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
July
31, 2008
|
|||
American
Electric Power Company, Inc.
|
402,258,849
|
||
($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
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
4.
|
Submission
of Matters to a Vote of Security Holders
|
|
||||||
Item
5.
|
Other
Information
|
|
||||||
Item
6.
|
Exhibits:
|
|
||||||
Exhibit 3(a) (PSO, SWEPCo) | ||||||||
Exhibit 3(b) (CSPCo, OPCo) | ||||||||
Exhibit
12 (AEP, APCo, CSPCo, I&M, OPCo, PSO, SWEPCo)
|
||||||||
Exhibit
31(a) (AEP, APCo, CSPCo, I&M, OPCo, PSO, SWEPCo)
|
||||||||
Exhibit
31(b) (AEP, APCo, CSPCo, I&M, OPCo, PSO, SWEPCo)
|
||||||||
Exhibit
32(a) (AEP, APCo, CSPCo, I&M, OPCo, PSO, SWEPCo)
|
||||||||
Exhibit
32(b) (AEP, APCo, CSPCo, I&M, OPCo, PSO, SWEPCo)
|
||||||||
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.
|
|
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.
|
|
DETM
|
Duke
Energy Trading and Marketing L.L.C., a risk management
counterparty.
|
|
DOE
|
United
States Department of Energy.
|
|
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.”
|
|
EPS
|
Earnings
Per Share.
|
|
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.”
|
|
FSP
|
FASB
Staff Position.
|
|
FTR
|
Financial
Transmission Right.
|
|
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.
|
|
Interconnection
Agreement
|
Agreement,
dated July 6, 1951, as amended, by and among APCo, CSPCo, I&M, KPCo
and OPCo, defining the sharing of costs and benefits associated with their
respective generating plants.
|
|
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.
|
|
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
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 (including the
costs of projects that are canceled) 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 implementation of the recently-passed
utility law 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.
|
Operating
Company
|
Jurisdiction
|
Revised
Annual Rate Increase Request
|
Projected
Effective Date of Rate Increase
|
||||||
(in
millions)
|
|||||||||
APCo
|
Virginia
|
$
|
208
|
November
2008
|
(a)
|
||||
PSO
|
Oklahoma
|
117
|
(b)
|
February
2009
|
|||||
I&M
|
Indiana
|
80
|
June
2009
|
(a)
|
Subject
to refund.
|
(b)
|
Net
of estimated amounts that PSO expects to recover through a generation cost
recovery rider which will terminate upon implementation of the new base
rates.
|
·
|
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. Effective July 30, 2008, AEP MEMCO LLC's
name was changed to AEP River Operations,
LLC.
|
·
|
Wind
farms and marketing and risk management activities primarily in
ERCOT.
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
(in
millions)
|
||||||||||||||||
Utility
Operations
|
$ | 263 | $ | 238 | $ | 673 | $ | 491 | ||||||||
MEMCO
Operations
|
3 | 7 | 10 | 22 | ||||||||||||
Generation
and Marketing
|
26 | 15 | 27 | 14 | ||||||||||||
All
Other (a)
|
(12 | ) | (3 | ) | 143 | 1 | ||||||||||
Income
Before Discontinued Operations
and
Extraordinary Loss
|
$ | 280 | $ | 257 | $ | 853 | $ | 528 |
(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 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.
|
|
·
|
Revenue
sharing related to the Plaquemine Cogeneration
Facility.
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||
(in
millions)
|
||||||||||||
Revenues
|
$
|
3,313
|
$
|
2,954
|
$
|
6,607
|
$
|
5,987
|
||||
Fuel
and Purchased Power
|
1,374
|
1,109
|
2,587
|
2,228
|
||||||||
Gross
Margin
|
1,939
|
1,845
|
4,020
|
3,759
|
||||||||
Depreciation
and Amortization
|
365
|
365
|
720
|
748
|
||||||||
Other
Operating Expenses
|
1,026
|
957
|
1,967
|
1,948
|
||||||||
Operating
Income
|
548
|
523
|
1,333
|
1,063
|
||||||||
Other
Income, Net
|
47
|
27
|
89
|
45
|
||||||||
Interest
Charges and Preferred Stock Dividend Requirements
|
218
|
207
|
428
|
386
|
||||||||
Income
Tax Expense
|
114
|
105
|
321
|
231
|
||||||||
Income
Before Discontinued Operations and Extraordinary
Loss
|
$
|
263
|
$
|
238
|
$
|
673
|
$
|
491
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
||||||||||||
Energy/Delivery Summary
|
2008
|
2007
|
2008
|
2007
|
|||||||||
(in
millions of KWH)
|
|||||||||||||
Energy
|
|||||||||||||
Retail:
|
|||||||||||||
Residential
|
9,829
|
10,127
|
24,329
|
24,267
|
|||||||||
Commercial
|
9,909
|
10,227
|
19,456
|
19,586
|
|||||||||
Industrial
|
15,060
|
14,848
|
29,410
|
28,413
|
|||||||||
Miscellaneous
|
639
|
632
|
1,248
|
1,245
|
|||||||||
Total
Retail
|
35,437
|
35,834
|
74,443
|
73,511
|
|||||||||
Wholesale
|
10,932
|
9,376
|
22,597
|
18,154
|
|||||||||
Delivery
|
|||||||||||||
Texas
Wires – Energy delivered to customers served
by
AEP’s Texas Wires Companies
|
7,132
|
6,746
|
12,955
|
12,577
|
|||||||||
Total
KWHs
|
53,501
|
51,956
|
109,995
|
104,242
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||
(in
degree days)
|
||||||||||||
Weather
Summary
|
||||||||||||
Eastern Region
|
||||||||||||
Actual
– Heating (a)
|
136
|
222
|
1,960
|
2,039
|
||||||||
Normal
– Heating (b)
|
175
|
174
|
1,943
|
1,966
|
||||||||
Actual
– Cooling (c)
|
272
|
367
|
272
|
382
|
||||||||
Normal
– Cooling (b)
|
278
|
275
|
281
|
278
|
||||||||
Western Region (d)
|
||||||||||||
Actual
– Heating (a)
|
40
|
92
|
989
|
994
|
||||||||
Normal
– Heating (b)
|
35
|
33
|
966
|
991
|
||||||||
Actual
– Cooling (c)
|
675
|
622
|
700
|
678
|
||||||||
Normal
– Cooling (b)
|
652
|
656
|
672
|
674
|
(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.
|
Second
Quarter of 2007
|
$
|
238
|
|||||||||||
Changes
in Gross Margin:
|
|||||||||||||
Retail
Margins
|
47
|
||||||||||||
Off-system
Sales
|
40
|
||||||||||||
Transmission
Revenues
|
11
|
||||||||||||
Other
Revenues
|
(4
|
)
|
|||||||||||
Total
Change in Gross Margin
|
94
|
||||||||||||
Changes
in Operating Expenses and Other:
|
|||||||||||||
Other
Operation and Maintenance
|
(70
|
)
|
|||||||||||
Depreciation
and Amortization
|
-
|
||||||||||||
Taxes
Other Than Income Taxes
|
(1
|
)
|
|||||||||||
Carrying
Costs Income
|
10
|
||||||||||||
Interest
Income
|
6
|
||||||||||||
Other
Income, Net
|
6
|
||||||||||||
Interest
and Other Charges
|
(11
|
)
|
|||||||||||
Total
Change in Operating Expenses and Other
|
(60
|
)
|
|||||||||||
Income
Tax Expense
|
(9
|
)
|
|||||||||||
Second
Quarter of 2008
|
$
|
263
|
·
|
Retail
Margins increased $47 million primarily due to the
following:
|
|
·
|
A
$39 million increase related to net rate increases implemented in our Ohio
jurisdictions, a $17 million increase related to recovery of E&R costs
in Virginia and the construction financing costs rider in West Virginia, a
$3 million increase in base rates in Texas and a $6 million increase in
base rates in Oklahoma.
|
|
·
|
A
$38 million net increase due to adjustments recorded in the prior year
related to the 2007 Virginia base rate case which included a second
quarter 2007 provision for revenue refund.
|
|
·
|
A
$25 million increase due to a second quarter 2007 provision related to a
SWEPCo Texas fuel reconciliation proceeding.
|
|
·
|
A
$12 million increase related to increased usage by Ormet, an industrial
customer in Ohio. See “Ormet” section of Note
3.
|
|
·
|
An
$11 million increase primarily related to higher revenues under formula
rate plans at I&M.
|
|
These
increases were partially offset by:
|
||
·
|
A
$90 million decrease related to increased fuel, consumable and PJM costs
in Ohio which included a $29 million expense resulting from a coal
contract amendment.
|
|
·
|
A
$20 million decrease in usage related to weather primarily from a 26%
decrease in cooling degree days and a 39% decrease in heating degree days
in our eastern region.
|
|
·
|
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.
|
|
·
|
Transmission
Revenues increased $11 million primarily due to increased usage in the SPP
and ERCOT regions and increased rates in the SPP
region.
|
·
|
Other
Operation and Maintenance expenses increased $70 million primarily due to
increases in generation expenses for non-outage maintenance at Cook plant
and outage expenses at other plants, transmission reliability expenses,
recoverable PJM and customer account expenses in Ohio and administrative
and general expenses primarily related to employee
benefits.
|
·
|
Depreciation
and Amortization expense was flat primarily due to lower
commission-approved depreciation rates in Indiana, Michigan, Oklahoma and
Texas and lower Ohio regulatory asset amortization, offset by higher
depreciable property balances and prior year adjustments related to the
2007 Virginia base rate case.
|
·
|
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 $11 million primarily due to additional debt
issued and higher interest rates on variable rate debt.
|
·
|
Income
Tax Expense increased $9 million due to an increase in pretax
income.
|
Six
Months Ended June 30, 2007
|
$
|
491
|
|||||||||||
Changes
in Gross Margin:
|
|||||||||||||
Retail
Margins
|
162
|
||||||||||||
Off-system
Sales
|
80
|
||||||||||||
Transmission
Revenues
|
19
|
||||||||||||
Total
Change in Gross Margin
|
261
|
||||||||||||
Changes
in Operating Expenses and Other:
|
|||||||||||||
Other
Operation and Maintenance
|
11
|
||||||||||||
Gain
on Dispositions of Assets, Net
|
(19
|
)
|
|||||||||||
Depreciation
and Amortization
|
28
|
||||||||||||
Taxes
Other Than Income Taxes
|
(11
|
)
|
|||||||||||
Carrying
Costs Income
|
19
|
||||||||||||
Interest
Income
|
17
|
||||||||||||
Other
Income, Net
|
8
|
||||||||||||
Interest
and Other Charges
|
(42
|
)
|
|||||||||||
Total
Change in Operating Expenses and Other
|
11
|
||||||||||||
Income
Tax Expense
|
(90
|
)
|
|||||||||||
Six
Months Ended June 30, 2008
|
$
|
673
|
·
|
Retail
Margins increased $162 million primarily due to the
following:
|
|
·
|
An
$83 million increase related to net rate increases implemented in our Ohio
jurisdictions, a $31 million increase related to recovery of E&R costs
in Virginia and the construction financing costs rider in West Virginia, a
$12 million increase in base rates in Texas and a $14 million increase in
base rates in Oklahoma.
|
|
·
|
A
$33 million increase related to increased usage by Ormet, an industrial
customer in Ohio. See “Ormet” section of Note
3.
|
|
·
|
A
$29 million increase related to coal contract amendments in
2008.
|
|
·
|
A
$28 million increase related to increased residential and commercial usage
and customer growth.
|
|
·
|
A
$25 million increase due to a second quarter 2007 provision related to a
SWEPCo Texas fuel reconciliation proceeding.
|
|
·
|
A
$21 million increase related to increased sales to municipal, cooperative
and other customers primarily a result of new power supply contracts and
higher revenues under formula rate plans at I&M.
|
|
These
increases were partially offset by:
|
||
·
|
A
$79 million decrease related to increased fuel, consumable and PJM costs
in Ohio.
|
|
·
|
A
$23 million decrease in usage related to weather primarily from a 29%
decrease in cooling degree days in our eastern region.
|
|
·
|
Margins
from Off-system Sales increased $80 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.
|
|
·
|
Transmission
Revenues increased $19 million primarily due to increased usage in the SPP
and ERCOT regions and increased rates in the SPP
region.
|
·
|
Other
Operation and Maintenance expenses decreased $11 million primarily due to
deferral of storm restoration costs, net of amortization, of $63 million
in Oklahoma as a result of a rate settlement to recover 2007 storm
restoration costs partially offset by an increase in generation expenses
at Cook plant, the write-off of unrecoverable pre-construction costs for
PSO’s canceled Red Rock Generating Facility, recoverable PJM and customer
account expenses in Ohio and increases in administrative and general
expenses primarily related to employee benefits.
|
·
|
Gain
on Disposition of Assets, Net decreased $19 million primarily 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, Oklahoma and
Texas and lower Ohio regulatory asset amortization, partially offset by
higher depreciable property balances and prior year adjustments related to
the Virginia base rate case.
|
·
|
Taxes
Other Than Income Taxes increased $11 million primarily due to favorable
adjustments to property tax returns recorded in the prior
year.
|
·
|
Carrying
Costs Income increased $19 million primarily due to increased carrying
cost income on cost deferrals in Virginia and Oklahoma.
|
·
|
Interest
Income increased $17 million primarily due to the favorable effect of
claims for refund filed with the IRS.
|
·
|
Interest
and Other Charges increased $42 million primarily due to additional debt
issued and higher interest rates on variable rate debt.
|
·
|
Income
Tax Expense increased $90 million due to an increase in pretax
income.
|
June
30, 2008
|
December
31, 2007
|
||||||||||
($
in millions)
|
|||||||||||
Long-term
Debt, including amounts due within one year
|
$
|
15,753
|
58.0
|
%
|
$
|
14,994
|
58.1
|
%
|
|||
Short-term
Debt
|
705
|
2.6
|
660
|
2.6
|
|||||||
Total
Debt
|
16,458
|
60.6
|
15,654
|
60.7
|
|||||||
Common
Equity
|
10,631
|
39.2
|
10,079
|
39.1
|
|||||||
Preferred
Stock
|
61
|
0.2
|
61
|
0.2
|
|||||||
Total
Debt and Equity Capitalization
|
$
|
27,150
|
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
|
|||||
Revolving
Credit Facility
|
650
|
April
2011
|
|||||
Revolving
Credit Facility
|
350
|
April
2009
|
|||||
Total
|
4,000
|
||||||
Cash
and Cash Equivalents
|
218
|
||||||
Total
Liquidity Sources
|
4,218
|
||||||
Less:
AEP Commercial Paper Outstanding
|
698
|
||||||
Letters of Credit Drawn
|
429
|
||||||
Net
Available Liquidity
|
$
|
3,091
|
Moody’s
|
S&P
|
Fitch
|
||||||||||||||||||||||
AEP
Short Term Debt
|
P-2
|
A-2
|
F-2
|
|||||||||||||||||||||
AEP
Senior Unsecured Debt
|
Baa2
|
BBB
|
BBB
|
Six
Months Ended
|
||||||||
June
30,
|
||||||||
2008
|
2007
|
|||||||
(in
millions)
|
||||||||
Cash
and Cash Equivalents at Beginning of Period
|
$ | 178 | $ | 301 | ||||
Net
Cash Flows from Operating Activities
|
1,197 | 969 | ||||||
Net
Cash Flows Used for Investing Activities
|
(1,645 | ) | (2,127 | ) | ||||
Net
Cash Flows from Financing Activities
|
488 | 1,029 | ||||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
40 | (129 | ) | |||||
Cash
and Cash Equivalents at End of Period
|
$ | 218 | $ | 172 |
Six
Months Ended
|
|||||||
June
30,
|
|||||||
2008
|
2007
|
||||||
(in
millions)
|
|||||||
Net
Income
|
$
|
854
|
$
|
451
|
|||
Less Discontinued
Operations, Net of Tax
|
(1
|
)
|
(2
|
)
|
|||
Income
Before Discontinued Operations
|
853
|
449
|
|||||
Depreciation
and Amortization
|
736
|
763
|
|||||
Other
|
(392
|
)
|
(243
|
)
|
|||
Net
Cash Flows from Operating Activities
|
$
|
1,197
|
$
|
969
|
Six
Months Ended
|
||||||||||||||||||||||||||||
June
30,
|
||||||||||||||||||||||||||||
2008
|
2007
|
|||||||||||||||||||||||||||
(in
millions)
|
||||||||||||||||||||||||||||
Construction
Expenditures
|
$
|
(1,608
|
)
|
$
|
(1,823
|
)
|
||||||||||||||||||||||
Acquisition
of Darby and Lawrenceburg Plants
|
-
|
(427
|
)
|
|||||||||||||||||||||||||
Acquisition
of Other Assets
|
(81
|
)
|
-
|
|||||||||||||||||||||||||
Proceeds
from Sales of Assets
|
69
|
74
|
||||||||||||||||||||||||||
Other
|
(25
|
)
|
49
|
|||||||||||||||||||||||||
Net
Cash Flows Used for Investing Activities
|
$
|
(1,645
|
)
|
$
|
(2,127
|
)
|
Six
Months Ended
|
||||||||||||||||||||||||||||
June
30,
|
||||||||||||||||||||||||||||
2008
|
2007
|
|||||||||||||||||||||||||||
(in
millions)
|
||||||||||||||||||||||||||||
Issuance
of Common Stock
|
$
|
72
|
$
|
90
|
||||||||||||||||||||||||
Issuance/Retirement
of Debt, Net
|
777
|
1,294
|
||||||||||||||||||||||||||
Dividends
Paid on Common Stock
|
(330
|
)
|
(311
|
)
|
||||||||||||||||||||||||
Other
|
(31
|
)
|
(44
|
)
|
||||||||||||||||||||||||
Net
Cash Flows from Financing Activities
|
$
|
488
|
$
|
1,029
|
June
30,
2008
|
December
31,
2007
|
|||||
(in
millions)
|
||||||
AEP
Credit Accounts Receivable Purchase Commitments
|
$
|
564
|
$
|
507
|
||
Rockport
Plant Unit 2 Future Minimum Lease Payments
|
2,142
|
2,216
|
||||
Railcars
Maximum Potential Loss From Lease Agreement
|
26
|
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
|
$
|
56
|
$
|
-
|
Gas
|
Simple-cycle
|
150
|
2008
|
||||||||||
PSO
|
Riverside
|
(d)
|
Oklahoma
|
58
|
-
|
Gas
|
Simple-cycle
|
150
|
2008
|
||||||||||||
AEGCo
|
Dresden
|
(e)
|
Ohio
|
309
|
(e)
|
119
|
Gas
|
Combined-cycle
|
580
|
2010
|
|||||||||||
SWEPCo
|
Stall
|
Louisiana
|
378
|
106
|
Gas
|
Combined-cycle
|
500
|
2010
|
|||||||||||||
SWEPCo
|
Turk
|
(f)
|
Arkansas
|
1,522
|
(f)
|
407
|
Coal
|
Ultra-supercritical
|
600
|
(f)
|
2012
|
||||||||||
APCo
|
Mountaineer
|
(g)
|
West
Virginia
|
2,230
|
(g)
|
-
|
Coal
|
IGCC
|
629
|
2012(g)
|
|||||||||||
CSPCo/OPCo
|
Great
Bend
|
(g)
|
Ohio
|
2,700
|
(g)
|
-
|
Coal
|
IGCC
|
629
|
2017(g)
|
(a)
|
Amount
excludes AFUDC.
|
(b)
|
Amount
includes AFUDC. Turk’s CWIP includes joint owners’
share.
|
(c)
|
Southwestern
Units were placed in service on February 29, 2008.
|
(d)
|
The
final Riverside Unit was placed in service on June 15,
2008.
|
(e)
|
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.
|
(f)
|
SWEPCo
plans to own approximately 73%, or 440 MW, totaling $1,110 million in
capital investment. The increase in the cost estimate disclosed
in the 2007 Annual Report relates to cost escalations due to the delay in
receipt of permits and approvals. See “Turk Plant” section
below.
|
(g)
|
Subject
to revision; construction of IGCC plants deferred pending regulatory
approval. See “IGCC Plants” section
below.
|
·
|
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
|
$
|
653
|
$
|
201
|
$
|
121
|
$
|
975
|
$
|
34
|
$
|
(118
|
)
|
$
|
891
|
||||||
Noncurrent
Assets
|
309
|
144
|
86
|
539
|
14
|
(64
|
)
|
489
|
|||||||||||||
Total
Assets
|
962
|
345
|
207
|
1,514
|
48
|
(182
|
)
|
1,380
|
|||||||||||||
Current
Liabilities
|
(660
|
)
|
(203
|
)
|
(124
|
)
|
(987
|
)
|
(101
|
)
|
97
|
(991
|
)
|
||||||||
Noncurrent
Liabilities
|
(202
|
)
|
(75
|
)
|
(90
|
)
|
(367
|
)
|
(5
|
)
|
24
|
(348
|
)
|
||||||||
Total
Liabilities
|
(862
|
)
|
(278
|
)
|
(214
|
)
|
(1,354
|
)
|
(106
|
)
|
121
|
(1,339
|
)
|
||||||||
Total MTM Derivative
Contract
Net Assets
(Liabilities)
|
$
|
100
|
$
|
67
|
$
|
(7
|
)
|
$
|
160
|
$
|
(58
|
)
|
$
|
(61
|
)
|
$
|
41
|
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
|
(36
|
)
|
4
|
-
|
(32
|
)
|
|||||||
Fair
Value of New Contracts at Inception When Entered
During
the Period (a)
|
2
|
16
|
-
|
18
|
|||||||||
Changes
in Fair Value Due to Valuation Methodology
Changes
on Forward Contracts (b)
|
6
|
3
|
1
|
10
|
|||||||||
Changes
in Fair Value Due to Market Fluctuations During
the
Period (c)
|
6
|
1
|
-
|
7
|
|||||||||
Changes
in Fair Value Allocated to Regulated Jurisdictions
(d)
|
(34
|
)
|
-
|
-
|
(34
|
)
|
|||||||
Total
MTM Risk Management Contract Net Assets
(Liabilities) at June 30, 2008
|
$
|
100
|
$
|
67
|
$
|
(7
|
)
|
|
160
|
||||
Net
Cash Flow and Fair Value Hedge Contracts
|
(58
|
)
|
|||||||||||
Collateral
Deposits
|
(61
|
)
|
|||||||||||
Ending
Net Risk Management Assets at June 30, 2008
|
$
|
41
|
(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 | ) | $ | 1 | $ | - | $ | - | $ | - | $ | - | $ | (5 | ) | ||||||||||||
Level
2 (b)
|
8 | 47 | 40 | 16 | 6 | - | 117 | |||||||||||||||||||||
Level
3 (c)
|
(29 | ) | (5 | ) | (12 | ) | (8 | ) | (4 | ) | - | (58 | ) | |||||||||||||||
Total
|
(27 | ) | 43 | 28 | 8 | 2 | - | 54 | ||||||||||||||||||||
Generation
and Marketing:
|
||||||||||||||||||||||||||||
Level
1 (a)
|
(36 | ) | 13 | (1 | ) | (1 | ) | - | - | (25 | ) | |||||||||||||||||
Level
2 (b)
|
31 | (8 | ) | 6 | 5 | 5 | 3 | 42 | ||||||||||||||||||||
Level
3 (c)
|
(2 | ) | - | 8 | 9 | 9 | 26 | 50 | ||||||||||||||||||||
Total
|
(7 | ) | 5 | 13 | 13 | 14 | 29 | 67 | ||||||||||||||||||||
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)
|
(42 | ) | 14 | (1 | ) | (1 | ) | - | - | (30 | ) | |||||||||||||||||
Level
2 (b)
|
38 | 35 | 42 | 23 | 11 | 3 | 152 | |||||||||||||||||||||
Level
3 (c) (d)
|
(31 | ) | (5 | ) | (4 | ) | 1 | 5 | 26 | (8 | ) | |||||||||||||||||
Total
|
(35 | ) | 44 | 37 | 23 | 16 | 29 | 114 | ||||||||||||||||||||
Dedesignated
Risk Management
Contracts (e)
|
7 | 14 | 14 | 6 | 5 | - | 46 | |||||||||||||||||||||
Total
MTM Risk Management
Contract Net Assets (Liabilities)
|
$ | (28 | ) | $ | 58 | $ | 51 | $ | 29 | $ | 21 | $ | 29 | $ | 160 |
(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 $29 million in individual periods beyond
2012. $13 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 $2
million is in 2017.
