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
|
||
0-18135
|
AEP
GENERATING COMPANY (An Ohio Corporation)
|
31-1033833
|
||
0-346
|
AEP
TEXAS CENTRAL COMPANY (A Texas Corporation)
|
74-0550600
|
||
0-340
|
AEP
TEXAS NORTH COMPANY (A Texas Corporation)
|
75-0646790
|
||
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
|
||
1-6858
|
KENTUCKY
POWER COMPANY (A Kentucky Corporation)
|
61-0247775
|
||
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, or a non-accelerated filer.
See
definition of ‘accelerated filer and large accelerated filer’ in Rule
12b-2 of the Exchange Act. (Check One)
|
Large
accelerated filer X
Accelerated filer
Non-accelerated
filer
|
Indicate
by check mark whether AEP Generating Company, AEP Texas Central Company,
AEP Texas North Company, Appalachian Power Company, Columbus Southern
Power Company, Indiana Michigan Power Company, Kentucky Power Company,
Ohio Power Company, Public Service Company of Oklahoma and Southwestern
Electric Power Company, are large accelerated filers, accelerated
filers,
or non-accelerated filers. See definition of ‘accelerated filer and large
accelerated filer’ in Rule 12b-2 of the Exchange Act. (Check
One)
|
|
Large
accelerated filer
Accelerated filer
Non-accelerated
filer X
|
|
Indicate
by check mark whether the registrants are shell companies (as defined
in
Rule 12b-2 of the Exchange Act.)
|
|
Yes
|
No X
|
Number
of shares of common stock outstanding of the registrants
at
April
30, 2007
|
|||
AEP
Generating Company
|
1,000
|
||
($1,000
par value)
|
|||
AEP
Texas Central Company
|
2,211,678
|
||
($25
par value)
|
|||
AEP
Texas North Company
|
5,488,560
|
||
($25
par value)
|
|||
American
Electric Power Company, Inc.
|
398,766,908
|
||
($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)
|
|||
Kentucky
Power Company
|
1,009,000
|
||
($50
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
|
|||
AEP
Generating Company:
|
|||
Management’s
Narrative Financial Discussion and Analysis
|
|||
Condensed
Financial Statements
|
|||
Index
to Condensed Notes to Condensed Financial Statements of Registrant
Subsidiaries
|
|||
AEP
Texas Central 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
|
|||
AEP
Texas North Company and Subsidiary:
|
|||
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
|
|||
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
|
|||
Kentucky
Power Company:
|
|||||||
Management’s
Narrative Financial Discussion and Analysis
|
|||||||
Quantitative
and Qualitative Disclosures About Risk Management
Activities
|
|||||||
Condensed
Financial Statements
|
|||||||
Index
to Condensed Notes to Condensed Financial Statements of Registrant
Subsidiaries
|
|||||||
Ohio
Power Company Consolidated:
|
|||||||
Management’s
Financial Discussion and Analysis
|
|||||||
Quantitative
and Qualitative Disclosures About Risk Management
Activities
|
|||||||
Condensed
Consolidated Financial Statements
|
|||||||
Index
to Condensed Notes to Condensed Financial Statements of Registrant
Subsidiaries
|
|||||||
Public
Service Company of Oklahoma:
|
|||||||
Management’s
Narrative Financial Discussion and Analysis
|
|||||||
Quantitative
and Qualitative Disclosures About Risk Management
Activities
|
|||||||
Condensed
Financial Statements
|
|||||||
Index
to Condensed Notes to Condensed Financial Statements of Registrant
Subsidiaries
|
|||||||
Southwestern
Electric Power Company Consolidated:
|
|||||||
Management’s
Financial Discussion and Analysis
|
|||||||
Quantitative
and Qualitative Disclosures About Risk Management
Activities
|
|||||||
Condensed
Consolidated Financial Statements
|
|||||||
Index
to Condensed Notes to Condensed Financial Statements of Registrant
Subsidiaries
|
|||||||
Condensed
Notes to Condensed Financial Statements of Registrant
Subsidiaries
|
|||||||
Combined
Management’s Discussion and Analysis of Registrant
Subsidiaries
|
|||||||
Controls
and Procedures
|
|||||||
Part
II. OTHER INFORMATION
|
|||||||
Item
1.
|
Legal
Proceedings
|
||||||
Item
1A.
|
Risk
Factors
|
||||||
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
||||||
Item
5.
|
Other
Information
|
||||||
Item
6.
|
Exhibits:
|
||||||
Exhibit
12
|
|||||||
Exhibit
31(a)
|
|||||||
Exhibit
31(b)
|
|||||||
Exhibit
31(c)
|
|||||||
Exhibit
31(d)
|
|||||||
Exhibit
32(a)
|
|||||||
Exhibit
32(b)
|
|||||||
SIGNATURE
|
This
combined Form 10-Q is separately filed by American Electric Power
Company,
Inc., AEP Generating Company, AEP Texas Central Company, AEP Texas
North
Company, Appalachian Power Company, Columbus Southern Power Company,
Indiana Michigan Power Company, Kentucky 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
|
ADITC
|
Accumulated
Deferred Investment Tax Credits.
|
|
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 domestic electric utility
companies.
|
|
AEP
East companies
|
APCo,
CSPCo, I&M, KPCo and OPCo.
|
|
AEP
System or the System
|
American
Electric Power System, an integrated electric utility system, owned
and
operated by AEP’s electric utility subsidiaries.
|
|
AEP
System Power Pool or
AEP Power Pool
|
Members
are APCo, CSPCo, I&M, KPCo and OPCo. The Pool shares the generation,
cost of generation and resultant wholesale off-system sales of the
member
companies.
|
|
AEPSC
|
American
Electric Power Service Corporation, a service subsidiary providing
management and professional services to AEP and its
subsidiaries.
|
|
AEP
West companies
|
PSO,
SWEPCo, TCC and TNC.
|
|
AFUDC
|
Allowance
for Funds Used During Construction.
|
|
ALJ
|
Administrative
Law Judge.
|
|
AOCI
|
Accumulated
Other Comprehensive Income (Loss).
|
|
APCo
|
Appalachian
Power Company, an AEP electric utility subsidiary.
|
|
ARO
|
Asset
Retirement Obligations.
|
|
CAA
|
Clean
Air Act.
|
|
CO2
|
Carbon
Dioxide.
|
|
Cook
Plant
|
Donald
C. Cook Nuclear Plant, a two-unit, 2,110 MW nuclear plant owned by
I&M.
|
|
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.).
|
|
CSW
Operating Agreement
|
Agreement,
dated January 1, 1997, by and among PSO, SWEPCo, TCC and TNC governing
generating capacity allocation. AEPSC acts as the
agent.
|
|
CTC
|
Competition
Transition Charge.
|
|
DETM
|
Duke
Energy Trading and Marketing L.L.C., a risk management
counterparty.
|
|
ECAR
|
East
Central Area Reliability Council.
|
|
EDFIT
|
Excess
Deferred Federal Income Taxes.
|
|
ERCOT
|
Electric
Reliability Council of Texas.
|
|
FASB
|
Financial
Accounting Standards Board.
|
|
Federal
EPA
|
United
States Environmental Protection Agency.
|
|
FERC
|
Federal
Energy Regulatory Commission.
|
|
FIN
46
|
FASB
Interpretation No. 46, “Consolidation of Variable Interest
Entities.”
|
|
FIN
48
|
FASB
Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” and
FASB Staff Position FIN 48-1, "Definition of Settlement in FASB
Interpretation No. 48."
|
|
GAAP
|
Accounting
Principles Generally Accepted in the United States of
America.
|
|
HPL
|
Houston
Pipeline Company, a former AEP
subsidiary.
|
IGCC
|
Integrated
Gasification Combined Cycle, technology that turns coal into a
cleaner-burning gas.
|
|
IPP
|
Independent
Power Producer.
|
|
IRS
|
Internal
Revenue Service.
|
|
IURC
|
Indiana
Utility Regulatory Commission.
|
|
I&M
|
Indiana
Michigan Power Company, an AEP electric utility
subsidiary.
|
|
JMG
|
JMG
Funding LP.
|
|
KGPCo
|
Kingsport
Power Company, an AEP electric distribution subsidiary.
|
|
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.
|
|
NRC
|
Nuclear
Regulatory Commission.
|
|
NSR
|
New
Source Review.
|
|
NYMEX
|
New
York Mercantile Exchange.
|
|
OATT
|
Open
Access Transmission Tariff.
|
|
OCC
|
Corporation
Commission of the State of Oklahoma.
|
|
OPCo
|
Ohio
Power Company, an AEP electric utility subsidiary.
|
|
OTC
|
Over
the counter.
|
|
OVEC
|
Ohio
Valley Electric Corporation, which is 43.47% owned by
AEP.
|
|
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; AEGCo, APCo, CSPCo, I&M, KPCo,
OPCo, PSO, SWEPCo, TCC and TNC.
|
|
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.
|
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
158
|
Statement
of Financial Accounting Standards No. 158, “Employers’ Accounting for
Defined Benefit Pension and Other Postretirement
Plans.”
|
|
SFAS
159
|
Statement
of Financial Accounting Standards No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities.”
|
|
SIA
|
System
Integration Agreement.
|
|
SO2
|
Sulfur
Dioxide.
|
|
SPP
|
Southwest
Power Pool.
|
|
Sweeny
|
Sweeny
Cogeneration Limited Partnership, owner and operator of a four unit,
480
MW gas-fired generation facility, owned 50% by AEP.
|
|
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.
|
|
Transmission
Equalization
Agreement
|
Transmission
Equalization Agreement by and among APCo, CSPCo, I&M, KPCo and OPCo
with AEPSC as agent, promoting the allocation of the cost of
ownership and operation of the transmission system in proportion
to their
demand ratios.
|
|
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.
|
|
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, costs and transportation for fuels and the creditworthiness
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 when needed at acceptable
prices and terms and to recover those costs through applicable rate
cases
or competitive rates.
|
·
|
New
legislation, litigation and government regulation including requirements
for reduced emissions of sulfur, nitrogen, mercury, carbon, soot
or
particulate matter and other substances.
|
·
|
Timing
and resolution of pending and future rate cases, negotiations and
other
regulatory decisions (including rate or other recovery for new
investments, transmission service and environmental
compliance).
|
·
|
Resolution
of litigation (including pending Clean Air Act enforcement actions
and
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.
|
·
|
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 and other
energy-related commodities.
|
·
|
Changes
in utility regulation, including recent legislation in Virginia,
the
potential for new legislation in Ohio and membership in and integration
into regional transmission organizations.
|
·
|
Accounting
pronouncements periodically issued by accounting standard-setting
bodies.
|
·
|
The
performance of our pension and other postretirement benefit
plans.
|
·
|
Prices
for power that we generate and sell at wholesale.
|
·
|
Changes
in technology, particularly with respect to new, developing or alternative
sources of generation.
|
·
|
Other
risks and unforeseen events, including wars, the effects of terrorism
(including increased security costs), embargoes and other catastrophic
events.
|
The
registrants expressly disclaim any obligation to update any
forward-looking information.
|
·
|
In
March 2007, the Texas District Court judge reversed his earlier
preliminary decision and concluded the sale of assets method used
by TCC
to value its nuclear plant stranded costs was appropriate.
|
·
|
In
March 2007, various intervenors and the PUCT staff filed their
recommendations in TCC’s and TNC’s energy delivery base rate filings.
Though the recommendations varied, the range of recommended increase
was
$8 million to $30 million for TCC and $1 million to $14 million for
TNC.
In April 2007, TCC and TNC filed rebuttal testimony and continue
to pursue
$70 million and $22 million, respectively, in annual base rate increases.
Hearings began in April 2007 and are scheduled to conclude in May
2007.
|
·
|
In
April 2007, the Virginia legislature approved amendments recommended
by
the Governor to the legislature’s recently adopted, comprehensive bill
providing for the re-regulation of electric utilities generation/supply
rates. The effective date of the new amendments is July 1, 2007.
|
·
|
In
March 2007, a Hearing Examiner (HE) in Virginia issued a report
recommending a $76 million increase in APCo’s base rates and $45 million
credit to the fuel factor for off-system sales margins. APCo
continues to pursue an annual base rate increase of $225 million
and a $27
million credit for off-system sales margins. We expect a ruling during
2007.
|
·
|
In
April 2007, the FERC issued an order reversing an initial favorable
ALJ
decision which had found the existing PJM zonal rate design to be
unjust
and determined that it should be replaced. In the April 2007 order,
the
FERC ruled that the existing PJM rate design is just and reasonable.
As a
result of this order, our retail customers will be asked to bear
the full
cost of the existing AEP east transmission zone facilities. We presently
recover approximately 85% of these costs from retail customers. The
FERC
further ruled that the cost of new facilities of 500 kV and above
would be
shared among all PJM participants.
|
·
|
In
March 2007, the OCC staff and various intervenors filed testimony
in PSO’s
base rate case. The recommendations were base rate reductions that
ranged
from $18 million to $52 million. In April 2007, PSO filed rebuttal
testimony and continues to pursue an increase in annual base rates
of $48
million.
|
·
|
Beginning
with the May 2007 billing cycle, CSPCo and OPCo implemented rates
filed
with the PUCO under the 4% provision of their RSPs to increase their
annual generation rates for 2007 by $24 million and $8 million,
respectively, to recover governmentally-mandated costs. These increases
are subject to refund until the PUCO issues a final order in the
matter.
