||||||||||
PSO
|
Riverside
|
Oklahoma
|
59
|
57
|
Gas
|
Simple-cycle
|
170
|
2008
|
|||||||||||||
AEGCo
|
Dresden
|
(d)
|
Ohio
|
305
|
(d)
|
101
|
Gas
|
Combined-cycle
|
580
|
2010
|
|||||||||||
SWEPCo
|
Stall
|
Louisiana
|
378
|
76
|
Gas
|
Combined-cycle
|
500
|
2010
|
|||||||||||||
SWEPCo
|
Turk
|
(e)
|
Arkansas
|
1,522
|
(e)
|
313
|
Coal
|
Ultra-supercritical
|
|
600
|
(e)
|
2012
|
|||||||||
APCo
|
Mountaineer
|
West
Virginia
|
2,230
|
-
|
Coal
|
IGCC
|
629
|
2012
|
|||||||||||||
CSPCo/OPCo
|
Great
Bend
|
Ohio
|
2,700
|
(f)
|
-
|
Coal
|
IGCC
|
629
|
2017
|
(a)
|
Amount
excludes AFUDC.
|
(b)
|
Amount
includes AFUDC.
|
(c)
|
Southwestern
Units were placed in service on February 29, 2008.
|
(d)
|
In
September 2007, AEGCo purchased the partially completed Dresden plant from
Dresden Energy LLC, a subsidiary of Dominion Resources, Inc., for $85
million, which is included in the “Total Projected Cost” section
above.
|
(e)
|
SWEPCo
plans to own approximately 73%, or 440 MW, totaling $1,110 million in
capital investment. The increase in the cost estimate relates
to cost escalations due to the delay in receipt of permits and
approvals. See “Turk Plant” section below.
|
(f)
|
Cost
estimates, updated to reflect cost escalations due to revised commercial
operation date of 2017, are not yet filed with the PUCO. See
“Ohio IGCC Plant” section of Note
3.
|
·
|
Requirements
under the CAA to reduce emissions of SO2,
NOx,
particulate matter (PM) and mercury from fossil fuel-fired power plants;
and
|
·
|
Requirements
under the Clean Water Act (CWA) to reduce the impacts of water intake
structures on aquatic species at certain power
plants.
|
Estimated
Compliance Investments
|
||||
Company
|
(in
millions)
|
|||
APCo
|
$ | 21 | ||
CSPCo
|
19 | |||
I&M
|
118 | |||
OPCo
|
31 |
Retained
|
|||||||
Earnings
|
Tax
|
||||||
Company
|
Reduction
|
Amount
|
|||||
(in
thousands)
|
|||||||
APCo
|
$ | 2,181 | $ | 1,175 | |||
CSPCo
|
1,095 | 589 | |||||
I&M
|
1,398 | 753 | |||||
OPCo
|
1,864 | 1,004 | |||||
PSO
|
1,107 | 596 | |||||
SWEPCo
|
1,156 | 622 |
Company
|
(in
thousands)
|
|||
APCo
|
$
|
7,646
|
||
CSPCo
|
4,423
|
|||
I&M
|
4,251
|
|||
OPCo
|
5,234
|
|||
PSO
|
187
|
|||
SWEPCo
|
229
|
Period
|
Total
Number
of
Shares
Purchased
|
Average
Price
Paid
per Share
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans or
Programs
|
Maximum
Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased
Under the Plans or Programs
|
|||||||
01/01/08
– 01/31/08
|
-
|
$
|
-
|
-
|
$
|
-
|
|||||
02/01/08
– 02/29/08
|
-
|
-
|
-
|
-
|
|||||||
03/01/08
– 03/31/08
|
-
|
-
|
-
|
-
|