|
Commodity
|
Transaction
Class
|
Market/Region
|
Tenor
|
|||
(in
Months)
|
||||||
Natural
Gas
|
Futures
|
NYMEX
/ Henry Hub
|
60
|
|||
Physical
Forwards
|
Gulf
Coast, Texas
|
30
|
||||
Swaps
|
Gas
East, Mid-Continent, Gulf Coast, Texas
|
30
|
||||
Exchange
Option Volatility
|
NYMEX
/ Henry Hub
|
12
|
||||
Power
|
Futures
|
Power
East – PJM
|
36
|
|||
Physical
Forwards
|
Power
East – Cinergy
|
54
|
||||
Physical
Forwards
|
Power
East – PJM West
|
54
|
||||
Physical
Forwards
|
Power
East – AEP Dayton (PJM)
|
54
|
||||
Physical
Forwards
|
Power
East – ERCOT
|
42
|
||||
Physical
Forwards
|
Power
East – Entergy
|
30
|
||||
Physical
Forwards
|
Power
West – PV, NP15, SP15, MidC, Mead
|
42
|
||||
Peak
Power Volatility (Options)
|
Cinergy,
PJM
|
12
|
||||
Emissions
|
Credits
|
SO2,
NOx
|
42
|
|||
Coal
|
Physical
Forwards
|
PRB,
NYMEX, CSX
|
42
|
Power
|
Interest
Rate
and
Foreign
Currency
|
Total
|
||||||||||
Beginning
Balance in AOCI, December 31, 2007
|
$ | (1 | ) | $ | (25 | ) | $ | (26 | ) | |||
Changes
in Fair Value
|
(32 | ) | (4 | ) | (36 | ) | ||||||
Reclassifications
from AOCI for Cash Flow Hedges
Settled
|
1 | 1 | 2 | |||||||||
Ending
Balance in AOCI, June 30, 2008
|
$ | (32 | ) | $ | (28 | ) | $ | (60 | ) | |||
After
Tax Portion Expected to be Reclassified to
Earnings During Next 12 Months
|
$ | (38 | ) | $ | (6 | ) | $ | (44 | ) |
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
|
$ | 873 | $ | 184 | $ | 689 | 2 | $ | 181 | |||||||||||
Split
Rating
|
36 | 7 | 29 | 4 | 27 | |||||||||||||||
Noninvestment
Grade
|
185 | 49 | 136 | 1 | 112 | |||||||||||||||
No
External Ratings:
|
||||||||||||||||||||
Internal
Investment Grade
|
89 | - | 89 | 2 | 63 | |||||||||||||||
Internal
Noninvestment Grade
|
68 | 1 | 67 | 2 | 61 | |||||||||||||||
Total
as of June 30, 2008
|
$ | 1,251 | $ | 241 | $ | 1,010 | 11 | $ | 444 | |||||||||||
Total
as of December 31, 2007
|
$ | 673 | $ | 42 | $ | 631 | 6 | $ | 74 |
Remainder
|
|||||
2008
|
2009
|
2010
|
|||
Estimated
Plant Output Hedged
|
90%
|
89%
|
91%
|
Six
Months Ended
June
30, 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
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
REVENUES
|
||||||||||||||||
Utility
Operations
|
$ | 3,200 | $ | 2,818 | $ | 6,210 | $ | 5,704 | ||||||||
Other
|
346 | 328 | 803 | 611 | ||||||||||||
TOTAL
|
3,546 | 3,146 | 7,013 | 6,315 | ||||||||||||
EXPENSES
|
||||||||||||||||
Fuel
and Other Consumables Used for Electric Generation
|
1,053 | 868 | 2,033 | 1,754 | ||||||||||||
Purchased
Energy for Resale
|
366 | 291 | 629 | 537 | ||||||||||||
Other
Operation and Maintenance
|
982 | 881 | 1,860 | 1,819 | ||||||||||||
Gain
on Disposition of Assets, Net
|
(5 | ) | (3 | ) | (8 | ) | (26 | ) | ||||||||
Asset
Impairments and Other Related Items
|
- | - | (255 | ) | - | |||||||||||
Depreciation
and Amortization
|
373 | 372 | 736 | 763 | ||||||||||||
Taxes
Other Than Income Taxes
|
191 | 188 | 389 | 374 | ||||||||||||
TOTAL
|
2,960 | 2,597 | 5,384 | 5,221 | ||||||||||||
OPERATING
INCOME
|
586 | 549 | 1,629 | 1,094 | ||||||||||||
Interest
and Investment Income
|
15 | 8 | 31 | 31 | ||||||||||||
Carrying
Costs Income
|
26 | 16 | 43 | 24 | ||||||||||||
Allowance
for Equity Funds Used During Construction
|
11 | 6 | 21 | 14 | ||||||||||||
INTEREST
AND OTHER CHARGES
|
||||||||||||||||
Interest
Expense
|
234 | 213 | 454 | 399 | ||||||||||||
Preferred
Stock Dividend Requirements of Subsidiaries
|
- | - | 1 | 1 | ||||||||||||
TOTAL
|
234 | 213 | 455 | 400 | ||||||||||||
INCOME
BEFORE INCOME TAX EXPENSE, MINORITY
INTEREST
EXPENSE AND EQUITY EARNINGS (LOSS)
|
404 | 366 | 1,269 | 763 | ||||||||||||
Income
Tax Expense
|
123 | 108 | 416 | 238 | ||||||||||||
Minority
Interest Expense
|
1 | 1 | 2 | 2 | ||||||||||||
Equity
Earnings of Unconsolidated Subsidiaries
|
- | - | 2 | 5 | ||||||||||||
INCOME
BEFORE DISCONTINUED OPERATIONS AND EXTRAORDINARY
LOSS
|
280 | 257 | 853 | 528 | ||||||||||||
DISCONTINUED
OPERATIONS, NET OF TAX
|
1 | 2 | 1 | 2 | ||||||||||||
INCOME
BEFORE EXTRAORDINARY LOSS
|
281 | 259 | 854 | 530 | ||||||||||||
EXTRAORDINARY
LOSS, NET OF TAX
|
- | (79 | ) | - | (79 | ) | ||||||||||
NET
INCOME
|
$ | 281 | $ | 180 | $ | 854 | $ | 451 | ||||||||
WEIGHTED
AVERAGE NUMBER OF BASIC SHARES OUTSTANDING
|
401,513,958 | 398,679,242 | 401,155,975 | 398,000,712 | ||||||||||||
BASIC
EARNINGS PER SHARE
|
||||||||||||||||
Income
Before Discontinued Operations and Extraordinary Loss
|
$ | 0.70 | $ | 0.64 | $ | 2.13 | $ | 1.33 | ||||||||
Discontinued
Operations, Net of Tax
|
- | 0.01 | - | - | ||||||||||||
Income
Before Extraordinary Loss
|
0.70 | 0.65 | 2.13 | 1.33 | ||||||||||||
Extraordinary
Loss, Net of Tax
|
- | (0.20 | ) | - | (0.20 | ) | ||||||||||
TOTAL
BASIC EARNINGS PER SHARE
|
$ | 0.70 | $ | 0.45 | $ | 2.13 | $ | 1.13 | ||||||||
WEIGHTED
AVERAGE NUMBER OF DILUTED SHARES
OUTSTANDING
|
402,785,942 | 399,868,900 | 402,429,019 | 399,214,277 | ||||||||||||
DILUTED
EARNINGS PER SHARE
|
||||||||||||||||
Income
Before Discontinued Operations and Extraordinary Loss
|
$ | 0.70 | $ | 0.64 | $ | 2.12 | $ | 1.32 | ||||||||
Discontinued
Operations, Net of Tax
|
- | 0.01 | - | 0.01 | ||||||||||||
Income
Before Extraordinary Loss
|
0.70 | 0.65 | 2.12 | 1.33 | ||||||||||||
Extraordinary
Loss, Net of Tax
|
- | (0.20 | ) | - | (0.20 | ) | ||||||||||
TOTAL
DILUTED EARNINGS PER SHARE
|
$ | 0.70 | $ | 0.45 | $ | 2.12 | $ | 1.13 | ||||||||
CASH
DIVIDENDS PAID PER SHARE
|
$ | 0.41 | $ | 0.39 | $ | 0.82 | $ | 0.78 |
2008
|
2007
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
and Cash Equivalents
|
$ | 218 | $ | 178 | ||||
Other
Temporary Investments
|
243 | 365 | ||||||
Accounts
Receivable:
|
||||||||
Customers
|
795 | 730 | ||||||
Accrued Unbilled Revenues
|
400 | 379 | ||||||
Miscellaneous
|
85 | 60 | ||||||
Allowance for Uncollectible Accounts
|
(45 | ) | (52 | ) | ||||
Total Accounts Receivable
|
1,235 | 1,117 | ||||||
Fuel,
Materials and Supplies
|
1,049 | 967 | ||||||
Risk
Management Assets
|
891 | 271 | ||||||
Margin
Deposits
|
63 | 47 | ||||||
Regulatory
Asset for Under-Recovered Fuel Costs
|
202 | 11 | ||||||
Prepayments
and Other
|
105 | 70 | ||||||
TOTAL
|
4,006 | 3,026 | ||||||
PROPERTY,
PLANT AND EQUIPMENT
|
||||||||
Electric:
|
||||||||
Production
|
20,675 | 20,233 | ||||||
Transmission
|
7,651 | 7,392 | ||||||
Distribution
|
12,389 | 12,056 | ||||||
Other
(including coal mining and nuclear fuel)
|
3,479 | 3,445 | ||||||
Construction
Work in Progress
|
3,257 | 3,019 | ||||||
Total
|
47,451 | 46,145 | ||||||
Accumulated
Depreciation and Amortization
|
16,447 | 16,275 | ||||||
TOTAL
- NET
|
31,004 | 29,870 | ||||||
OTHER
NONCURRENT ASSETS
|
||||||||
Regulatory
Assets
|
2,234 | 2,199 | ||||||
Securitized
Transition Assets
|
2,121 | 2,108 | ||||||
Spent
Nuclear Fuel and Decommissioning Trusts
|
1,362 | 1,347 | ||||||
Goodwill
|
76 | 76 | ||||||
Long-term
Risk Management Assets
|
489 | 319 | ||||||
Employee
Benefits and Pension Assets
|
481 | 486 | ||||||
Deferred
Charges and Other
|
923 | 888 | ||||||
TOTAL
|
7,686 | 7,423 | ||||||
TOTAL
ASSETS
|
$ | 42,696 | $ | 40,319 |
2008
|
2007
|
|||||||||||||||
CURRENT
LIABILITIES
|
(in
millions)
|
|||||||||||||||
Accounts
Payable
|
$ | 1,414 | $ | 1,324 | ||||||||||||
Short-term
Debt
|
705 | 660 | ||||||||||||||
Long-term
Debt Due Within One Year
|
569 | 792 | ||||||||||||||
Risk
Management Liabilities
|
991 | 240 | ||||||||||||||
Customer
Deposits
|
319 | 301 | ||||||||||||||
Accrued
Taxes
|
555 | 601 | ||||||||||||||
Accrued
Interest
|
256 | 235 | ||||||||||||||
Other
|
817 | 1,008 | ||||||||||||||
TOTAL
|
5,626 | 5,161 | ||||||||||||||
NONCURRENT
LIABILITIES
|
||||||||||||||||
Long-term
Debt
|
15,184 | 14,202 | ||||||||||||||
Long-term
Risk Management Liabilities
|
348 | 188 | ||||||||||||||
Deferred
Income Taxes
|
5,021 | 4,730 | ||||||||||||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
2,895 | 2,952 | ||||||||||||||
Asset
Retirement Obligations
|
1,081 | 1,075 | ||||||||||||||
Employee
Benefits and Pension Obligations
|
677 | 712 | ||||||||||||||
Deferred
Gain on Sale and Leaseback – Rockport Plant Unit 2
|
134 | 139 | ||||||||||||||
Deferred
Credits and Other
|
1,038 | 1,020 | ||||||||||||||
TOTAL
|
26,378 | 25,018 | ||||||||||||||
TOTAL
LIABILITIES
|
32,004 | 30,179 | ||||||||||||||
Cumulative
Preferred Stock Not Subject to Mandatory Redemption
|
61 | 61 | ||||||||||||||
Commitments
and Contingencies (Note 4)
|
||||||||||||||||
COMMON
SHAREHOLDERS’ EQUITY
|
||||||||||||||||
Common
Stock – $6.50 Par Value Per Share:
|
||||||||||||||||
2008
|
2007
|
|||||||||||||||
Shares
Authorized
|
600,000,000 | 600,000,000 | ||||||||||||||
Shares
Issued
|
423,634,828 | 421,926,696 | ||||||||||||||
(21,499,992
shares were held in treasury at June 30, 2008 and December 31, 2007,
respectively)
|
2,754 | 2,743 | ||||||||||||||
Paid-in
Capital
|
4,415 | 4,352 | ||||||||||||||
Retained
Earnings
|
3,651 | 3,138 | ||||||||||||||
Accumulated
Other Comprehensive Income (Loss)
|
(189 | ) | (154 | ) | ||||||||||||
TOTAL
|
10,631 | 10,079 | ||||||||||||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$ | 42,696 | $ | 40,319 |
2008
|
2007
|
|||||||
OPERATING
ACTIVITIES
|
||||||||
Net
Income
|
$ | 854 | $ | 451 | ||||
Less: Discontinued
Operations, Net of Tax
|
(1 | ) | (2 | ) | ||||
Income
Before Discontinued Operations
|
853 | 449 | ||||||
Adjustments
to Reconcile Net Income to Net Cash Flow from Operating
Activities:
|
||||||||
Depreciation
and Amortization
|
736 | 763 | ||||||
Deferred
Income Taxes
|
316 | (24 | ) | |||||
Deferred
Investment Tax Credits
|
(10 | ) | (13 | ) | ||||
Extraordinary
Loss, Net of Tax
|
- | 79 | ||||||
Regulatory
Provision
|
- | 105 | ||||||
Carrying
Costs Income
|
(43 | ) | (24 | ) | ||||
Allowance
for Equity Funds Used During Construction
|
(21 | ) | (14 | ) | ||||
Mark-to-Market
of Risk Management Contracts
|
66 | 22 | ||||||
Amortization
of Nuclear Fuel
|
45 | 33 | ||||||
Deferred
Property Taxes
|
36 | 24 | ||||||
Fuel
Over/Under-Recovery, Net
|
(245 | ) | (101 | ) | ||||
Gain
on Sales of Assets and Equity Investments, Net
|
(8 | ) | (26 | ) | ||||
Change
in Other Noncurrent Assets
|
(195 | ) | (39 | ) | ||||
Change
in Other Noncurrent Liabilities
|
(80 | ) | 23 | |||||
Changes
in Certain Components of Working Capital:
|
||||||||
Accounts Receivable, Net
|
(123 | ) | (81 | ) | ||||
Fuel, Materials and Supplies
|
(82 | ) | (90 | ) | ||||
Margin Deposits
|
(16 | ) | 32 | |||||
Accounts Payable
|
188 | (58 | ) | |||||
Customer Deposits
|
18 | 24 | ||||||
Accrued Taxes, Net
|
(61 | ) | 49 | |||||
Accrued Interest
|
16 | 67 | ||||||
Other Current Assets
|
(13 | ) | (21 | ) | ||||
Other Current Liabilities
|
(180 | ) | (210 | ) | ||||
Net
Cash Flows From Operating Activities
|
1,197 | 969 | ||||||
INVESTING
ACTIVITIES
|
||||||||
Construction
Expenditures
|
(1,608 | ) | (1,823 | ) | ||||
Change
in Other Temporary Investments, Net
|
48 | (129 | ) | |||||
Purchases
of Investment Securities
|
(635 | ) | (6,827 | ) | ||||
Sales
of Investment Securities
|
666 | 7,035 | ||||||
Acquisition
of Nuclear Fuel
|
(99 | ) | (30 | ) | ||||
Acquisition
of Darby and Lawrenceburg Plants
|
- | (427 | ) | |||||
Acquisition
of Other Assets
|
(81 | ) | - | |||||
Proceeds
from Sales of Assets
|
69 | 74 | ||||||
Other
|
(5 | ) | - | |||||
Net
Cash Flows Used For Investing Activities
|
(1,645 | ) | (2,127 | ) | ||||
FINANCING
ACTIVITIES
|
||||||||
Issuance
of Common Stock
|
72 | 90 | ||||||
Change
in Short-term Debt, Net
|
45 | 420 | ||||||
Issuance
of Long-term Debt
|
2,204 | 1,064 | ||||||
Retirement
of Long-term Debt
|
(1,472 | ) | (190 | ) | ||||
Dividends
Paid on Common Stock
|
(330 | ) | (311 | ) | ||||
Other
|
(31 | ) | (44 | ) | ||||
Net
Cash Flows From Financing Activities
|
488 | 1,029 | ||||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
40 | (129 | ) | |||||
Cash
and Cash Equivalents at Beginning of Period
|
178 | 301 | ||||||
Cash
and Cash Equivalents at End of Period
|
$ | 218 | $ | 172 | ||||
SUPPLEMENTARY
INFORMATION
|
||||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$ | 412 | $ | 304 | ||||
Net
Cash Paid for Income Taxes
|
131 | 128 | ||||||
Noncash
Acquisitions Under Capital Leases
|
35 | 23 | ||||||
Noncash
Acquisition of Land/Mineral Rights
|
42 | - | ||||||
Construction
Expenditures Included in Accounts Payable at June 30,
|
328 | 295 | ||||||
Acquisition
of Nuclear Fuel in Accounts Payable at June 30,
|
- | 31 | ||||||
Noncash
Assumption of Liabilities Related to Acquisitions
|
- | 5 |
Common
Stock
|
Accumulated
Other Comprehensive Income (Loss)
|
|||||||||||||||||||
Shares
|
Amount
|
Paid-in
Capital
|
Retained
Earnings
|
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
|
3
|
16
|
74
|
90
|
||||||||||||||||
Common
Stock Dividends
|
(311
|
)
|
(311
|
)
|
||||||||||||||||
Other
|
10
|
10
|
||||||||||||||||||
TOTAL
|
9,184
|
|||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other
Comprehensive Income (Loss), Net of Tax:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $8
|
15
|
15
|
||||||||||||||||||
Securities
Available for Sale, Net of Tax of $3
|
(5
|
)
|
(5
|
)
|
||||||||||||||||
SFAS
158 Costs Established as a Regulatory Asset for the
Reapplication of SFAS 71, Net of Tax of $6
|
11
|
11
|
||||||||||||||||||
NET
INCOME
|
451
|
451
|
||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
472
|
|||||||||||||||||||
JUNE
30, 2007
|
421
|
$
|
2,734
|
$
|
4,305
|
$
|
2,819
|
$
|
(202
|
)
|
$
|
9,656
|
||||||||
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
|
2
|
11
|
61
|
72
|
||||||||||||||||
Common
Stock Dividends
|
(330
|
)
|
(330
|
)
|
||||||||||||||||
Other
|
2
|
2
|
||||||||||||||||||
TOTAL
|
9,812
|
|||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other
Comprehensive Income, Net of Tax:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $19
|
(34
|
)
|
(34
|
)
|
||||||||||||||||
Securities
Available for Sale, Net of Tax of $4
|
(7
|
)
|
(7
|
)
|
||||||||||||||||
Amortization
of Pension and OPEB Deferred Costs,
Net
of Tax of $3
|
6
|
6
|
||||||||||||||||||
NET
INCOME
|
854
|
854
|
||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
819
|
|||||||||||||||||||
JUNE
30, 2008
|
424
|
$
|
2,754
|
$
|
4,415
|
$
|
3,651
|
$
|
(189
|
)
|
$
|
10,631
|
1.
|
Significant
Accounting Matters
|
2.
|
New
Accounting Pronouncements and Extraordinary Item
|
3.
|
Rate
Matters
|
4.
|
Commitments,
Guarantees and Contingencies
|
5.
|
Acquisitions,
Dispositions and Discontinued Operations
|
6.
|
Benefit
Plans
|
7.
|
Business
Segments
|
8.
|
Income
Taxes
|
9.
|
Financing
Activities
|
10.
|
Subsequent
Event
|
CONDENSED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
|
1.
|
SIGNIFICANT ACCOUNTING
MATTERS
|
Three
Months Ended June 30,
|
||||||||||||||||
2008
|
2007
|
|||||||||||||||
(in
millions, except per share data)
|
||||||||||||||||
$/share
|
$/share
|
|||||||||||||||
Earnings
Applicable to Common Stock
|
$ | 281 | $ | 180 | ||||||||||||
Average
Number of Basic Shares Outstanding
|
401.5 | $ | 0.70 | 398.7 | $ | 0.45 | ||||||||||
Average
Dilutive Effect of:
|
||||||||||||||||
Performance
Share Units
|
0.9 | - | 0.6 | - | ||||||||||||
Stock
Options
|
0.2 | - | 0.4 | - | ||||||||||||
Restricted
Stock Units
|
0.1 | - | 0.1 | - | ||||||||||||
Restricted
Shares
|
0.1 | - | 0.1 | - | ||||||||||||
Average
Number of Diluted Shares Outstanding
|
402.8 | $ | 0.70 | 399.9 | $ | 0.45 |
Six
Months Ended June 30,
|
||||||||||||||||
2008
|
2007
|
|||||||||||||||
(in
millions, except per share data)
|
||||||||||||||||
$/share
|
$/share
|
|||||||||||||||
Earnings
Applicable to Common Stock
|
$ | 854 | $ | 451 | ||||||||||||
Average
Number of Basic Shares Outstanding
|
401.2 | $ | 2.13 | 398.0 | $ | 1.13 | ||||||||||
Average
Dilutive Effect of:
|
||||||||||||||||
Performance
Share Units
|
0.8 | (0.01 | ) | 0.6 | - | |||||||||||
Stock
Options
|
0.2 | - | 0.4 | - | ||||||||||||
Restricted
Stock Units
|
0.1 | - | 0.1 | - | ||||||||||||
Restricted
Shares
|
0.1 | - | 0.1 | - | ||||||||||||
Average
Number of Diluted Shares Outstanding
|
402.4 | $ | 2.12 | 399.2 | $ | 1.13 |
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Related
Party Transactions
|
(in
millions)
|
(in
millions)
|
||||||||||||||
AEP
Consolidated Revenues – Utility Operations:
|
||||||||||||||||
Power
Pool Purchases – Ohio Valley Electric
Corporation
(43.47% owned)
|
$ | (13 | ) | $ | (4 | ) | $ | (25 | ) | $ | (4 | ) | ||||
AEP
Consolidated Revenues – Other:
|
||||||||||||||||
Ohio
Valley Electric Corporation – Barging and
Other
Transportation Services (43.47% Owned)
|
5 | 8 | 14 | 17 | ||||||||||||
AEP
Consolidated Expenses – Purchased Energy for Resale:
|
||||||||||||||||
Ohio
Valley Electric Corporation (43.47% Owned)
|
61 | 56 | 124 | 105 | ||||||||||||
Sweeny
Cogeneration Limited Partnership (a)
|
- | 29 | - | 59 |
(a)
|
In
October 2007, we sold our 50% ownership in the Sweeny Cogeneration Limited
Partnership.
|
2.
|
NEW ACCOUNTING
PRONOUNCEMENTS AND EXTRAORDINARY
ITEM
|
Assets
and Liabilities Measured at Fair Value on a Recurring Basis as of June 30,
2008
|
||||||||||||||||||||
Level
1
|
Level
2
|
Level
3
|
Other
|
Total
|
||||||||||||||||
Assets:
|
(in
millions)
|
|||||||||||||||||||
Cash
and Cash Equivalents (a)
|
$ | 167 | $ | - | $ | - | $ | 51 | $ | 218 | ||||||||||
Other
Temporary Investments:
|
||||||||||||||||||||
Cash
and Cash Equivalents (b)
|
$ | 188 | $ | - | $ | - | $ | 39 | $ | 227 | ||||||||||
Equity
Securities
|
16 | - | - | - | 16 | |||||||||||||||
Total Other Temporary
Investments
|
$ | 204 | $ | - | $ | - | $ | 39 | $ | 243 | ||||||||||
Risk
Management Assets:
|
||||||||||||||||||||
Risk
Management Contracts (c)
|
$ | 375 | $ | 5,660 | $ | 143 | $ | (4,892 | ) | $ | 1,286 | |||||||||
Cash
Flow and Fair Value Hedges (c)
|
- | 65 | - | (17 | ) | 48 | ||||||||||||||
Dedesignated
Risk Management Contracts (d)
|
- | - | - | 46 | 46 | |||||||||||||||
Total
Risk Management Assets
|
$ | 375 | $ | 5,725 | $ | 143 | $ | (4,863 | ) | $ | 1,380 | |||||||||
Spent
Nuclear Fuel and Decommissioning Trusts:
|
||||||||||||||||||||
Cash
and Cash Equivalents (e)
|
$ | - | $ | 17 | $ | - | $ | 12 | $ | 29 | ||||||||||
Debt
Securities
|
326 | 508 | - | - | 834 | |||||||||||||||
Equity
Securities
|
499 | - | - | - | 499 | |||||||||||||||
Total Spent Nuclear Fuel and
Decommissioning Trusts
|
$ | 825 | $ | 525 | $ | - | $ | 12 | $ | 1,362 | ||||||||||
Total
Assets
|
$ | 1,571 | $ | 6,250 | $ | 143 | $ | (4,761 | ) | $ | 3,203 | |||||||||
Liabilities:
|
||||||||||||||||||||
Risk
Management Liabilities:
|
||||||||||||||||||||
Risk
Management Contracts (c)
|
$ | 405 | $ | 5,508 | $ | 151 | $ | (4,831 | ) | $ | 1,233 | |||||||||
Cash
Flow and Fair Value Hedges (c)
|
8 | 115 | - | (17 | ) | 106 | ||||||||||||||
Total
Risk Management Liabilities
|
$ | 413 | $ | 5,623 | $ | 151 | $ | (4,848 | ) | $ | 1,339 |
(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 FSP 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 accrued interest receivables to/from
financial institutions. Level 2 amounts primarily represent
investments in money market funds.
|
Three
Months Ended June 30, 2008
|
Net
Risk Management Assets (Liabilities)
|
Other
Temporary Investments
|
Investments
in Debt Securities
|
|||||||||
(in
millions)
|
||||||||||||
Balance
as of April 1, 2008
|
$ | 49 | $ | 22 | $ | 17 | ||||||
Realized
(Gain) Loss Included in Earnings (or Changes in Net Assets)
(a)
|
(2 | ) | - | - | ||||||||
Unrealized
Gain (Loss) Included in Earnings (or Changes in Net
Assets)
Relating to Assets Still Held at the Reporting Date (a)
|
(1 | ) | - | - | ||||||||
Realized
and Unrealized Gains (Losses) Included in Other
Comprehensive
Income
|
- | - | - | |||||||||
Purchases,
Issuances and Settlements
|
- | (22 | ) | (17 | ) | |||||||
Transfers
in and/or out of Level 3 (b)
|
(8 | ) | - | - | ||||||||
Changes
in Fair Value Allocated to Regulated Jurisdictions (c)
|
(46 | ) | - | - | ||||||||
Balance
as of June 30, 2008
|
$ | (8 | ) | $ | - | $ | - |
Six
Months Ended June 30, 2008
|
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)
|
(2 | ) | - | - | ||||||||
Unrealized
Gain (Loss) Included in Earnings (or Changes in Net
Assets)
Relating to Assets Still Held at the Reporting Date (a)
|
(3 | ) | - | - | ||||||||
Realized
and Unrealized Gains (Losses) Included in Other
Comprehensive
Income
|
- | - | - | |||||||||
Purchases,
Issuances and Settlements
|
- | (118 | ) | (17 | ) | |||||||
Transfers
in and/or out of Level 3 (b)
|
(1 | ) | 118 | 17 | ||||||||
Changes
in Fair Value Allocated to Regulated Jurisdictions (c)
|
(51 | ) | - | - | ||||||||
Balance
as of June 30, 2008
|
$ | (8 | ) | $ | - | $ | - |
(a)
|
Included
in revenues on our Condensed Consolidated Statement of
Income.
|
(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
June
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.
|
·
|
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,
DISPOSITIONS AND DISCONTINUED
OPERATIONS
|
U.K.
Generation (a)
|
||||
Three
Months Ended June 30,
|
(in
millions)
|
|||
2008
Revenue
|
$
|
-
|
||
2008
Pretax Income
|
2
|
|||
2008
Earnings, Net of Tax
|
1
|
|||
2007
Revenue
|
$
|
-
|
||
2007
Pretax Income
|
3
|
|||
2007
Earnings, Net of Tax
|
2
|
U.K.
Generation (a)
|
||||
Six
Months Ended June 30,
|
(in
millions)
|
|||
2008
Revenue
|
$
|
-
|
||
2008
Pretax Income
|
2
|
|||
2008
Earnings, Net of Tax
|
1
|
|||
2007
Revenue
|
$
|
-
|
||
2007
Pretax Income
|
3
|
|||
2007
Earnings, Net of Tax
|
2
|
(a)
|
The
2008 amounts relate to final proceeds received for the sale of land
related to the sale of U.K. Generation. The 2007 amounts relate
to tax adjustments from the sale of U.K.