The hearing is scheduled to begin in late May 2007.
|
·
|
In
March 2007, CSPCo filed an application under the 4% provision of
the RSP
to adjust the Power Acquisition Rider (PAR) which was authorized
in 2005
by the PUCO in connection with CSPCo's acquisition of Monongahela
Power
Company's certified territory in Ohio. If approved, CSPCo's revenues
would
increase by $22 million and $38 million for 2007 and 2008,
respectively.
|
·
|
In
April 2007, CSPCo and OPCo filed a joint motion with the PUCO staff
and
other intervenors to withdraw the proposed enhanced reliability
plan.
|
·
|
We
completed the 480 MW Darby Electric Generation Station acquisition
in
April 2007.
|
·
|
In
April 2007, we signed a memorandum of understanding with Allegheny
Energy
Inc. to form a joint venture company to build and own certain electric
transmission assets within PJM with the initial focus on a transmission
line between AEP’s Amos power plant in West Virginia and Allegheny’s
proposed Kemptown power plant in Maryland. We expect to execute definitive
agreements for the joint venture with Allegheny Energy Inc. by mid-2007
and anticipate the joint venture will begin activities in the second
half
of 2007.
|
·
|
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 34 million tons
of coal
and dry bulk commodities primarily on the Ohio, Illinois and Lower
Mississippi rivers. Approximately 35% of the barging operations
relates to
the transportation of coal, 28% relates to agricultural
products, 21% relates to steel and 16% relates to other
commodities.
|
·
|
IPPs,
wind farms and marketing and risk management activities primarily in
ERCOT.
|
Three
Months Ended March 31,
|
|||||||||||||
2007
|
2006
|
||||||||||||
Earnings
|
EPS
(b)
|
Earnings
|
EPS
(b)
|
||||||||||
Utility
Operations
|
$
|
253
|
$
|
0.63
|
$
|
365
|
$
|
0.93
|
|||||
MEMCO
Operations
|
15
|
0.04
|
21
|
0.05
|
|||||||||
Generation
and Marketing
|
(1
|
)
|
-
|
4
|
0.01
|
||||||||
All
Other (a)
|
4
|
0.01
|
(12
|
)
|
(0.03
|
)
|
|||||||
Income
Before Discontinued Operations
|
$
|
271
|
$
|
0.68
|
$
|
378
|
$
|
0.96
|
|||||
Weighted
Average Number of Basic Shares Outstanding
|
397
|
394
|
(a)
|
All
Other includes:
|
|
·
|
Parent
company’s guarantee revenue received from affiliates, interest income and
interest expense and other nonallocated costs.
|
|
·
|
Other
energy supply related businesses, including the Plaquemine Cogeneration
Facility, which was sold in the fourth quarter of 2006.
|
|
(b)
|
The
earnings per share of any segment does not represent a direct legal
interest in the assets and liabilities allocated to any one segment
but
rather represents a direct equity interest in AEP’s assets and liabilities
as a whole.
|
Three
Months Ended
|
|||||||
March
31,
|
|||||||
2007
|
2006
|
||||||
(in
millions)
|
|||||||
Revenues
|
$
|
3,033
|
$
|
2,966
|
|||
Fuel
and Purchased Power
|
1,119
|
1,126
|
|||||
Gross
Margin
|
1,914
|
1,840
|
|||||
Depreciation
and Amortization
|
383
|
340
|
|||||
Other
Operating Expenses
|
991
|
836
|
|||||
Operating
Income
|
540
|
664
|
|||||
Other
Income, Net
|
18
|
41
|
|||||
Interest
Charges and Preferred Stock Dividend Requirements
|
179
|
154
|
|||||
Income
Tax Expense
|
126
|
186
|
|||||
Income
Before Discontinued Operations
|
$
|
253
|
$
|
365
|
2007
|
2006
|
||||||
Energy
Summary
|
(in
millions of KWH)
|
||||||
Retail:
|
|||||||
Residential
|
14,139
|
12,938
|
|||||
Commercial
|
9,359
|
8,909
|
|||||
Industrial
|
13,565
|
13,222
|
|||||
Miscellaneous
|
614
|
618
|
|||||
Total
Retail
|
37,677
|
35,687
|
|||||
Wholesale
|
8,778
|
10,844
|
|||||
Texas
Wires Delivery
|
5,831
|
5,546
|
|||||
Total
KWHs
|
52,286
|
52,077
|
2007
|
2006
|
|||||||||||||||||||||||||
Weather
Summary
|
(in
degree days)
|
|||||||||||||||||||||||||
Eastern
Region
|
||||||||||||||||||||||||||
Actual
- Heating (a)
|
1,816
|
1,456
|
||||||||||||||||||||||||
Normal
- Heating (b)
|
1,792
|
1,817
|
||||||||||||||||||||||||
Actual
- Cooling (c)
|
14
|
1
|
||||||||||||||||||||||||
Normal
- Cooling (b)
|
3
|
3
|
||||||||||||||||||||||||
Western
Region
(d)
|
||||||||||||||||||||||||||
Actual
- Heating (a)
|
902
|
658
|
||||||||||||||||||||||||
Normal
- Heating (b)
|
959
|
972
|
||||||||||||||||||||||||
Actual
- Cooling (c)
|
56
|
43
|
||||||||||||||||||||||||
Normal
- Cooling (b)
|
18
|
17
|
(a)
|
Eastern
region and western region heating degree days are calculated on a
55
degree temperature base.
|
(b)
|
Normal
Heating/Cooling represents the thirty-year average of degree
days.
|
(c)
|
Eastern
region and western region cooling degree days are calculated on a
65
degree temperature base.
|
(d)
|
Western
region statistics represent PSO/SWEPCo customer base
only.
|
First
Quarter of 2006
|
$
|
365
|
|||||
Changes
in Gross Margin:
|
|||||||
Retail
Margins
|
139
|
||||||
Off-system
Sales
|
(41
|
)
|
|||||
Transmission
Revenues
|
(29
|
)
|
|||||
Other
Revenues
|
5
|
||||||
Total
Change in Gross Margin
|
74
|
||||||
Changes
in Operating Expenses and Other:
|
|||||||
Other
Operation and Maintenance
|
(111
|
)
|
|||||
Gain
on Dispositions of Assets, Net
|
(47
|
)
|
|||||
Depreciation
and Amortization
|
(43
|
)
|
|||||
Carrying
Costs Income
|
(22
|
)
|
|||||
Other
Income, Net
|
2
|
||||||
Interest
and Other Charges
|
(25
|
)
|
|||||
Total
Change in Operating Expenses and Other
|
(246
|
)
|
|||||
Income
Tax Expense
|
60
|
||||||
First
Quarter of 2007
|
$
|
253
|
·
|
Retail
Margins increased $139 million primarily due to the
following:
|
|
·
|
A
$35 million increase related to new rates implemented in our Ohio
jurisdictions as approved by the PUCO in our RSPs and a $58 million
increase related to new rates implemented in other east jurisdictions
of
Kentucky, West Virginia and Virginia. See “APCo Virginia Base Rate Case”
in Note 3 for discussion of the Virginia increase implemented subject
to
refund.
|
|
·
|
A
$34 million increase related to increased residential and commercial
usage
and customer growth.
|
|
·
|
A
$40 million increase in usage related to weather. As compared to
the prior
year, our eastern region and western region experienced 25% and
37%
increases, respectively, in heating degree days.
|
|
These
increases were partially offset by:
|
||
·
|
A
$27 million decrease in financial transmission rights revenue,
net of
congestion, primarily due to fewer transmission constraints within
the PJM
market.
|
|
·
|
Margins
from Off-system Sales decreased $41 million primarily due to lower
generation availability in the east due to planned outages for
completion
of environmental retrofits and higher retail load offset by higher
margins
from trading activities.
|
|
·
|
Transmission
Revenues decreased $29 million primarily due to the elimination
of SECA
revenues as of April 1, 2006. See the “Transmission Rate Proceedings at
the FERC” section of Note 3.
|
·
|
Other
Operation and Maintenance expenses increased $111 million primarily
due to
increases in generation expenses related to plant outages and removal
costs, distribution expenses associated with service reliability
and storm
restoration primarily in Oklahoma and expenses associated with employee
benefits.
|
·
|
Gain
on Disposition of Assets, Net decreased $47 million primarily related
to
the earnings sharing agreement with Centrica from the sale of our
REPs in
2002. In 2006, we received $70 million from Centrica for earnings
sharing
and in 2007 we received $20 million as the earnings sharing agreement
ended.
|
·
|
Depreciation
and Amortization expense increased $43 million primarily due to increased
Ohio regulatory asset amortization related to recovery of IGCC
preconstruction costs, increased Texas amortization of the
securitized transition assets, increased Virginia regulatory amortization
related to environmental and reliability recovery and higher depreciable
property balances.
|
·
|
Carrying
Costs Income decreased $22 million because TCC started recovering
Texas
stranded costs in October 2006, resulting in lower Texas carrying
costs
income in 2007.
|
·
|
Interest
and Other Charges increased $25 million primarily due to additional
debt
issued in the fourth quarter of 2006 partially offset by an increase
in
allowance for borrowed funds used for construction.
|
·
|
Income
Tax Expense decreased $60 million due to a decrease in pretax
income.
|
March
31, 2007
|
December
31, 2006
|
||||||||||||
($
in millions)
|
|||||||||||||
Long-term
Debt, including amounts due within one year
|
$
|
13,902
|
58.7
|
%
|
$
|
13,698
|
59.1
|
%
|
|||||
Short-term
Debt
|
175
|
0.7
|
18
|
0.0
|
|||||||||
Total
Debt
|
14,077
|
59.4
|
13,716
|
59.1
|
|||||||||
Common
Equity
|
9,540
|
40.3
|
9,412
|
40.6
|
|||||||||
Preferred
Stock
|
61
|
0.3
|
61
|
0.3
|
|||||||||
Total
Debt and Equity Capitalization
|
$
|
23,678
|
100.0
|
%
|
$
|
23,189
|
100.0
|
%
|
Amount
|
Maturity
|
||||||
(in
millions)
|
|||||||
Commercial
Paper Backup:
|
|||||||
Revolving
Credit Facility
|
$
|
1,500
|
March
2011
|
||||
Revolving
Credit Facility
|
1,500
|
April
2012
|
|||||
Total
|
3,000
|
||||||
Cash
and Cash Equivalents
|
259
|
||||||
Total
Liquidity Sources
|
3,259
|
||||||
Less:
AEP Commercial Paper Outstanding
|
150
|
||||||
Letters of Credit Drawn
|
27
|
||||||
Net
Available Liquidity
|
$
|
3,082
|
Moody’s
|
S&P
|
Fitch
|
||||||||||||||||||||||
AEP
Short Term Debt
|
P-2
|
A-2
|
F-2
|
|||||||||||||||||||||
AEP
Senior Unsecured Debt
|
Baa2
|
BBB
|
BBB
|
Three
Months Ended
|
|||||||
March
31,
|
|||||||
2007
|
2006
|
||||||
(in
millions)
|
|||||||
Cash
and Cash Equivalents at Beginning of Period
|
$
|
301
|
$
|
401
|
|||
Net
Cash Flows From Operating Activities
|
351
|
583
|
|||||
Net
Cash Flows Used For Investing Activities
|
(628
|
)
|
(750
|
)
|
|||
Net
Cash Flows From Financing Activities
|
235
|
42
|
|||||
Net
Decrease in Cash and Cash Equivalents
|
(42
|
)
|
(125
|
)
|
|||
Cash
and Cash Equivalents at End of Period
|
$
|
259
|
$
|
276
|
Three
Months Ended
|
|||||||
March
31,
|
|||||||
2007
|
2006
|
||||||
(in
millions)
|
|||||||
Net
Income
|
$
|
271
|
$
|
381
|
|||
Less:
Discontinued Operations, Net of Tax
|
-
|
(3
|
)
|
||||
Income
Before Discontinued Operations
|
271
|
378
|
|||||
Noncash
Items Included in Earnings
|
420
|
323
|
|||||
Changes
in Assets and Liabilities
|
(340
|
)
|
(118
|
)
|
|||
Net
Cash Flows From Operating Activities
|
$
|
351
|
$
|
583
|
Three
Months Ended
|
|||||||
March
31,
|
|||||||
2007
|
2006
|
||||||
(in
millions)
|
|||||||
Construction
Expenditures
|
$
|
(907
|
)
|
$
|
(765
|
)
|
|
Change
in Other Temporary Cash Investments, Net
|
(20
|
)
|
27
|
||||
(Purchases)/Sales
of Investment Securities, Net
|
236
|
(89
|
)
|
||||
Proceeds
from Sales of Assets
|
68
|
111
|
|||||
Other
|
(5
|
)
|
(34
|
)
|
|||
Net
Cash Flows Used for Investing Activities
|
$
|
(628
|
)
|
$
|
(750
|
)
|
Three
Months Ended
|
|||||||
March
31,
|
|||||||
2007
|
2006
|
||||||
(in
millions)
|
|||||||
Issuance
of Common Stock
|
$
|
54
|
$
|
5
|
|||
Issuance/Retirement
of Debt, Net
|
355
|
129
|
|||||
Dividends
Paid on Common Stock
|
(155
|
)
|
(146
|
)
|
|||
Other
|
(19
|
)
|
54
|
||||
Net
Cash Flows From Financing Activities
|
$
|
235
|
$
|
42
|
March
31,
2007
|
December
31,
2007
|
||||||
(in
millions)
|
|||||||
AEP
Credit Accounts Receivable Purchase Commitments
|
$
|
549
|
$
|
536
|
|||
Rockport
Plant Unit 2 Future Minimum Lease Payments
|
2,364
|
2,364
|
|||||
Railcars
Maximum Potential Loss From Lease Agreement
|
31
|
31
|
·
|
The
PUCT ruling that TCC did not comply with the statute 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 it failed to determine a minimum price at which it would
reject
bids for the sale of its nuclear generating plant and it 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 cost, and
|
·
|
The
two federal matters regarding the allocation of off-system sales
related
to fuel recoveries and the potential tax normalization
violation.