Generation.
|
Other
Postretirement
|
||||||||||||
Pension
Plans
|
Benefit
Plans
|
|||||||||||
Three
Months Ended June 30,
|
Three
Months Ended June 30,
|
|||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||
(in
millions)
|
||||||||||||
Service
Cost
|
$ | 25 | $ | 23 | $ | 11 | $ | 11 | ||||
Interest
Cost
|
62 | 57 | 28 | 26 | ||||||||
Expected
Return on Plan Assets
|
(84 | ) | (82 | ) | (28 | ) | (26 | ) | ||||
Amortization
of Transition Obligation
|
- | - | 7 | 7 | ||||||||
Amortization
of Net Actuarial Loss
|
10 | 14 | 2 | 3 | ||||||||
Net
Periodic Benefit Cost
|
$ | 13 | $ | 12 | $ | 20 | $ | 21 |
Other
Postretirement
|
||||||||||||
Pension
Plans
|
Benefit
Plans
|
|||||||||||
Six
Months Ended June 30,
|
Six
Months Ended June 30,
|
|||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||
(in
millions)
|
||||||||||||
Service
Cost
|
$ | 50 | $ | 47 | $ | 21 | $ | 21 | ||||
Interest
Cost
|
125 | 116 | 56 | 52 | ||||||||
Expected
Return on Plan Assets
|
(168 | ) | (167 | ) | (56 | ) | (52 | ) | ||||
Amortization
of Transition Obligation
|
- | - | 14 | 14 | ||||||||
Amortization
of Net Actuarial Loss
|
19 | 29 | 5 | 6 | ||||||||
Net
Periodic Benefit Cost
|
$ | 26 | $ | 25 | $ | 40 | $ | 41 |
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. Effective July 30, 2008, AEP MEMCO LLC's
name was changed to AEP River Operations,
LLC.
|
·
|
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 June 30, 2008
|
||||||||||||||||||||
Revenues
from:
|
||||||||||||||||||||
External
Customers
|
$
|
3,200
|
(d)
|
$
|
144
|
$
|
137
|
$
|
65
|
$
|
-
|
$
|
3,546
|
|||||||
Other
Operating Segments
|
113
|
(d)
|
7
|
(26
|
)
|
(57
|
)
|
(37
|
)
|
-
|
||||||||||
Total
Revenues
|
$
|
3,313
|
$
|
151
|
$
|
111
|
$
|
8
|
$
|
(37
|
)
|
$
|
3,546
|
|||||||
Income
(Loss) Before Discontinued Operations and Extraordinary
Loss
|
$
|
263
|
$
|
3
|
$
|
26
|
$
|
(12
|
)
|
$
|
-
|
$
|
280
|
|||||||
Discontinued
Operations, Net of Tax
|
-
|
-
|
-
|
1
|
-
|
1
|
||||||||||||||
Net
Income (Loss)
|
$
|
263
|
$
|
3
|
$
|
26
|
$
|
(11
|
)
|
$
|
-
|
$
|
281
|
Nonutility
Operations
|
||||||||||||||||||||
Utility
Operations
|
MEMCO
Operations
|
Generation
and
Marketing
|
All
Other (a)
|
Reconciling
Adjustments
|
Consolidated
|
|||||||||||||||
(in
millions)
|
||||||||||||||||||||
Three
Months Ended June 30, 2007
|
||||||||||||||||||||
Revenues
from:
|
||||||||||||||||||||
External
Customers
|
$
|
2,818
|
(d)
|
$
|
116
|
$
|
218
|
$
|
(6
|
)
|
$
|
-
|
$
|
3,146
|
||||||
Other
Operating Segments
|
136
|
(d)
|
3
|
(113
|
)
|
12
|
(38
|
)
|
-
|
|||||||||||
Total
Revenues
|
$
|
2,954
|
$
|
119
|
$
|
105
|
$
|
6
|
$
|
(38
|
)
|
$
|
3,146
|
|||||||
Income
(Loss) Before Discontinued Operations and Extraordinary
Loss
|
$
|
238
|
$
|
7
|
$
|
15
|
$
|
(3
|
)
|
$
|
-
|
$
|
257
|
|||||||
Discontinued
Operations, Net of Tax
|
-
|
-
|
-
|
2
|
-
|
2
|
||||||||||||||
Extraordinary
Loss, Net of Tax
|
(79
|
)
|
-
|
-
|
-
|
-
|
(79
|
)
|
||||||||||||
Net
Income (Loss)
|
$
|
159
|
$
|
7
|
$
|
15
|
$
|
(1
|
)
|
$
|
-
|
$
|
180
|
Nonutility
Operations
|
||||||||||||||||||||
Utility
Operations
|
MEMCO
Operations
|
Generation
and
Marketing
|
All
Other (a)
|
Reconciling
Adjustments
|
Consolidated
|
|||||||||||||||
(in
millions)
|
||||||||||||||||||||
Six
Months Ended June 30, 2008
|
||||||||||||||||||||
Revenues
from:
|
||||||||||||||||||||
External
Customers
|
$
|
6,210
|
(d)
|
$
|
282
|
$
|
408
|
$
|
113
|
$
|
-
|
$
|
7,013
|
|||||||
Other
Operating Segments
|
397
|
(d)
|
11
|
(238
|
)
|
(100
|
)
|
(70
|
)
|
-
|
||||||||||
Total
Revenues
|
$
|
6,607
|
$
|
293
|
$
|
170
|
$
|
13
|
$
|
(70
|
)
|
$
|
7,013
|
|||||||
Income
Before Discontinued Operations
and
Extraordinary Loss
|
$
|
673
|
$
|
10
|
$
|
27
|
$
|
143
|
$
|
-
|
$
|
853
|
||||||||
Discontinued
Operations, Net of Tax
|
-
|
-
|
-
|
1
|
-
|
1
|
||||||||||||||
Net
Income
|
$
|
673
|
$
|
10
|
$
|
27
|
$
|
144
|
$
|
-
|
$
|
854
|
Nonutility
Operations
|
||||||||||||||||||||
Utility
Operations
|
MEMCO
Operations
|
Generation
and
Marketing
|
All
Other (a)
|
Reconciling
Adjustments
|
Consolidated
|
|||||||||||||||
(in
millions)
|
||||||||||||||||||||
Six
Months Ended June 30, 2007
|
||||||||||||||||||||
Revenues
from:
|
||||||||||||||||||||
External
Customers
|
$
|
5,704
|
(d)
|
$
|
233
|
$
|
333
|
$
|
45
|
$
|
-
|
$
|
6,315
|
|||||||
Other
Operating Segments
|
283
|
(d)
|
6
|
(186
|
)
|
(33
|
)
|
(70
|
)
|
-
|
||||||||||
Total
Revenues
|
$
|
5,987
|
$
|
239
|
$
|
147
|
$
|
12
|
$
|
(70
|
)
|
$
|
6,315
|
|||||||
Income
Before Discontinued Operations
and
Extraordinary Loss
|
$
|
491
|
$
|
22
|
$
|
14
|
$
|
1
|
$
|
-
|
$
|
528
|
||||||||
Discontinued
Operations, Net of Tax
|
-
|
-
|
-
|
2
|
-
|
2
|
||||||||||||||
Extraordinary
Loss, Net of Tax
|
(79
|
)
|
-
|
-
|
-
|
-
|
(79
|
)
|
||||||||||||
Net
Income
|
$
|
412
|
$
|
22
|
$
|
14
|
$
|
3
|
$
|
-
|
$
|
451
|
Nonutility
Operations
|
|||||||||||||||||||
Utility
Operations
|
MEMCO
Operations
|
Generation
and
Marketing
|
All
Other (a)
|
Reconciling
Adjustments
(c)
|
Consolidated
|
||||||||||||||
(in
millions)
|
|||||||||||||||||||
June
30, 2008
|
|||||||||||||||||||
Total
Property, Plant and Equipment
|
$
|
46,776
|
$
|
302
|
$
|
576
|
$
|
42
|
$
|
(245
|
)
|
$
|
47,451
|
||||||
Accumulated
Depreciation and
Amortization
|
16,266
|
66
|
126
|
7
|
(18
|
)
|
16,447
|
||||||||||||
Total
Property, Plant and Equipment – Net
|
$
|
30,510
|
$
|
236
|
$
|
450
|
$
|
35
|
$
|
(227
|
)
|
$
|
31,004
|
||||||
Total
Assets
|
$
|
41,519
|
$
|
374
|
$
|
953
|
$
|
13,182
|
$
|
(13,332
|
)(b)
|
$
|
42,696
|
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:
|
|
·
|
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. The cash settlement of $255 million
($163 million, net of tax) is included in Net Income.
|
|
·
|
Revenue
sharing related to the Plaquemine Cogeneration
Facility.
|
|
(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 AEP Energy Partners, Inc. (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 $26
million and $113 million for the three months ended June 30, 2008 and
2007, respectively, and $238 million and $186 million for the six months
ended June 30, 2008 and 2007, respectively. 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
|
June
30,
|
December
31,
|
|||||||
Type
of Debt
|
2008
|
2007
|
||||||
(in
millions)
|
||||||||
Senior
Unsecured Notes
|
$ | 10,940 | $ | 9,905 | ||||
Pollution
Control Bonds
|
1,747 | 2,190 | ||||||
First
Mortgage Bonds
|
- | 19 | ||||||
Notes
Payable
|
258 | 311 | ||||||
Securitization
Bonds
|
2,183 | 2,257 | ||||||
Junior
Subordinated Debentures
|
315 | - | ||||||
Notes
Payable To Trust
|
113 | 113 | ||||||
Spent
Nuclear Fuel Obligation (a)
|
262 | 259 | ||||||
Other
Long-term Debt
|
3 | 2 | ||||||
Unamortized
Discount (net)
|
(68 | ) | (62 | ) | ||||
Total
Long-term Debt Outstanding
|
15,753 | 14,994 | ||||||
Less
Portion Due Within One Year
|
569 | 792 | ||||||
Long-term
Portion
|
$ | 15,184 | $ | 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 $294 million and $285 million at June 30,
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
|
Pollution
Control Bonds
|
75
|
Variable
|
2036
|
||||||
APCo
|
Pollution
Control Bonds
|
50
|
Variable
|
2036
|
||||||
APCo
|
Senior
Unsecured Notes
|
500
|
7.00
|
2038
|
||||||
CSPCo
|
Senior
Unsecured Notes
|
350
|
6.05
|
2018
|
||||||
I&M
|
Pollution
Control Bonds
|
25
|
Variable
|
2019
|
||||||
I&M
|
Pollution
Control Bonds
|
52
|
Variable
|
2021
|
||||||
I&M
|
Pollution
Control Bonds
|
40
|
5.25
|
2025
|
||||||
OPCo
|
Pollution
Control Bonds
|
50
|
Variable
|
2014
|
||||||
OPCo
|
Pollution
Control Bonds
|
50
|
Variable
|
2014
|
||||||
OPCo
|
Pollution
Control Bonds
|
65
|
Variable
|
2036
|
||||||
SWEPCo
|
Senior
Unsecured Notes
|
400
|
6.45
|
2019
|
||||||
Non-Registrant:
|
||||||||||
TCC
|
Pollution
Control Bonds
|
41
|
5.625
|
2017
|
||||||
TCC
|
Pollution
Control Bonds
|
120
|
5.125
|
2030
|
||||||
TNC
|
Senior
Unsecured Notes
|
30
|
5.89
|
2018
|
||||||
TNC
|
Senior
Unsecured Notes
|
70
|
6.76
|
2038
|
||||||
Total
Issuances
|
$
|
2,233
|
(a)
|
(a)
|
Amount
indicated on statement of cash flows of $2,204 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:
|
||||||||||
APCo
|
Senior
Unsecured Notes
|
$
|
200
|
3.60
|
2008
|
|||||
APCo
|
Pollution
Control Bonds
|
40
|
Variable
|
2019
|
||||||
APCo
|
Pollution
Control Bonds
|
30
|
Variable
|
2019
|
||||||
APCo
|
Pollution
Control Bonds
|
18
|
Variable
|
2021
|
||||||
APCo
|
Pollution
Control Bonds
|
50
|
Variable
|
2036
|
||||||
APCo
|
Pollution
Control Bonds
|
75
|
Variable
|
2037
|
||||||
CSPCo
|
Senior
Unsecured Notes
|
60
|
6.55
|
2008
|
||||||
CSPCo
|
Senior
Unsecured Notes
|
52
|
6.51
|
2008
|
||||||
CSPCo
|
Pollution
Control Bonds
|
48
|
Variable
|
2038
|
||||||
CSPCo
|
Pollution
Control Bonds
|
44
|
Variable
|
2038
|
||||||
I&M
|
Pollution
Control Bonds
|
45
|
Variable
|
2009
|
||||||
I&M
|
Pollution
Control Bonds
|
25
|
Variable
|
2019
|
||||||
I&M
|
Pollution
Control Bonds
|
52
|
Variable
|
2021
|
||||||
I&M
|
Pollution
Control Bonds
|
50
|
Variable
|
2025
|
||||||
I&M
|
Pollution
Control Bonds
|
50
|
Variable
|
2025
|
||||||
I&M
|
Pollution
Control Bonds
|
40
|
Variable
|
2025
|
||||||
OPCo
|
Notes
Payable
|
1
|
6.81
|
2008
|
||||||
OPCo
|
Notes
Payable
|
6
|
6.27
|
2009
|
||||||
OPCo
|
Pollution
Control Bonds
|
50
|
Variable
|
2014
|
||||||
OPCo
|
Pollution
Control Bonds
|
50
|
Variable
|
2016
|
||||||
OPCo
|
Pollution
Control Bonds
|
50
|
Variable
|
2022
|
||||||
OPCo
|
Pollution
Control Bonds
|
35
|
Variable
|
2022
|
||||||
OPCo
|
Pollution
Control Bonds
|
65
|
Variable
|
2036
|
||||||
PSO
|
Pollution
Control Bonds
|
34
|
Variable
|
2014
|
||||||
SWEPCo
|
Notes
Payable
|
2
|
Variable
|
2008
|
||||||
SWEPCo
|
Notes
Payable
|
2
|
4.47
|
2011
|
||||||
Non-Registrant:
|
||||||||||
AEP
Subsidiaries
|
Notes
Payable
|
4
|
5.88
|
2011
|
||||||
AEP
Subsidiaries
|
Notes
Payable
|
2
|
Variable
|
2017
|
||||||
AEGCo
|
Senior
Unsecured Notes
|
4
|
6.33
|
2037
|
||||||
AEPSC
|
Mortgage
Notes
|
34
|
9.60
|
2008
|
||||||
TCC
|
First
Mortgage Bonds
|
19
|
7.125
|
2008
|
||||||
TCC
|
Securitization
Bonds
|
29
|
5.01
|
2008
|
||||||
TCC
|
Securitization
Bonds
|
45
|
4.98
|
2010
|
||||||
TCC
|
Pollution
Control Bonds
|
41
|
Variable
|
2015
|
||||||
TCC
|
Pollution
Control Bonds
|
60
|
Variable
|
2028
|
||||||
TCC
|
Pollution
Control Bonds
|
60
|
Variable
|
2028
|
||||||
Total
Retirements and
Principal Payments
|
$
|
1,472
|
June
30, 2008
|
December
31, 2007
|
|||||||||||||
Outstanding
Amount
|
Interest
Rate
(a)
|
Outstanding
Amount
|
Interest
Rate
(a)
|
|||||||||||
Type
of Debt
|
(in
thousands)
|
(in
thousands)
|
||||||||||||
Commercial
Paper – AEP
|
$
|
697,974
|
3.22
|
%
|
$
|
659,135
|
5.54
|
%
|
||||||
Commercial
Paper – JMG (b)
|
-
|
-
|
701
|
5.35
|
%
|
|||||||||
Line
of Credit – Sabine Mining Company (c)
|
7,039
|
3.25
|
%
|
285
|
5.25
|
%
|
||||||||
Total
|
$
|
705,013
|
$
|
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.
|
10.
SUBSEQUENT
EVENT
|
Results of
Operations
|
Second
Quarter of 2007
|
$ | 3 | ||||||
Changes
in Gross Margin:
|
||||||||
Retail
Margins
|
48 | |||||||
Off-system
Sales
|
8 | |||||||
Other
|
(1 | ) | ||||||
Total
Change in Gross Margin
|
55 | |||||||
Changes
in Operating Expenses and Other:
|
||||||||
Other
Operation and Maintenance
|
6 | |||||||
Depreciation
and Amortization
|
(31 | ) | ||||||
Taxes
Other Than Income Taxes
|
(1 | ) | ||||||
Carrying
Costs Income
|
6 | |||||||
Other
Income
|
4 | |||||||
Interest
Expense
|
(2 | ) | ||||||
Total
Change in Operating Expenses and Other
|
(18 | ) | ||||||
Income
Tax Expense
|
(14 | ) | ||||||
Second Quarter of 2008
|
$ | 26 |
·
|
Retail
Margins increased $48 million primarily due to the impact of the Virginia
base rate order issued in May 2007 which included a second quarter 2007
provision for revenue refund in addition to an increase in the recovery of
E&R costs in Virginia and construction financing costs in West
Virginia. These increases were partially offset by an increase
in sharing of off-system sales margins with customers and higher capacity
settlement expenses under the Interconnection
Agreement.
|
·
|
Margins
from Off-system Sales increased $8 million primarily due to higher
physical sales margins partially offset by lower trading margins.
|
·
|
Other
Operation and Maintenance expenses decreased $6 million primarily due to a
$3 million decrease in expenses associated with the Transmission
Equalization Agreement and a $3 million decrease in uncollectible accounts
receivable expense.
|
·
|
Depreciation
and Amortization expenses increased $31 million primarily due to favorable
adjustments made in the second quarter of 2007 for the Virginia Rate Base
order of $22 million and an increase in the amortization of carrying
charges and depreciation expense of $6 million that are being collected
through the Virginia E&R surcharges.
|
·
|
Carrying
Costs Income increased $6 million due to an increase in Virginia E&R
deferrals.
|
·
|
Interest
Expense increased $2 million primarily due to an $11 million increase in
interest expense from long-term debt issuances. This increase
was partially offset by a $4 million favorable increase in allowance for
borrowed funds used during construction and a $3 million decrease in
interest related to the Virginia provision for refund recorded in the
second quarter of 2007.
|
·
|
Income
Tax Expense increased $14 million primarily due to an increase in pretax
book income.
|
Six
Months Ended June 30, 2007
|
$ | 74 | ||||||
Changes
in Gross Margin:
|
||||||||
Retail
Margins
|
29 | |||||||
Off-system
Sales
|
24 | |||||||
Transmission
Revenues
|
1 | |||||||
Other
|
(2 | ) | ||||||
Total
Change in Gross Margin
|
52 | |||||||
Changes
in Operating Expenses and Other:
|
||||||||
Other
Operation and Maintenance
|
(14 | ) | ||||||
Depreciation
and Amortization
|
(34 | ) | ||||||
Taxes
Other Than Income Taxes
|
(4 | ) | ||||||
Carrying
Costs Income
|
13 | |||||||
Other
Income
|
4 | |||||||
Interest
Expense
|
(14 | ) | ||||||
Total
Change in Operating Expenses and Other
|
(49 | ) | ||||||
Income
Tax Expense
|
5 | |||||||
Six Months Ended June 30, 2008
|
$ | 82 |
·
|
Retail
Margins increased $29 million primarily due to the impact of the Virginia
base rate order issued in May 2007 which included a second quarter 2007
provision for revenue refund in addition to an increase in the recovery of
E&R costs in Virginia and construction financing costs in West
Virginia. These increases were partially offset by an increase
in sharing of off-system sales margins with customers and higher capacity
settlement expenses under the Interconnection
Agreement.
|
·
|
Margins
from Off-system Sales increased $24 million primarily due to higher
physical sales margins partially offset by lower trading margins.
|
·
|
Other
Operation and Maintenance expenses increased $14 million primarily due to
a $6 million increase in distribution maintenance expenses resulting from
repairs from storm damage. In addition, steam maintenance
expenses increased $5 million due to a planned outage at the Mountaineer
Plant in March 2008.
|
·
|
Depreciation
and Amortization expenses increased $34 million primarily due to favorable
adjustments made in the second quarter 2007 for the Virginia base rate
order of $22 million and the amortization of carrying charges and
depreciation expense of $9 million that are being collected through the
Virginia E&R surcharges.
|
·
|
Taxes
Other Than Income Taxes increased $4 million primarily due to favorable
franchise tax return adjustments recorded in 2007.
|
·
|
Carrying
Costs Income increased $13 million due to an increase in Virginia E&R
deferrals.
|
·
|
Interest
Expense increased $14 million primarily due to a $19 million increase in
interest expense from long-term debt issuances partially offset by a $4
million decrease in interest on the Virginia provision for refund recorded
in the second quarter of 2007.
|
·
|
Income
Tax Expense decreased $5 million primarily due to a decrease in state
income taxes partially offset by changes in certain book/tax differences
accounted for on a flow-through
basis.
|
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
|
140,378 | 265,414 | ||||||
Investing
Activities
|
(296,095 | ) | (378,985 | ) | ||||
Financing
Activities
|
155,398 | 112,605 | ||||||
Net
Decrease in Cash and Cash Equivalents
|
(319 | ) | (966 | ) | ||||
Cash
and Cash Equivalents at End of Period
|
$ | 1,876 | $ | 1,352 |
Principal
Amount
|
Interest
|
Due
|
|||||
Type
of Debt
|
Rate
|
Date
|
|||||
(in
thousands)
|
(%)
|
||||||
Pollution
Control Bonds
|
$
|
75,000
|
Variable
|
2036
|
|||
Pollution
Control Bonds
|
50,275
|
Variable
|
2036
|
||||
Senior
Unsecured Notes
|
500,000
|
7.00
|
2038
|
Principal
Amount
Paid
|
Interest
|
Due
|
|||||
Type
of Debt
|
Rate
|
Date
|
|||||
(in
thousands)
|
(%)
|
||||||
Pollution
Control Bonds
|
$
|
40,000
|
Variable
|
2019
|
|||
Pollution
Control Bonds
|
17,500
|
Variable
|
2021
|
||||
Pollution
Control Bonds
|
30,000
|
Variable
|
2019
|
||||
Pollution
Control Bonds
|
50,275
|
Variable
|
2036
|
||||
Pollution
Control Bonds
|
75,000
|
Variable
|
2037
|
||||
Senior
Unsecured Notes
|
200,000
|
3.60
|
2008
|
||||
Other
|
7
|
13.718
|
2026
|
Cash
Flow
|
||||||||||||||||||||
MTM
Risk
|
&
|
DETM
|
||||||||||||||||||
Management
|
Fair
Value
|
Assignment
|
Collateral
|
|||||||||||||||||
Contracts
|
Hedges
|
(a)
|
Deposits
|
Total
|
||||||||||||||||
Current
Assets
|
$ | 219,254 | $ | 3,871 | $ | - | $ | (15,261 | ) | $ | 207,864 | |||||||||
Noncurrent
Assets
|
114,005 | 363 | - | (8,538 | ) | 105,830 | ||||||||||||||
Total
MTM Derivative Contract Assets
|
333,259 | 4,234 | - | (23,799 | ) | 313,694 | ||||||||||||||
Current
Liabilities
|
(223,908 | ) | (28,732 | ) | (3,396 | ) | 17,200 | (238,836 | ) | |||||||||||
Noncurrent
Liabilities
|
(80,869 | ) | (1,287 | ) | (3,720 | ) | 2,519 | (83,357 | ) | |||||||||||
Total
MTM Derivative Contract Liabilities
|
(304,777 | ) | (30,019 | ) | (7,116 | ) | 19,719 | (322,193 | ) | |||||||||||
Total
MTM Derivative Contract Net Assets (Liabilities)
|
$ | 28,482 | $ | (25,785 | ) | $ | (7,116 | ) | $ | (4,080 | ) | $ | (8,499 | ) |
(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
|
(8,933
|
)
|
||
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)
|
1,151
|
|||
Changes
in Fair Value Due to Market Fluctuations During the Period
(c)
|
(408
|
)
|
||
Changes
in Fair Value Allocated to Regulated Jurisdictions (d)
|
(9,198
|
)
|
||
Total
MTM Risk Management Contract Net Assets
|
28,482
|
|||
Net
Cash Flow & Fair Value Hedge Contracts
|
(25,785
|
)
|
||
DETM
Assignment (e)
|
(7,116
|
)
|
||
Collateral
Deposits
|
(4,080
|
)
|
||
Ending
Net Risk Management Assets at June 30, 2008
|
$
|
(8,499
|
)
|
(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)
|
“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
|
After
|
|||||||||||||||||||||||||||
2008
|
2009
|
2010
|
2011
|
2012
|
2012
|
Total
|
||||||||||||||||||||||
Level
1 (a)
|
$ | (2,770 | ) | $ | 471 | $ | (21 | ) | $ | - | $ | - | $ | - | $ | (2,320 | ) | |||||||||||
Level
2 (b)
|
2,314 | 12,244 | 12,956 | 5,150 | 1,782 | - | 34,446 | |||||||||||||||||||||
Level
3 (c)
|
(9,305 | ) | (1,566 | ) | (3,892 | ) | (2,504 | ) | (1,293 | ) | - | (18,560 | ) | |||||||||||||||
Total
|
(9,761 | ) | 11,149 | 9,043 | 2,646 | 489 | - | 13,566 | ||||||||||||||||||||
Dedesignated
Risk Management Contracts
(d)
|
2,380 | 4,602 | 4,565 | 1,778 | 1,591 | - | 14,916 | |||||||||||||||||||||
Total MTM Risk Management
Contract Net Assets
(Liabilities)
|
$ | (7,381 | ) | $ | 15,751 | $ | 13,608 | $ | 4,424 | $ | 2,080 | $ | - | $ | 28,482 |
(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
|
(15,824
|
)
|
(3,114
|
)
|
75
|
(18,863
|
)
|
|||||||||
Reclassifications
from AOCI for Cash Flow Hedges
Settled
|
(682
|
)
|
813
|
3
|
134
|
|||||||||||
Ending
Balance in AOCI June 30, 2008
|
$
|
(15,723
|
)
|
$
|
(8,903
|
)
|
$
|
(47
|
)
|
$
|
(24,673
|
)
|
Six
Months Ended
June
30, 2008
|
Twelve
Months Ended
December
31, 2007
|
|||||||||||||||||||||
(in
thousands)
|
(in
thousands)
|
|||||||||||||||||||||
End
|
High
|
Average
|
Low
|
End
|
High
|
Average
|
Low
|
|||||||||||||||
$603
|
$1,002
|
$391
|
$161
|
$455
|
$2,328
|
$569
|
$117
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
REVENUES
|
||||||||||||||||
Electric
Generation, Transmission and Distribution
|
$ | 566,089 | $ | 499,189 | $ | 1,207,546 | $ | 1,100,735 | ||||||||
Sales
to AEP Affiliates
|
97,508 | 55,371 | 187,598 | 116,916 | ||||||||||||
Other
|
3,800 | 2,850 | 7,280 | 5,487 | ||||||||||||
TOTAL
|
667,397 | 557,410 | 1,402,424 | 1,223,138 | ||||||||||||
EXPENSES
|
||||||||||||||||
Fuel
and Other Consumables Used for Electric Generation
|
159,237 | 164,018 | 333,067 | 335,204 | ||||||||||||
Purchased
Electricity for Resale
|
52,931 | 34,328 | 96,130 | 70,278 | ||||||||||||
Purchased
Electricity from AEP Affiliates
|
186,243 | 144,630 | 375,838 | 272,231 | ||||||||||||
Other
Operation
|
68,415 | 75,125 | 143,946 | 142,754 | ||||||||||||
Maintenance
|
52,235 | 51,414 | 110,079 | 97,167 | ||||||||||||
Depreciation
and Amortization
|
61,592 | 31,076 | 124,164 | 90,236 | ||||||||||||
Taxes
Other Than Income Taxes
|
24,104 | 22,975 | 48,095 | 44,250 | ||||||||||||
TOTAL
|
604,757 | 523,566 | 1,231,319 | 1,052,120 | ||||||||||||
OPERATING
INCOME
|
62,640 | 33,844 | 171,105 | 171,018 | ||||||||||||
Other
Income (Expense):
|
||||||||||||||||
Interest
Income
|
2,827 | 390 | 5,596 | 1,029 | ||||||||||||
Carrying
Costs Income
|
17,411 | 10,950 | 26,997 | 14,116 | ||||||||||||
Allowance
for Equity Funds Used During Construction
|
2,652 | 1,581 | 4,148 | 4,358 | ||||||||||||
Interest
Expense
|
(47,119 | ) | (44,955 | ) | (91,259 | ) | (76,778 | ) | ||||||||
INCOME
BEFORE INCOME TAX EXPENSE (CREDIT)
|
38,411 | 1,810 | 116,587 | 113,743 | ||||||||||||
Income
Tax Expense (Credit)
|
12,129 | (1,471 | ) | 34,992 | 40,235 | |||||||||||
INCOME
BEFORE EXTRAORDINARY LOSS
|
26,282 | 3,281 | 81,595 | 73,508 | ||||||||||||
Extraordinary
Loss – Reapplication of Regulatory Accounting for Generation,
Net of Tax
|
- | (78,763 | ) | - | (78,763 | ) | ||||||||||
NET
INCOME (LOSS)
|
26,282 | (75,482 | ) | 81,595 | (5,255 | ) | ||||||||||
Preferred
Stock Dividend Requirements Including
Capital
Stock Expense
|
238 | 238 | 476 | 476 | ||||||||||||
EARNINGS
(LOSS) APPLICABLE TO COMMON STOCK
|
$ | 26,044 | $ | (75,720 | ) | $ | 81,119 | $ | (5,731 | ) |
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
|
(25,000 | ) | (25,000 | ) | ||||||||||||||||
Preferred
Stock Dividends
|
(400 | ) | (400 | ) | ||||||||||||||||
Capital
Stock Expense
|
76 | (76 | ) | - | ||||||||||||||||
TOTAL
|
2,008,089 | |||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other
Comprehensive Income, Net of Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $2,482
|
4,610 | 4,610 | ||||||||||||||||||
SFAS
158 Costs Established as a Regulatory
Asset
Related to the Reapplication of
SFAS
71, Net of Tax of $6,055
|
11,245 | 11,245 | ||||||||||||||||||
NET
LOSS
|
(5,255 | ) | (5,255 | ) | ||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
10,600 | |||||||||||||||||||
JUNE
30, 2007
|
$ | 260,458 | $ | 1,025,070 | $ | 772,097 | $ | (38,936 | ) | $ | 2,018,689 | |||||||||
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
|
125,000 | 125,000 | ||||||||||||||||||
Preferred
Stock Dividends
|
(399 | ) | (399 | ) | ||||||||||||||||
Capital
Stock Expense
|
77 | (77 | ) | - | ||||||||||||||||
TOTAL
|
2,204,166 | |||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other
Comprehensive Income (Loss), Net of Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of
$10,085
|
(18,729 | ) | (18,729 | ) | ||||||||||||||||
Amortization
of Pension and OPEB Deferred
Costs,
Net of Tax of $897
|
1,666 | 1,666 | ||||||||||||||||||
NET
INCOME
|
81,595 | 81,595 | ||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
64,532 | |||||||||||||||||||
JUNE
30, 2008
|
$ | 260,458 | $ | 1,150,226 | $ | 910,264 | $ | (52,250 | ) | $ | 2,268,698 |
2008
|
2007
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
and Cash Equivalents
|
$ | 1,876 | $ | 2,195 | ||||
Accounts
Receivable:
|
||||||||
Customers
|
198,958 | 176,834 | ||||||
Affiliated Companies
|
79,810 | 113,582 | ||||||
Accrued Unbilled Revenues
|
34,213 | 38,397 | ||||||
Miscellaneous
|
592 | 2,823 | ||||||
Allowance for Uncollectible Accounts
|
(5,835 | ) | (13,948 | ) | ||||
Total
Accounts Receivable
|
307,738 | 317,688 | ||||||
Fuel
|
84,139 | 82,203 | ||||||
Materials
and Supplies
|
80,244 | 76,685 | ||||||
Risk
Management Assets
|
207,864 | 62,955 | ||||||
Regulatory
Asset for Under-Recovered Fuel Costs
|
53,399 | - | ||||||
Prepayments
and Other
|
51,831 | 16,369 | ||||||
TOTAL
|
787,091 | 558,095 | ||||||
PROPERTY,
PLANT AND EQUIPMENT
|
||||||||
Electric:
|
||||||||
Production
|
3,633,832 | 3,625,788 | ||||||
Transmission
|
1,712,793 | 1,675,081 | ||||||
Distribution
|
2,429,600 | 2,372,687 | ||||||
Other
|
356,089 | 351,827 | ||||||
Construction
Work in Progress
|
856,270 | 713,063 | ||||||
Total
|
8,988,584 | 8,738,446 | ||||||
Accumulated
Depreciation and Amortization
|
2,639,155 | 2,591,833 | ||||||
TOTAL
- NET
|
6,349,429 | 6,146,613 | ||||||
OTHER
NONCURRENT ASSETS
|
||||||||
Regulatory
Assets
|
683,609 | 652,739 | ||||||
Long-term
Risk Management Assets
|
105,830 | 72,366 | ||||||
Deferred
Charges and Other
|
197,938 | 191,871 | ||||||
TOTAL
|
987,377 | 916,976 | ||||||
TOTAL
ASSETS
|
$ | 8,123,897 | $ | 7,621,684 |
2008
|
2007
|
|||||||
CURRENT
LIABILITIES
|
(in
thousands)
|
|||||||
Advances
from Affiliates
|
$ | 103,802 | $ | 275,257 | ||||
Accounts
Payable:
|
||||||||
General
|
281,893 | 241,871 | ||||||
Affiliated Companies
|
99,692 | 106,852 | ||||||
Long-term
Debt Due Within One Year – Nonaffiliated
|
150,016 | 239,732 | ||||||
Risk
Management Liabilities
|
238,836 | 51,708 | ||||||
Customer
Deposits
|
50,978 | 45,920 | ||||||
Accrued
Taxes
|
48,527 | 58,519 | ||||||
Accrued
Interest
|
46,693 | 41,699 | ||||||
Other
|
99,752 | 139,476 | ||||||
TOTAL
|
1,120,189 | 1,201,034 | ||||||
NONCURRENT
LIABILITIES
|
||||||||
Long-term
Debt – Nonaffiliated
|
2,803,466 | 2,507,567 | ||||||
Long-term
Debt – Affiliated
|
100,000 | 100,000 | ||||||
Long-term
Risk Management Liabilities
|
83,357 | 47,357 | ||||||
Deferred
Income Taxes
|
1,013,394 | 948,891 | ||||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
490,350 | 505,556 | ||||||
Deferred
Credits and Other
|
226,691 | 211,495 | ||||||
TOTAL
|
4,717,258 | 4,320,866 | ||||||
TOTAL
LIABILITIES
|
5,837,447 | 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
|
1,150,226 | 1,025,149 | ||||||
Retained
Earnings
|
910,264 | 831,612 | ||||||
Accumulated
Other Comprehensive Income (Loss)
|
(52,250 | ) | (35,187 | ) | ||||
TOTAL
|
2,268,698 | 2,082,032 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$ | 8,123,897 | $ | 7,621,684 |
2008
|
2007
|
|||||||
OPERATING
ACTIVITIES
|
||||||||
Net
Income (Loss)
|
$ | 81,595 | $ | (5,255 | ) | |||
Adjustments
to Reconcile Net Income (Loss) to Net Cash Flows from Operating
Activities:
|
||||||||
Depreciation
and Amortization
|
124,164 | 90,236 | ||||||
Deferred
Income Taxes
|
71,728 | (17,439 | ) | |||||
Extraordinary
Loss, Net of Tax
|
- | 78,763 | ||||||
Regulatory
Provision
|
- | 105,110 | ||||||
Carrying
Costs Income
|
(26,997 | ) | (14,116 | ) | ||||
Allowance
for Equity Funds Used During Construction
|
(4,148 | ) | (4,358 | ) | ||||
Mark-to-Market
of Risk Management Contracts
|
17,298 | 5,457 | ||||||
Change
in Other Noncurrent Assets
|
(14,006 | ) | (7,896 | ) | ||||
Change
in Other Noncurrent Liabilities
|
(20,038 | ) | (1,239 | ) | ||||
Changes
in Certain Components of Working Capital:
|
||||||||
Accounts Receivable, Net
|
2,583 | 31,483 | ||||||
Fuel, Materials and Supplies
|
(5,495 | ) | (20,654 | ) | ||||
Accounts Payable
|
40,905 | (26,786 | ) | |||||
Accrued Taxes, Net
|
(31,213 | ) | 39,168 | |||||
Fuel Over/Under-Recovery, Net
|
(77,036 | ) | 15,221 | |||||
Other Current Assets
|
(14,225 | ) | 3,140 | |||||
Other Current Liabilities
|
(4,737 | ) | (5,421 | ) | ||||
Net
Cash Flows from Operating Activities
|
140,378 | 265,414 | ||||||
INVESTING
ACTIVITIES
|
||||||||
Construction
Expenditures
|
(311,550 | ) | (382,501 | ) | ||||
Change
in Other Cash Deposits, Net
|
(15 | ) | (2,678 | ) | ||||
Proceeds
from Sales of Assets
|
15,470 | 6,194 | ||||||
Net
Cash Flows Used for Investing Activities
|
(296,095 | ) | (378,985 | ) | ||||
FINANCING
ACTIVITIES
|
||||||||
Capital
Contribution from Parent
|
125,000 | - | ||||||
Issuance
of Long-term Debt – Nonaffiliated
|
617,111 | 73,438 | ||||||
Change
in Advances from Affiliates, Net
|
(171,455 | ) | 212,641 | |||||
Retirement
of Long-term Debt – Nonaffiliated
|
(412,782 | ) | (125,006 | ) | ||||
Principal
Payments for Capital Lease Obligations
|
(2,077 | ) | (2,200 | ) | ||||
Amortization
of Funds From Amended Coal Contract
|
- | (20,868 | ) | |||||
Dividends
Paid on Common Stock
|
- | (25,000 | ) | |||||
Dividends
Paid on Cumulative Preferred Stock
|
(399 | ) | (400 | ) | ||||
Net
Cash Flows from Financing Activities
|
155,398 | 112,605 | ||||||
Net
Decrease in Cash and Cash Equivalents
|
(319 | ) | (966 | ) | ||||
Cash
and Cash Equivalents at Beginning of Period
|
2,195 | 2,318 | ||||||
Cash
and Cash Equivalents at End of Period
|
$ | 1,876 | $ | 1,352 | ||||
SUPPLEMENTARY
INFORMATION
|
||||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$ | 86,873 | $ | 69,823 | ||||
Net
Cash Paid (Received) for Income Taxes
|
(10,708 | ) | 6,197 | |||||
Noncash
Acquisitions Under Capital Leases
|
1,014 | 1,693 | ||||||
Construction
Expenditures Included in Accounts Payable at June 30,
|
98,958 | 97,044 |
Footnote
Reference
|
|
Significant
Accounting Matters
|
Note
1
|
New
Accounting Pronouncements and Extraordinary Item
|
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
|
Results of
Operations
|
Second
Quarter of 2007
|
$ | 80 | ||||||
Changes
in Gross Margin:
|
||||||||
Retail
Margins
|
(13 | ) | ||||||
Off-system
Sales
|
10 | |||||||
Transmission
Revenues
|
1 | |||||||
Total
Change in Gross Margin
|
(2 | ) | ||||||
Changes
in Operating Expenses and Other:
|
||||||||
Other
Operation and Maintenance
|
(30 | ) | ||||||
Depreciation
and Amortization
|
2 | |||||||
Taxes
Other Than Income Taxes
|
(5 | ) | ||||||
Interest
Expense
|
(1 | ) | ||||||
Other
|
1 | |||||||
Total
Change in Operating Expenses and Other
|
(33 | ) | ||||||
Income
Tax Expense
|
11 | |||||||
Second
Quarter of 2008
|
$ | 56 |
·
|
Retail
Margins decreased $13 million primarily due to:
|
|
·
|
A
$32 million decrease related to increased fuel and PJM
expenses.
|
|
·
|
A
$12 million decrease in residential and commercial revenue primarily due
to a 55% decrease in heating degree days and a 24% decrease in cooling
degree days.
|
|
These
decreases were partially offset by:
|
||
·
|
A
$26 million increase related to a net increase in rates
implemented.
|
|
·
|
A
$7 million decrease in capacity purchases related to CSPCo’s unit power
agreement for AEGCo’s Lawrenceburg Plant which began in May 2007 and the
April 2007 acquisition of the Darby Plant.
|
|
·
|
A
$4 million increase in industrial revenue due to increased usage by Ormet,
a major industrial customer.
|
|
·
|
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 $30 million due
to:
|
|
·
|
A
$9 million increase in recoverable PJM costs.
|
|
·
|
An
$8 million increase in steam plant maintenance expenses primarily related
to work performed at the Conesville Plant.
|
|
·
|
A
$4 million increase in boiler plant removal expenses primarily related to
work performed at the Conesville Plant.
|
|
·
|
A
$4 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 recoverable customer account expenses related to
the Universal Service Fund for customers who qualify for payment
assistance.
|
|
·
|
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 $5 million due to property tax
adjustments.
|
|
·
|
Income
Tax Expense decreased $11 million primarily due to a decrease in pretax
book income.
|
Six
Months Ended June 30, 2007
|
$ | 127 | ||||||
Changes
in Gross Margin:
|
||||||||
Retail
Margins
|
40 | |||||||
Off-system
Sales
|
20 | |||||||
Transmission
Revenues
|
1 | |||||||
Total
Change in Gross Margin
|
61 | |||||||
Changes
in Operating Expenses and Other:
|
||||||||
Other
Operation and Maintenance
|
(43 | ) | ||||||
Depreciation
and Amortization
|
4 | |||||||
Taxes
Other Than Income Taxes
|
(9 | ) | ||||||
Other
Income
|
5 | |||||||
Interest
Expense
|
(5 | ) | ||||||
Total
Change in Operating Expenses and Other
|
(48 | ) | ||||||
Income
Tax Expense
|
(7 | ) | ||||||
Six
Months Ended June 30, 2008
|
$ | 133 |
·
|
Retail
Margins increased $40 million primarily due to:
|
|
·
|
A
$58 million increase related to a net increase in rates
implemented.
|
|
·
|
A
$39 million decrease in capacity settlement charges related to CSPCo’s
unit power agreement for AEGCo’s Lawrenceburg Plant which began in May
2007 and the April 2007 acquisition of the Darby Plant.
|
|
·
|
A
$15 million increase in industrial revenue due to increased usage by
Ormet, a major industrial customer.
|
|
These
increases were partially offset by:
|
||
·
|
A
$60 million decrease related to increased fuel and PJM
expenses.
|
|
·
|
A
$9 million decrease in residential and commercial revenue primarily due to
a 25% decrease in cooling degree days.
|
|
·
|
Margins
from Off-system Sales increased $20 million primarily due to higher
physical sales margins and higher trading
margins.
|
·
|
Other
Operation and Maintenance expenses increased $43 million primarily due
to:
|
|
·
|
A
$13 million increase in expenses related to CSPCo’s unit power agreement
for AEGCo’s Lawrenceburg Plant which began in May 2007.
|
|
·
|
A
$12 million increase in steam plant maintenance expenses primarily related
to work performed at the Conesville Plant.
|
|
·
|
An
$8 million increase in recoverable PJM expenses.
|
|
·
|
A
$5 million increase in recoverable customer account expenses related to
the Universal Service Fund for customers who qualify for payment
assistance.
|
|
·
|
A
$3 million increase in boiler plant removal expenses primarily related to
work performed at the Conesville Plant.
|
|
·
|
Depreciation
and Amortization decreased $4 million primarily due to a $6 million
decrease in amortization of IGCC pre-construction costs offset by a $3
million increase related to the acquisition of the Darby Plant in
2007.
|
|
·
|
Taxes
Other Than Income Taxes increased $9 million due to property tax
adjustments.
|
|
·
|
Interest
Expense increased $5 million due to increased long-term borrowings and an
increase in short-term borrowings from the Utility Money
Pool.
|
|
·
|
Income
Tax Expense increased $7 million primarily due to an increase in pretax
book income and state income taxes.
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
REVENUES
|
||||||||||||||||
Electric
Generation, Transmission and Distribution
|
$ | 500,056 | $ | 469,648 | $ | 1,005,380 | $ | 893,114 | ||||||||
Sales
to AEP Affiliates
|
47,413 | 35,356 | 82,521 | 58,369 | ||||||||||||
Other
|
1,478 | 1,018 | 2,695 | 2,451 | ||||||||||||
TOTAL
|
548,947 | 506,022 | 1,090,596 | 953,934 | ||||||||||||
EXPENSES
|
||||||||||||||||
Fuel
and Other Consumables Used for Electric Generation
|
86,253 | 76,342 | 171,380 | 152,204 | ||||||||||||
Purchased
Electricity for Resale
|
45,010 | 32,835 | 87,196 | 64,146 | ||||||||||||
Purchased
Electricity from AEP Affiliates
|
110,578 | 87,788 | 204,682 | 171,329 | ||||||||||||
Other
Operation
|
84,955 | 62,516 | 158,021 | 123,675 | ||||||||||||
Maintenance
|
34,435 | 26,723 | 57,666 | 49,287 | ||||||||||||
Depreciation
and Amortization
|
47,693 | 49,446 | 96,295 | 99,743 | ||||||||||||
Taxes
Other Than Income Taxes
|
40,989 | 35,796 | 85,545 | 76,378 | ||||||||||||
TOTAL
|
449,913 | 371,446 | 860,785 | 736,762 | ||||||||||||
OPERATING
INCOME
|
99,034 | 134,576 | 229,811 | 217,172 | ||||||||||||
Other
Income (Expense):
|
||||||||||||||||
Interest
Income
|
1,603 | 194 | 3,942 | 616 | ||||||||||||
Carrying
Costs Income
|
1,538 | 1,139 | 3,304 | 2,231 | ||||||||||||
Allowance
for Equity Funds Used During Construction
|
565 | 620 | 1,420 | 1,392 | ||||||||||||
Interest
Expense
|
(17,246 | ) | (16,382 | ) | (36,485 | ) | (31,663 | ) | ||||||||
INCOME
BEFORE INCOME TAX EXPENSE
|
85,494 | 120,147 | 201,992 | 189,748 | ||||||||||||
Income
Tax Expense
|
29,101 | 40,125 | 69,446 | 62,745 | ||||||||||||
NET INCOME | 56,393 | 80,022 | 132,546 | 127,003 | ||||||||||||
Capital
Stock Expense
|
40 | 40 | 79 | 79 | ||||||||||||
EARNINGS APPLICABLE TO COMMON STOCK | $ | 56,353 | $ | 79,982 | $ | 132,467 | $ | 126,924 |
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
|
(40,000 | ) | (40,000 | ) | ||||||||||||||||
Capital
Stock Expense
|
79 | (79 | ) | - | ||||||||||||||||
TOTAL
|
1,012,995 | |||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other
Comprehensive Income, Net of Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $360
|
669 | 669 | ||||||||||||||||||
NET
INCOME
|
127,003 | 127,003 | ||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
127,672 | |||||||||||||||||||
JUNE
30, 2007
|
$ | 41,026 | $ | 580,271 | $ | 540,689 | $ | (21,319 | ) | $ | 1,140,667 | |||||||||
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
|
(62,500 | ) | (62,500 | ) | ||||||||||||||||
Capital
Stock Expense
|
79 | (79 | ) | - | ||||||||||||||||
TOTAL
|
1,100,366 | |||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other
Comprehensive Income (Loss), Net of Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $5,090
|
(9,451 | ) | (9,451 | ) | ||||||||||||||||
Amortization
of Pension and OPEB Deferred
Costs,
Net of Tax of $304
|
564 | 564 | ||||||||||||||||||
NET
INCOME
|
132,546 | 132,546 | ||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
123,659 | |||||||||||||||||||
JUNE
30, 2008
|
$ | 41,026 | $ | 580,428 | $ | 630,252 | $ | (27,681 | ) | $ | 1,224,025 |
2008
|
2007
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
and Cash Equivalents
|
$ | 1,591 | $ | 1,389 | ||||
Other
Cash Deposits
|
36,975 | 53,760 | ||||||
Advances
to Affiliates
|
25,199 | - | ||||||
Accounts
Receivable:
|
||||||||
Customers
|
78,715 | 57,268 | ||||||
Affiliated Companies
|
20,346 | 32,852 | ||||||
Accrued Unbilled Revenues
|
18,759 | 14,815 | ||||||
Miscellaneous
|
15,238 | 9,905 | ||||||
Allowance for Uncollectible Accounts
|
(2,647 | ) | (2,563 | ) | ||||
Total
Accounts Receivable
|
130,411 | 112,277 | ||||||
Fuel
|
37,196 | 35,849 | ||||||
Materials
and Supplies
|
37,191 | 36,626 | ||||||
Emission
Allowances
|
11,766 | 16,811 | ||||||
Risk
Management Assets
|
111,622 | 33,558 | ||||||
Prepayments
and Other
|
17,153 | 9,960 | ||||||
TOTAL
|
409,104 | 300,230 | ||||||
PROPERTY,
PLANT AND EQUIPMENT
|
||||||||
Electric:
|
||||||||
Production
|
2,135,486 | 2,072,564 | ||||||
Transmission
|
563,847 | 510,107 | ||||||
Distribution
|
1,577,693 | 1,552,999 | ||||||
Other
|
205,097 | 198,476 | ||||||
Construction
Work in Progress
|
464,286 | 415,327 | ||||||
Total
|
4,946,409 | 4,749,473 | ||||||
Accumulated
Depreciation and Amortization
|
1,749,038 | 1,697,793 | ||||||
TOTAL
- NET
|
3,197,371 | 3,051,680 | ||||||
OTHER
NONCURRENT ASSETS
|
||||||||
Regulatory
Assets
|
218,323 | 235,883 | ||||||
Long-term
Risk Management Assets
|
61,708 | 41,852 | ||||||
Deferred
Charges and Other
|
146,808 | 181,563 | ||||||
TOTAL
|
426,839 | 459,298 | ||||||
TOTAL
ASSETS
|
$ | 4,033,314 | $ | 3,811,208 |
2008
|
2007
|
|||||||
CURRENT
LIABILITIES
|
(in
thousands)
|
|||||||
Advances
from Affiliates
|
$ | - | $ | 95,199 | ||||
Accounts
Payable:
|
||||||||
General
|
150,298 | 113,290 | ||||||
Affiliated
Companies
|
57,025 | 65,292 | ||||||
Long-term
Debt Due Within One Year – Nonaffiliated
|
- | 112,000 | ||||||
Risk
Management Liabilities
|
131,260 | 28,237 | ||||||
Customer
Deposits
|
45,190 | 43,095 | ||||||
Accrued
Taxes
|
154,288 | 179,831 | ||||||
Other
|
85,794 | 96,892 | ||||||
TOTAL
|
623,855 | 733,836 | ||||||
NONCURRENT
LIABILITIES
|
||||||||
Long-term
Debt – Nonaffiliated
|
1,343,388 | 1,086,224 | ||||||
Long-term
Debt – Affiliated
|
100,000 | 100,000 | ||||||
Long-term
Risk Management Liabilities
|
49,103 | 27,419 | ||||||
Deferred
Income Taxes
|
440,884 | 437,306 | ||||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
159,635 | 165,635 | ||||||
Deferred
Credits and Other
|
92,424 | 96,511 | ||||||
TOTAL
|
2,185,434 | 1,913,095 | ||||||
TOTAL
LIABILITIES
|
2,809,289 | 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
|
580,428 | 580,349 | ||||||
Retained
Earnings
|
630,252 | 561,696 | ||||||
Accumulated
Other Comprehensive Income (Loss)
|
(27,681 | ) | (18,794 | ) | ||||
TOTAL
|
1,224,025 | 1,164,277 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDER’S EQUITY
|
$ | 4,033,314 | $ | 3,811,208 |
2008
|
2007
|
||||||||
OPERATING
ACTIVITIES
|
|||||||||
Net
Income
|
$ | 132,546 | $ | 127,003 | |||||
Adjustments
to Reconcile Net Income to Net Cash Flows from Operating
Activities:
|
|||||||||
Depreciation
and Amortization
|
96,295 | 99,743 | |||||||
Deferred
Income Taxes
|
9,670 | (5,077 | ) | ||||||
Carrying
Costs Income
|
(3,304 | ) | (2,231 | ) | |||||
Allowance
for Equity Funds Used During Construction
|
(1,420 | ) | (1,392 | ) | |||||
Mark-to-Market
of Risk Management Contracts
|
10,859 | 6,842 | |||||||
Deferred
Property Taxes
|
43,745 | 39,063 | |||||||
Change
in Other Noncurrent Assets
|
(19,046 | ) | (24,593 | ) | |||||
Change
in Other Noncurrent Liabilities
|
(2,759 | ) | (7,054 | ) | |||||
Changes
in Certain Components of Working Capital:
|
|||||||||
Accounts Receivable, Net
|
(18,134 | ) | 7,678 | ||||||
Fuel, Materials and Supplies
|
(1,912 | ) | (8,896 | ) | |||||
Accounts Payable
|
8,747 | (10,735 | ) | ||||||
Customer Deposits
|
2,095 | 15,616 | |||||||
Accrued Taxes, Net
|
(25,530 | ) | 5,493 | ||||||
Other Current Assets
|
(2,160 | ) | 8,601 | ||||||
Other Current Liabilities
|
(13,657 | ) | (1,952 | ) | |||||
Net
Cash Flows from Operating Activities
|
216,035 | 248,109 | |||||||
INVESTING
ACTIVITIES
|
|||||||||
Construction
Expenditures
|
(191,668 | ) | (169,014 | ) | |||||
Change
in Other Cash Deposits, Net
|
16,785 | (20 | ) | ||||||
Change
in Advances to Affiliates, Net
|
(25,199 | ) | - | ||||||
Acquisition
of Darby Plant
|
- | (102,032 | ) | ||||||
Proceeds
from Sales of Assets
|
700 | 842 | |||||||
Net
Cash Flows Used for Investing Activities
|
(199,382 | ) | (270,224 | ) | |||||
FINANCING
ACTIVITIES
|
|||||||||
Issuance
of Long-term Debt – Nonaffiliated
|
346,934 | - | |||||||
Change
in Advances from Affiliates, Net
|
(95,199 | ) | 63,307 | ||||||
Retirement
of Long-term Debt – Nonaffiliated
|
(204,245 | ) | - | ||||||
Principal
Payments for Capital Lease Obligations
|
(1,441 | ) | (1,446 | ) | |||||
Dividends
Paid on Common Stock
|
(62,500 | ) | (40,000 | ) | |||||
Net
Cash Flows from (Used for) Financing Activities
|
(16,451 | ) | 21,861 | ||||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
202 | (254 | ) | ||||||
Cash
and Cash Equivalents at Beginning of Period
|
1,389 | 1,319 | |||||||
Cash
and Cash Equivalents at End of Period
|
$ | 1,591 | $ | 1,065 | |||||
SUPPLEMENTARY
INFORMATION
|
|||||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$ | 38,531 | $ | 31,557 | |||||
Net
Cash Paid for Income Taxes
|
22,307 | 1,704 | |||||||
Noncash
Acquisitions Under Capital Leases
|
1,228 | 1,347 | |||||||
Construction
Expenditures Included in Accounts Payable at June 30,
|
62,157 | 30,659 | |||||||
Noncash
Assumption of Liabilities Related to Acquisition of Darby
Plant
|
- | 2,339 |
Footnote
Reference
|
|
Significant
Accounting Matters
|
Note
1
|
New
Accounting Pronouncements and Extraordinary Item
|
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
|
Second
Quarter of 2007
|
$ | 30 | ||||||
Changes
in Gross Margin:
|
||||||||
Retail
Margins
|
(3 | ) | ||||||
FERC
Municipals and Cooperatives
|
3 | |||||||
Off-system
Sales
|
5 | |||||||
Other
|
10 | |||||||
Total
Change in Gross Margin
|
15 | |||||||
Changes
in Operating Expenses and Other:
|
||||||||
Other
Operation and Maintenance
|
(14 | ) | ||||||
Depreciation
and Amortization
|
22 | |||||||
Taxes
Other Than Income Taxes
|
(1 | ) | ||||||
Interest
Expense
|
3 | |||||||
Total
Change in Operating Expenses and Other
|
10 | |||||||
Income
Tax Expense
|
(5 | ) | ||||||
Second
Quarter of 2008
|
$ | 50 |
·
|
Retail
Margins decreased $3 million primarily due to lower retail sales
reflecting weather conditions as cooling degree days decreased
significantly in both the Indiana and Michigan
jurisdictions.
|
·
|
FERC
Municipals and Cooperatives margins increased $3 million due to higher
revenues under formula rate plans in 2008.
|
·
|
Margins
from Off-system Sales increased $5 million primarily due to higher
physical sales margins partially offset by lower trading
margins.
|
·
|
Other
revenues increased $10 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 earning only a return approved under a
regulatory order.
|
·
|
Other
Operation and Maintenance expenses increased $14 million primarily due to
higher operation and maintenance expenses for RTD of $12 million caused by
increased barging activity and increased cost of fuel. Nuclear
operation and maintenance expense increases were offset by lower
coal-fired plant maintenance expenses. Scheduled outages
occurred at Cook Plant in 2008 and Rockport Plant in
2007.
|
·
|
Depreciation
and Amortization expense decreased $22 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 $5 million primarily due to an increase in pretax
book income and a decrease in amortization of investment tax credits
partially offset by changes in certain book/tax differences accounted for
on a flow-through basis and a decrease in state income
tax.
|
Six
Months Ended June 30, 2007
|
$ | 59 | ||||||
Changes
in Gross Margin:
|
||||||||
Retail
Margins
|
(2 | ) | ||||||
FERC
Municipals and Cooperatives
|
7 | |||||||
Off-system
Sales
|
14 | |||||||
Transmission
Revenues
|
(1 | ) | ||||||
Other
|
18 | |||||||
Total
Change in Gross Margin
|
36 | |||||||
Changes
in Operating Expenses and Other:
|
||||||||
Other
Operation and Maintenance
|
(23 | ) | ||||||
Depreciation
and Amortization
|
47 | |||||||
Taxes
Other Than Income Taxes
|
(3 | ) | ||||||
Other
Income
|
2 | |||||||
Interest
Expense
|
3 | |||||||
Total
Change in Operating Expenses and Other
|
26 | |||||||
Income
Tax Expense
|
(16 | ) | ||||||
Six
Months Ended June 30, 2008
|
$ | 105 |
·
|
FERC
Municipals and Cooperatives margins increased $7 million due to higher
revenues under formula rate plans in 2008.
|
·
|
Margins
from Off-system Sales increased $14 million primarily due to higher
physical sales margins partially offset by lower trading
margins.
|
·
|
Other
revenues increased $18 million primarily due to increased 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 earning only a return
approved under regulatory
order.
|
·
|
Other Operation
and Maintenance expenses increased $23 million primarily due to higher
operation and maintenance expenses for RTD of $19 million caused by
increased barging activity and increased cost of fuel. Nuclear
operation and maintenance expense increases were offset by lower
coal-fired plant maintenance and accretion expenses. Scheduled
outages occurred at Cook Plant in 2008 and Rockport Plant in
2007.
|
·
|
Depreciation
and Amortization expense decreased $47 million primarily due to the
reduced depreciation rates in all jurisdictions.
|
·
|
Income
Tax Expense increased $16 million primarily due to an increase in pretax
book income and a decrease in amortization of investment tax credits
partially offset by changes in certain book/tax differences accounted for
on a flow-through basis.