|
·
|
Requirements
under the Clean Air Act (CAA) to reduce emissions of sulfur dioxide
(SO2),
nitrogen oxide (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
|
PLUS:
MTM of Cash Flow and Fair Value Hedges
|
Total
|
|||||||||||||
Current
Assets
|
$
|
319
|
$
|
30
|
$
|
121
|
$
|
470
|
$
|
6
|
$
|
476
|
||||||
Noncurrent
Assets
|
210
|
21
|
110
|
|
341
|
10
|
351
|
|||||||||||
Total
Assets
|
529
|
51
|
231
|
|
811
|
16
|
827
|
|||||||||||
Current
Liabilities
|
(228
|
)
|
(35
|
)
|
(120
|
)
|
(383
|
)
|
(20
|
)
|
(403
|
)
|
||||||
Noncurrent
Liabilities
|
(92
|
)
|
(8
|
)
|
(117
|
)
|
|
(217
|
)
|
(2
|
)
|
(219
|
)
|
|||||
Total
Liabilities
|
(320
|
)
|
(43
|
)
|
(237
|
)
|
|
(600
|
)
|
(22
|
)
|
(622
|
)
|
|||||
Total
MTM Derivative
Contract
Net Assets
(Liabilities)
|
$
|
209
|
$
|
8
|
$
|
(6
|
)
|
$
|
211
|
$
|
(6
|
)
|
$
|
205
|
Utility
Operations
|
Generation
and
Marketing
|
All
Other
|
Total
|
||||||||||
Total
MTM Risk Management Contract Net Assets (Liabilities) at
December 31, 2006
|
$
|
236
|
$
|
2
|
$
|
(5
|
)
|
$
|
233
|
||||
(Gain)
Loss from Contracts Realized/Settled During
the Period and Entered in a Prior Period
|
(23
|
)
|
-
|
-
|
(23
|
)
|
|||||||
Fair
Value of New Contracts at Inception When Entered
During
the Period (a)
|
1
|
3
|
-
|
4
|
|||||||||
Net
Option Premiums Paid/(Received) for Unexercised or
Unexpired Option Contracts Entered During The
Period
|
-
|
-
|
-
|
-
|
|||||||||
Changes
in Fair Value Due to Valuation Methodology
Changes
on Forward Contracts
|
-
|
-
|
-
|
-
|
|||||||||
Changes
in Fair Value Due to Market Fluctuations During
the
Period (b)
|
5
|
3
|
(1
|
)
|
7
|
||||||||
Changes
in Fair Value Allocated to Regulated Jurisdictions
(c)
|
(10
|
)
|
-
|
-
|
(10
|
)
|
|||||||
Total
MTM Risk Management Contract Net Assets
(Liabilities) at March 31, 2007
|
$
|
209
|
$
|
8
|
$
|
(6
|
)
|
211
|
|||||
Net
Cash Flow and Fair Value Hedge Contracts
|
(6
|
)
|
|||||||||||
Total
MTM Risk Management Contract Net Assets at March 31,
2007
|
$
|
205
|
(a)
|
Reflects
fair value on long-term contracts which are typically with customers
that
seek fixed pricing to limit their risk against fluctuating energy
prices.
Inception value is only recorded if observable market data can be
obtained
for valuation inputs for the entire contract term. The contract prices
are
valued against market curves associated with the delivery location
and
delivery term.
|
(b)
|
Market
fluctuations are attributable to various factors such as supply/demand,
weather, storage, etc.
|
(c)
|
“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.
|
·
|
The
method of measuring fair value used in determining the carrying amount
of
our total MTM asset or liability (external sources or modeled
internally).
|
·
|
The
maturity, by year, of our net assets/liabilities, to give an indication
of
when these MTM amounts will settle and generate
cash.
|
Remainder
2007
|
2008
|
2009
|
2010
|
2011
|
After
2011
|
Total
|
||||||||||||||||
Utility
Operations:
|
||||||||||||||||||||||
Prices
Actively Quoted - Exchange Traded
Contracts
|
$
|
14
|
$
|
1
|
$
|
2
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
17
|
||||||||
Prices
Provided by Other External Sources
-
OTC
Broker Quotes (a)
|
85
|
50
|
33
|
14
|
-
|
-
|
182
|
|||||||||||||||
Prices
Based on Models and Other Valuation
Methods (b)
|
(18
|
)
|
(7
|
)
|
9
|
17
|
4
|
5
|
10
|
|||||||||||||
Total
|
$
|
81
|
$
|
44
|
$
|
44
|
$
|
31
|
$
|
4
|
$
|
5
|
$
|
209
|
||||||||
Generation
and Marketing:
|
||||||||||||||||||||||
Prices
Actively Quoted - Exchange Traded Contracts
|
$
|
(5
|
)
|
$
|
(4
|
)
|
$
|
1
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
(8
|
)
|
|||||
Prices
Provided by Other External Sources
-
OTC Broker Quotes (a)
|
(3
|
)
|
8
|
1
|
-
|
-
|
-
|
6
|
||||||||||||||
Prices
Based on Models and Other Valuation
Methods (b)
|
3
|
6
|
(1
|
)
|
-
|
-
|
2
|
10
|
||||||||||||||
Total
|
$
|
(5
|
)
|
$
|
10
|
$
|
1
|
$
|
-
|
$
|
-
|
$
|
2
|
$
|
8
|
|||||||
All
Other:
|
||||||||||||||||||||||
Prices
Actively Quoted - Exchange Traded Contracts
|
$
|
4
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
4
|
||||||||
Prices
Provided by Other External Sources
-
OTC Broker Quotes (a)
|
(3
|
)
|
-
|
-
|
-
|
-
|
-
|
(3
|
)
|
|||||||||||||
Prices
Based on Models and Other Valuation
Methods (b)
|
-
|
(1
|
)
|
(4
|
)
|
(4
|
)
|
2
|
-
|
(7
|
)
|
|||||||||||
Total
|
$
|
1
|
$
|
(1
|
)
|
$
|
(4
|
)
|
$
|
(4
|
)
|
$
|
2
|
$
|
-
|
$
|
(6
|
)
|
||||
Total:
|
||||||||||||||||||||||
Prices
Actively Quoted - Exchange Traded
Contracts
|
$
|
13
|
$
|
(3
|
)
|
$
|
3
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
13
|
|||||||
Prices
Provided by Other External Sources
-
OTC Broker Quotes (a)
|
79
|
58
|
34
|
14
|
-
|
-
|
185
|
|||||||||||||||
Prices
Based on Models and Other Valuation
Methods (b)
|
(15
|
)
|
(2
|
)
|
4
|
13
|
6
|
7
|
13
|
|||||||||||||
Total
|
$
|
77
|
$
|
53
|
$
|
41
|
$
|
27
|
$
|
6
|
$
|
7
|
$
|
211
|
(a)
|
Prices
Provided by Other External Sources - OTC Broker Quotes reflects
information obtained from over-the-counter brokers (OTC), industry
services, or multiple-party online platforms.
|
(b)
|
Prices
Based on Models and Other Valuation Methods is used in the absence
of
pricing information from external sources. Modeled information is
derived
using valuation models developed by the reporting entity, reflecting
when
appropriate, option pricing theory, discounted cash flow concepts,
valuation adjustments, etc. and may require projection of prices
for
underlying commodities beyond the period that prices are available
from
third-party sources. In addition, where external pricing information
or
market liquidity is limited, such valuations are classified as
modeled.
|
Contract
values that are measured using models or valuation methods other
than
active quotes or OTC broker quotes (because of the lack of such data
for
all delivery quantities, locations and periods) incorporate in the
model
or other valuation methods, to the extent possible, OTC broker quotes
and
active quotes for deliveries in years and at locations for which
such
quotes are available.
|
Commodity
|
Transaction
Class
|
Market/Region
|
Tenor
|
|||
(in
Months)
|
||||||
Natural
Gas
|
Futures
|
NYMEX
/ Henry Hub
|
60
|
|||
Physical
Forwards
|
Gulf
Coast, Texas
|
19
|
||||
Swaps
|
Northeast,
Mid-Continent, Gulf Coast, Texas
|
19
|
||||
Exchange
Option Volatility
|
NYMEX
/ Henry Hub
|
12
|
||||
Power
|
Futures
|
AEP
East - PJM
|
33
|
|||
Physical
Forwards
|
AEP
East
|
45
|
||||
Physical
Forwards
|
AEP
West
|
33
|
||||
Physical
Forwards
|
West
Coast
|
33
|
||||
Peak
Power Volatility (Options)
|
AEP
East - Cinergy, PJM
|
12
|
||||
Emissions
|
Credits
|
SO2,
NOx
|
33
|
|||
Coal
|
Physical
Forwards
|
PRB,
NYMEX, CSX
|
33
|
Power
|
Interest
Rate and
Foreign
Currency
|
Total
|
||||||||
Beginning
Balance in AOCI, December 31, 2006
|
$
|
17
|
$
|
(23
|
)
|
$
|
(6
|
)
|
||
Changes
in Fair Value
|
(15
|
)
|
-
|
(15
|
)
|
|||||
Reclassifications
from AOCI to Net Income for
Cash
Flow Hedges Settled
|
(7
|
)
|
-
|
(7
|
)
|
|||||
Ending
Balance in AOCI, March 31, 2007
|
$
|
(5
|
)
|
$
|
(23
|
)
|
$
|
(28
|
)
|
|
After
Tax Portion Expected to be Reclassified
to Earnings During Next 12 Months
|
$
|
(10
|
)
|
$
|
(1
|
)
|
$
|
(11
|
)
|
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
|
$
|
665
|
$
|
102
|
$
|
563
|
1
|
$
|
72
|
|||||||
Split
Rating
|
7
|
2
|
5
|
2
|
4
|
|||||||||||
Noninvestment
Grade
|
7
|
-
|
7
|
2
|
7
|
|||||||||||
No
External Ratings:
|
||||||||||||||||
Internal
Investment Grade
|
15
|
-
|
15
|
3
|
11
|
|||||||||||
Internal
Noninvestment Grade
|
45
|
33
|
12
|
2
|
8
|
|||||||||||
Total
as of March 31, 2007
|
$
|
739
|
$
|
137
|
$
|
602
|
10
|
$
|
102
|
|||||||
Total
as of December 31, 2006
|
$
|
998
|
$
|
161
|
$
|
837
|
9
|
$
|
169
|
Remainder
|
|||||
2007
|
2008
|
2009
|
|||
Estimated
Plant Output Hedged
|
93%
|
89%
|
90%
|
Three
Months Ended
March
31, 2007
|
Twelve
Months Ended
December
31, 2006
|
||||||||||||||||
(in
millions)
|
(in
millions)
|
||||||||||||||||
End
|
High
|
Average
|
Low
|
End
|
High
|
Average
|
Low
|
||||||||||
$2
|
$6
|
$2
|
$1
|
$3
|
$10
|
$3
|
$1
|
2007
|
2006
|
||||||
REVENUES
|
|||||||
Utility
Operations
|
$
|
2,886
|
$
|
2,982
|
|||
Other
|
283
|
126
|
|||||
TOTAL
|
3,169
|
3,108
|
|||||
EXPENSES
|
|||||||
Fuel
and Other Consumables Used for Electric Generation
|
886
|
961
|
|||||
Purchased
Energy for Resale
|
246
|
166
|
|||||
Other
Operation and Maintenance
|
938
|
821
|
|||||
Gain/Loss
on Disposition of Assets, Net
|
(23
|
)
|
(68
|
)
|
|||
Depreciation
and Amortization
|
391
|
348
|
|||||
Taxes
Other Than Income Taxes
|
186
|
191
|
|||||
TOTAL
|
2,624
|
2,419
|
|||||
OPERATING
INCOME
|
545
|
689
|
|||||
Interest
and Investment Income
|
23
|
8
|
|||||
Carrying
Costs Income
|
8
|
30
|
|||||
Allowance
For Equity Funds Used During Construction
|
8
|
6
|
|||||
Gain
on Disposition of Equity Investments, Net
|
-
|
3
|
|||||
INTEREST
AND OTHER CHARGES
|
|||||||
Interest
Expense
|
186
|
168
|
|||||
Preferred
Stock Dividend Requirements of Subsidiaries
|
1
|
1
|
|||||
TOTAL
|
187
|
169
|
|||||
INCOME
BEFORE INCOME TAX EXPENSE, MINORITY
INTEREST
EXPENSE AND EQUITY EARNINGS
|
397
|
567
|
|||||
Income
Tax Expense
|
130
|
189
|
|||||
Minority
Interest Expense
|
1
|
-
|
|||||
Equity
Earnings of Unconsolidated Subsidiaries
|
5
|
-
|
|||||
INCOME
BEFORE DISCONTINUED OPERATIONS
|
271
|
378
|
|||||
DISCONTINUED
OPERATIONS, Net of Tax
|
-
|
3
|
|||||
NET
INCOME
|
$
|
271
|
$
|
381
|
|||
WEIGHTED
AVERAGE NUMBER OF BASIC SHARES OUTSTANDING
|
397,314,642
|
393,653,162
|
|||||
BASIC
EARNINGS PER SHARE
|
|||||||
Income
Before Discontinued Operations
|
$
|
0.68
|
$
|
0.96
|
|||
Discontinued
Operations, Net of Tax
|
-
|
0.01
|
|||||
TOTAL
BASIC EARNINGS PER SHARE
|
$
|
0.68
|
$
|
0.97
|
|||
WEIGHTED
AVERAGE NUMBER OF DILUTED SHARES OUTSTANDING
|
398,552,113
|
395,580,106
|
|||||
DILUTED
EARNINGS PER SHARE
|
|||||||
Income
Before Discontinued Operations
|
$
|
0.68
|
$
|
0.95
|
|||
Discontinued
Operations, Net of Tax
|
-
|
0.01
|
|||||
TOTAL
DILUTED EARNINGS PER SHARE
|
$
|
0.68
|
$
|
0.96
|
|||
CASH
DIVIDENDS PAID PER SHARE