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
REVENUES
|
||||||||||||||||
Electric
Generation, Transmission and Distribution
|
$ | 425,018 | $ | 402,152 | $ | 856,610 | $ | 807,316 | ||||||||
Sales
to AEP Affiliates
|
83,927 | 62,962 | 160,439 | 130,391 | ||||||||||||
Other
– Affiliated
|
29,257 | 14,571 | 52,476 | 27,238 | ||||||||||||
Other
– Nonaffiliated
|
4,445 | 6,352 | 10,271 | 13,961 | ||||||||||||
TOTAL
|
542,647 | 486,037 | 1,079,796 | 978,906 | ||||||||||||
EXPENSES
|
||||||||||||||||
Fuel
and Other Consumables Used for Electric Generation
|
108,496 | 90,650 | 209,737 | 186,767 | ||||||||||||
Purchased
Electricity for Resale
|
26,441 | 19,310 | 47,924 | 37,250 | ||||||||||||
Purchased
Electricity from AEP Affiliates
|
91,858 | 75,791 | 184,499 | 153,304 | ||||||||||||
Other
Operation
|
124,687 | 117,311 | 245,053 | 238,044 | ||||||||||||
Maintenance
|
52,608 | 45,725 | 103,829 | 88,155 | ||||||||||||
Depreciation
and Amortization
|
31,757 | 53,890 | 63,479 | 110,197 | ||||||||||||
Taxes
Other Than Income Taxes
|
20,342 | 19,238 | 40,244 | 37,232 | ||||||||||||
TOTAL
|
456,189 | 421,915 | 894,765 | 850,949 | ||||||||||||
OPERATING
INCOME
|
86,458 | 64,122 | 185,031 | 127,957 | ||||||||||||
Other
Income (Expense):
|
||||||||||||||||
Interest
Income
|
1,904 | 707 | 2,733 | 1,295 | ||||||||||||
Allowance
for Equity Funds Used During Construction
|
128 | 727 | 1,008 | 992 | ||||||||||||
Interest
Expense
|
(17,146 | ) | (19,611 | ) | (36,348 | ) | (39,432 | ) | ||||||||
INCOME
BEFORE INCOME TAX EXPENSE
|
71,344 | 45,945 | 152,424 | 90,812 | ||||||||||||
Income
Tax Expense
|
21,200 | 15,910 | 47,022 | 31,314 | ||||||||||||
NET
INCOME
|
50,144 | 30,035 | 105,402 | 59,498 | ||||||||||||
Preferred
Stock Dividend Requirements
|
85 | 85 | 170 | 170 | ||||||||||||
EARNINGS
APPLICABLE TO COMMON STOCK
|
$ | 50,059 | $ | 29,950 | $ | 105,232 | $ | 59,328 |
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
|
(20,000 | ) | (20,000 | ) | ||||||||||||||||
Preferred
Stock Dividends
|
(170 | ) | (170 | ) | ||||||||||||||||
Gain
on Reacquired Preferred Stock
|
1 | 1 | ||||||||||||||||||
TOTAL
|
1,269,597 | |||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other
Comprehensive Income, Net of Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $649
|
1,206 | 1,206 | ||||||||||||||||||
NET
INCOME
|
59,498 | 59,498 | ||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
60,704 | |||||||||||||||||||
JUNE
30, 2007
|
$ | 56,584 | $ | 861,291 | $ | 426,271 | $ | (13,845 | ) | $ | 1,330,301 | |||||||||
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
|
(37,500 | ) | (37,500 | ) | ||||||||||||||||
Preferred
Stock Dividends
|
(170 | ) | (170 | ) | ||||||||||||||||
TOTAL
|
1,346,631 | |||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other
Comprehensive Income (Loss), Net of Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $4,618
|
(8,577 | ) | (8,577 | ) | ||||||||||||||||
Amortization
of Pension and OPEB Deferred
Costs,
Net of Tax of $118
|
220 | 220 | ||||||||||||||||||
NET
INCOME
|
105,402 | 105,402 | ||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
97,045 | |||||||||||||||||||
JUNE
30, 2008
|
$ | 56,584 | $ | 861,291 | $ | 549,833 | $ | (24,032 | ) | $ | 1,443,676 |
2008
|
2007
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
and Cash Equivalents
|
$ | 982 | $ | 1,139 | ||||
Accounts
Receivable:
|
||||||||
Customers
|
97,676 | 70,995 | ||||||
Affiliated Companies
|
62,238 | 92,018 | ||||||
Accrued Unbilled Revenues
|
13,432 | 16,207 | ||||||
Miscellaneous
|
1,080 | 1,335 | ||||||
Allowance for Uncollectible Accounts
|
(2,776 | ) | (2,711 | ) | ||||
Total
Accounts Receivable
|
171,650 | 177,844 | ||||||
Fuel
|
56,541 | 61,342 | ||||||
Materials
and Supplies
|
145,091 | 141,384 | ||||||
Risk
Management Assets
|
105,164 | 32,365 | ||||||
Accrued
Tax Benefits
|
10,619 | 4,438 | ||||||
Prepayments
and Other
|
22,870 | 11,091 | ||||||
TOTAL
|
512,917 | 429,603 | ||||||
PROPERTY,
PLANT AND EQUIPMENT
|
||||||||
Electric:
|
||||||||
Production
|
3,507,581 | 3,529,524 | ||||||
Transmission
|
1,094,164 | 1,078,575 | ||||||
Distribution
|
1,242,898 | 1,196,397 | ||||||
Other
(including nuclear fuel and coal mining)
|
608,205 | 626,390 | ||||||
Construction
Work in Progress
|
135,723 | 122,296 | ||||||
Total
|
6,588,571 | 6,553,182 | ||||||
Accumulated
Depreciation, Depletion and Amortization
|
2,988,253 | 2,998,416 | ||||||
TOTAL
- NET
|
3,600,318 | 3,554,766 | ||||||
OTHER
NONCURRENT ASSETS
|
||||||||
Regulatory
Assets
|
263,951 | 246,435 | ||||||
Spent
Nuclear Fuel and Decommissioning Trusts
|
1,361,927 | 1,346,798 | ||||||
Long-term
Risk Management Assets
|
58,516 | 40,227 | ||||||
Deferred
Charges and Other
|
134,693 | 128,623 | ||||||
TOTAL
|
1,819,087 | 1,762,083 | ||||||
TOTAL
ASSETS
|
$ | 5,932,322 | $ | 5,746,452 |
2008
|
2007
|
|||||||
CURRENT
LIABILITIES
|
(in
thousands)
|
|||||||
Advances
from Affiliates
|
$ | 272,707 | $ | 45,064 | ||||
Accounts
Payable:
|
||||||||
General
|
107,120 | 184,435 | ||||||
Affiliated
Companies
|
47,603 | 61,749 | ||||||
Long-term
Debt Due Within One Year – Nonaffiliated
|
50,000 | 145,000 | ||||||
Risk
Management Liabilities
|
124,092 | 27,271 | ||||||
Customer
Deposits
|
27,341 | 26,445 | ||||||
Accrued
Taxes
|
73,783 | 60,995 | ||||||
Obligations
Under Capital Leases
|
44,388 | 43,382 | ||||||
Other
|
108,766 | 130,232 | ||||||
TOTAL
|
855,800 | 724,573 | ||||||
NONCURRENT
LIABILITIES
|
||||||||
Long-term
Debt – Nonaffiliated
|
1,375,757 | 1,422,427 | ||||||
Long-term
Risk Management Liabilities
|
46,777 | 26,348 | ||||||
Deferred
Income Taxes
|
370,242 | 321,716 | ||||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
767,385 | 789,346 | ||||||
Asset
Retirement Obligations
|
874,941 | 852,646 | ||||||
Deferred
Credits and Other
|
189,664 | 215,617 | ||||||
TOTAL
|
3,624,766 | 3,628,100 | ||||||
TOTAL
LIABILITIES
|
4,480,566 | 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
|
549,833 | 483,499 | ||||||
Accumulated
Other Comprehensive Income (Loss)
|
(24,032 | ) | (15,675 | ) | ||||
TOTAL
|
1,443,676 | 1,385,699 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$ | 5,932,322 | $ | 5,746,452 |
2008
|
2007
|
|||||||
OPERATING
ACTIVITIES
|
||||||||
Net
Income
|
$ | 105,402 | $ | 59,498 | ||||
Adjustments
to Reconcile Net Income to Net Cash Flows from Operating
Activities:
|
||||||||
Depreciation
and Amortization
|
63,479 | 110,197 | ||||||
Deferred
Income Taxes
|
41,362 | (9,547 | ) | |||||
Amortization
(Deferral) of Incremental Nuclear Refueling Outage Expenses,
Net
|
(8,576 | ) | 23,099 | |||||
Allowance
for Equity Funds Used During Construction
|
(1,008 | ) | (992 | ) | ||||
Mark-to-Market
of Risk Management Contracts
|
10,862 | 6,903 | ||||||
Amortization
of Nuclear Fuel
|
45,312 | 33,003 | ||||||
Change
in Other Noncurrent Assets
|
(9,103 | ) | (11,316 | ) | ||||
Change
in Other Noncurrent Liabilities
|
19,847 | 19,425 | ||||||
Changes
in Certain Components of Working Capital:
|
||||||||
Accounts Receivable, Net
|
6,194 | 36,805 | ||||||
Fuel, Materials and Supplies
|
1,094 | 9,911 | ||||||
Accounts Payable
|
449 | (46,049 | ) | |||||
Accrued Taxes, Net
|
6,607 | 72,977 | ||||||
Other Current Assets
|
(11,777 | ) | 3,373 | |||||
Other Current Liabilities
|
(23,583 | ) | (16,388 | ) | ||||
Net
Cash Flows from Operating Activities
|
246,561 | 290,899 | ||||||
INVESTING
ACTIVITIES
|
||||||||
Construction
Expenditures
|
(140,537 | ) | (124,252 | ) | ||||
Purchases
of Investment Securities
|
(276,031 | ) | (409,163 | ) | ||||
Sales
of Investment Securities
|
241,079 | 370,986 | ||||||
Acquisitions
of Nuclear Fuel
|
(98,732 | ) | (30,498 | ) | ||||
Proceeds
from Sales of Assets and Other
|
2,912 | 292 | ||||||
Net
Cash Flows Used for Investing Activities
|
(271,309 | ) | (192,635 | ) | ||||
FINANCING
ACTIVITIES
|
||||||||
Issuance
of Long-term Debt – Nonaffiliated
|
115,553 | - | ||||||
Change
in Advances from Affiliates, Net
|
227,643 | (76,232 | ) | |||||
Retirement
of Long-term Debt – Nonaffiliated
|
(262,000 | ) | - | |||||
Retirement
of Cumulative Preferred Stock
|
- | (2 | ) | |||||
Principal
Payments for Capital Lease Obligations
|
(18,935 | ) | (2,622 | ) | ||||
Dividends
Paid on Common Stock
|
(37,500 | ) | (20,000 | ) | ||||
Dividends
Paid on Cumulative Preferred Stock
|
(170 | ) | (170 | ) | ||||
Net
Cash Flows from (Used for) Financing Activities
|
24,591 | (99,026 | ) | |||||
Net
Decrease in Cash and Cash Equivalents
|
(157 | ) | (762 | ) | ||||
Cash
and Cash Equivalents at Beginning of Period
|
1,139 | 1,369 | ||||||
Cash
and Cash Equivalents at End of Period
|
$ | 982 | $ | 607 | ||||
SUPPLEMENTARY
INFORMATION
|
||||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$ | 38,706 | $ | 32,082 | ||||
Net
Cash Paid (Received) for Income Taxes
|
13,827 | (20,001 | ) | |||||
Noncash
Acquisitions Under Capital Leases
|
2,911 | 1,160 | ||||||
Construction
Expenditures Included in Accounts Payable at June 30,
|
20,650 | 24,145 | ||||||
Acquisition
of Nuclear Fuel Included in Accounts Payable at June 30,
|
- | 30,867 |
Footnote
Reference
|
|
Significant
Accounting Matters
|
Note
1
|
New
Accounting Pronouncements and Extraordinary Item
|
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
|
Second
Quarter of 2007
|
$ | 74 | ||||||
Changes
in Gross Margin:
|
||||||||
Retail
Margins
|
(46 | ) | ||||||
Off-system
Sales
|
9 | |||||||
Other
|
2 | |||||||
Total
Change in Gross Margin
|
(35 | ) | ||||||
Changes
in Operating Expenses and Other:
|
||||||||
Other
Operation and Maintenance
|
(13 | ) | ||||||
Depreciation
and Amortization
|
14 | |||||||
Taxes
Other Than Income Taxes
|
4 | |||||||
Other
Income
|
2 | |||||||
Interest
Expense
|
(8 | ) | ||||||
Total
Change in Operating Expenses and Other
|
(1 | ) | ||||||
Income
Tax Expense
|
15 | |||||||
Second
Quarter of 2008
|
$ | 53 |
·
|
Retail
Margins decreased $46 million primarily due to the
following:
|
|
|
·
|
A
$29 million decrease related to a coal contract amendment in the second
quarter of 2008.
|
·
|
A
$29 million decrease related to increased fuel, consumable, allowance and
PJM expenses.
|
|
·
|
A
$6 million decrease in residential revenue primarily due to a 27% decrease
in cooling degree days and a 30% decrease in heating degree
days.
|
|
These
decreases were partially offset by:
|
||
·
|
A
$14 million increase related to a net increase in rates
implemented.
|
|
·
|
Margins
from Off-system Sales increased $9 million due to higher physical sales
margins partially offset by lower trading
margins.
|
·
|
Other
Operation and Maintenance expenses increased $13 million primarily due
to:
|
|
·
|
A
$10 million increase in recoverable PJM expenses.
|
|
·
|
A
$10 million increase in steam plant maintenance
expenses.
|
|
·
|
A
$3 million increase in recoverable customer account expenses related to
the Universal Service Fund for customers who qualify for payment
assistance.
|
|
These
increases were partially offset by:
|
||
·
|
A
$4 million decrease in overhead line maintenance
expenses.
|
|
·
|
A
$3 million decrease in removal expenses due to work performed at the
Cardinal, Mitchell and Gavin Plants in 2007.
|
|
·
|
Depreciation
and Amortization decreased $14 million primarily due
to:
|
|
·
|
A
$17 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
$6 million increase in depreciation related to environmental improvements
placed in service at the Cardinal Plant in 2008 and the Mitchell Plant in
July 2007.
|
|
·
|
Taxes
Other Than Income Taxes decreased $4 million primarily due to property tax
adjustments.
|
|
·
|
Interest
Expense increased $8 million primarily due to a decrease in the debt
component of AFUDC as a result of Mitchell Plant and Cardinal Plant
environmental improvements placed in service and higher interest rates on
variable rate debt.
|
|
·
|
Income
Tax Expense decreased $15 million primarily due to a decrease in pretax
book income.
|
Six
Months Ended June 30, 2007
|
$ | 154 | ||||||
Changes
in Gross Margin:
|
||||||||
Retail
Margins
|
(6 | ) | ||||||
Off-system
Sales
|
23 | |||||||
Other
|
9 | |||||||
Total
Change in Gross Margin
|
26 | |||||||
Changes
in Operating Expenses and Other:
|
||||||||
Other
Operation and Maintenance
|
10 | |||||||
Depreciation
and Amortization
|
29 | |||||||
Taxes
Other Than Income Taxes
|
1 | |||||||
Other
Income
|
5 | |||||||
Interest
Expense
|
(16 | ) | ||||||
Total
Change in Operating Expenses and Other
|
29 | |||||||
Income
Tax Expense
|
(18 | ) | ||||||
Six
Months Ended June 30, 2008
|
$ | 191 |
·
|
Retail
Margins decreased $6 million primarily due to the
following:
|
|
·
|
A
$76 million decrease related to increased fuel, consumable and PJM
expenses.
|
|
·
|
A
$5 million decrease in residential and commercial revenues primarily due
to a 28% decrease in cooling degree days.
|
|
These
decreases were partially offset by:
|
||
·
|
A
$29 million increase related to coal contract amendments in
2008.
|
|
·
|
A
$25 million increase related to a net increase in rates
implemented.
|
|
·
|
A
$15 million increase related to increased usage by Ormet, an industrial
customer. See “Ormet” section of Note 3.
|
|
·
|
A
$7 million increase in capacity settlements under the Interconnection
Agreement related to an increase in an affiliate’s
peak.
|
|
·
|
Margins
from Off-system Sales increased $23 million due to higher physical sales
margins and higher trading margins.
|
|
·
|
Other
revenues increased $9 million primarily due to increased gains on sales of
emission allowances.
|
·
|
Other
Operation and Maintenance expenses decreased $10 million primarily due
to:
|
|
·
|
A
$21 million decrease in removal expenses.
|
|
·
|
A
$9 million decrease in overhead line maintenance
expenses.
|
|
These
decreases were partially offset by:
|
||
·
|
A
$7 million increase in recoverable customer account expenses related to
the Universal Service Fund for customers who qualify for payment
assistance.
|
|
·
|
A
$7 million increase in recoverable PJM expenses.
|
|
·
|
Depreciation
and Amortization decreased $29 million primarily due
to:
|
|
·
|
A
$35 million decrease in amortization as a result of completion of
amortization of regulatory assets in December 2007.
|
|
·
|
A
$6 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
$14 million increase in depreciation related to environmental improvements
placed in service at the Cardinal Plant in 2008 and the Mitchell Plant
during 2007.
|
|
·
|
Interest
Expense increased $16 million primarily due to a decrease in the debt
component of AFUDC as a result of Mitchell Plant and Cardinal Plant
environmental improvements placed in service, the issuance of additional
long-term debt and higher interest rates on variable rate
debt.
|
|
·
|
Income
Tax Expense increased $18 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
|
289,944 | 279,029 | ||||||
Investing
Activities
|
(271,527 | ) | (560,262 | ) | ||||
Financing
Activities
|
(14,985 | ) | 282,607 | |||||
Net
Increase in Cash and Cash Equivalents
|
3,432 | 1,374 | ||||||
Cash
and Cash Equivalents at End of Period
|
$ | 10,098 | $ | 2,999 |
Principal
Amount
|
Interest
|
Due
|
|||||
Type
of Debt
|
Rate
|
Date
|
|||||
(in
thousands)
|
(%)
|
||||||
Pollution
Control Bonds
|
$
|
50,000
|
Variable
|
2014
|
|||
Pollution
Control Bonds
|
50,000
|
Variable
|
2014
|
||||
Pollution
Control Bonds
|
65,000
|
Variable
|
2036
|
Principal
Amount
Paid
|
Interest
|
Due
|
|||||
Type
of Debt
|
Rate
|
Date
|
|||||
(in
thousands)
|
(%)
|
||||||
Notes
Payable – Nonaffiliated
|
$
|
1,463
|
6.81
|
2008
|
|||
Notes
Payable – Nonaffiliated
|
6,000
|
6.27
|
2009
|
||||
Pollution
Control Bonds
|
50,000
|
Variable
|
2014
|
||||
Pollution
Control Bonds
|
50,000
|
Variable
|
2016
|
||||
Pollution
Control Bonds
|
50,000
|
Variable
|
2022
|
||||
Pollution
Control Bonds
|
35,000
|
Variable
|
2022
|
||||
Pollution
Control Bonds
|
65,000
|
Variable
|
2036
|
MTM
Risk Management Contracts
|
Cash
Flow
&
Fair
Value Hedges
|
DETM
Assignment (a)
|
Collateral
Deposits
|
Total
|
||||||||||||||||
Current
Assets
|
$ | 183,037 | $ | 1,530 | $ | - | $ | (10,714 | ) | $ | 173,853 | |||||||||
Noncurrent
Assets
|
93,550 | 254 | - | (5,974 | ) | 87,830 | ||||||||||||||
Total
MTM Derivative Contract Assets
|
276,587 | 1,784 | - | (16,688 | ) | 261,683 | ||||||||||||||
Current
Liabilities
|
(189,390 | ) | (22,777 | ) | (2,376 | ) | 17,082 | (197,461 | ) | |||||||||||
Noncurrent
Liabilities
|
(66,264 | ) | (901 | ) | (2,603 | ) | 4,305 | (65,463 | ) | |||||||||||
Total
MTM Derivative Contract Liabilities
|
(255,654 | ) | (23,678 | ) | (4,979 | ) | 21,387 | (262,924 | ) | |||||||||||
Total
MTM Derivative Contract Net Assets (Liabilities)
|
$ | 20,933 | $ | (21,894 | ) | $ | (4,979 | ) | $ | 4,699 | $ | (1,241 | ) |
(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
|
(5,931
|
)
|
||
Fair
Value of New Contracts at Inception When Entered During the Period
(a)
|
866
|
|||
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)
|
2,158
|
|||
Changes
in Fair Value Due to Market Fluctuations During the Period
(c)
|
4,368
|
|||
Changes
in Fair Value Allocated to Regulated Jurisdictions (d)
|
(10,712
|
)
|
||
Total
MTM Risk Management Contract Net Assets
|
20,933
|
|||
Net
Cash Flow & Fair Value Hedge Contracts
|
(21,894
|
)
|
||
DETM
Assignment (e)
|
(4,979
|
)
|
||
Collateral
Deposits
|
4,699
|
|||
Ending
Net Risk Management Assets at June 30, 2008
|
$
|
(1,241
|
)
|
(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)
|
“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)
|
$ | (1,938 | ) | $ | 330 | $ | (14 | ) | $ | - | $ | - | $ | - | $ | (1,622 | ) | |||||||||||
Level
2 (b)
|
(1,281 | ) | 13,609 | 8,184 | 3,604 | 1,247 | - | 25,363 | ||||||||||||||||||||
Level
3 (c)
|
(6,774 | ) | (1,096 | ) | (2,719 | ) | (1,752 | ) | (904 | ) | - | (13,245 | ) | |||||||||||||||
Total
|
(9,993 | ) | 12,843 | 5,451 | 1,852 | 343 | - | 10,496 | ||||||||||||||||||||
Dedesignated
Risk Management Contracts (d)
|
1,666 | 3,220 | 3,194 | 1,244 | 1,113 | - | 10,437 | |||||||||||||||||||||
Total
MTM Risk Management Contract
Net Assets (Liabilities)
|
$ | (8,327 | ) | $ | 16,063 | $ | 8,645 | $ | 3,096 | $ | 1,456 | $ | - | $ | 20,933 |
(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
|
(11,404 | ) | (899 | ) | 205 | (12,098 | ) | |||||||||
Reclassifications
from AOCI for Cash Flow Hedges
Settled
|
101 | (382 | ) | (123 | ) | (404 | ) | |||||||||
Ending
Balance in AOCI June 30, 2008
|
$ | (12,059 | ) | $ | 886 | $ | (172 | ) | $ | (11,345 | ) |
Six
Months Ended
|
Twelve
Months Ended
|
||||||||||||||
June
30, 2008
|
December
31, 2007
|
||||||||||||||
(in
thousands)
|
(in
thousands)
|
||||||||||||||
End
|
High
|
Average
|
Low
|
End
|
High
|
Average
|
Low
|
||||||||
$585
|
$1,048
|
$385
|
$132
|
$325
|
$2,054
|
$490
|
$90
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
REVENUES
|
||||||||||||||||
Electric
Generation, Transmission and Distribution
|
$ | 515,884 | $ | 480,445 | $ | 1,071,362 | $ | 972,979 | ||||||||
Sales
to AEP Affiliates
|
256,399 | 180,205 | 493,247 | 359,099 | ||||||||||||
Other
- Affiliated
|
6,487 | 6,817 | 11,786 | 10,855 | ||||||||||||
Other
- Nonaffiliated
|
3,591 | 3,466 | 8,154 | 7,441 | ||||||||||||
TOTAL
|
782,361 | 670,933 | 1,584,549 | 1,350,374 | ||||||||||||
EXPENSES
|
||||||||||||||||
Fuel
and Other Consumables Used for Electric Generation
|
330,190 | 201,338 | 569,124 | 399,631 | ||||||||||||
Purchased
Electricity for Resale
|
39,155 | 27,868 | 73,732 | 52,722 | ||||||||||||
Purchased
Electricity from AEP Affiliates
|
35,157 | 28,745 | 67,673 | 49,711 | ||||||||||||
Other
Operation
|
91,959 | 86,972 | 181,841 | 189,959 | ||||||||||||
Maintenance
|
59,218 | 50,617 | 107,915 | 109,765 | ||||||||||||
Depreciation
and Amortization
|
71,173 | 84,779 | 139,739 | 169,055 | ||||||||||||
Taxes
Other Than Income Taxes
|
45,937 | 50,320 | 97,515 | 98,705 | ||||||||||||
TOTAL
|
672,789 | 530,639 | 1,237,539 | 1,069,548 | ||||||||||||
OPERATING
INCOME
|
109,572 | 140,294 | 347,010 | 280,826 | ||||||||||||
Other
Income (Expense):
|
||||||||||||||||
Interest
Income
|
1,750 | 472 | 4,658 | 884 | ||||||||||||
Carrying
Costs Income
|
3,994 | 3,594 | 8,223 | 7,135 | ||||||||||||
Allowance
for Equity Funds Used During Construction
|
702 | 446 | 1,246 | 1,017 | ||||||||||||
Interest
Expense
|
(41,853 | ) | (33,734 | ) | (76,235 | ) | (59,665 | ) | ||||||||
INCOME
BEFORE INCOME TAX EXPENSE
|
74,165 | 111,072 | 284,902 | 230,197 | ||||||||||||
Income
Tax Expense
|
21,271 | 36,732 | 94,181 | 76,596 | ||||||||||||
NET
INCOME
|
52,894 | 74,340 | 190,721 | 153,601 | ||||||||||||
Preferred
Stock Dividend Requirements
|
183 | 183 | 366 | 366 | ||||||||||||
EARNINGS
APPLICABLE TO COMMON STOCK
|
$ | 52,711 | $ | 74,157 | $ | 190,355 | $ | 153,235 |
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
|
(366 | ) | (366 | ) | ||||||||||||||||
TOTAL
|
2,002,596 | |||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other
Comprehensive Income, Net of Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $523
|
971 | 971 | ||||||||||||||||||
NET
INCOME
|
153,601 | 153,601 | ||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
154,572 | |||||||||||||||||||
JUNE
30, 2007
|
$ | 321,201 | $ | 536,639 | $ | 1,355,120 | $ | (55,792 | ) | $ | 2,157,168 | |||||||||
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
|
(366 | ) | (366 | ) | ||||||||||||||||
TOTAL
|
2,288,505 | |||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other
Comprehensive Income (Loss), Net of Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $6,732
|
(12,502 | ) | (12,502 | ) | ||||||||||||||||
Amortization
of Pension and OPEB Deferred
Costs,
Net of Tax of $758
|
1,406 | 1,406 | ||||||||||||||||||
NET
INCOME
|
190,721 | 190,721 | ||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
179,625 | |||||||||||||||||||
JUNE
30, 2008
|
$ | 321,201 | $ | 536,640 | $ | 1,657,926 | $ | (47,637 | ) | $ | 2,468,130 |
2008
|
2007
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
and Cash Equivalents
|
$ | 10,098 | $ | 6,666 | ||||
Accounts
Receivable:
|
||||||||
Customers
|
117,920 | 104,783 | ||||||
Affiliated Companies
|
125,613 | 119,560 | ||||||
Accrued Unbilled Revenues
|
26,903 | 26,819 | ||||||
Miscellaneous
|
20,689 | 1,578 | ||||||
Allowance for Uncollectible Accounts
|
(3,502 | ) | (3,396 | ) | ||||
Total Accounts Receivable
|
287,623 | 249,344 | ||||||
Fuel
|
125,844 | 92,874 | ||||||
Materials
and Supplies
|
116,097 | 108,447 | ||||||
Risk
Management Assets
|
173,853 | 44,236 | ||||||
Prepayments
and Other
|
33,256 | 18,300 | ||||||
TOTAL
|
746,771 | 519,867 | ||||||
PROPERTY,
PLANT AND EQUIPMENT
|
||||||||
Electric:
|
||||||||
Production
|
5,906,996 | 5,641,537 | ||||||
Transmission
|
1,092,630 | 1,068,387 | ||||||
Distribution
|
1,424,744 | 1,394,988 | ||||||
Other
|
371,427 | 318,805 | ||||||
Construction
Work in Progress
|
586,892 | 716,640 | ||||||
Total
|
9,382,689 | 9,140,357 | ||||||
Accumulated
Depreciation and Amortization
|
3,032,379 | 2,967,285 | ||||||
TOTAL
- NET
|
6,350,310 | 6,173,072 | ||||||
OTHER
NONCURRENT ASSETS
|
||||||||
Regulatory
Assets
|
327,764 | 323,105 | ||||||
Long-term
Risk Management Assets
|
87,830 | 49,586 | ||||||
Deferred
Charges and Other
|
230,925 | 272,799 | ||||||
TOTAL
|
646,519 | 645,490 | ||||||
TOTAL
ASSETS
|
$ | 7,743,600 | $ | 7,338,429 |
2008
|
2007
|
|||||||
CURRENT
LIABILITIES
|
(in
thousands)
|
|||||||
Advances
from Affiliates
|
$ | 173,833 | $ | 101,548 | ||||
Accounts
Payable:
|
||||||||
General
|
209,084 | 141,196 | ||||||
Affiliated Companies
|
104,468 | 137,389 | ||||||
Short-term
Debt – Nonaffiliated
|
- | 701 | ||||||
Long-term
Debt Due Within One Year – Nonaffiliated
|
125,225 | 55,188 | ||||||
Risk
Management Liabilities
|
197,461 | 40,548 | ||||||
Customer
Deposits
|
32,031 | 30,613 | ||||||
Accrued
Taxes
|
180,760 | 185,011 | ||||||
Accrued
Interest
|
39,687 | 41,880 | ||||||
Other
|
143,465 | 149,658 | ||||||
TOTAL
|
1,206,014 | 883,732 | ||||||
NONCURRENT
LIABILITIES
|
||||||||
Long-term
Debt – Nonaffiliated
|
2,432,266 | 2,594,410 | ||||||
Long-term
Debt – Affiliated
|
200,000 | 200,000 | ||||||
Long-term
Risk Management Liabilities
|
65,463 | 32,194 | ||||||
Deferred
Income Taxes
|
926,957 | 914,170 | ||||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
154,258 | 160,721 | ||||||
Deferred
Credits and Other
|
256,438 | 229,635 | ||||||
TOTAL
|
4,035,382 | 4,131,130 | ||||||
TOTAL
LIABILITIES
|
5,241,396 | 5,014,862 | ||||||
Minority
Interest
|
17,447 | 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
|
1,657,926 | 1,469,717 | ||||||
Accumulated
Other Comprehensive Income (Loss)
|
(47,637 | ) | (36,541 | ) | ||||
TOTAL
|
2,468,130 | 2,291,017 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$ | 7,743,600 | $ | 7,338,429 |
2008
|
2007
|
|||||||
OPERATING
ACTIVITIES
|
||||||||
Net
Income
|
$ | 190,721 | $ | 153,601 | ||||
Adjustments
to Reconcile Net Income to Net Cash Flows from Operating
Activities:
|
||||||||
Depreciation
and Amortization
|
139,739 | 169,055 | ||||||
Deferred
Income Taxes
|
27,984 | 550 | ||||||
Carrying
Costs Income
|
(8,223 | ) | (7,135 | ) | ||||
Allowance
for Equity Funds Used During Construction
|
(1,246 | ) | (1,017 | ) | ||||
Mark-to-Market
of Risk Management Contracts
|
2,018 | 2,876 | ||||||
Deferred
Property Taxes
|
42,089 | 34,629 | ||||||
Change
in Other Noncurrent Assets
|
(59,294 | ) | (17,321 | ) | ||||
Change
in Other Noncurrent Liabilities
|
13,265 | 272 | ||||||
Changes
in Certain Components of Working Capital:
|
||||||||
Accounts Receivable, Net
|
(38,279 | ) | (18,273 | ) | ||||
Fuel, Materials and Supplies
|
(40,620 | ) | (42,452 | ) | ||||
Accounts Payable
|
47,035 | (46,758 | ) | |||||
Accrued Taxes, Net
|
(5,865 | ) | 46,587 | |||||
Other Current Assets
|
(9,620 | ) | 162 | |||||
Other Current Liabilities
|
(9,760 | ) | 4,253 | |||||
Net
Cash Flows from Operating Activities
|
289,944 | 279,029 | ||||||
INVESTING
ACTIVITIES
|
||||||||
Construction
Expenditures
|
(276,911 | ) | (565,832 | ) | ||||
Proceeds
from Sales of Assets
|
5,889 | 5,594 | ||||||
Other
|
(505 | ) | (24 | ) | ||||
Net
Cash Flows Used for Investing Activities
|
(271,527 | ) | (560,262 | ) | ||||
FINANCING
ACTIVITIES
|
||||||||
Issuance
of Long-term Debt – Nonaffiliated
|
164,474 | 461,324 | ||||||
Change
in Short-term Debt, Net – Nonaffiliated
|
(701 | ) | (1,203 | ) | ||||
Change
in Advances from Affiliates, Net
|
72,285 | (164,698 | ) | |||||
Retirement
of Long-term Debt – Nonaffiliated
|
(257,463 | ) | (8,927 | ) | ||||
Retirement
of Cumulative Preferred Stock
|
- | (2 | ) | |||||
Principal
Payments for Capital Lease Obligations
|
(3,214 | ) | (3,521 | ) | ||||
Dividends
Paid on Cumulative Preferred Stock
|
(366 | ) | (366 | ) | ||||
Other
|
10,000 | - | ||||||
Net
Cash Flows from (Used for) Financing Activities
|
(14,985 | ) | 282,607 | |||||
Net
Increase in Cash and Cash Equivalents
|
3,432 | 1,374 | ||||||
Cash
and Cash Equivalents at Beginning of Period
|
6,666 | 1,625 | ||||||
Cash
and Cash Equivalents at End of Period
|
$ | 10,098 | $ | 2,999 | ||||
SUPPLEMENTARY
INFORMATION
|
||||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$ | 72,685 | $ | 51,991 | ||||
Net
Cash Paid (Received) for Income Taxes
|
32,569 | (9,193 | ) | |||||
Noncash
Acquisitions Under Capital Leases
|
1,673 | 1,036 | ||||||
Construction
Expenditures Included in Accounts Payable at June 30,
|
27,610 | 65,936 |
Footnote
Reference
|
|
Significant
Accounting Matters
|
Note
1
|
New
Accounting Pronouncements and Extraordinary Item
|
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
|
Second
Quarter of 2007
|
$ | 6 | ||||||
Changes
in Gross Margin:
|
||||||||
Retail
and Off-system Sales Margins
|
8 | |||||||
Transmission
Revenues
|
3 | |||||||
Other
|
1 | |||||||
Total
Change in Gross Margin
|
12 | |||||||
Changes
in Operating Expenses and Other:
|
||||||||
Other
Operation and Maintenance
|
(6 | ) | ||||||
Deferral
of Ice Storm Costs
|
(8 | ) | ||||||
Depreciation
and Amortization
|
(2 | ) | ||||||
Other
Income
|
3 | |||||||
Interest
Expense
|
(2 | ) | ||||||
Total
Change in Operating Expenses and Other
|
(15 | ) | ||||||
Income
Tax Expense
|
1 | |||||||
Second
Quarter of 2008
|
$ | 4 |
·
|
Retail
and Off-system Sales Margins increased $8 million primarily due
to:
|
|
·
|
A
$7 million increase in retail sales margins mainly due to base rate
adjustments and a slight increase in KWH sales.
|
|
·
|
A
$1 million net increase in off-system margins retained primarily due to
higher physical sales margins, partially offset by lower trading
margins.
|
|
·
|
Transmission
Revenues increased $3 million primarily due to higher rates within
SPP.
|
·
|
Other
Operation and Maintenance expenses increased $6 million primarily due
to:
|
|
·
|
A
$7 million increase due to a credit in 2007 to adjust the expenses of the
January 2007 ice storm.
|
|
·
|
A
$4 million increase in transmission expense primarily due to an increase
in transmission services from other utilities.
|
|
·
|
A
$3 million increase in administrative and general expenses, primarily
associated with maintenance, outside services and employee-related
expenses.
|
|
·
|
A
$2 million increase in expense for the June 2008
storms.
|
|
·
|
A
$2 million increase due to amortization of the deferred ice storm
costs.
|
|
These
increases were partially offset by:
|
||
·
|
A
$10 million decrease primarily to true-up actual December ice storm costs
to the 2007 estimated accrual and is offset in the Deferral
below. See “Deferral of Ice Storm Costs”
below.
|
|
·
|
Deferral
of Ice Storm Costs increased $8 million due to 2008 costs and true-up
entries as discussed above. See “Oklahoma 2007 Ice Storms”
section of Note 3.
|
|
·
|
Depreciation
and Amortization expenses increased $2 million primarily due to a $3
million increase in the amortization of the Lawton Settlement regulatory
asset offset by a $1 million decrease in depreciation primarily resulting
from lower rates.
|
|
·
|
Other
Income increased $3 million primarily due to an increase in carrying
charges related to the new peaking units and to deferred ice storms
costs. See “Oklahoma 2007 Ice Storms” section of Note
3.
|
|
·
|
Interest
Expense increased $2 million primarily due to a $4 million increase in
interest expense from long-term borrowings offset by a $1 million decrease
in interest expense from short-term
borrowings.
|
Six
Months Ended June 30, 2007
|
$ | (14 | ) | |||||
Changes
in Gross Margin:
|
||||||||
Retail
and Off-system Sales Margins
|
22 | |||||||
Transmission
Revenues
|
4 | |||||||
Other
|
11 | |||||||
Total
Change in Gross Margin
|
37 | |||||||
Changes
in Operating Expenses and Other:
|
||||||||
Other
Operation and Maintenance
|
(13 | ) | ||||||
Deferral
of Ice Storm Costs
|
72 | |||||||
Depreciation
and Amortization
|
(5 | ) | ||||||
Taxes
Other Than Income Taxes
|
(1 | ) | ||||||
Other
Income
|
6 | |||||||
Interest
Expense
|
(5 | ) | ||||||
Total
Change in Operating Expenses and Other
|
54 | |||||||
Income
Tax Expense
|
(35 | ) | ||||||
Six
Months Ended June 30, 2008
|
$ | 42 |
·
|
Retail
and Off-system Sales Margins increased $22 million primarily due to an
increase in retail sales margins resulting from base rate adjustments and
a slight increase in KWH sales.
|
·
|
Transmission
Revenues increased $4 million primarily due to higher rates within
SPP.
|
·
|
Other
revenues increased $11 million primarily due to a $10 million increase
related to the recognition of the sale of SO2
allowances. See “Oklahoma 2007 Ice Storms” section of Note
3.
|
·
|
Other
Operation and Maintenance expenses increased $13 million primarily due
to:
|
|
·
|
A
$10 million increase in production expenses primarily due to a write-off
of pre-construction costs related to the canceled Red Rock Generating
Facility. See “Red Rock Generating Facility” section of Note
3.
|
|
·
|
A
$9 million increase due to amortization of the deferred 2007 ice storm
costs.
|
|
·
|
An
$8 million increase in transmission expense primarily due to an increase
in transmission services from other utilities.
|
|
·
|
A
$4 million increase in administrative and general expenses, primarily
associated with maintenance, outside services and employee-related
expenses.
|
|
·
|
A
$2 million increase in expense for the June 2008
storms.
|
|
·
|
A
$1 million increase in distribution maintenance expense due to increased
vegetation management activities.
|
|
These
increases were partially offset by:
|
||
·
|
A
$14 million decrease for the costs of the January 2007 ice
storm.
|
|
·
|
A
$10 million decrease primarily to true-up actual December ice storm costs
to the 2007 estimated accrual.
|
|
·
|
Deferral
of Ice Storm Costs in 2008 of $72 million results from an OCC order
approving recovery of ice storm costs related to ice storms in January and
December 2007. See “Oklahoma 2007 Ice Storms” section of Note
3.
|
|
·
|
Depreciation
and Amortization expenses increased $5 million primarily due to a $7
million increase related to the amortization of the Lawton Settlement
regulatory asset offset by a $2 million decrease in depreciation primarily
resulting from lower rates.
|
|
·
|
Other
Income increased $6 million primarily due to a $3 million increase in
carrying charges related to the new peaking units and to deferred ice
storms costs (see “Oklahoma 2007 Ice Storms” section of Note 3) and a $1
million increase in the equity component of AFUDC.
|
|
·
|
Interest
Expense increased $5 million primarily due to an $8 million increase in
interest expense from long-term borrowings offset by a $2 million decrease
in interest expense from short-term borrowings.
|
|
·
|
Income
Tax Expense increased $35 million primarily due to an increase in pretax
book income.
|
Moody’s
|
S&P
|
Fitch
|
|||
Senior
Unsecured Debt
|
Baa1
|
BBB
|
BBB+
|
2008
|
2007
|
|||||||
(in
thousands)
|
||||||||
Cash
and Cash Equivalents at Beginning of Period
|
$ | 1,370 | $ | 1,651 | ||||
Cash
Flows from (Used for):
|
||||||||
Operating
Activities
|
(6,309 | ) | (30,543 | ) | ||||
Investing
Activities
|
(99,942 | ) | (161,760 | ) | ||||
Financing
Activities
|
106,405 | 191,560 | ||||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
154 | (743 | ) | |||||
Cash
and Cash Equivalents at End of Period
|
$ | 1,524 | $ | 908 |
Type
of Debt
|
Principal
Amount
Paid
|
Interest
Rate
|
Due
Date
|
||||
(in
thousands)
|
(%)
|
||||||
Pollution
Control Bonds
|
$ | 33,700 |
Variable
|
2014
|
Contractual
Cash Obligations
|
Less
Than
1
year
|
2-3
years
|
4-5
years
|
After
5
years
|
Total
|
|||||||||||||||
Interest
on Fixed Rate Portion of Long-term
Debt
(a)
|
$ | 51.7 | $ | 99.5 | $ | 78.5 | $ | 695.2 | $ | 924.9 | ||||||||||
Fixed
Rate Portion of Long-term Debt (b)
|
- | 200.0 | 75.0 | 612.7 | 887.7 | |||||||||||||||
Variable
Rate Portion of Long-term Debt (c)
|
- | - | - | 33.7 | 33.7 | |||||||||||||||
Capital
Lease Obligations (d)
|
1.7 | 2.2 | 0.5 | - | 4.4 | |||||||||||||||
Noncancelable
Operating Leases (d)
|
6.7 | 10.7 | 5.7 | 5.6 | 28.7 | |||||||||||||||
Fuel
Purchase Contracts (e)
|
295.6 | 130.1 | 85.3 | - | 511.0 | |||||||||||||||
Energy
and Capacity Purchase Contracts (f)
|
6.9 | 6.4 | - | - | 13.3 | |||||||||||||||
Construction
Contracts for Capital Assets (g)
|
55.2 | 128.4 | 143.5 | 10.0 | 337.1 | |||||||||||||||
Total
|
$ | 417.8 | $ | 577.3 | $ | 388.5 | $ | 1,357.2 | $ | 2,740.8 |
(a)
|
Interest
payments are estimated based on final maturity dates of debt securities
outstanding at December 31, 2007 and do not reflect anticipated future
refinancing, early redemptions or debt issuances.
|
(b)
|
See
Note 15 of the 2007 Annual Report. Represents principal only
excluding interest.
|
(c)
|
See
Note 15 of the 2007 Annual Report. Represents principal only
excluding interest. Variable rate debt had a 3.75% interest
rate at December 31, 2007.
|
(d)
|
See
Note 14 of the 2007 Annual Report.
|
(e)
|
Represents
contractual obligations to purchase coal, natural gas and other consumable
as fuel for electric generation along with related transportation of the
fuel.
|
(f)
|
Represents
contractual cash flows of energy and capacity purchase
contracts.
|
(g)
|
Represents
only capital assets that are contractual
obligations.
|
MTM
Risk
|
DETM
|
|||||||||||||||
Management
|
Assignment
|
Collateral
|
||||||||||||||
Contracts
|
(a)
|
Deposits
|
Total
|
|||||||||||||
Current
Assets
|
$ | 88,788 | $ | - | $ | (1,705 | ) | $ | 87,083 | |||||||
Noncurrent
Assets
|
12,321 | - | (39 | ) | 12,282 | |||||||||||
Total
MTM Derivative Contract Assets
|
101,109 | - | (1,744 | ) | 99,365 | |||||||||||
Current
Liabilities
|
(86,621 | ) | (93 | ) | 2,249 | (84,465 | ) | |||||||||
Noncurrent
Liabilities
|
(11,098 | ) | (102 | ) | 852 | (10,348 | ) | |||||||||
Total
MTM Derivative Contract Liabilities
|
(97,719 | ) | (195 | ) | 3,101 | (94,813 | ) | |||||||||
Total
MTM Derivative Contract Net Assets (Liabilities)
|
$ | 3,390 | $ | (195 | ) | $ | 1,357 | $ | 4,552 |
(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
|
$
|
6,981
|
||
(Gain)
Loss from Contracts Realized/Settled During the Period and Entered in a
Prior Period
|
(4,066
|
)
|
||
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)
|
32
|
|||
Changes
in Fair Value Due to Market Fluctuations During the Period
(c)
|
(146
|
)
|
||
Changes
in Fair Value Allocated to Regulated Jurisdictions (d)
|
589
|
|||
Total
MTM Risk Management Contract Net Assets
|
3,390
|
|||
DETM
Assignment (e)
|
(195
|
)
|
||
Collateral
Deposits
|
1,357
|
|||
Ending
Net Risk Management Assets at June 30, 2008
|
$
|
4,552
|
(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)
|
“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)
|
$ | 1,167 | $ | (235 | ) | $ | - | $ | - | $ | - | $ | - | $ | 932 | |||||||||||||
Level
2 (b)
|
434 | 2,189 | (128 | ) | (14 | ) | - | - | 2,481 | |||||||||||||||||||
Level
3 (c)
|
(24 | ) | - | 1 | - | - | - | (23 | ) | |||||||||||||||||||
Total
|
$ | 1,577 | $ | 1,954 | $ | (127 | ) | $ | (14 | ) | $ | - | $ | - | $ | 3,390 |
(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
|
||||
Beginning
Balance in AOCI December 31, 2007
|
$
|
(887
|
)
|
|
Changes
in Fair Value
|
-
|
|||
Reclassifications
from AOCI for Cash Flow Hedges
Settled
|
91
|
|||
Ending
Balance in AOCI June 30, 2008
|
$
|
(796
|
)
|
Six
Months Ended June 30, 2008
|
Twelve
Months Ended December 31, 2007
|
||||||||||||||
(in
thousands)
|
(in
thousands)
|
||||||||||||||
End
|
High
|
Average
|
Low
|
End
|
High
|
Average
|
Low
|
||||||||
$39
|
$109
|
$37
|
$8
|
$13
|
$189
|
$53
|
$5
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
REVENUES
|
||||||||||||||||
Electric
Generation, Transmission and Distribution
|
$ | 357,675 | $ | 304,820 | $ | 676,555 | $ | 594,900 | ||||||||
Sales
to AEP Affiliates
|
41,767 | 16,275 | 57,702 | 40,868 | ||||||||||||
Other
|
892 | 544 | 2,077 | 1,184 | ||||||||||||
TOTAL
|
400,334 | 321,639 | 736,334 | 636,952 | ||||||||||||
EXPENSES
|
||||||||||||||||
Fuel
and Other Consumables Used for Electric Generation
|
143,537 | 113,633 | 296,742 | 256,148 | ||||||||||||
Purchased
Electricity for Resale
|
104,016 | 70,145 | 152,598 | 137,554 | ||||||||||||
Purchased
Electricity from AEP Affiliates
|
21,506 | 18,979 | 38,775 | 32,463 | ||||||||||||
Other
Operation
|
45,186 | 42,345 | 101,185 | 83,352 | ||||||||||||
Maintenance
|
25,655 | 22,177 | 60,242 | 65,262 | ||||||||||||
Deferral
of Ice Storm Costs
|
8,223 | - | (71,679 | ) | - | |||||||||||
Depreciation
and Amortization
|
24,720 | 22,992 | 50,887 | 45,698 | ||||||||||||
Taxes
Other Than Income Taxes
|
10,474 | 9,890 | 21,426 | 20,184 | ||||||||||||
TOTAL
|
383,317 | 300,161 | 650,176 | 640,661 | ||||||||||||
OPERATING
INCOME (LOSS)
|
17,017 | 21,478 | 86,158 | (3,709 | ) | |||||||||||
Other
Income (Expense):
|
||||||||||||||||
Interest
Income
|
967 | 518 | 2,095 | 518 | ||||||||||||
Carrying
Costs Income
|
2,128 | - | 3,762 | - | ||||||||||||
Allowance
for Equity Funds Used During Construction
|
516 | 44 | 1,875 | 690 | ||||||||||||
Interest
Expense
|
(14,525 | ) | (12,785 | ) | (29,466 | ) | (24,168 | ) | ||||||||
INCOME
(LOSS) BEFORE INCOME TAX EXPENSE
(CREDIT)
|
6,103 | 9,255 | 64,424 | (26,669 | ) | |||||||||||
Income
Tax Expense (Credit)
|
1,976 | 2,960 | 22,898 | (12,538 | ) | |||||||||||
NET
INCOME (LOSS)
|
4,127 | 6,295 | 41,526 | (14,131 | ) | |||||||||||
Preferred
Stock Dividend Requirements
|
53 | 53 | 106 | 106 | ||||||||||||
EARNINGS
(LOSS) APPLICABLE TO COMMON STOCK
|
$ | 4,074 | $ | 6,242 | $ | 41,420 | $ | (14,237 | ) |
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
|
40,000 | 40,000 | ||||||||||||||||||
Preferred
Stock Dividends
|
(106 | ) | (106 | ) | ||||||||||||||||
TOTAL
|
624,946 | |||||||||||||||||||
COMPREHENSIVE
LOSS
|
||||||||||||||||||||
Other
Comprehensive Income, Net of Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $49
|
91 | 91 | ||||||||||||||||||
NET
LOSS
|
(14,131 | ) | (14,131 | ) | ||||||||||||||||
TOTAL
COMPREHENSIVE LOSS
|
(14,040 | ) | ||||||||||||||||||
JUNE
30, 2007
|
$ | 157,230 | $ | 270,016 | $ | 184,639 | $ | (979 | ) | $ | 610,906 | |||||||||
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 | ) | ||||||||||||||||
Capital
Contribution from Parent
|
30,000 | 30,000 | ||||||||||||||||||
Preferred
Stock Dividends
|
(106 | ) | (106 | ) | ||||||||||||||||
TOTAL
|
669,685 | |||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other Comprehensive
Income, Net
of Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $49
|
91 | 91 | ||||||||||||||||||
NET
INCOME
|
41,526 | 41,526 | ||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
41,617 | |||||||||||||||||||
JUNE
30, 2008
|
$ | 157,230 | $ | 340,016 | $ | 214,852 | $ | (796 | ) | $ | 711,302 |
2008
|
2007
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
and Cash Equivalents
|
$ | 1,524 | $ | 1,370 | ||||
Advances
to Affiliates
|
- | 51,202 | ||||||
Accounts
Receivable:
|
||||||||
Customers
|
54,815 | 74,330 | ||||||
Affiliated Companies
|
79,370 | 59,835 | ||||||
Miscellaneous
|
10,748 | 10,315 | ||||||
Allowance for Uncollectible Accounts
|
(18 | ) | - | |||||
Total
Accounts Receivable
|
144,915 | 144,480 | ||||||
Fuel
|
27,124 | 19,394 | ||||||
Materials
and Supplies
|
47,925 | 47,691 | ||||||
Risk
Management Assets
|
87,083 | 33,308 | ||||||
Accrued
Tax Benefits
|
52,082 | 31,756 | ||||||
Regulatory
Asset for Under-Recovered Fuel Costs
|
61,876 | - | ||||||
Margin
Deposits
|
992 | 8,980 | ||||||
Prepayments
and Other
|
14,559 | 18,137 | ||||||
TOTAL
|
438,080 | 356,318 | ||||||
PROPERTY,
PLANT AND EQUIPMENT
|
||||||||
Electric:
|
||||||||
Production
|
1,234,217 | 1,110,657 | ||||||
Transmission
|
598,361 | 569,746 | ||||||
Distribution
|
1,402,521 | 1,337,038 | ||||||
Other
|
249,073 | 241,722 | ||||||
Construction
Work in Progress
|
94,615 | 200,018 | ||||||
Total
|
3,578,787 | 3,459,181 | ||||||
Accumulated
Depreciation and Amortization
|
1,191,109 | 1,182,171 | ||||||
TOTAL
- NET
|
2,387,678 | 2,277,010 | ||||||
OTHER
NONCURRENT ASSETS
|
||||||||
Regulatory
Assets
|
186,807 | 158,731 | ||||||
Long-term
Risk Management Assets
|
12,282 | 3,358 | ||||||
Deferred
Charges and Other
|
67,944 | 48,454 | ||||||
TOTAL
|
267,033 | 210,543 | ||||||
TOTAL
ASSETS
|
$ | 3,092,791 | $ | 2,843,871 |
2008
|
2007
|
|||||||
CURRENT
LIABILITIES
|
(in
thousands)
|
|||||||
Advances
from Affiliates
|
$ | 110,981 | $ | - | ||||
Accounts
Payable:
|
||||||||
General
|
164,652 | 189,032 | ||||||
Affiliated
Companies
|
107,254 | 80,316 | ||||||
Long-term
Debt Due Within One Year – Nonaffiliated
|
50,000 | - | ||||||
Risk
Management Liabilities
|
84,465 | 27,118 | ||||||
Customer
Deposits
|
40,409 | 41,477 | ||||||
Accrued
Taxes
|
36,383 | 18,374 | ||||||
Regulatory
Liability for Over-Recovered Fuel Costs
|
- | 11,697 | ||||||
Other
|
42,588 | 57,708 | ||||||
TOTAL
|
636,732 | 425,722 | ||||||
NONCURRENT
LIABILITIES
|
||||||||
Long-term
Debt – Nonaffiliated
|
834,737 | 918,316 | ||||||
Long-term
Risk Management Liabilities
|
10,348 | 2,808 | ||||||
Deferred
Income Taxes
|
526,319 | 456,497 | ||||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
316,575 | 338,788 | ||||||
Deferred
Credits and Other
|
51,516 | 55,580 | ||||||
TOTAL
|
1,739,495 | 1,771,989 | ||||||
TOTAL
LIABILITIES
|
2,376,227 | 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
|
340,016 | 310,016 | ||||||
Retained
Earnings
|
214,852 | 174,539 | ||||||
Accumulated
Other Comprehensive Income (Loss)
|
(796 | ) | (887 | ) | ||||
TOTAL
|
711,302 | 640,898 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$ | 3,092,791 | $ | 2,843,871 |
2008
|
2007
|
|||||||
OPERATING
ACTIVITIES
|
||||||||
Net
Income (Loss)
|
$ | 41,526 | $ | (14,131 | ) | |||
Adjustments
to Reconcile Net Income (Loss) to Net Cash Flows Used for
Operating Activities:
|
||||||||
Depreciation
and Amortization
|
50,887 | 45,698 | ||||||
Deferred
Income Taxes
|
70,618 | 11,059 | ||||||
Deferral
of Ice Storm Costs
|
(71,679 | ) | - | |||||
Allowance
for Equity Funds Used During Construction
|
(1,875 | ) | (690 | ) | ||||
Mark-to-Market
of Risk Management Contracts
|
2,216 | 4,832 | ||||||
Deferred
Property Taxes
|
(17,796 | ) | (16,539 | ) | ||||
Change
in Other Noncurrent Assets
|
25,981 | (25,601 | ) | |||||
Change
in Other Noncurrent Liabilities
|
(33,384 | ) | (22,811 | ) | ||||
Changes
in Certain Components of Working Capital:
|
||||||||
Accounts Receivable, Net
|
1,270 | 19,413 | ||||||
Fuel, Materials and Supplies
|
(7,964 | ) | (8,414 | ) | ||||
Margin Deposits
|
7,988 | 10,216 | ||||||
Accounts Payable
|
18,238 | 11,810 | ||||||
Customer Deposits
|
(1,068 | ) | (3,354 | ) | ||||
Accrued Taxes, Net
|
(2,317 | ) | (6,888 | ) | ||||
Fuel Over/Under-Recovery, Net
|
(73,573 | ) | (13,512 | ) | ||||
Other Current Assets
|
820 | 597 | ||||||
Other Current Liabilities
|
(16,197 | ) | (22,228 | ) | ||||
Net
Cash Flows Used for Operating Activities
|
(6,309 | ) | (30,543 | ) | ||||
INVESTING
ACTIVITIES
|
||||||||
Construction
Expenditures
|
(151,711 | ) | (151,973 | ) | ||||
Change
in Other Cash Deposits, Net
|
- | (12,896 | ) | |||||
Change
in Advances to Affiliates, Net
|
51,202 | - | ||||||
Proceeds
from Sales of Assets
|
567 | 3,109 | ||||||
Net
Cash Flows Used for Investing Activities
|
(99,942 | ) | (161,760 | ) | ||||
FINANCING
ACTIVITIES
|
||||||||
Capital
Contribution from Parent
|
30,000 | 40,000 | ||||||
Issuance
of Long-term Debt – Nonaffiliated
|
- | 12,495 | ||||||
Change
in Advances from Affiliates, Net
|
110,981 | 139,916 | ||||||
Retirement
of Long-term Debt – Nonaffiliated
|
(33,700 | ) | - | |||||
Principal
Payments for Capital Lease Obligations
|
(770 | ) | (745 | ) | ||||
Dividends
Paid on Cumulative Preferred Stock
|
(106 | ) | (106 | ) | ||||
Net
Cash Flows from Financing Activities
|
106,405 | 191,560 | ||||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
154 | (743 | ) | |||||
Cash
and Cash Equivalents at Beginning of Period
|
1,370 | 1,651 | ||||||
Cash
and Cash Equivalents at End of Period
|
$ | 1,524 | $ | 908 | ||||
SUPPLEMENTARY
INFORMATION
|
||||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$ | 27,774 | $ | 21,339 | ||||
Net
Cash Received for Income Taxes
|
19,529 | 2,353 | ||||||
Noncash
Acquisitions Under Capital Leases
|
253 | 434 | ||||||
Construction
Expenditures Included in Accounts Payable at June 30,
|
11,731 | 21,261 |
Footnote Reference
|
|
Significant
Accounting Matters
|
Note
1
|
New
Accounting Pronouncements and Extraordinary Item
|
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
|
Second
Quarter of 2007
|
$ | 2 | ||||||
Changes
in Gross Margin:
|
||||||||
Retail
and Off-system Sales Margins (a)
|
23 | |||||||
Transmission
Revenues
|
2 | |||||||
Other
|
(2 | ) | ||||||
Total
Change in Gross Margin
|
23 | |||||||
Changes
in Operating Expenses and Other:
|
||||||||
Other
Operation and Maintenance
|
(7 | ) | ||||||
Depreciation
and Amortization
|
(2 | ) | ||||||
Taxes
Other Than Income Taxes
|
2 | |||||||
Other
Income
|
1 | |||||||
Total
Change in Operating Expenses and Other
|
(6 | ) | ||||||
Income
Tax Expense
|
(5 | ) | ||||||
Second
Quarter of 2008
|
$ | 14 |
(a)
|
Includes
firm wholesale sales to municipals and
cooperatives.