|
$
|
0.39
|
$
|
0.37
|
|||
2007
|
2006
|
||||||
CURRENT
ASSETS
|
|||||||
Cash
and Cash Equivalents
|
$
|
259
|
$
|
301
|
|||
Other
Temporary Cash Investments
|
197
|
425
|
|||||
Accounts
Receivable:
|
|||||||
Customers
|
757
|
676
|
|||||
Accrued
Unbilled Revenues
|
304
|
350
|
|||||
Miscellaneous
|
59
|
44
|
|||||
Allowance
for Uncollectible Accounts
|
(31
|
)
|
(30
|
)
|
|||
Total Accounts Receivable
|
1,089
|
1,040
|
|||||
Fuel,
Materials and Supplies
|
942
|
913
|
|||||
Risk
Management Assets
|
476
|
680
|
|||||
Regulatory
Asset for Under-Recovered Fuel Costs
|
22
|
38
|
|||||
Margin
Deposits
|
88
|
120
|
|||||
Prepayments
and Other
|
90
|
71
|
|||||
TOTAL
|
3,163
|
3,588
|
|||||
PROPERTY,
PLANT AND EQUIPMENT
|
|||||||
Electric:
|
|||||||
Production
|
17,736
|
16,787
|
|||||
Transmission
|
7,094
|
7,018
|
|||||
Distribution
|
11,539
|
11,338
|
|||||
Other
(including coal mining and nuclear fuel)
|
3,423
|
3,405
|
|||||
Construction
Work in Progress
|
2,902
|
3,473
|
|||||
Total
|
42,694
|
42,021
|
|||||
Accumulated
Depreciation and Amortization
|
(15,391
|
)
|
(15,240
|
)
|
|||
TOTAL
- NET
|
27,303
|
26,781
|
|||||
OTHER
NONCURRENT ASSETS
|
|||||||
Regulatory
Assets
|
2,385
|
2,477
|
|||||
Securitized
Transition Assets
|
2,134
|
2,158
|
|||||
Spent
Nuclear Fuel and Decommissioning Trusts
|
1,263
|
1,248
|
|||||
Goodwill
|
76
|
76
|
|||||
Long-term
Risk Management Assets
|
351
|
378
|
|||||
Employee
Benefits and Pension Assets
|
316
|
327
|
|||||
Deferred
Charges and Other
|
945
|
910
|
|||||
TOTAL
|
7,470
|
7,574
|
|||||
Assets
Held for Sale
|
-
|
44
|
|||||
TOTAL
ASSETS
|
$
|
37,936
|
$
|
37,987
|
2007
|
2006
|
||||||||||||
CURRENT
LIABILITIES
|
(in
millions)
|
||||||||||||
Accounts
Payable
|
$
|
1,263
|
$
|
1,360
|
|||||||||
Short-term
Debt
|
175
|
18
|
|||||||||||
Long-term
Debt Due Within One Year
|
1,377
|
1,269
|
|||||||||||
Risk
Management Liabilities
|
403
|
541
|
|||||||||||
Customer
Deposits
|
315
|
339
|
|||||||||||
Accrued
Taxes
|
758
|
781
|
|||||||||||
Accrued
Interest
|
247
|
186
|
|||||||||||
Other
|
770
|
962
|
|||||||||||
TOTAL
|
5,308
|
5,456
|
|||||||||||
NONCURRENT
LIABILITIES
|
|||||||||||||
Long-term
Debt
|
12,525
|
12,429
|
|||||||||||
Long-term
Risk Management Liabilities
|
219
|
260
|
|||||||||||
Deferred
Income Taxes
|
4,581
|
4,690
|
|||||||||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
2,759
|
2,910
|
|||||||||||
Asset
Retirement Obligations
|
1,035
|
1,023
|
|||||||||||
Employee
Benefits and Pension Obligations
|
829
|
823
|
|||||||||||
Deferred
Gain on Sale and Leaseback - Rockport Plant Unit 2
|
146
|
148
|
|||||||||||
Deferred
Credits and Other
|
933
|
775
|
|||||||||||
TOTAL
|
23,027
|
23,058
|
|||||||||||
TOTAL
LIABILITIES
|
28,335
|
28,514
|
|||||||||||
Cumulative
Preferred Stock Not Subject to Mandatory Redemption
|
61
|
61
|
|||||||||||
Commitments
and Contingencies (Note 4)
|
|||||||||||||
COMMON
SHAREHOLDERS’ EQUITY
|
|||||||||||||
Common
Stock Par Value $6.50:
|
|||||||||||||
2007
|
2006
|
||||||||||||
Shares
Authorized
|
600,000,000
|
600,000,000
|
|||||||||||
Shares
Issued
|
419,667,962
|
418,174,728
|
|||||||||||
(21,499,992
shares were held in treasury at March 31, 2007 and December 31, 2006)
|
2,728
|
2,718
|
|||||||||||
Paid-in
Capital
|
4,270
|
4,221
|
|||||||||||
Retained
Earnings
|
2,795
|
2,696
|
|||||||||||
Accumulated
Other Comprehensive Income (Loss)
|
(253
|
)
|
(223
|
)
|
|||||||||
TOTAL
|
9,540
|
9,412
|
|||||||||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
37,936
|
$
|
37,987
|
2007
|
2006
|
||||||
OPERATING
ACTIVITIES
|
|||||||
Net
Income
|
$
|
271
|
$
|
381
|
|||
Less:
Discontinued Operations, Net of Tax
|
-
|
(3
|
)
|
||||
Income
before Discontinued Operations
|
271
|
378
|
|||||
Adjustments
for Noncash Items:
|
|||||||
Depreciation
and Amortization
|
391
|
348
|
|||||
Deferred
Income Taxes
|
5
|
7
|
|||||
Deferred
Investment Tax Credits
|
(6
|
)
|
(7
|
)
|
|||
Carrying
Costs Income
|
(8
|
)
|
(30
|
)
|
|||
Mark-to-Market
of Risk Management Contracts
|
22
|
(9
|
)
|
||||
Amortization
of Nuclear Fuel
|
16
|
14
|
|||||
Deferred
Property Taxes
|
(67
|
)
|
(82
|
)
|
|||
Fuel
Over/Under-Recovery, Net
|
(62
|
)
|
103
|
||||
Gain
on Sales of Assets and Equity Investments, Net
|
(23
|
)
|
(71
|
)
|
|||
Change
in Other Noncurrent Assets
|
44
|
45
|
|||||
Change
in Other Noncurrent Liabilities
|
16
|
10
|
|||||
Changes
in Certain Components of Working Capital:
|
|||||||
Accounts
Receivable, Net
|
(29
|
)
|
214
|
||||
Fuel,
Materials and Supplies
|
(3
|
)
|
(50
|
)
|
|||
Margin
Deposits
|
33
|
50
|
|||||
Accounts
Payable
|
(31
|
)
|
(115
|
)
|
|||
Accrued
Taxes
|
32
|
176
|
|||||
Customer
Deposits
|
(23
|
)
|
(157
|
)
|
|||
Other
Current Assets
|
(40
|
)
|
19
|
||||
Other
Current Liabilities
|
(187
|
)
|
(260
|
)
|
|||
Net
Cash Flows From Operating Activities
|
351
|
583
|
|||||
INVESTING
ACTIVITIES
|
|||||||
Construction
Expenditures
|
(907
|
)
|
(765
|
)
|
|||
Change
in Other Temporary Cash Investments, Net
|
(20
|
)
|
27
|
||||
Purchases
of Investment Securities
|
(3,693
|
)
|
(2,469
|
)
|
|||
Sales
of Investment Securities
|
3,929
|
2,380
|
|||||
Proceeds
from Sales of Assets
|
68
|
111
|
|||||
Other
|
(5
|
)
|
(34
|
)
|
|||
Net
Cash Flows Used For Investing Activities
|
(628
|
)
|
(750
|
)
|
|||
FINANCING
ACTIVITIES
|
|||||||
Issuance
of Common Stock
|
54
|
5
|
|||||
Change
in Short-term Debt, Net
|
157
|
216
|
|||||
Issuance
of Long-term Debt
|
247
|
55
|
|||||
Retirement
of Long-term Debt
|
(49
|
)
|
(142
|
)
|
|||
Dividends
Paid on Common Stock
|
(155
|
)
|
(146
|
)
|
|||
Other
|
(19
|
)
|
54
|
||||
Net
Cash Flows From Financing Activities
|
235
|
42
|
|||||
Net
Decrease in Cash and Cash Equivalents
|
(42
|
)
|
(125
|
)
|
|||
Cash
and Cash Equivalents at Beginning of Period
|
301
|
401
|
|||||
Cash
and Cash Equivalents at End of Period
|
$
|
259
|
$
|
276
|
|||
SUPPLEMENTARY
INFORMATION
|
|||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$
|
152
|
$
|
159
|
|||
Net
Cash Paid for Income Taxes
|
66
|
13
|
|||||
Noncash
Acquisitions Under Capital Leases
|
11
|
20
|
|||||
Construction
Expenditures Included in Accounts Payable at March 31,
|
323
|
246
|
|||||
See
Condensed Notes to Condensed Consolidated Financial
Statements.
|
Common
Stock
|
Accumulated
Other Comprehensive Income (Loss)
|
|||||||||||||||||||
Shares
|
Amount
|
Paid-in
Capital
|
Retained
Earnings
|
Total
|
||||||||||||||||
DECEMBER
31, 2005
|
415
|
$
|
2,699
|
$
|
4,131
|
$
|
2,285
|
$
|
(27
|
)
|
$
|
9,088
|
||||||||
Issuance
of Common Stock
|
1
|
4
|
5
|
|||||||||||||||||
Common
Stock Dividends
|
(146
|
)
|
(146
|
)
|
||||||||||||||||
Other
|
2
|
2
|
||||||||||||||||||
TOTAL
|
8,949
|
|||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other
Comprehensive Income, Net of Tax:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $19
|
35
|
35
|
||||||||||||||||||
Securities
Available for Sale, Net of Tax of $10
|
19
|
19
|
||||||||||||||||||
NET
INCOME
|
381
|
381
|
||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
435
|
|||||||||||||||||||
MARCH
31, 2006
|
415
|
$
|
2,700
|
$
|
4,137
|
$
|
2,520
|
$
|
27
|
$
|
9,384
|
|||||||||
DECEMBER
31, 2006
|
418
|
$
|
2,718
|
$
|
4,221
|
$
|
2,696
|
$
|
(223
|
)
|
$
|
9,412
|
||||||||
FIN
48 Adoption, Net of Tax
|
(17
|
)
|
(17
|
)
|
||||||||||||||||
Issuance
of Common Stock
|
2
|
10
|
44
|
54
|
||||||||||||||||
Common
Stock Dividends
|
(155
|
)
|
(155
|
)
|
||||||||||||||||
Other
|
5
|
5
|
||||||||||||||||||
TOTAL
|
9,299
|
|||||||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Other
Comprehensive Loss, Net of Tax:
|
||||||||||||||||||||
Cash
Flow Hedges, Net of Tax of $12
|
(22
|
)
|
(22
|
)
|
||||||||||||||||
Securities
Available for Sale, Net of Tax of $4
|
(8
|
)
|
(8
|
)
|
||||||||||||||||
NET
INCOME
|
271
|
271
|
||||||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
241
|
|||||||||||||||||||
MARCH
31, 2007
|
420
|
$
|
2,728
|
$
|
4,270
|
$
|
2,795
|
$
|
(253
|
)
|
$
|
9,540
|
1.
|
Significant
Accounting Matters
|
2.
|
New
Accounting Pronouncements
|
3.
|
Rate
Matters
|
4.
|
Commitments,
Guarantees and Contingencies
|
5.
|
Acquisitions,
Dispositions, Discontinued Operations and Assets Held for
Sale
|
6.
|
Benefit
Plans
|
7.
|
Business
Segments
|
8.
|
Income
Taxes
|
9.
|
Financing
Activities
|
March
31,
|
December
31,
|
||||||
2007
|
2006
|
||||||
Components
|
(in
millions)
|
||||||
Securities
Available for Sale, Net of Tax
|
$
|
10
|
$
|
18
|
|||
Cash
Flow Hedges, Net of Tax
|
(28
|
)
|
(6
|
)
|
|||
SFAS
158 Adoption, Net of Tax
|
(235
|
)
|
(235
|
)
|
|||
Total
|
$
|
(253
|
)
|
$
|
(223
|
)
|
Three
Months Ended March 31,
|
|||||||||||||
2007
|
2006
|
||||||||||||
(in
millions, except per share data)
|
|||||||||||||
$/share
|
$/share
|
||||||||||||
Earnings
Applicable to Common Stock
|
$
|
271
|
$
|
381
|
|||||||||
Average
Number of Basic Shares Outstanding
|
397.3
|
$
|
0.68
|
393.7
|
$
|
0.97
|
|||||||
Average
Dilutive Effect of:
|
|||||||||||||
Performance
Share Units
|
0.6
|
-
|
1.4
|
(0.01
|
)
|
||||||||
Stock
Options
|
0.5
|
-
|
0.3
|
-
|
|||||||||
Restricted
Stock Units
|
0.1
|
-
|
0.1
|
-
|
|||||||||
Restricted
Shares
|
0.1
|
-
|
0.1
|
-
|
|||||||||
Average
Number of Diluted Shares Outstanding
|
398.6
|
$
|
0.68
|
395.6
|
$
|
0.96
|
Three
Months Ended
March
31,
|
|||||||
2007
|
2006
|
||||||
Related
Party Transactions
|
(in
millions)
|
||||||
AEP
Consolidated Purchased Energy:
|
|||||||
Ohio
Valley Electric Corporation (43.47% Owned)
|
$
|
49
|
$
|
55
|
|||
Sweeny
Cogeneration Limited Partnership (50% Owned)
|
30
|
34
|
|||||
AEP
Consolidated Other Revenues - Barging and Other
Transportation Services - Ohio Valley Electric Corporation (43.47%
Owned)
|
9
|
7
|
·
|
The
PUCT ruling that TCC did not comply with the statute 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 it failed to determine a minimum price at which it would
reject
bids for the sale of its nuclear generating plant and it 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 cost, and
|
·
|
The
two federal matters regarding the allocation of off-system sales
related
to fuel recoveries and the potential tax normalization violation.
See
“TCC
and TNC Deferred Fuel” and“TCC
Deferred Investment Tax Credits and Excess Deferred Federal Income
Taxes”
sections below.
|
·
|
AEP/AP
proposed a Highway/Byway rate design in which:
|
|
·
|
The
cost of all transmission facilities in the PJM region operated at
345 kV
or higher would be included in a “Highway” rate that all load serving
entities (LSEs) would pay based on peak demand. The AEP/AP proposal
would
produce about $125 million in additional revenues per year for AEP
from
users in other zones of PJM.
|
|
·
|
The
cost of transmission facilities operating at lower voltages would
be
collected in the zones where those costs are presently charged under
PJM’s
existing rate design.
|
|
·
|
Two
other utilities, Baltimore Gas & Electric Company (BG&E) and Old
Dominion Electric Cooperative (ODEC), proposed a Highway/Byway rate
that
includes transmission facilities above 200 kV, which would produce
lower
revenues for AEP than the AEP/AP proposal.
|
|
·
|
In
another competing Highway/Byway proposal, a group of LSEs proposed
rates
that would include existing 500 kV and higher voltage facilities
and new
facilities above 200 kV in the Highway rate, which would produce
considerably lower revenues for AEP than the AEP/AP proposal.
|
|
·
|
In
January 2006, the FERC staff issued testimony and exhibits supporting
a
PJM-wide flat rate or “Postage Stamp” type of rate design that would
include all transmission facilities, which would produce higher
transmission revenues for AEP than the AEP/AP
proposal.
|
·
|
In
Kentucky, KPCo settled a rate case, which provided for the recovery
of its
share of the transmission revenue reduction in new rates effective
March
30, 2006.
|
·
|
In
Ohio, CSPCo and OPCo recover their FERC-approved OATT that reflects
their
share of the full transmission revenue requirement retroactive to
April 1,
2006 under a May 2006 PUCO order.
|
·
|
In
West Virginia, APCo settled a rate case, which provided for the recovery
of its share of the T&O/SECA transmission revenue reduction beginning
July 28, 2006.
|
·
|
In
Virginia, APCo filed a request for revised rates, which includes
recovery
of its share of the T&O/SECA transmission revenue reduction starting
October 2, 2006, subject to refund.
|
·
|
In
Indiana, I&M is precluded by a rate cap from raising its rates until
July 1, 2007.
|
·
|
In
Michigan, I&M has not filed to seek recovery of the lost transmission
revenues.
|
Gross
SECA Revenues Recognized
|
||||
(in
millions)
|
||||
Year
Ended December 31, 2006 (a)
|
$
|
43
|
||
Year
Ended December 31, 2005
|
163
|
|||
Year
Ended December 31, 2004
|
14
|
(a)
|
Represents
revenues through March 31, 2006, when SECA rates expired, and excludes
all
provisions for refund.
|
March
31,
|
December
31,
|
||||||
2007
|
2006
|
||||||
Texas
Plants
|
(in
millions)
|
||||||
Other
Current Assets
|
$
|
-
|
$
|
1
|
|||
Property,
Plant and Equipment, Net
|
-
|
43
|
|||||
Total
Assets Held for Sale
|
$
|
-
|
$
|
44
|
Other
|
|||||||||||||
Postretirement
|
|||||||||||||
Pension
Plans
|
Benefit
Plans
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
(in
millions)
|
|||||||||||||
Service
Cost
|
$
|
24
|
$
|
24
|
$
|
10
|
$
|
10
|
|||||
Interest
Cost
|
59
|
57
|
26
|
25
|
|||||||||
Expected
Return on Plan Assets
|
(85
|
)
|
(83
|
)
|
(26
|
)
|
(23
|
)
|
|||||
Amortization
of Transition Obligation
|
-
|
-
|
7
|
7
|
|||||||||
Amortization
of Net Actuarial Loss
|
15
|
20
|
3
|
5
|
|||||||||
Net
Periodic Benefit Cost
|
$
|
13
|
$
|
18
|
$
|
20
|
$
|
24
|
·
|
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 34 million tons
of coal
and dry bulk commodities primarily on the Ohio, Illinois and Lower
Mississippi rivers. Approximately 35% of the barging operations
relates to
the transportation of coal, 28% relates to agricultural
products, 21% relates to steel and 16% relates to other
commodities.
|
·
|
IPPs,
wind farms and marketing and risk management activities primarily in
ERCOT.
|
·
|
Parent
company’s guarantee revenue received from affiliates, interest income and
interest expense and other nonallocated costs.
|
·
|
Other
energy supply related businesses, including the Plaquemine Cogeneration
Facility, which was sold in the fourth quarter of
2006.
|
Nonutility
Operations
|
||||||||||||||||||||
Utility
Operations
|
MEMCO
Operations
|
Generation
and
Marketing
|
All
Other (a)
|
Reconciling
Adjustments
|
Consolidated
|
|||||||||||||||
(in
millions)
|
||||||||||||||||||||
Three
Months Ended March 31, 2007
|
||||||||||||||||||||
Revenues
from:
|
||||||||||||||||||||
External
Customers
|
$
|
2,886
|
$
|
117
|
$
|
115
|
$
|
51
|
$
|
-
|
$
|
3,169
|
||||||||
Other
Operating Segments
|
147
|
3
|
(73
|
)
|
(45
|
)
|
(32
|
)
|
-
|
|||||||||||
Total
Revenues
|
$
|
3,033
|
$
|
120
|
$
|
42
|
$
|
6
|
$
|
(32
|
)
|
$
|
3,169
|
|||||||
Net
Income (Loss)
|
$
|
253
|
$
|
15
|
$
|
(1
|
)
|
$
|
4
|
$
|
-
|
$
|
271
|
Nonutility
Operations
|
|||||||||||||||||||
Utility
Operations
|
MEMCO
Operations
|
Generation
and
Marketing
|
All
Other (a)
|
Reconciling
Adjustments
|
Consolidated
|
||||||||||||||
(in
millions)
|
|||||||||||||||||||
Three
Months Ended March 31, 2006
|
|||||||||||||||||||
Revenues
from:
|
|||||||||||||||||||
External
Customers
|
$
|
2,982
|
$
|
116
|
$
|
13
|
$
|
(3
|
)
|
$
|
-
|
$
|
3,108
|
||||||
Other
Operating Segments
|
(16
|
)
|
3
|
-
|
22
|
(9
|
)
|
-
|
|||||||||||
Total
Revenues
|
$
|
2,966
|
$
|
119
|
$
|
13
|
$
|
19
|
$
|
(9
|
)
|
$
|
3,108
|
||||||
Income
(Loss) Before Discontinued
Operations
|
$
|
365
|
$
|
21
|
$
|
4
|
$
|
(12
|
)
|
$
|
-
|
$
|
378
|
||||||
Discontinued
Operations, Net of Tax
|
-
|
-
|
-
|
3
|
-
|
3
|
|||||||||||||
Net
Income (Loss)
|
$
|
365
|
$
|
21
|
$
|
4
|
$
|
(9
|
)
|
$
|
-
|
$
|
381
|
Nonutility
Operations
|
|||||||||||||||||||
Utility
Operations
|
MEMCO
Operations
|
Generation
and
Marketing
|
All
Other (a)
|
Reconciling
Adjustments
|
Consolidated
|
||||||||||||||
March
31, 2007
|
(in
millions)
|
||||||||||||||||||
Total
Property, Plant and Equipment
|
$
|
42,092
|
$
|
239
|
$
|
565
|
$
|
35
|
$
|
(237
|
)(c)
|
$
|
42,694
|
||||||
Accumulated
Depreciation and Amortization
|
15,244
|
53
|
90
|
7
|
(3
|
)(c)
|
15,391
|
||||||||||||
Total
Property, Plant and Equipment - Net
|
$
|
26,848
|
$
|
186
|
$
|
475
|
$
|
28
|
$
|
(234
|
)(c)
|
$
|
27,303
|
||||||
Total
Assets
|
$
|
36,789
|
$
|
305
|
$
|
705
|
$
|
11,732
|
$
|
(11,595
|
)(b)
|
$
|
37,936
|
Nonutility
Operations
|
|||||||||||||||||||
Utility
Operations
|
MEMCO
Operations
|
Generation
and
Marketing
|
All
Other (a)
|
Reconciling
Adjustments
|
Consolidated
|
||||||||||||||
December
31, 2006
|
(in
millions)
|
||||||||||||||||||
Total
Property, Plant and Equipment
|
$
|
41,420
|
$
|
239
|
$
|
327
|
$
|
35
|
$
|
-
|
$
|
42,021
|
|||||||
Accumulated
Depreciation and Amortization
|
15,101
|
51
|
83
|
5
|
-
|
15,240
|
|||||||||||||
Total
Property, Plant and Equipment - Net
|
$
|
26,319
|
$
|
188
|
$
|
244
|
$
|
30
|
$
|
-
|
$
|
26,781
|
|||||||
Total
Assets
|
$
|
36,632
|
$
|
315
|
$
|
342
|
$
|
11,460
|
$
|
(10,762
|
)(b)
|
$
|
37,987
|
||||||
Assets
Held for Sale
|
44
|
-
|
-
|
-
|
-
|
44
|
(a)
|
All
Other includes:
|
|
·
|
Parent
company’s guarantee revenue received from affiliates, interest income and
interest expense and other nonallocated costs.
|
|
·
|
Other
energy supply related businesses, including the Plaquemine Cogeneration
Facility, which was sold in the fourth quarter of 2006.
|
|
(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)
|
Reconciling
Adjustments for Total Property, Plant and Equipment and Accumulated
Depreciation and Amortization as of March 31, 2007 represent the
elimination of an intercompany capital lease that began during the
first
quarter of 2007.
|
March
31,
|
December
31,
|
||||||
Type
of Debt
|
2007
|
2006
|
|||||
(in
millions)
|
|||||||
Senior
Unsecured Notes
|
$
|
8,903
|
$
|
8,653
|
|||
Pollution
Control Bonds
|
1,950
|
1,950
|
|||||
First
Mortgage Bonds
|
90
|
90
|
|||||
Defeased
First Mortgage Bonds (a)
|
27
|
27
|
|||||
Notes
Payable
|
320
|
337
|
|||||
Securitization
Bonds
|
2,303
|
2,335
|
|||||
Notes
Payable To Trust
|
113
|
113
|
|||||
Spent
Nuclear Fuel Obligation (b)
|
251
|
247
|
|||||
Other
Long-term Debt
|
2
|
2
|
|||||
Unamortized
Discount (net)
|
(57
|
)
|
(56
|
)
|
|||
Total
Long-term Debt Outstanding
|
13,902
|
13,698
|
|||||
Less
Portion Due Within One Year
|
1,377
|
1,269
|
|||||
Long-term
Portion
|
$
|
12,525
|
$
|
12,429
|
(a)
|
In
May 2004, we deposited cash and treasury securities with a trustee
to
defease all of TCC’s outstanding First Mortgage Bonds. The defeased TCC
First Mortgage Bonds had a balance of $19 million at both March 31,
2007
and December 31, 2006. Trust Fund Assets related to this obligation
of $23
million and $2 million at March 31, 2007 and December 31, 2006,
respectively, are included in Other Temporary Cash Investments and
$0 and
$21 million at March 31, 2007 and December 31, 2006, respectively,
are
included in Other Noncurrent Assets on our Condensed Consolidated
Balance
Sheets. In December 2005, we deposited cash and treasury securities
with a
trustee to defease the remaining TNC outstanding First Mortgage Bond.
The
defeased TNC First Mortgage Bond had a balance of $8 million at both
March
31, 2007 and December 31, 2006. Trust fund assets related to this
obligation of $9 million at both March 31, 2007 and December 31,
2006 are
included in Other Temporary Cash Investments on our Condensed Consolidated
Balance Sheet. Trust fund assets are restricted for exclusive use
in
funding the interest and principal due on the First Mortgage
Bonds.
|
(b)
|
Pursuant
to the Nuclear Waste Policy Act of 1982, I&M (a nuclear licensee) has
an obligation with 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 $276 million and $274 million at March 31, 2007 and
December
31, 2006, 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:
|
||||||||||
SWEPCo
|
Senior
Unsecured Notes
|
$
|
250
|
5.55
|
2017
|
|||||
Total
Issuances
|
$
|
250
|
(a)
|
The above borrowing arrangement does not contain guarantees, collateral or dividend restrictions. | |
(a)
|
Amount
indicated on statement of cash flows of $247 million is net of issuance
costs and unamortized premium or
discount.
|
Company
|
Type
of Debt
|
Principal
Amount Paid
|
Interest
Rate
|
Due
Date
|
||||||
(in
millions)
|
(%)
|
|||||||||
Retirements
and Principal Payments:
|
||||||||||
OPCo
|
Notes
Payable
|
$
|
1
|
6.81
|
2008
|
|||||
OPCo
|
Notes
Payable
|
6
|
6.27
|
2009
|
||||||
SWEPCo
|
Notes
Payable
|
2
|
4.47
|
2011
|
||||||
SWEPCo
|
Notes
Payable
|
4
|
6.36
|
2007
|
||||||
SWEPCo
|
Notes
Payable
|
1
|
Variable
|
2008
|
||||||
TCC
|
Securitization
Bonds
|
32
|
5.01
|
2008
|
||||||
Non-Registrant:
|
||||||||||
AEP
Subsidiaries
|
Notes
Payable
|
3
|
Variable
|
2017
|
||||||
Total
Retirements
|
$
|
49
|
March
31, 2007
|
December
31, 2006
|
|||||||||||||
Outstanding
Amount
|
Interest
Rate
|
Outstanding
Amount
|
Interest
Rate
|
|||||||||||
Type
of Debt
|
(in
millions)
|
(in
millions)
|
||||||||||||
Commercial
Paper - AEP
|
$
|
150
|
5.43
|
%
|
(a)
|
$
|
-
|
-
|
||||||
Commercial
Paper - JMG (b)
|
5
|
5.56
|
%
|
1
|
5.56
|
%
|
||||||||
Line
of Credit - Sabine (c)
|
20
|
6.52
|
%
|
17
|
6.38
|
%
|
||||||||
Total
|
$
|
175
|
$
|
18
|
(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
is consolidated under FIN 46. This line of credit does not reduce
available liquidity under AEP’s credit
facilities.