|
·
|
Retail
and Off-system Sales Margins increased $23 million primarily due to a $25
million refund provision booked in 2007 pursuant to an unfavorable ALJ
ruling in the Texas Fuel Reconciliation proceeding.
|
·
|
Transmission
Revenues increased $2 million due to higher rates in the SPP
region.
|
·
|
Other
revenues decreased $2 million primarily due to a $6 million decrease in
gains on sales of emission allowances offset by a $4 million increase in
revenues from coal deliveries from SWEPCo’s mining subsidiary, Dolet Hills
Lignite Company, LLC, to Cleco Corporation, a nonaffiliated
entity. The increase in coal deliveries was the result of
planned and forced outages during 2007 at the Dolet Hills Generating
Station, which is jointly-owned by SWEPCo and Cleco
Corporation. The increased revenue from coal deliveries was
offset by a corresponding increase in Other Operation and Maintenance
expenses from mining operations as discussed
below.
|
·
|
Other
Operation and Maintenance expenses increased $7 million primarily due to a
$5 million increase in expenses for coal deliveries from SWEPCo’s mining
subsidiary, Dolet Hills Lignite Company, LLC. The increased
expenses for coal deliveries were partially offset by a corresponding
increase in revenues from mining operations as discussed
above.
|
·
|
Depreciation
and Amortization increased $2 million primarily due to higher depreciable
asset balances.
|
·
|
Taxes
Other Than Income Taxes decreased $2 million primarily due to a decrease
in franchise taxes.
|
·
|
Income
Tax Expense increased $5 million primarily due to an increase in pretax
book income.
|
Six
Months Ended June 30, 2007
|
$ | 11 | ||||||
Changes
in Gross Margin:
|
||||||||
Retail
and Off-system Sales Margins (a)
|
28 | |||||||
Transmission
Revenues
|
3 | |||||||
Other
|
(3 | ) | ||||||
Total
Change in Gross Margin
|
28 | |||||||
Changes
in Operating Expenses and Other:
|
||||||||
Other
Operation and Maintenance
|
(17 | ) | ||||||
Depreciation
and Amortization
|
(4 | ) | ||||||
Other
Income
|
3 | |||||||
Interest
Expense
|
(2 | ) | ||||||
Total
Change in Operating Expenses and Other
|
(20 | ) | ||||||
Six
Months Ended June 30, 2008
|
$ | 19 |
(a)
|
Includes
firm wholesale sales to municipals and
cooperatives.
|
·
|
Retail
and Off-system Sales Margins increased $28 million primarily due to a $25
million refund provision booked in 2007 pursuant to an unfavorable ALJ
ruling in the Texas Fuel Reconciliation proceeding.
|
·
|
Transmission
Revenues increased $3 million due to higher rates in the SPP
region.
|
·
|
Other
revenues decreased $3 million primarily due to a $12 million decrease in
gains on sales of emission allowances offset by a $9 million increase in
revenue from coal deliveries from SWEPCo’s mining subsidiary, Dolet Hills
Lignite Company, LLC, to Cleco Corporation, a nonaffiliated
entity. The increase in coal deliveries was the result of
planned and forced outages during 2007 at the Dolet Hills Generating
Station, which is jointly-owned by SWEPCo and Cleco
Corporation. The increased revenue from coal deliveries was
offset by a corresponding increase in Other Operation and Maintenance
expenses from mining operations as discussed
below.
|
·
|
Other
Operation and Maintenance expenses increased $17 million primarily due to
the following:
|
|
·
|
An
$11 million increase in expenses for coal deliveries from SWEPCo’s mining
subsidiary, Dolet Hills Lignite Company, LLC. The increased
expenses for coal deliveries were partially offset by a corresponding
increase in revenues from mining operations as discussed
above.
|
|
·
|
A
$3 million increase in transmission expenses related to increased usage
and rates in the SPP region.
|
|
·
|
A
$3 million increase in administrative and general expenses, primarily
associated with outside services and employee-related
expenses.
|
|
·
|
Depreciation
and Amortization increased $4 million primarily due to higher depreciable
asset balances.
|
|
·
|
Other
Income increased $3 million primarily due to an increase in the equity
component of AFUDC as a result of new generation
projects.
|
|
·
|
Interest
Expense increased $2 million primarily due to higher interest of $8
million related to higher long-term debt partially offset by a $4 million
increase in the debt component of AFUDC due to new generation projects and
a $3 million decrease in other interest expense partially related to
decreased interest expense on fuel
recovery.
|
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
|
74,622 | 120,597 | ||||||
Investing
Activities
|
(569,109 | ) | (253,267 | ) | ||||
Financing
Activities
|
494,987 | 131,610 | ||||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
500 | (1,060 | ) | |||||
Cash
and Cash Equivalents at End of Period
|
$ | 2,242 | $ | 1,558 |
Principal
Amount
|
Interest
|
Due
|
|||||
Type
of Debt
|
Rate
|
Date
|
|||||
(in
thousands)
|
(%)
|
||||||
Senior
Unsecured Notes
|
$
|
400,000
|
6.45
|
2019
|
Principal
Amount
Paid
|
Interest
|
Due
|
|||||
Type
of Debt
|
Rate
|
Date
|
|||||
(in
thousands)
|
(%)
|
||||||
Notes
Payable – Nonaffiliated
|
$
|
2,203
|
4.47
|
2011
|
|||
Notes
Payable – Nonaffiliated
|
1,500
|
Variable
|
2008
|
MTM
Risk Management Contracts
|
Cash
Flow
&
Fair
Value Hedges
|
DETM
Assignment (a)
|
Collateral
Deposits
|
Total
|
||||||||||||||||
Current
Assets
|
$ | 108,564 | $ | - | $ | - | $ | (2,014 | ) | $ | 106,550 | |||||||||
Noncurrent
Assets
|
15,872 | 71 | - | (46 | ) | 15,897 | ||||||||||||||
Total
MTM Derivative Contract Assets
|
124,436 | 71 | - | (2,060 | ) | 122,447 | ||||||||||||||
Current
Liabilities
|
(106,167 | ) | (4 | ) | (110 | ) | 3,144 | (103,137 | ) | |||||||||||
Noncurrent
Liabilities
|
(14,030 | ) | - | (120 | ) | 1,252 | (12,898 | ) | ||||||||||||
Total
MTM Derivative Contract Liabilities
|
(120,197 | ) | (4 | ) | (230 | ) | 4,396 | (116,035 | ) | |||||||||||
Total
MTM Derivative Contract Net Assets (Liabilities)
|
$ | 4,239 | $ | 67 | $ | (230 | ) | $ | 2,336 | $ | 6,412 |
(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
|
(4,779
|
)
|
||
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)
|
418
|
|||
Changes
in Fair Value Due to Market Fluctuations During the Period
(c)
|
(258
|
)
|
||
Changes
in Fair Value Allocated to Regulated Jurisdictions (d)
|
727
|
|||
Total
MTM Risk Management Contract Net Assets
|
4,239
|
|||
Net
Cash Flow & Fair Value Hedge Contracts
|
67
|
|||
DETM
Assignment (e)
|
(230
|
)
|
||
Collateral
Deposits
|
2,336
|
|||
Ending
Net Risk Management Assets at June 30, 2008
|
$
|
6,412
|
(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)
|
“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)
|
$ | 1,376 | $ | (277 | ) | $ | - | $ | - | $ | - | $ | - | $ | 1,099 | |||||||||||||
Level
2 (b)
|
366 | 3,072 | (237 | ) | (16 | ) | - | - | 3,185 | |||||||||||||||||||
Level
3 (c)
|
(47 | ) | - | 2 | - | - | - | (45 | ) | |||||||||||||||||||
Total
|
$ | 1,695 | $ | 2,795 | $ | (235 | ) | $ | (16 | ) | $ | - | $ | - | $ | 4,239 |
(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
|
- | 120 | 120 | |||||||||
Reclassifications
from AOCI for Cash
Flow Hedges Settled
|
413 | (705 | ) | (292 | ) | |||||||
Ending
Balance in AOCI June 30, 2008
|
$ | (6,237 | ) | $ | 44 | $ | (6,193 | ) |
Six
Months Ended
June
30, 2008
|
Twelve
Months Ended
December
31, 2007
|
||||||||||||||
(in
thousands)
|
(in
thousands)
|
||||||||||||||
End
|
High
|
Average
|
Low
|
End
|
High
|
Average
|
Low
|
||||||||
$62
|
$163
|
$54
|
$11
|
$17
|
$245
|
$75
|
$7
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
REVENUES
|
||||||||||||||||
Electric
Generation, Transmission and Distribution
|
$ | 405,632 | $ | 329,250 | $ | 731,533 | $ | 656,534 | ||||||||
Sales
to AEP Affiliates
|
17,592 | 16,237 | 31,184 | 32,652 | ||||||||||||
Other
|
393 | 535 | 693 | 935 | ||||||||||||
TOTAL
|
423,617 | 346,022 | 763,410 | 690,121 | ||||||||||||
EXPENSES
|
||||||||||||||||
Fuel
and Other Consumables Used for Electric Generation
|
147,147 | 125,994 | 264,808 | 237,981 | ||||||||||||
Purchased
Electricity for Resale
|
54,378 | 56,870 | 94,648 | 109,368 | ||||||||||||
Purchased
Electricity from AEP Affiliates
|
51,932 | 16,085 | 72,372 | 39,002 | ||||||||||||
Other
Operation
|
58,757 | 50,204 | 122,336 | 103,987 | ||||||||||||
Maintenance
|
27,692 | 29,721 | 55,160 | 56,060 | ||||||||||||
Depreciation
and Amortization
|
36,897 | 34,668 | 73,033 | 68,790 | ||||||||||||
Taxes
Other Than Income Taxes
|
15,705 | 17,540 | 33,124 | 33,531 | ||||||||||||
TOTAL
|
392,508 | 331,082 | 715,481 | 648,719 | ||||||||||||
OPERATING
INCOME
|
31,109 | 14,940 | 47,929 | 41,402 | ||||||||||||
Other
Income (Expense):
|
||||||||||||||||
Interest
Income
|
1,540 | 776 | 2,417 | 1,481 | ||||||||||||
Allowance
for Equity Funds Used During Construction
|
2,952 | 2,562 | 6,015 | 3,953 | ||||||||||||
Interest
Expense
|
(17,270 | ) | (17,235 | ) | (34,412 | ) | (32,725 | ) | ||||||||
INCOME
BEFORE INCOME TAX EXPENSE (CREDIT)
AND MINORITY INTEREST EXPENSE
|
18,331 | 1,043 | 21,949 | 14,111 | ||||||||||||
Income
Tax Expense (Credit)
|
3,351 | (1,553 | ) | 1,364 | 1,068 | |||||||||||
Minority
Interest Expense
|
899 | 972 | 1,894 | 1,814 | ||||||||||||
NET
INCOME
|
14,081 | 1,624 | 18,691 | 11,229 | ||||||||||||
Preferred
Stock Dividend Requirements
|
57 | 57 | 114 | 114 | ||||||||||||
EARNINGS
APPLICABLE TO COMMON STOCK
|
$ | 14,024 | $ | 1,567 | $ | 18,577 | $ | 11,115 |
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 | ) | ||||||||||||||||
Capital
Contribution from Parent
|
25,000 | 25,000 | ||||||||||||||||||
Preferred
Stock Dividends
|
(114 | ) | (114 | ) | ||||||||||||||||
TOTAL
|
844,446 | |||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other
Comprehensive Loss, Net of Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $172
|
(79 | ) | (79 | ) | ||||||||||||||||
NET
INCOME
|
11,229 | 11,229 | ||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
11,150 | |||||||||||||||||||
JUNE
30, 2007
|
$ | 135,660 | $ | 270,003 | $ | 468,811 | $ | (18,878 | ) | $ | 855,596 | |||||||||
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
|
100,000 | 100,000 | ||||||||||||||||||
Preferred
Stock Dividends
|
(114 | ) | (114 | ) | ||||||||||||||||
TOTAL
|
1,071,695 | |||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other Comprehensive Income
(Loss), Net
of Taxes:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $92
|
(172 | ) | (172 | ) | ||||||||||||||||
Amortization
of Pension and OPEB Deferred
Costs,
Net of Tax of $253
|
471 | 471 | ||||||||||||||||||
NET
INCOME
|
18,691 | 18,691 | ||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
18,990 | |||||||||||||||||||
JUNE
30, 2008
|
$ | 135,660 | $ | 430,003 | $ | 541,162 | $ | (16,140 | ) | $ | 1,090,685 |
2008
|
2007
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
and Cash Equivalents
|
$ | 2,242 | $ | 1,742 | ||||
Advances
to Affiliates
|
300,525 | - | ||||||
Accounts
Receivable:
|
||||||||
Customers
|
64,754 | 91,379 | ||||||
Affiliated Companies
|
25,663 | 33,196 | ||||||
Miscellaneous
|
12,723 | 10,544 | ||||||
Allowance for Uncollectible Accounts
|
(139 | ) | (143 | ) | ||||
Total Accounts Receivable
|
103,001 | 134,976 | ||||||
Fuel
|
87,705 | 75,662 | ||||||
Materials
and Supplies
|
51,581 | 48,673 | ||||||
Risk
Management Assets
|
106,550 | 39,850 | ||||||
Regulatory
Asset for Under-Recovered Fuel Costs
|
67,186 | 5,859 | ||||||
Margin
Deposits
|
1,319 | 10,650 | ||||||
Prepayments
and Other
|
70,233 | 28,147 | ||||||
TOTAL
|
790,342 | 345,559 | ||||||
PROPERTY,
PLANT AND EQUIPMENT
|
||||||||
Electric:
|
||||||||
Production
|
1,751,081 | 1,743,198 | ||||||
Transmission
|
770,560 | 737,975 | ||||||
Distribution
|
1,351,982 | 1,312,746 | ||||||
Other
|
642,255 | 631,765 | ||||||
Construction
Work in Progress
|
632,514 | 451,228 | ||||||
Total
|
5,148,392 | 4,876,912 | ||||||
Accumulated
Depreciation and Amortization
|
1,964,954 | 1,939,044 | ||||||
TOTAL
- NET
|
3,183,438 | 2,937,868 | ||||||
OTHER
NONCURRENT ASSETS
|
||||||||
Regulatory
Assets
|
118,139 | 133,617 | ||||||
Long-term
Risk Management Assets
|
15,897 | 4,073 | ||||||
Deferred
Charges and Other
|
107,440 | 67,269 | ||||||
TOTAL
|
241,476 | 204,959 | ||||||
TOTAL
ASSETS
|
$ | 4,215,256 | $ | 3,488,386 |
2008
|
2007
|
|||||||
CURRENT
LIABILITIES
|
(in
thousands)
|
|||||||
Advances
from Affiliates
|
$ | - | $ | 1,565 | ||||
Accounts
Payable:
|
||||||||
General
|
183,533 | 152,305 | ||||||
Affiliated
Companies
|
89,863 | 51,767 | ||||||
Short-term
Debt – Nonaffiliated
|
7,039 | 285 | ||||||
Long-term
Debt Due Within One Year – Nonaffiliated
|
4,406 | 5,906 | ||||||
Risk
Management Liabilities
|
103,137 | 32,629 | ||||||
Customer
Deposits
|
36,729 | 37,473 | ||||||
Accrued
Taxes
|
49,529 | 26,494 | ||||||
Regulatory
Liability for Over-Recovered Fuel Costs
|
- | 22,879 | ||||||
Other
|
91,895 | 76,554 | ||||||
TOTAL
|
566,131 | 407,857 | ||||||
NONCURRENT
LIABILITIES
|
||||||||
Long-term
Debt – Nonaffiliated
|
1,538,795 | 1,141,311 | ||||||
Long-term
Debt – Affiliated
|
50,000 | 50,000 | ||||||
Long-term
Risk Management Liabilities
|
12,898 | 3,334 | ||||||
Deferred
Income Taxes
|
397,158 | 361,806 | ||||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
340,563 | 334,014 | ||||||
Deferred
Credits and Other
|
212,656 | 210,725 | ||||||
TOTAL
|
2,552,070 | 2,101,190 | ||||||
TOTAL
LIABILITIES
|
3,118,201 | 2,509,047 | ||||||
Minority
Interest
|
1,673 | 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
|
430,003 | 330,003 | ||||||
Retained
Earnings
|
541,162 | 523,731 | ||||||
Accumulated
Other Comprehensive Income (Loss)
|
(16,140 | ) | (16,439 | ) | ||||
TOTAL
|
1,090,685 | 972,955 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$ | 4,215,256 | $ | 3,488,386 |
2008
|
2007
|
|||||||
OPERATING
ACTIVITIES
|
||||||||
Net
Income
|
$ | 18,691 | $ | 11,229 | ||||
Adjustments
to Reconcile Net Income to Net Cash Flows from Operating
Activities:
|
||||||||
Depreciation
and Amortization
|
73,033 | 68,790 | ||||||
Deferred
Income Taxes
|
28,256 | (21,658 | ) | |||||
Provision
for Fuel Disallowance
|
- | 24,500 | ||||||
Allowance
for Equity Funds Used During Construction
|
(6,015 | ) | (3,953 | ) | ||||
Mark-to-Market
of Risk Management Contracts
|
1,541 | 5,190 | ||||||
Deferred
Property Taxes
|
(19,866 | ) | (19,210 | ) | ||||
Change
in Other Noncurrent Assets
|
3,434 | 3,846 | ||||||
Change
in Other Noncurrent Liabilities
|
(17,106 | ) | (7,932 | ) | ||||
Changes
in Certain Components of Working Capital:
|
||||||||
Accounts Receivable, Net
|
31,975 | 26,897 | ||||||
Fuel, Materials and Supplies
|
(14,978 | ) | (11,126 | ) | ||||
Accounts Payable
|
60,552 | 8,388 | ||||||
Accrued Taxes, Net
|
(12,503 | ) | 36,445 | |||||
Fuel Over/Under-Recovery, Net
|
(84,206 | ) | 1,293 | |||||
Other Current Assets
|
7,296 | 12,928 | ||||||
Other Current Liabilities
|
4,518 | (15,030 | ) | |||||
Net
Cash Flows from Operating Activities
|
74,622 | 120,597 | ||||||
INVESTING
ACTIVITIES
|
||||||||
Construction
Expenditures
|
(266,145 | ) | (250,409 | ) | ||||
Change
in Advances to Affiliates, Net
|
(300,525 | ) | - | |||||
Other
|
(2,439 | ) | (2,858 | ) | ||||
Net
Cash Flows Used for Investing Activities
|
(569,109 | ) | (253,267 | ) | ||||
FINANCING
ACTIVITIES
|
||||||||
Capital
Contribution from Parent
|
100,000 | 25,000 | ||||||
Issuance
of Long-term Debt – Nonaffiliated
|
396,446 | 247,496 | ||||||
Change
in Short-term Debt, Net – Nonaffiliated
|
6,754 | 5,230 | ||||||
Change
in Advances from Affiliates, Net
|
(1,565 | ) | (135,010 | ) | ||||
Retirement
of Long-term Debt – Nonaffiliated
|
(3,703 | ) | (8,609 | ) | ||||
Principal
Payments for Capital Lease Obligations
|
(2,831 | ) | (2,383 | ) | ||||
Dividends
Paid on Cumulative Preferred Stock
|
(114 | ) | (114 | ) | ||||
Net
Cash Flows from Financing Activities
|
494,987 | 131,610 | ||||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
500 | (1,060 | ) | |||||
Cash
and Cash Equivalents at Beginning of Period
|
1,742 | 2,618 | ||||||
Cash
and Cash Equivalents at End of Period
|
$ | 2,242 | $ | 1,558 | ||||
SUPPLEMENTARY
INFORMATION
|
||||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$ | 19,848 | $ | 25,876 | ||||
Net
Cash Paid for Income Taxes
|
10,276 | 10,617 | ||||||
Noncash
Acquisitions Under Capital Leases
|
17,236 | 6,511 | ||||||
Construction
Expenditures Included in Accounts Payable at June 30,
|
68,670 | 38,630 |
Footnote
Reference
|
|
Significant
Accounting Matters
|
Note
1
|
New
Accounting Pronouncements and Extraordinary Item
|
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 and Extraordinary Item
|
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 AND EXTRAORDINARY
ITEM
|
APCo
|
||||||||||||||||||||
Level
1
|
Level
2
|
Level
3
|
Other
|
Total
|
||||||||||||||||
Assets:
|
(in
thousands)
|
|||||||||||||||||||
Risk
Management Assets:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 35,609 | $ | 1,261,131 | $ | 10,761 | $ | (1,012,957 | ) | $ | 294,544 | |||||||||
Cash
Flow and Fair Value Hedges (a)
|
- | 9,201 | - | (4,967 | ) | 4,234 | ||||||||||||||
Dedesignated
Risk Management Contracts (b)
|
- | - | - | 14,916 | 14,916 | |||||||||||||||
Total
Risk Management Assets
|
$ | 35,609 | $ | 1,270,332 | $ | 10,761 | $ | (1,003,008 | ) | $ | 313,694 | |||||||||
Liabilities:
|
||||||||||||||||||||
Risk
Management Liabilities:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 37,928 | $ | 1,226,686 | $ | 29,321 | $ | (1,008,877 | ) | $ | 285,058 | |||||||||
Cash
Flow and Fair Value Hedges (a)
|
- | 34,986 | - | (4,967 | ) | 30,019 | ||||||||||||||
DETM
Assignment (c)
|
- | - | - | 7,116 | 7,116 | |||||||||||||||
Total
Risk Management Liabilities
|
$ | 37,928 | $ | 1,261,672 | $ | 29,321 | $ | (1,006,728 | ) | $ | 322,193 |
CSPCo
|
||||||||||||||||||||
Level
1
|
Level
2
|
Level
3
|
Other
|
Total
|
||||||||||||||||
Assets:
|
(in
thousands)
|
|||||||||||||||||||
Other
Cash Deposits (e)
|
$ | 35,806 | $ | - | $ | - | $ | 1,169 | $ | 36,975 | ||||||||||
Risk
Management Assets:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 21,385 | $ | 692,082 | $ | 6,467 | $ | (557,082 | ) | $ | 162,852 | |||||||||
Cash
Flow and Fair Value Hedges (a)
|
- | 4,503 | - | (2,983 | ) | 1,520 | ||||||||||||||
Dedesignated
Risk Management Contracts (b)
|
- | - | - | 8,958 | 8,958 | |||||||||||||||
Total
Risk Management Assets
|
$ | 21,385 | $ | 696,585 | $ | 6,467 | $ | (551,107 | ) | $ | 173,330 | |||||||||
Total
Assets
|
$ | 57,191 | $ | 696,585 | $ | 6,467 | $ | (549,938 | ) | $ | 210,305 | |||||||||
Liabilities:
|
||||||||||||||||||||
Risk
Management Liabilities:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 22,778 | $ | 671,311 | $ | 17,589 | $ | (553,617 | ) | $ | 158,061 | |||||||||
Cash
Flow and Fair Value Hedges (b)
|
- | 21,011 | - | (2,983 | ) | 18,028 | ||||||||||||||
DETM
Assignment (c)
|
- | - | - | 4,274 | 4,274 | |||||||||||||||
Total
Risk Management Liabilities
|
$ | 22,778 | $ | 692,322 | $ | 17,589 | $ | (552,326 | ) | $ | 180,363 |
I&M
|
||||||||||||||||||||
Level
1
|
Level
2
|
Level
3
|
Other
|
Total
|
||||||||||||||||
Assets:
|
(in
thousands)
|
|||||||||||||||||||
Risk
Management Assets:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 20,545 | $ | 643,285 | $ | 6,215 | $ | (516,431 | ) | $ | 153,614 | |||||||||
Cash
Flow and Fair Value Hedges (a)
|
- | 4,326 | - | (2,866 | ) | 1,460 | ||||||||||||||
Dedesignated
Risk Management Contracts (b)
|
- | - | - | 8,606 | 8,606 | |||||||||||||||
Total
Risk Management Assets
|
$ | 20,545 | $ | 647,611 | $ | 6,215 | $ | (510,691 | ) | $ | 163,680 | |||||||||
Spent
Nuclear Fuel and Decommissioning Trusts:
|
||||||||||||||||||||
Cash
and Cash Equivalents (d)
|
$ | - | $ | 16,728 | $ | - | $ | 12,246 | $ | 28,974 | ||||||||||
Debt
Securities
|
326,416 | 507,611 | - | - | 834,027 | |||||||||||||||
Equity
Securities
|
498,926 | - | - | - | 498,926 | |||||||||||||||
Total Spent Nuclear Fuel and
Decommissioning Trusts
|
$ | 825,342 | $ | 524,339 | $ | - | $ | 12,246 | $ | 1,361,927 | ||||||||||
Total
Assets
|
$ | 845,887 | $ | 1,171,950 | $ | 6,215 | $ | (498,445 | ) | $ | 1,525,607 | |||||||||
Liabilities:
|
||||||||||||||||||||
Risk
Management Liabilities:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 21,883 | $ | 623,352 | $ | 16,890 | $ | (512,683 | ) | $ | 149,442 | |||||||||
Cash
Flow and Fair Value Hedges (a)
|
- | 20,186 | - | (2,866 | ) | 17,320 | ||||||||||||||
DETM
Assignment (c)
|
- | - | - | 4,107 | 4,107 | |||||||||||||||
Total
Risk Management Liabilities
|
$ | 21,883 | $ | 643,538 | $ | 16,890 | $ | (511,442 | ) | $ | 170,869 |
OPCo
|
||||||||||||||||||||
Level
1
|
Level
2
|
Level
3
|
Other
|
Total
|
||||||||||||||||
Assets:
|
(in
thousands)
|
|||||||||||||||||||
Other
Cash Deposits (e)
|
$ | 3,216 | $ | - | $ | - | $ | 2,182 | $ | 5,398 | ||||||||||
Risk
Management Assets:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 24,915 | $ | 1,255,573 | $ | 7,493 | $ | (1,038,518 | ) | $ | 249,463 | |||||||||
Cash
Flow and Fair Value Hedges (a)
|
- | 5,259 | - | (3,475 | ) | 1,784 | ||||||||||||||
Dedesignated
Risk Management Contracts (b)
|
- | - | - | 10,436 | 10,436 | |||||||||||||||
Total
Risk Management Assets
|
$ | 24,915 | $ | 1,260,832 | $ | 7,493 | $ | (1,031,557 | ) | $ | 261,683 | |||||||||
Total
Assets
|
$ | 28,131 | $ | 1,260,832 | $ | 7,493 | $ | (1,029,375 | ) | $ | 267,081 | |||||||||
Liabilities:
|
||||||||||||||||||||
Risk
Management Liabilities:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 26,538 | $ | 1,230,208 | $ | 20,738 | $ | (1,043,217 | ) | $ | 234,267 | |||||||||
Cash
Flow and Fair Value Hedges (a)
|
- | 27,153 | - | (3,475 | ) | 23,678 | ||||||||||||||
DETM
Assignment (c)
|
- | - | - | 4,979 | 4,979 | |||||||||||||||
Total
Risk Management Liabilities
|
$ | 26,538 | $ | 1,257,361 | $ | 20,738 | $ | (1,041,713 | ) | $ | 262,924 |
PSO
|
||||||||||||||||||||
Level
1
|
Level
2
|
Level
3
|
Other
|
Total
|
||||||||||||||||
Assets:
|
(in
thousands)
|
|||||||||||||||||||
Risk
Management Assets:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 52,111 | $ | 562,955 | $ | 7 | $ | (515,708 | ) | $ | 99,365 | |||||||||
Cash
Flow and Fair Value Hedges (a)
|
- | - | - | - | - | |||||||||||||||
Total
Risk Management Assets
|
$ | 52,111 | $ | 562,955 | $ | 7 | $ | (515,708 | ) | $ | 99,365 | |||||||||
Liabilities:
|
||||||||||||||||||||
Risk
Management Liabilities:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 51,180 | $ | 560,473 | $ | 30 | $ | (517,065 | ) | $ | 94,618 | |||||||||
Cash
Flow and Fair Value Hedges (a)
|
- | - | - | - | - | |||||||||||||||
DETM
Assignment (c)
|
- | - | - | 195 | 195 | |||||||||||||||
Total
Risk Management Liabilities
|
$ | 51,180 | $ | 560,473 | $ | 30 | $ | (516,870 | ) | $ | 94,813 |
SWEPCo
|
||||||||||||||||||||
Level
1
|
Level
2
|
Level
3
|
Other
|
Total
|
||||||||||||||||
Assets:
|
(in
thousands)
|
|||||||||||||||||||
Risk
Management Assets:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 61,460 | $ | 701,896 | $ | 5 | $ | (640,985 | ) | $ | 122,376 | |||||||||
Cash
Flow and Fair Value Hedges (a)
|
- | 80 | - | (9 | ) | 71 | ||||||||||||||
Total
Risk Management Assets
|
$ | 61,460 | $ | 701,976 | $ | 5 | $ | (640,994 | ) | $ | 122,447 | |||||||||
Liabilities:
|
||||||||||||||||||||
Risk
Management Liabilities:
|
||||||||||||||||||||
Risk
Management Contracts (a)
|
$ | 60,361 | $ | 698,711 | $ | 50 | $ | (643,321 | ) | $ | 115,801 | |||||||||
Cash
Flow and Fair Value Hedges (a)
|
- | 13 | - | (9 | ) | 4 | ||||||||||||||
DETM
Assignment (c)
|
- | - | - | 230 | 230 | |||||||||||||||
Total
Risk Management Liabilities
|
$ | 60,361 | $ | 698,724 | $ | 50 | $ | (643,100 | ) | $ | 116,035 |
(a)
|
Amounts
in “Other” column primarily represent counterparty netting of risk
management contracts and associated cash collateral under FSP 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 accrued interest receivables to/from
financial institutions. Level 2 amounts primarily represent
investments in money market funds.