|
First
Quarter of 2006
|
$
|
2.9
|
|||||
Change
in Gross Margin:
|
|||||||
Wholesale
Sales
|
(0.7
|
)
|
|||||
Changes
in Operating Expenses and Other:
|
|||||||
Other
Operation and Maintenance
|
(1.3
|
)
|
|||||
Interest
Expense
|
(0.5
|
)
|
|||||
Total
Change in Operating Expenses and Other
|
(1.8
|
)
|
|||||
Income
Tax Expense (Credit)
|
1.2
|
||||||
First
Quarter of 2007
|
$
|
1.6
|
2007
|
2006
|
||||||
OPERATING
REVENUES
|
$
|
77,151
|
$
|
78,151
|
|||
EXPENSES
|
|||||||
Fuel
Used for Electric Generation
|
43,649
|
43,961
|
|||||
Rent
- Rockport Plant Unit 2
|
17,071
|
17,071
|
|||||
Other
Operation
|
3,326
|
3,068
|
|||||
Maintenance
|
3,811
|
2,786
|
|||||
Depreciation
and Amortization
|
5,990
|
5,975
|
|||||
Taxes
Other Than Income Taxes
|
1,081
|
1,070
|
|||||
TOTAL
|
74,928
|
73,931
|
|||||
OPERATING
INCOME
|
2,223
|
4,220
|
|||||
Interest
Expense
|
(1,252
|
)
|
(722
|
)
|
|||
INCOME
BEFORE INCOME TAXES
|
971
|
3,498
|
|||||
Income
Tax Expense (Credit)
|
(620
|
)
|
570
|
||||
NET
INCOME
|
$
|
1,591
|
$
|
2,928
|
2007
|
2006
|
||||||
BALANCE
AT BEGINNING OF PERIOD
|
$
|
30,942
|
$
|
26,038
|
|||
FIN
48 Adoption, Net of Tax
|
27
|
-
|
|||||
Net
Income
|
1,591
|
2,928
|
|||||
Cash
Dividends Declared
|
-
|
1,998
|
|||||
BALANCE
AT END OF PERIOD
|
$
|
32,560
|
$
|
26,968
|
2007
|
2006
|
||||||
CURRENT
ASSETS
|
|||||||
Accounts
Receivable - Affiliated Companies
|
$
|
29,380
|
$
|
31,060
|
|||
Fuel
|
28,414
|
37,701
|
|||||
Materials
and Supplies
|
8,024
|
7,873
|
|||||
Accrued
Tax Benefits
|
1,820
|
3,808
|
|||||
Prepayments
and Other
|
38
|
57
|
|||||
TOTAL
|
67,676
|
80,499
|
|||||
PROPERTY,
PLANT AND EQUIPMENT
|
|||||||
Electric
- Production
|
688,599
|
686,776
|
|||||
Other
|
2,567
|
2,460
|
|||||
Construction
Work in Progress
|
15,931
|
15,198
|
|||||
Total
|
707,097
|
704,434
|
|||||
Accumulated
Depreciation and Amortization
|
405,676
|
398,422
|
|||||
TOTAL
- NET
|
301,421
|
306,012
|
|||||
OTHER
NONCURRENT ASSETS
|
|||||||
Regulatory
Assets
|
5,403
|
5,438
|
|||||
Deferred
Charges and Other
|
3,667
|
1,382
|
|||||
TOTAL
|
9,070
|
6,820
|
|||||
TOTAL
ASSETS
|
$
|
378,167
|
$
|
393,331
|
2007
|
2006
|
||||||
CURRENT
LIABILITIES
|
(in
thousands)
|
||||||
Advances
from Affiliates
|
$
|
29,997
|
$
|
53,646
|
|||
Accounts
Payable:
|
|||||||
General
|
6
|
549
|
|||||
Affiliated
Companies
|
18,918
|
27,935
|
|||||
Accrued
Taxes
|
7,092
|
3,685
|
|||||
Accrued
Rent - Rockport Plant Unit 2
|
23,427
|
4,963
|
|||||
Other
|
521
|
1,200
|
|||||
TOTAL
|
79,961
|
91,978
|
|||||
NONCURRENT
LIABILITIES
|
|||||||
Long-term
Debt - Nonaffiliated
|
44,839
|
44,837
|
|||||
Deferred
Income Taxes
|
19,792
|
19,749
|
|||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
76,069
|
79,650
|
|||||
Deferred
Gain on Sale and Leaseback - Rockport Plant Unit 2
|
87,370
|
88,762
|
|||||
Deferred
Credits and Other
|
13,142
|
12,979
|
|||||
TOTAL
|
241,212
|
245,977
|
|||||
TOTAL
LIABILITIES
|
321,173
|
337,955
|
|||||
Commitments
and Contingencies (Note 4)
|
|||||||
COMMON
SHAREHOLDER’S EQUITY
|
|||||||
Common
Stock - Par Value - $1,000 Per Share:
Authorized
- 1,000 Shares
Outstanding
- 1,000 Shares
|
1,000
|
1,000
|
|||||
Paid-in
Capital
|
23,434
|
23,434
|
|||||
Retained
Earnings
|
32,560
|
30,942
|
|||||
TOTAL
|
56,994
|
55,376
|
|||||
TOTAL
LIABILITIES AND SHAREHOLDER’S EQUITY
|
$
|
378,167
|
$
|
393,331
|
2007
|
2006
|
||||||
OPERATING
ACTIVITIES
|
|||||||
Net
Income
|
$
|
1,591
|
$
|
2,928
|
|||
Adjustments
for Noncash Items:
|
|||||||
Depreciation
and Amortization
|
5,990
|
5,975
|
|||||
Deferred
Income Taxes
|
(1,205
|
)
|
(1,126
|
)
|
|||
Deferred
Investment Tax Credits
|
(820
|
)
|
(827
|
)
|
|||
Amortization
of Deferred Gain on Sale and Leaseback - Rockport Plant Unit
2
|
(1,392
|
)
|
(1,392
|
)
|
|||
Deferred
Property Taxes
|
(2,516
|
)
|
(2,734
|
)
|
|||
Changes
in Other Noncurrent Assets
|
47
|
(403
|
)
|
||||
Changes
in Other Noncurrent Liabilities
|
200
|
374
|
|||||
Changes
in Certain Components of Working Capital:
|
|||||||
Accounts
Receivable
|
1,680
|
1,607
|
|||||
Fuel,
Materials and Supplies
|
9,136
|
(1,044
|
)
|
||||
Accounts
Payable
|
(9,560
|
)
|
(2,068
|
)
|
|||
Accrued
Taxes, Net
|
5,252
|
6,179
|
|||||
Accrued
Rent - Rockport Plant Unit 2
|
18,464
|
18,464
|
|||||
Other
Current Assets
|
(28
|
)
|
(35
|
)
|
|||
Other
Current Liabilities
|
(332
|
)
|
(379
|
)
|
|||
Net
Cash Flows From Operating Activities
|
26,507
|
25,519
|
|||||
INVESTING
ACTIVITIES
|
|||||||
Construction
Expenditures
|
(2,841
|
)
|
(1,693
|
)
|
|||
FINANCING
ACTIVITIES
|
|||||||
Change
in Advances from Affiliates, Net
|
(23,649
|
)
|
(21,814
|
)
|
|||
Principal
Payments for Capital Lease Obligations
|
(17
|
)
|
(14
|
)
|
|||
Dividends
Paid on Common Stock
|
-
|
(1,998
|
)
|
||||
Net
Cash Flows Used For Financing Activities
|
(23,666
|
)
|
(23,826
|
)
|
|||
Net
Change in Cash and Cash Equivalents
|
-
|
-
|
|||||
Cash
and Cash Equivalents at Beginning of Period
|
-
|
-
|
|||||
Cash
and Cash Equivalents at End of Period
|
$
|
-
|
$
|
-
|
SUPPLEMENTARY
INFORMATION
|
|||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$
|
1,398
|
$
|
1,109
|
|||
Net
Cash Received for Income Taxes
|
(439
|
)
|
-
|
||||
Noncash
Acquisitions Under Capital Leases
|
1
|
27
|
Footnote
Reference
|
|
Significant
Accounting Matters
|
Note
1
|
New
Accounting Pronouncements
|
Note
2
|
Commitments,
Guarantees and Contingencies
|
Note
4
|
Acquisitions,
Dispositions and Assets Held for Sale
|
Note
5
|
Business
Segments
|
Note
7
|
Income
Taxes
|
Note
8
|
Financing
Activities
|
Note
9
|
First
Quarter of 2006
|
$
|
4
|
|||||
Changes
in Gross Margin:
|
|||||||
Off-system
Sales
|
7
|
||||||
Texas
Wires
|
6
|
||||||
Transmission
Revenues
|
1
|
||||||
Other
|
28
|
||||||
Total
Change in Gross Margin
|
42
|
||||||
Changes
in Operating Expenses and Other:
|
|||||||
Other
Operation and Maintenance
|
2
|
||||||
Depreciation
and Amortization
|
(13
|
)
|
|||||
Taxes
Other Than Income Taxes
|
2
|
||||||
Carrying
Costs Income
|
(19
|
)
|
|||||
Other
Income
|
5
|
||||||
Interest
Expense
|
(19
|
)
|
|||||
Total
Change in Operating Expenses and Other
|
(42
|
)
|
|||||
First
Quarter of 2007
|
$
|
4
|
·
|
Margins
from Off-system Sales increased $7 million primarily due to lower
margins
from optimization activities of $5 million in 2006. An additional
$2
million increase was primarily due to a $4 million provision
for refund
recorded in 2006 related to the pending and subsequent sale of
our portion
of the Oklaunion Plant offset in part by reduced sales margins
upon
completion of the sale.
|
·
|
Texas
Wires revenues increased $6 million primarily due to increased
usage and
favorable weather conditions. As compared to the prior year, heating
degree days more than doubled.
|
·
|
Other
revenues increased $28 million. This increase was due in part
to $36
million of revenue from securitization transition charges primarily
resulting from new financing in October 2006. Securitization
transition
charges represent amounts collected to recover securitization
bond
principal and interest payments related to our securitized transition
assets and are fully offset by amortization and interest expenses.
This
increase was partially offset by a $7 million decrease in third
party
construction project revenues mainly related to work performed
for the
Lower Colorado River Authority.
|
·
|
Other
Operation and Maintenance expenses decreased $2 million primarily
due to a
$5 million decrease from lower expenses related to construction
projects
performed for third parties, primarily Lower Colorado River Authority.
This decrease is partially offset by an increase of $2 million
in payments
made for transmission services and approximately $1 million increase
related to the replacement of meters.
|
·
|
Depreciation
and Amortization expense increased $13 million primarily due
to the
recovery and amortization of the securitization assets of $15
million
offset in part by $2 million related to the amortization of the
CTC
liability (see “TCC’s 2006 Securitization Proceeding” and “TCC’s 2006 CTC
Proceeding” sections of Note 4 of the 2006 Annual
Report).
|
·
|
Taxes
Other Than Income Taxes decreased $2 million primarily due to
lower
property-related taxes related to Texas tax legislation and the
sale of
our portion of Oklaunion in February 2007.
|
·
|
Carrying
Costs Income decreased $19 million primarily due to the absence
of
carrying cost on stranded cost recovery.
|
·
|
Other
Income increased $5 million primarily due to larger invested
balances in
the Utility Money Pool.
|
·
|
Interest
Expense increased $19 million primarily due to a $22 million
increase in
long-term debt interest primarily related to the Securitization
Bonds
issued in October 2006, offset in part by the retirement of other
long-term debt.
|
2007
|
2006
|
||||||
REVENUES
|
|||||||
Electric
Generation, Transmission and Distribution
|
$
|
171,987
|
$
|
123,211
|
|||
Sales
to AEP Affiliates
|
1,130
|
1,598
|
|||||
Other
|
3,814
|
10,479
|
|||||
TOTAL
|
176,931
|
135,288
|
|||||
EXPENSES
|
|||||||
Fuel
and Other Consumables Used for Electric Generation
|
825
|
1,726
|
|||||
Purchased
Electricity for Resale
|
1,509
|
1,680
|
|||||
Other
Operation
|
57,396
|
58,902
|
|||||
Maintenance
|
7,785
|
7,789
|
|||||
Depreciation
and Amortization
|
46,020
|
33,360
|
|||||
Taxes
Other Than Income Taxes
|
18,524
|
20,363
|
|||||
TOTAL
|
132,059
|
123,820
|
|||||
OPERATING
INCOME
|
44,872
|
11,468
|
|||||
Other
Income (Expense):
|
|||||||
Interest
Income
|
4,959
|
505
|
|||||
Carrying
Costs Income
|
-
|
19,423
|
|||||
Allowance
for Equity Funds Used During Construction
|
1,159
|
373
|
|||||
Interest
Expense
|
(46,021
|
)
|
(26,773
|
)
|
|||
INCOME
BEFORE INCOME TAXES
|
4,969
|
4,996
|
|||||
Income
Tax Expense
|
1,431
|
1,223
|
|||||
NET
INCOME
|
3,538
|
3,773
|
|||||
Preferred
Stock Dividend Requirements
|
60
|
60
|
|||||
EARNINGS
APPLICABLE TO COMMON STOCK
|
$
|
3,478
|
$
|
3,713
|
Common
Stock
|
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other Comprehensive Income (Loss)
|
Total
|
||||||||||||
DECEMBER
31, 2005
|
$
|
55,292
|
$
|
132,606
|
$
|
760,884
|
$
|
(1,152
|
)
|
$
|
947,630
|
|||||
Preferred
Stock Dividends
|
(60
|
)
|
(60
|
)
|
||||||||||||
TOTAL
|
947,570
|
|||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||
Other
Comprehensive Income, Net of Taxes:
|
||||||||||||||||
Cash
Flow Hedges, Net of Tax of $141
|
262
|
262
|
||||||||||||||
NET
INCOME
|
3,773
|
3,773
|
||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
4,035
|
|||||||||||||||
MARCH
31, 2006
|
$
|
55,292
|
$
|
132,606
|
$
|
764,597
|
$
|
(890
|
)
|
$
|
951,605
|
|||||
DECEMBER
31, 2006
|
$
|
55,292
|
$
|
132,606
|
$
|
217,218
|
$
|
-
|
$
|
405,116
|
||||||
FIN
48 Adoption, Net of Tax
|
(2,187
|
)
|
(2,187
|
)
|
||||||||||||
Preferred
Stock Dividends
|
(60
|
)
|
(60
|
)
|
||||||||||||
TOTAL
|
402,869
|
|||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||
NET
INCOME
|
3,538
|
3,538
|
||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
3,538
|
|||||||||||||||
MARCH
31, 2007
|
$
|
55,292
|
$
|
132,606
|
$
|
218,509
|
$
|
-
|
$
|
406,407
|
2007
|
2006
|
||||||
CURRENT
ASSETS
|
|||||||
Cash
and Cash Equivalents
|
$
|
52
|
$
|
779
|
|||
Other
Cash Deposits
|
131,824
|
104,203
|
|||||
Advances
to Affiliates
|
216,953
|
394,004
|
|||||
Accounts
Receivable:
|
|||||||
Customers
|
44,519
|
31,215
|
|||||
Affiliated
Companies
|
6,513
|
8,613
|
|||||
Accrued
Unbilled Revenues
|
17,969
|
10,093
|
|||||
Allowance
for Uncollectible Accounts
|
(45
|
)
|
(49
|
)
|
|||
Total Accounts Receivable
|
68,956
|
49,872
|
|||||
Materials
and Supplies
|
30,526
|
28,347
|
|||||
Prepayments
and Other
|
11,107
|
5,672
|
|||||
TOTAL
|
459,418
|
582,877
|
|||||
PROPERTY,
PLANT AND EQUIPMENT
|
|||||||
Electric:
|
|||||||
Transmission
|
917,708
|
904,527
|
|||||
Distribution
|
1,602,745
|
1,579,498
|
|||||
Other
|
224,856
|
220,028
|
|||||
Construction
Work in Progress
|
166,300
|
165,979
|
|||||
Total
|
2,911,609
|
2,870,032
|
|||||
Accumulated
Depreciation and Amortization
|
636,740
|
630,239
|
|||||
TOTAL
- NET
|
2,274,869
|
2,239,793
|
|||||
OTHER
NONCURRENT ASSETS
|
|||||||
Regulatory
Assets
|
187,765
|
193,111
|
|||||
Securitized
Transition Assets
|
2,133,966
|
2,158,408
|
|||||
Employee
Benefits and Pension Assets
|
35,534
|
35,574
|
|||||
Deferred
Charges and Other
|
68,393
|
69,493
|
|||||
TOTAL
|
2,425,658
|
2,456,586
|
|||||
Assets
Held for Sale - Texas Generation Plant
|
-
|
44,475
|
|||||
TOTAL
ASSETS
|
$
|
5,159,945
|
$
|
5,323,731
|
2007
|
2006
|
||||||
CURRENT
LIABILITIES
|
(in
thousands)
|
||||||
Accounts
Payable:
|
|||||||
General
|
$
|
17,857
|
$
|
26,934
|
|||
Affiliated
Companies
|
17,329
|
21,234
|
|||||
Long-term
Debt Due Within One Year - Nonaffiliated
|
138,507
|
78,227
|
|||||
Customer
Deposits
|
17,851
|
18,742
|
|||||
Accrued
Taxes
|
33,474
|
74,499
|
|||||
Accrued
Interest
|
57,625
|
44,712
|
|||||
Other
|
21,138
|
34,762
|
|||||
TOTAL
|
303,781
|
299,110
|
|||||
NONCURRENT
LIABILITIES
|
|||||||
Long-term
Debt - Nonaffiliated
|
2,845,020
|
2,937,387
|
|||||
Deferred
Income Taxes
|
1,037,080
|
1,034,123
|
|||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
503,627
|
598,027
|
|||||
Deferred
Credits and Other
|
58,109
|
44,047
|
|||||
TOTAL
|
4,443,836
|
4,613,584
|
|||||
TOTAL
LIABILITIES
|
4,747,617
|
4,912,694
|
|||||
Cumulative
Preferred Stock Not Subject to Mandatory Redemption
|
5,921
|
5,921
|
|||||
Commitments
and Contingencies (Note 4)
|
|||||||
COMMON
SHAREHOLDER’S EQUITY
|
|||||||
Common
Stock - Par Value - $25 Per Share:
|
|||||||
Authorized
- 12,000,000 Shares
|
|||||||
Outstanding
- 2,211,678 Shares
|
55,292
|
55,292
|
|||||
Paid-in
Capital
|
132,606
|
132,606
|
|||||
Retained
Earnings
|
218,509
|
217,218
|
|||||
TOTAL
|
406,407
|
405,116
|
|||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
5,159,945
|
$
|
5,323,731
|
2007
|
2006
|
||||||
OPERATING
ACTIVITIES
|
|||||||
Net
Income
|
$
|
3,538
|
$
|
3,773
|
|||
Adjustments
for Noncash Items:
|
|||||||
Depreciation
and Amortization
|
46,020
|
33,360
|
|||||
Deferred
Income Taxes
|
11,102
|
2,928
|
|||||
Carrying
Costs on Stranded Cost Recovery
|
-
|
(19,423
|
)
|
||||
Mark-to-Market
of Risk Management Contracts
|
-
|
5,125
|
|||||
Fuel
Over/Under Recovery, Net
|
(98,665
|
)
|
-
|
||||
Deferred
Property Taxes
|
(20,064
|
)
|
(25,755
|
)
|
|||
Change
in Other Noncurrent Assets
|
(753
|
)
|
(1,330
|
)
|
|||
Change
in Other Noncurrent Liabilities
|
3,187
|
1,398
|
|||||
Changes
in Certain Components of Working Capital:
|
|||||||
Accounts
Receivable, Net
|
(19,084
|
)
|
121,367
|
||||
Fuel,
Materials and Supplies
|
(2,543
|
)
|
(2,569
|
)
|
|||
Accounts
Payable
|
(3,957
|
)
|
(53,124
|
)
|
|||
Customer
Deposits
|
(891
|
)
|
(6,514
|
)
|
|||
Accrued
Taxes, Net
|
(40,642
|
)
|
6,854
|
||||
Accrued
Interest
|
11,019
|
(16,152
|
)
|
||||
Other
Current Assets
|
681
|
2,629
|
|||||
Other
Current Liabilities
|
(13,867
|
)
|
(7,461
|
)
|
|||
Net
Cash Flows From (Used for) Operating Activities
|
(124,919
|
)
|
45,106
|
||||
INVESTING
ACTIVITIES
|
|||||||
Construction
Expenditures
|
(59,872
|
)
|
(58,645
|
)
|
|||
Change
in Other Cash Deposits, Net
|
(6,071
|
)
|
29,736
|
||||
Change
in Advances to Affiliates, Net
|
177,051
|
(32,101
|
)
|
||||
Proceeds
from Sale of Assets
|
45,619
|
3,837
|
|||||
Net
Cash Flows From (Used For) Investing Activities
|
156,727
|
(57,173
|
)
|
||||
FINANCING
ACTIVITIES
|
|||||||
Issuance
of Long-term Debt - Affiliated
|
-
|
125,000
|
|||||
Change
in Advances from Affiliates, Net
|
-
|
(82,080
|
)
|
||||
Retirement
of Long-term Debt - Nonaffiliated
|
(32,125
|
)
|
(30,641
|
)
|
|||
Principal
Payments for Capital Lease Obligations
|
(350
|
)
|
(152
|
)
|
|||
Dividends
Paid on Cumulative Preferred Stock
|
(60
|
)
|
(60
|
)
|
|||
Net
Cash From (Used For) Financing Activities
|
(32,535
|
)
|
12,067
|
||||
Net
Decrease in Cash and Cash Equivalents
|
(727
|
)
|
-
|
||||
Cash
and Cash Equivalents at Beginning of Period
|
779
|
-
|
|||||
Cash
and Cash Equivalents at End of Period
|
$
|
52
|
$
|
-
|
SUPPLEMENTARY
INFORMATION
|
|||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$
|
27,961
|
$
|
40,646
|
|||
Net
Cash Paid for Income Taxes
|
32,601
|
485
|
|||||
Noncash
Acquisitions Under Capital Leases
|
363
|
680
|
|||||
Construction
Expenditures Included in Accounts Payable at March 31,
|
7,477
|
9,970
|
Footnote
Reference
|
|
Significant
Accounting Matters
|
Note
1
|
New
Accounting Pronouncements
|
Note
2
|
Rate
Matters
|
Note
3
|
Commitments,
Guarantees and Contingencies
|
Note
4
|
Acquisitions,
Dispositions and Assets Held for Sale
|
Note
5
|
Benefit
Plans
|
Note
6
|
Business
Segments
|
Note
7
|
Income
Taxes
|
Note
8
|
Financing
Activities
|
Note
9
|
First
Quarter of 2006
|
$
|
4
|
|||||
Changes
in Gross Margin:
|
|||||||
Off-system
Sales
|
3
|
||||||
Texas
Wires
|
2
|
||||||
Transmission
Revenues
|
1
|
||||||
Total
Change in Gross Margin
|
6
|
||||||
Changes
in Operating Expenses and Other:
|
|||||||
Other
Operation and Maintenance
|
(4
|
)
|
|||||
Total
Change in Operating Expenses and Other
|
(4
|
)
|
|||||
Income
Tax Expense
|
(1
|
)
|
|||||
First
Quarter of 2007
|
$
|
5
|
·
|
Margins
from Off-system Sales increased $3 million primarily due to lower
margins
from optimization activities of $2 million in 2006. An additional
$1
million increase was primarily due to the implementation of the
Power
Purchase Agreement with AEP Energy Partners in January 2007.
Under this
agreement, we recover our costs and capacity charges regardless
of plant
availability. See “Oklaunion PPA between TNC and AEP Energy Partners”
section of Note 1.
|
·
|
Texas
Wires revenues increased $2 million primarily due to increased
usage and
favorable weather conditions. As compared to the prior year,
heating
degree days increased 77%.
|
·
|
Other
Operation and Maintenance expenses increased $4 million primarily
resulting from planned and forced outages at our Oklaunion Plant
during
the first quarter of 2007.