|
(e)
|
Amounts
in “Other” column primarily represent cash deposits with third
parties. Level 1 amounts primarily represent investments in
money market funds.
|
Three
Months Ended June 30, 2008
|
APCo
|
CSPCo
|
I&M
|
OPCo
|
PSO
|
SWEPCo
|
||||||||||||||||||
(in
thousands)
|
||||||||||||||||||||||||
Balance
as of April 1, 2008
|
$ | (942 | ) | $ | (552 | ) | $ | (519 | ) | $ | (837 | ) | $ | (21 | ) | $ | (35 | ) | ||||||
Realized
(Gain) Loss Included in Earnings (or Changes in Net Assets)
(a)
|
(532 | ) | (324 | ) | (315 | ) | (327 | ) | 1 | 4 | ||||||||||||||
Unrealized
Gain (Loss) Included in Earnings (or Changes in Net Assets)
Relating to Assets Still Held at the Reporting Date
(a)
|
- | 261 | - | 161 | - | (5 | ) | |||||||||||||||||
Realized
and Unrealized Gains (Losses) Included in Other Comprehensive
Income
|
- | - | - | - | - | - | ||||||||||||||||||
Purchases,
Issuances and Settlements
|
- | - | - | - | - | - | ||||||||||||||||||
Transfers
in and/or out of Level 3 (b)
|
(2,186 | ) | (1,313 | ) | (1,261 | ) | (1,530 | ) | - | - | ||||||||||||||
Changes
in Fair Value Allocated to Regulated Jurisdictions
(c)
|
(14,900 | ) | (9,194 | ) | (8,580 | ) | (10,712 | ) | (3 | ) | (9 | ) | ||||||||||||
Balance
as of June 30, 2008
|
$ | (18,560 | ) | $ | (11,122 | ) | $ | (10,675 | ) | $ | (13,245 | ) | $ | (23 | ) | $ | (45 | ) |
Six
Months Ended June 30, 2008
|
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)
|
(467 | ) | (339 | ) | (312 | ) | 232 | 98 | 174 | |||||||||||||||
Unrealized
Gain (Loss) Included in Earnings (or Changes in Net Assets)
Relating to Assets Still Held at the Reporting Date
(a)
|
- | (1,138 | ) | - | (2,019 | ) | - | (64 | ) | |||||||||||||||
Realized
and Unrealized Gains (Losses) Included in Other Comprehensive
Income
|
- | - | - | - | - | - | ||||||||||||||||||
Purchases,
Issuances and Settlements
|
- | - | - | - | - | - | ||||||||||||||||||
Transfers
in and/or out of Level 3 (b)
|
(122 | ) | (188 | ) | (158 | ) | 861 | 232 | 375 | |||||||||||||||
Changes
in Fair Value Allocated to Regulated Jurisdictions
(c)
|
(17,274 | ) | (9,194 | ) | (9,925 | ) | (10,712 | ) | (110 | ) | (122 | ) | ||||||||||||
Balance
as of June 30, 2008
|
$ | (18,560 | ) | $ | (11,122 | ) | $ | (10,675 | ) | $ | (13,245 | ) | $ | (23 | ) | $ | (45 | ) |
(a)
|
Included
in revenues on the Condensed Statement of Income.
|
(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
|
||||||||||||
As
Reported for
|
As Reported for | |||||||||||
Balance
Sheet
|
the
December 2007
|
FIN
39-1
|
the June 2008 | |||||||||
Line
Description
|
10-K |
Reclassification
|
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
|
||||||||||||
As
Reported for
|
As
Reported for
|
|||||||||||
Balance
Sheet
|
the
December 2007
|
FIN
39-1
|
the June 2008 | |||||||||
Line
Description
|
10-K | Reclassification |
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
|
||||||||||||
As
Reported for
|
As
Reported for
|
|||||||||||
Balance
Sheet
|
the
December 2007
|
FIN
39-1
|
the
June 2008
|
|||||||||
Line
Description
|
10-K |
Reclassification
|
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
|
||||||||||||
As
Reported for
|
As
Reported for
|
|||||||||||
Balance
Sheet
|
the
December 2007
|
FIN
39-1
|
the
June 2008
|
|||||||||
Line
Description
|
10-K
|
Reclassification
|
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
|
||||||||||||
As
Reported for
|
As
Reported for
|
|||||||||||
Balance
Sheet
|
the
December 2007
|
FIN
39-1
|
the
June 2008
|
|||||||||
Line
Description
|
10-K
|
Reclassification
|
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
|
||||||||||||
As
Reported for
|
As
Reported for
|
|||||||||||
Balance
Sheet
|
the
December 2007
|
FIN
39-1
|
the
June 2008
|
|||||||||
Line
Description
|
10-K
|
Reclassification
|
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 |
June
30, 2008
|
||||||
Cash
Collateral
|
Cash
Collateral
|
|||||
Received
|
Paid
|
|||||
Netted
Against
|
Netted
Against
|
|||||
Risk
Management
|
Risk
Management
|
|||||
Assets
|
Liabilities
|
|||||
(in
thousands)
|
||||||
APCo
|
$ | 23,799 | $ | 19,719 | ||
CSPCo
|
14,288 | 10,823 | ||||
I&M
|
13,724 | 9,976 | ||||
OPCo
|
16,688 | 21,387 | ||||
PSO
|
1,744 | 3,101 | ||||
SWEPCo
|
2,060 | 4,396 |
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
|
Borrower
|
||||||||
Company
|
Amount
|
Maturity
|
Sublimit
|
|||||
(in
thousands)
|
||||||||
$1.5
billion LOC:
|
||||||||
I&M
|
$
|
1,113
|
March
2009
|
N/A
|
||||
SWEPCo
|
4,000
|
December
2008
|
N/A
|
|||||
$650
million LOC:
|
||||||||
APCo
|
$
|
126,717
|
June
2009
|
$
|
300,000
|
|||
I&M
|
77,886
|
May
2009
|
230,000
|
|||||
OPCo
|
166,899
|
June
2009
|
400,000
|
Maximum
|
||||
Potential
|
||||
Loss
|
||||
Company
|
(in
millions)
|
|||
APCo
|
$ | 10 | ||
CSPCo
|
5 | |||
I&M
|
7 | |||
OPCo
|
10 | |||
PSO
|
6 | |||
SWEPCo
|
6 |
5.
|
ACQUISITION
|
6.
|
BENEFIT
PLANS
|
Other
Postretirement
|
||||||||||||
Pension
Plans
|
Benefit
Plans
|
|||||||||||
Three
Months Ended June 30,
|
Three
Months Ended June 30,
|
|||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||
(in
millions)
|
||||||||||||
Service
Cost
|
$ | 25 | $ | 23 | $ | 11 | $ | 11 | ||||
Interest
Cost
|
62 | 57 | 28 | 26 | ||||||||
Expected
Return on Plan Assets
|
(84 | ) | (82 | ) | (28 | ) | (26 | ) | ||||
Amortization
of Transition Obligation
|
- | - | 7 | 7 | ||||||||
Amortization
of Net Actuarial Loss
|
10 | 14 | 2 | 3 | ||||||||
Net
Periodic Benefit Cost
|
$ | 13 | $ | 12 | $ | 20 | $ | 21 |
Other
Postretirement
|
||||||||||||
Pension
Plans
|
Benefit
Plans
|
|||||||||||
Six
Months Ended June 30,
|
Six
Months Ended June 30,
|
|||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||
(in
millions)
|
||||||||||||
Service
Cost
|
$ | 50 | $ | 47 | $ | 21 | $ | 21 | ||||
Interest
Cost
|
125 | 116 | 56 | 52 | ||||||||
Expected
Return on Plan Assets
|
(168 | ) | (167 | ) | (56 | ) | (52 | ) | ||||
Amortization
of Transition Obligation
|
- | - | 14 | 14 | ||||||||
Amortization
of Net Actuarial Loss
|
19 | 29 | 5 | 6 | ||||||||
Net
Periodic Benefit Cost
|
$ | 26 | $ | 25 | $ | 40 | $ | 41 |
Other
Postretirement
|
|||||||||||||
Pension
Plans
|
Benefit
Plans
|
||||||||||||
Three
Months Ended June 30,
|
Three
Months Ended June 30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Company
|
(in
thousands)
|
||||||||||||
APCo
|
$ | 834 | $ | 842 | $ | 3,700 | $ | 3,560 | |||||
CSPCo
|
(349 | ) | (258 | ) | 1,499 | 1,491 | |||||||
I&M
|
1,820 | 1,900 | 2,423 | 2,531 | |||||||||
OPCo
|
320 | 245 | 2,817 | 2,801 | |||||||||
PSO
|
508 | 424 | 1,387 | 1,430 | |||||||||
SWEPCo
|
936 | 747 | 1,376 | 1,419 |
Other
Postretirement
|
|||||||||||||
Pension
Plans
|
Benefit
Plans
|
||||||||||||
Six
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Company
|
(in
thousands)
|
||||||||||||
APCo
|
$ | 1,669 | $ | 1,684 | $ | 7,399 | $ | 7,120 | |||||
CSPCo
|
(698 | ) | (515 | ) | 2,997 | 2,982 | |||||||
I&M
|
3,641 | 3,800 | 4,846 | 5,061 | |||||||||
OPCo
|
639 | 490 | 5,633 | 5,603 | |||||||||
PSO
|
1,016 | 848 | 2,774 | 2,861 | |||||||||
SWEPCo
|
1,871 | 1,493 | 2,752 | 2,838 |
7.
|
BUSINESS
SEGMENTS
|
8.
|
INCOME
TAXES
|
Principal
|
Interest
|
Due
|
|||||||
Company
|
Type
of Debt
|
Amount
|
Rate
|
Date
|
|||||
(in
thousands)
|
(%)
|
||||||||
Issuances:
|
|||||||||
APCo
|
Pollution
Control Bonds
|
$
|
75,000
|
Variable
|
2036
|
||||
APCo
|
Pollution
Control Bonds
|
50,275
|
Variable
|
2036
|
|||||
APCo
|
Senior
Unsecured Notes
|
500,000
|
7.00
|
2038
|
|||||
CSPCo
|
Senior
Unsecured Notes
|
350,000
|
6.05
|
2018
|
|||||
I&M
|
Pollution
Control Bonds
|
25,000
|
Variable
|
2019
|
|||||
I&M
|
Pollution
Control Bonds
|
52,000
|
Variable
|
2021
|
|||||
I&M
|
Pollution
Control Bonds
|
40,000
|
5.25
|
2025
|
|||||
OPCo
|
Pollution
Control Bonds
|
50,000
|
Variable
|
2014
|
|||||
OPCo
|
Pollution
Control Bonds
|
50,000
|
Variable
|
2014
|
|||||
OPCo
|
Pollution
Control Bonds
|
65,000
|
Variable
|
2036
|
|||||
SWEPCo
|
Senior
Unsecured Notes
|
400,000
|
6.45
|
2019
|
Principal
|
Interest
|
Due
|
|||||||
Company
|
Type
of Debt
|
Amount
Paid
|
Rate
|
Date
|
|||||
(in
thousands)
|
(%)
|
||||||||
Retirements
and Principal Payments:
|
|||||||||
APCo
|
Senior
Unsecured Notes
|
$
|
200,000
|
3.60
|
2008
|
||||
APCo
|
Pollution
Control Bonds
|
40,000
|
Variable
|
2019
|
|||||
APCo
|
Pollution
Control Bonds
|
30,000
|
Variable
|
2019
|
|||||
APCo
|
Pollution
Control Bonds
|
17,500
|
Variable
|
2021
|
|||||
APCo
|
Pollution
Control Bonds
|
50,275
|
Variable
|
2036
|
|||||
APCo
|
Pollution
Control Bonds
|
75,000
|
Variable
|
2037
|
|||||
APCo
|
Other
|
7
|
13.718
|
2026
|
|||||
CSPCo
|
Senior
Unsecured Notes
|
52,000
|
6.51
|
2008
|
|||||
CSPCo
|
Senior
Unsecured Notes
|
60,000
|
6.55
|
2008
|
|||||
CSPCo
|
Pollution
Control Bonds
|
48,550
|
Variable
|
2038
|
|||||
CSPCo
|
Pollution
Control Bonds
|
43,695
|
Variable
|
2038
|
|||||
I&M
|
Pollution
Control Bonds
|
45,000
|
Variable
|
2009
|
|||||
I&M
|
Pollution
Control Bonds
|
25,000
|
Variable
|
2019
|
|||||
I&M
|
Pollution
Control Bonds
|
52,000
|
Variable
|
2021
|
|||||
I&M
|
Pollution
Control Bonds
|
50,000
|
Variable
|
2025
|
|||||
I&M
|
Pollution
Control Bonds
|
40,000
|
Variable
|
2025
|
|||||
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
|
|||||
OPCo
|
Pollution
Control Bonds
|
50,000
|
Variable
|
2014
|
|||||
OPCo
|
Pollution
Control Bonds
|
50,000
|
Variable
|
2016
|
|||||
OPCo
|
Pollution
Control Bonds
|
50,000
|
Variable
|
2022
|
|||||
OPCo
|
Pollution
Control Bonds
|
35,000
|
Variable
|
2022
|
|||||
OPCo
|
Pollution
Control Bonds
|
65,000
|
Variable
|
2036
|
|||||
PSO
|
Pollution
Control Bonds
|
33,700
|
Variable
|
2014
|
|||||
SWEPCo
|
Notes
Payable
|
1,500
|
Variable
|
2008
|
|||||
SWEPCo
|
Notes
Payable
|
2,203
|
4.47
|
2011
|
Remarketed
at
|
Remarketed
at
|
Remains
at
|
||||||||||||||||||||||
Fixed
Rates
|
Variable
Rates
|
Auction
Rate
|
||||||||||||||||||||||
During
the First
|
During
the First
|
Variable
Rate
|
at
|
Held
by
|
||||||||||||||||||||
Retired
in
|
Six
Months of
|
Fixed
Rate at
|
Six
Months of
|
at
|
June
30,
|
Trustee
at
|
||||||||||||||||||
2008
|
2008
|
June
30, 2008
|
2008
|
June
30, 2008
|
2008
|
June
30, 2008
|
||||||||||||||||||
Company
|
(in
thousands)
|
(in
thousands)
|
(in
thousands)
|
|||||||||||||||||||||
APCo
|
$ | - | $ | - | - | % | $ | 75,000 | 1.62 | % | $ | - | $ | 87,500 | ||||||||||
APCo
|
- | - | - | % | 50,275 | 1.68 | % | - | - | |||||||||||||||
CSPCo
|
- | 56,000 | 5.10 | % | - | - | % | - | 92,245 | |||||||||||||||
CSPCo
|
- | 44,500 | 4.85 | % | - | - | % | - | - | |||||||||||||||
I&M
|
45,000 | 40,000 | 5.25 | % | 52,000 | 1.57 | % | - | 100,000 | |||||||||||||||
I&M
|
- | - | - | % | 25,000 | 1.50 | % | - | - | |||||||||||||||
OPCo
|
- | - | - | % | 65,000 | 1.60 | % | 218,000 | 85,000 | |||||||||||||||
OPCo
|
- | - | - | % | 50,000 | 1.45 | % | - | - | |||||||||||||||
OPCo
|
- | - | - | % | 50,000 | 1.47 | % | - | - | |||||||||||||||
PSO
|
- | - | - | % | - | - | % | - | 33,700 | |||||||||||||||
SWEPCo
|
- | 81,700 | 4.95 | % | - | - | % | 94,635 | - | |||||||||||||||
Total
|
$ | 45,000 | $ | 222,200 | $ | 367,275 | $ | 312,635 | $ | 398,445 |
Loans
|
||||||||||||||||||||
Maximum
|
Maximum
|
Average
|
Average
|
(Borrowings)
|
Authorized
|
|||||||||||||||
Borrowings
|
Loans
to
|
Borrowings
|
Loans
to
|
to/from
Utility
|
Short-Term
|
|||||||||||||||
from
Utility
|
Utility
|
from
Utility
|
Utility
Money
|
Money
Pool as of
|
Borrowing
|
|||||||||||||||
Money
Pool
|
Money
Pool
|
Money
Pool
|
Pool
|
June
30, 2008
|
Limit
|
|||||||||||||||
Company
|
(in
thousands)
|
|||||||||||||||||||
APCo
|
$ | 307,226 | $ | 269,987 | $ | 226,292 | $ | 187,192 | $ | (103,802 | ) | $ | 600,000 | |||||||
CSPCo
|
238,172 | 150,358 | 157,569 | 65,413 | 25,199 | 350,000 | ||||||||||||||
I&M
|
345,064 | - | 174,380 | - | (272,707 | ) | 500,000 | |||||||||||||
OPCo
|
415,951 | - | 165,436 | - | (173,833 | ) | 600,000 | |||||||||||||
PSO
|
128,114 | 59,384 | 61,023 | 29,811 | (110,981 | ) | 300,000 | |||||||||||||
SWEPCo
|
168,495 | 300,525 | 87,426 | 273,118 | 300,525 | 350,000 |
Six
Months Ended June 30,
|
||||||||
2008
|
2007
|
|||||||
Maximum
Interest Rate
|
5.37 | % | 5.46 | % | ||||
Minimum
Interest Rate
|
2.91 | % | 5.30 | % |
Average
Interest Rate for Funds
|
Average
Interest Rate for Funds
|
||||||||||||
Borrowed
from
|
Loaned
to
|
||||||||||||
the
Utility Money Pool for the
|
the
Utility Money Pool for the
|
||||||||||||
Six
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Company
|
|||||||||||||
APCo
|
3.86 | % | 5.36 | % | 3.25 | % | - | % | |||||
CSPCo
|
3.66 | % | 5.37 | % | 2.93 | % | 5.33 | % | |||||
I&M
|
3.30 | % | 5.35 | % | - | % | - | % | |||||
OPCo
|
3.39 | % | 5.35 | % | - | % | 5.43 | % | |||||
PSO
|
3.03 | % | 5.36 | % | 4.53 | % | - | % | |||||
SWEPCo
|
3.36 | % | 5.36 | % | 2.93 | % | 5.34 | % |
June
30, 2008
|
December
31, 2007
|
||||||||||||
Outstanding
|
Interest
|
Outstanding
|
Interest
|
||||||||||
Type
of Debt
|
Amount
|
Rate
|
Amount
|
Rate
|
|||||||||
Company
|
(in
thousands)
|
(in
thousands)
|
|||||||||||
OPCo
|
Commercial
Paper – JMG
|
$
|
-
|
-
|
%
|
$
|
701
|
5.35
|
%
|
||||
SWEPCo
|
Line
of Credit – Sabine Mining Company
|
7,039
|
3.25
|
%
|
285
|
5.25
|
%
|
LOC
Amount
|
|||||||||||||
Outstanding
|
|||||||||||||
$650
million
|
$350
million
|
Against
|
|||||||||||
Credit
Facility
|
Credit
Facility
|
$650
million
|
|||||||||||
Borrowing/LOC
|
Borrowing/LOC
|
Agreement
at
|
|||||||||||
Limit
|
Limit
|
June
30, 2008
|
|||||||||||
Company
|
(in
millions)
|
||||||||||||
APCo
|
$ | 300 | $ | 150 | $ | 127 | |||||||
CSPCo
|
230 | 120 | - | ||||||||||
I&M
|
230 | 120 | 77 | ||||||||||
OPCo
|
400 | 200 | 167 | ||||||||||
PSO
|
65 | 35 | - | ||||||||||
SWEPCo
|
230 | 120 | - |
Remarketed
at
|
|||||||||||||||||
Fixed
or
|
|||||||||||||||||
Variable
Rates
|
Remains
in
|
Held
|
|||||||||||||||
Retired
|
During
the First
|
Auction
Rate at
|
by
Trustee at
|
||||||||||||||
in
2008
|
Half
of 2008
|
June
30, 2008
|
June
30, 2008
|
||||||||||||||
Company
|
(in
millions)
|
||||||||||||||||
APCo
|
$ | - | $ | 125 | $ | - | $ | 88 | |||||||||
CSPCo
|
- | 101 | - | 92 | |||||||||||||
I&M
|
45 | 117 | - | 100 | |||||||||||||
OPCo
|
- | 165 | 218 | 85 | |||||||||||||
PSO
|
- | - | - | 34 | |||||||||||||
SWEPCo
|
- | 82 | 95 | - |
Estimated
Construction Expenditures
|
||||||||
2009
|
2010
|
|||||||
Company
|
(in
millions)
|
|||||||
APCo
|
$ | 583.2 | $ | 474.4 | ||||
CSPCo
|
311.7 | 308.3 | ||||||
I&M
|
457.7 | 496.8 | ||||||
OPCo
|
441.1 | 410.9 | ||||||
PSO
|
257.2 | 419.2 | ||||||
SWEPCo
|
710.3 | 681.0 |
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
|
$ | 56 | $ | - |
Gas
|
Simple-cycle
|
150
|
2008
|
|||||||||||||
PSO
|
Riverside
|
(d)
|
Oklahoma
|
58 | - |
Gas
|
Simple-cycle
|
150 |
2008
|
|||||||||||||||
AEGCo
|
Dresden
|
(e)
|
Ohio
|
309 |
(e)
|
119 |
Gas
|
Combined-cycle
|
580 |
2010
|
||||||||||||||
SWEPCo
|
Stall
|
Louisiana
|
378 | 106 |
Gas
|
Combined-cycle
|
500 |
2010
|
||||||||||||||||
SWEPCo
|
Turk
|
(f)
|
Arkansas
|
1,522 |
(f)
|
407 |
Coal
|
Ultra-supercritical
|
600 |
(f)
|
2012
|
|||||||||||||
APCo
|
Mountaineer
|
(g)
|
West
Virginia
|
2,230 |
(g)
|
- |
Coal
|
IGCC
|
629 |
2012(g)
|
||||||||||||||
CSPCo/OPCo
|
Great
Bend
|
(g)
|
Ohio
|
2,700 |
(g)
|
- |
Coal
|
IGCC
|
629 |
2017(g)
|
(a)
|
Amount
excludes AFUDC.
|
(b)
|
Amount
includes AFUDC. Turk’s CWIP includes joint owners’
share.
|
(c)
|
Southwestern
Units were placed in service on February 29, 2008.
|
(d)
|
The
final Riverside Unit was placed in service on June 15,
2008.
|
(e)
|
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.
|
(f)
|
SWEPCo
plans to own approximately 73%, or 440 MW, totaling $1,110 million in
capital investment. The increase in the cost estimate disclosed
in the 2007 Annual Report relates to cost escalations due to the delay in
receipt of permits and approvals. See “Turk Plant” section
below.
|
(g)
|
Subject
to revision; construction of IGCC plants deferred pending regulatory
approval. See “IGCC Plants” section
below.
|
·
|
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
|
|||||||
04/01/08
– 04/30/08
|
-
|
$
|
-
|
-
|
$
|
-
|
|||||
05/01/08
– 05/31/08
|
-
|
-
|
-
|
-
|
|||||||
06/01/08
– 06/30/08
|
-
|
-
|
-
|
-
|
1.
|
Election
of eleven directors to hold office until the next annual meeting and until
their successors are duly elected. Each nominee for director
received the votes of shareholders as
follows:
|
Number
of Shares Voted For
|
Number
of Shares Abstaining
|
|||||||
E.
R. Brooks
|
312,075,636 | 9,048,078 | ||||||
Donald
M. Carlton
|
312,678,087 | 8,445,627 | ||||||
Ralph
D. Crosby, Jr.
|
313,030,107 | 8,093,607 | ||||||
John
P. DesBarres
|
298,693,953 | 22,429,761 | ||||||
Linda
A. Goodspeed
|
312,709,888 | 8,413,826 | ||||||
Thomas
E. Hoaglin
|
311,691,406 | 9,432,308 | ||||||
Lester
A. Hudson, Jr.
|
312,928,042 | 8,195,672 | ||||||
Michael
G. Morris
|
298,827,464 | 22,296,250 | ||||||
Lionel
L. Nowell, III
|
311,500,225 | 9,623,489 | ||||||
Richard
L. Sandor
|
308,409,310 | 12,714,404 | ||||||
Kathryn
D. Sullivan
|
310,429,848 | 10,693,866 |
|
2.
|
Ratification
of the appointment of the firm of Deloitte & Touche LLP as the
independent registered public accounting firm for 2008. The
proposal was approved by a vote of the shareholders as
follows:
|
Votes
FOR
|
313,470,119 | |||
Votes
AGAINST
|
4,721,969 | |||
Votes
ABSTAINED
|
2,931,626 |
Nicholas
K. Akins
|
Robert
P. Powers
|
Carl
L. English
|
Stephen
P. Smith
|
John
B. Keane
|
Brian
X. Tierney
|
Holly
K. Koeppel
|
Susan
Tomasky
|
Michael
G. Morris
|
Dennis
E. Welch
|
Nicholas
K. Akins
|
Robert
P. Powers
|
Carl
L. English
|
Stephen
P. Smith
|
John
B. Keane
|
Brian
X. Tierney
|
Holly
K. Koeppel
|
Susan
Tomasky
|
Michael
G. Morris
|
Dennis
E. Welch
|
Nicholas
K. Akins
|
Marc
E. Lewis
|
Kent
D. Curry
|
Susanne
M. Moorman Rowe
|
John
E. Ehler
|
Michael
G. Morris
|
Carl
L. English
|
Helen
J. Murray
|
Allen
R. Glassburn
|
Robert
P. Powers
|
JoAnn
M. Grevenow
|
Brian
X. Tierney
|
Patrick
C. Hale
|
Susan
Tomasky
|
Holly
K. Koeppel
|
Nicholas
K. Akins
|
Robert
P. Powers
|
Carl
L. English
|
Stephen
P. Smith
|
John
B. Keane
|
Brian
X. Tierney
|
Holly
K. Koeppel
|
Susan
Tomasky
|
Michael
G. Morris
|
Dennis
E. Welch
|
Nicholas
K. Akins
|
Michael
G. Morris
|
Carl
L. English
|
Richard
E. Munczinski
|
John
B. Keane
|
Robert
P. Powers
|
Holly
K. Koeppel
|
Susan
Tomasky
|
Venita
McCellon-Allen
|
Dennis
E. Welch
|
Nicholas
K. Akins
|
Michael
G. Morris
|
Carl
L. English
|
Richard
E. Munczinski
|
John
B. Keane
|
Robert
P. Powers
|
Holly
K. Koeppel
|
Susan
Tomasky
|
Venita
McCellon-Allen
|
Dennis
E. Welch
|