|
2007
|
2006
|
||||||
REVENUES
|
|||||||
Electric
Generation, Transmission and Distribution
|
$
|
38,079
|
$
|
68,825
|
|||
Sales
to AEP Affiliates
|
24,654
|
6,025
|
|||||
Other
|
230
|
(184
|
)
|
||||
TOTAL
|
62,963
|
74,666
|
|||||
EXPENSES
|
|||||||
Fuel
and Other Consumables Used for Electric Generation
|
6,276
|
12,115
|
|||||
Purchased
Electricity for Resale
|
2,802
|
14,396
|
|||||
Other
Operation
|
19,563
|
18,478
|
|||||
Maintenance
|
7,467
|
5,201
|
|||||
Depreciation
and Amortization
|
10,346
|
10,301
|
|||||
Taxes
Other Than Income Taxes
|
4,841
|
5,540
|
|||||
TOTAL
|
51,295
|
66,031
|
|||||
OPERATING
INCOME
|
11,668
|
8,635
|
|||||
Other
Income (Expense):
|
|||||||
Interest
Income
|
133
|
219
|
|||||
Allowance
for Equity Funds Used During Construction
|
52
|
382
|
|||||
Interest
Expense
|
(4,346
|
)
|
(4,362
|
)
|
|||
INCOME
BEFORE INCOME TAXES
|
7,507
|
4,874
|
|||||
Income
Tax Expense
|
2,230
|
1,040
|
|||||
NET
INCOME
|
5,277
|
3,834
|
|||||
Preferred
Stock Dividend Requirements
|
26
|
26
|
|||||
Gain
on Reacquired Preferred Stock
|
-
|
2
|
|||||
EARNINGS
APPLICABLE TO COMMON STOCK
|
$
|
5,251
|
$
|
3,810
|
Common
Stock
|
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other Comprehensive Income (Loss)
|
Total
|
||||||||||||
DECEMBER
31, 2005
|
$
|
137,214
|
$
|
2,351
|
$
|
174,858
|
$
|
(504
|
)
|
$
|
313,919
|
|||||
Common
Stock Dividends
|
(8,000
|
)
|
(8,000
|
)
|
||||||||||||
Preferred
Stock Dividends
|
(26
|
)
|
(26
|
)
|
||||||||||||
Gain
on Reacquired Preferred Stock
|
2
|
2
|
||||||||||||||
TOTAL
|
305,895
|
|||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||
Other
Comprehensive Income, Net of Taxes:
|
||||||||||||||||
Cash
Flow Hedges, Net of Tax of $102
|
189
|
189
|
||||||||||||||
NET
INCOME
|
3,834
|
3,834
|
||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
4,023
|
|||||||||||||||
MARCH
31, 2006
|
$
|
137,214
|
$
|
2,351
|
$
|
170,668
|
$
|
(315
|
)
|
$
|
309,918
|
|||||
DECEMBER
31, 2006
|
$
|
137,214
|
$
|
2,351
|
$
|
176,950
|
$
|
(10,159
|
)
|
$
|
306,356
|
|||||
FIN
48 Adoption, Net of Tax
|
(557
|
)
|
(557
|
)
|
||||||||||||
Preferred
Stock Dividends
|
(26
|
)
|
(26
|
)
|
||||||||||||
TOTAL
|
305,773
|
|||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||
Other
Comprehensive Income, Net of Taxes:
|
||||||||||||||||
Cash
Flow Hedges, Net of Tax of $378
|
702
|
702
|
||||||||||||||
NET
INCOME
|
5,277
|
5,277
|
||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
5,979
|
|||||||||||||||
MARCH
31, 2007
|
$
|
137,214
|
$
|
2,351
|
$
|
181,644
|
$
|
(9,457
|
)
|
$
|
311,752
|
2007
|
2006
|
||||||
CURRENT
ASSETS
|
|||||||
Cash
and Cash Equivalents
|
$
|
3
|
$
|
84
|
|||
Other
Cash Deposits
|
8,958
|
8,863
|
|||||
Advances
to Affiliates
|
-
|
13,543
|
|||||
Accounts
Receivable:
|
|||||||
Customers
|
11,080
|
21,742
|
|||||
Affiliated
Companies
|
13,177
|
5,634
|
|||||
Accrued
Unbilled Revenues
|
2,917
|
2,292
|
|||||
Allowance
for Uncollectible Accounts
|
(18
|
)
|
(9
|
)
|
|||
Total Accounts Receivable
|
27,156
|
29,659
|
|||||
Fuel
|
11,401
|
8,559
|
|||||
Materials
and Supplies
|
9,544
|
9,319
|
|||||
Prepayments
and Other
|
1,879
|
1,681
|
|||||
TOTAL
|
58,941
|
71,708
|
|||||
PROPERTY,
PLANT AND EQUIPMENT
|
|||||||
Electric:
|
|||||||
Production
|
290,654
|
290,485
|
|||||
Transmission
|
330,272
|
327,845
|
|||||
Distribution
|
506,752
|
512,265
|
|||||
Other
|
160,141
|
159,451
|
|||||
Construction
Work in Progress
|
36,145
|
38,847
|
|||||
Total
|
1,323,964
|
1,328,893
|
|||||
Accumulated
Depreciation and Amortization
|
483,960
|
486,961
|
|||||
TOTAL
- NET
|
840,004
|
841,932
|
|||||
OTHER
NONCURRENT ASSETS
|
|||||||
Regulatory
Assets
|
38,356
|
38,402
|
|||||
Employee
Benefits and Pension Assets
|
12,824
|
12,867
|
|||||
Deferred
Charges and Other
|
12,807
|
2,605
|
|||||
TOTAL
|
63,987
|
53,874
|
|||||
TOTAL
ASSETS
|
$
|
962,932
|
$
|
967,514
|
2007
|
2006
|
||||||
CURRENT
LIABILITIES
|
(in
thousands)
|
||||||
Advances
from Affiliates
|
$
|
11,185
|
$
|
-
|
|||
Accounts
Payable:
|
|||||||
General
|
6,328
|
4,448
|
|||||
Affiliated
Companies
|
34,129
|
43,993
|
|||||
Long-term
Debt Due Within One Year - Nonaffiliated
|
8,151
|
8,151
|
|||||
Accrued
Taxes
|
19,477
|
21,782
|
|||||
Other
|
8,687
|
14,934
|
|||||
TOTAL
|
87,957
|
93,308
|
|||||
NONCURRENT
LIABILITIES
|
|||||||
Long-term
Debt - Nonaffiliated
|
268,807
|
268,785
|
|||||
Long-term
Risk Management Liabilities
|
-
|
1,081
|
|||||
Deferred
Income Taxes
|
120,261
|
124,048
|
|||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
132,646
|
139,429
|
|||||
Deferred
Credits and Other
|
39,160
|
32,158
|
|||||
TOTAL
|
560,874
|
565,501
|
|||||
TOTAL
LIABILITIES
|
648,831
|
658,809
|
|||||
Cumulative
Preferred Stock Not Subject to Mandatory Redemption
|
2,349
|
2,349
|
|||||
Commitments
and Contingencies (Note 4)
|
|||||||
COMMON
SHAREHOLDER’S EQUITY
|
|||||||
Common
Stock - Par Value - $25 Per Share:
|
|||||||
Authorized
- 7,800,000 Shares
|
|||||||
Outstanding
- 5,488,560 Shares
|
137,214
|
137,214
|
|||||
Paid-in
Capital
|
2,351
|
2,351
|
|||||
Retained
Earnings
|
181,644
|
176,950
|
|||||
Accumulated
Other Comprehensive Income (Loss)
|
(9,457
|
)
|
(10,159
|
)
|
|||
TOTAL
|
311,752
|
306,356
|
|||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
962,932
|
$
|
967,514
|
2007
|
2006
|
||||||
OPERATING
ACTIVITIES
|
|||||||
Net
Income
|
$
|
5,277
|
$
|
3,834
|
|||
Adjustments
for Noncash Items:
|
|||||||
Depreciation
and Amortization
|
10,346
|
10,301
|
|||||
Deferred
Income Taxes
|
(1,016
|
)
|
(1,323
|
)
|
|||
Mark-to-Market
of Risk Management Contracts
|
-
|
1,989
|
|||||
Deferred
Property Taxes
|
(10,862
|
)
|
(12,360
|
)
|
|||
Change
in Other Noncurrent Assets
|
1,508
|
(2,081
|
)
|
||||
Change
in Other Noncurrent Liabilities
|
(5,713
|
)
|
652
|
||||
Changes
in Certain Components of Working Capital:
|
|||||||
Accounts
Receivable, Net
|
2,503
|
36,836
|
|||||
Fuel,
Materials and Supplies
|
(3,067
|
)
|
(2,156
|
)
|
|||
Accounts
Payable
|
(9,176
|
)
|
(36,932
|
)
|
|||
Accrued
Taxes, Net
|
(302
|
)
|
4,059
|
||||
Other
Current Assets
|
(255
|
)
|
1,676
|
||||
Other
Current Liabilities
|
(5,975
|
)
|
(9,775
|
)
|
|||
Net
Cash Flows Used For Operating Activities
|
(16,732
|
)
|
(5,280
|
)
|
|||
INVESTING
ACTIVITIES
|
|||||||
Construction
Expenditures
|
(19,793
|
)
|
(18,662
|
)
|
|||
Change
in Other Cash Deposits, Net
|
(95
|
)
|
792
|
||||
Change
In Advances to Affiliates, Net
|
13,543
|
31,240
|
|||||
Proceeds
from Sale of Assets
|
11,965
|
-
|
|||||
Net
Cash Flows From Investing Activities
|
5,620
|
13,370
|
|||||
FINANCING
ACTIVITIES
|
|||||||
Change
in Advances from Affiliates, Net
|
11,185
|
-
|
|||||
Principal
Payments for Capital Lease Obligations
|
(128
|
)
|
(64
|
)
|
|||
Dividends
Paid on Common Stock
|
-
|
(8,000
|
)
|
||||
Dividends
Paid on Cumulative Preferred Stock
|
(26
|
)
|
(26
|
)
|
|||
Net
Cash Flows From (Used For) Financing Activities
|
11,031
|
(8,090
|
)
|
||||
Net
Decrease in Cash and Cash Equivalents
|
(81
|
)
|
-
|
||||
Cash
and Cash Equivalents at Beginning of Period
|
84
|
-
|
|||||
Cash
and Cash Equivalents at End of Period
|
$
|
3
|
$
|
-
|
SUPPLEMENTARY
INFORMATION
|
|||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$
|
6,150
|
$
|
6,113
|
|||
Net
Cash Paid for Income Taxes
|
2,288
|
-
|
|||||
Noncash
Acquisitions Under Capital Leases
|
98
|
224
|
|||||
Construction
Expenditures Included in Accounts Payable at March 31,
|
2,509
|
2,372
|
Footnote
Reference
|
|
Significant
Accounting Matters
|
Note
1
|
New
Accounting Pronouncements
|
Note
2
|
Rate
Matters
|
Note
3
|
Commitments,
Guarantees and Contingencies
|
Note
4
|
Benefit
Plans
|
Note
6
|
Business
Segments
|
Note
7
|
Income
Taxes
|
Note
8
|
Financing
Activities
|
Note
9
|
First
Quarter of 2006
|
$
|
74
|
|||||
Changes
in Gross Margin:
|
|||||||
Retail
Margins
|
29
|
||||||
Off-system
Sales
|
(6
|
)
|
|||||
Transmission
Revenues
|
(11
|
)
|
|||||
Other
|
1
|
||||||
Total
Change in Gross Margin
|
13
|
||||||
Changes
in Operating Expenses and Other:
|
|||||||
Other
Operation and Maintenance
|
(5
|
)
|
|||||
Depreciation
and Amortization
|
(11
|
)
|
|||||
Taxes
Other Than Income Taxes
|
2
|
||||||
Carrying
Costs Income
|
(3
|
)
|
|||||
Interest
Expense
|
(2
|
)
|
|||||
Total
Change in Operating Expenses and Other
|
(19
|
)
|
|||||
Income
Tax Expense
|
2
|
||||||
First
Quarter of 2007
|
$
|
70
|
·
|
Retail
Margins increased $29 million in comparison to 2006 primarily
due
to:
|
|
·
|
A
$42 million increase in retail revenues primarily related to
new rates
implemented in relation to our Virginia general rate case, which
are being
collected subject to refund, and recovery of Virginia Environmental
and
Reliability (E&R) costs. See the “APCo Virginia Base Rate Case”
section of Note 3.
|
|
·
|
A
$9 million increase in retail sales primarily due to increased
demand in
the residential class associated with favorable weather conditions.
Heating degree days increased approximately 19%.
|
|
These
increases were partially offset by:
|
||
·
|
A
$14 million decrease in revenues related to financial transmission
rights,
net of congestion, primarily due to fewer transmission constraints
in the
PJM market.
|
|
·
|
A
$9 million decrease in revenues related to the Expanded Net Energy
Cost
(ENEC) mechanism with West Virginia retail customers primarily
due to
pass-through of off-system sales margins. The mechanism
was reinstated in West Virginia effective July 1, 2006 in conjunction
with
our West Virginia rate case.
|
|
·
|
Margins
from Off-system Sales decreased $6 million primarily due to an
$18 million
decrease in physical sales margins partially offset by a $10
million
increase in margins from optimization activities and a $2 million
increase
in our allocation of off-system sales margins under the SIA.
The change in
allocation methodology of the SIA occurred on April 1, 2006.
|
|
·
|
Transmission
Revenues decreased $11 million primarily due to the elimination
of SECA
revenues as of April 1, 2006. See the “Transmission Rate Proceedings at
the FERC” section of Note 3.
|
·
|
Other
Operation and Maintenance expenses increased $5 million mainly
due to a $6
million increase in expenses for overhead line right-of-way clearing,
overhead line repairs and increases in various other operation
and
maintenance expenses totaling $8 million. These increases were
partially
offset by a $9 million decrease in expenses related to the AEP
Transmission Equalization Agreement due to the addition of our
Wyoming-Jacksons Ferry 765 kV line which was energized and placed
into
service in June 2006.
|
·
|
Depreciation
and Amortization expenses increased $11 million primarily due
to the
amortization of carrying charges and depreciation expense that
are being
collected through the E&R surcharges and increased plant in service
related to the Wyoming-Jacksons Ferry 765 kV line, which was
energized and
placed in service in June 2006.
|
·
|
Carrying
Costs Income decreased $3 million related to carrying costs associated
with our E&R case.
|
Moody’s
|
S&P
|
Fitch
|
|||
Senior
Unsecured Debt
|
Baa2
|
BBB
|
BBB+
|
2007
|
2006
|
||||||
(in
thousands)
|
|||||||
Cash
and Cash Equivalents at Beginning of Period
|
$
|
2,318
|
$
|
1,741
|
|||
Cash
Flows From (Used For):
|
|||||||
Operating
Activities
|
176,029
|
210,980
|
|||||
Investing
Activities
|
(200,894
|
)
|
(194,897
|
)
|
|||
Financing
Activities
|
24,534
|
(16,372
|
)
|
||||
Net
Decrease in Cash and Cash Equivalents
|
(331
|
)
|
(289
|
)
|
|||
Cash
and Cash Equivalents at End of Period
|
$
|
1,987
|
$
|
1,452
|
MTM
Risk Management Contracts
|
Cash
Flow &
Fair
Value
Hedges
|
DETM
Assignment
(a)
|
Total
|
||||||||||
Current
Assets
|
$
|
66,058
|
$
|
1,405
|
$
|
-
|
$
|
67,463
|
|||||
Noncurrent
Assets
|
84,718
|
1,269
|
-
|
85,987
|
|||||||||
Total
MTM Derivative Contract Assets
|
150,776
|
2,674
|
-
|
153,450
|
|||||||||
Current
Liabilities
|
(47,767
|
)
|
(6,899
|
)
|
(3,152
|
)
|
(57,818
|
)
|
|||||
Noncurrent
Liabilities
|
(49,833
|
)
|
(804
|
)
|
(8,358
|
)
|
(58,995
|
)
|
|||||
Total
MTM Derivative Contract Liabilities
|
(97,600
|
)
|
(7,703
|
)
|
(11,510
|
)
|
(116,813
|
)
|
|||||
Total
MTM Derivative Contract Net Assets
(Liabilities)
|
$
|
53,176
|
$
|
(5,029
|
)
|
$
|
(11,510
|
)
|
$
|
36,637
|
(a)
|
See
“Natural Gas Contracts with DETM” section of Note 16 of the 2006 Annual
Report.
|
Total
MTM Risk Management Contract Net Assets at December 31,
2006
|
$
|
52,489
|
||
(Gain)
Loss from Contracts Realized/Settled During the Period and Entered
in a
Prior Period
|
(5,389
|
)
|
||
Fair
Value of New Contracts at Inception When Entered During the Period
(a)
|
255
|
|||
Net
Option Premiums Paid/(Received) for Unexercised or Unexpired
Option
Contracts Entered During the Period
|
(35
|
)
|
||
Change
in Fair Value Due to Valuation Methodology Changes on Forward
Contracts
|
-
|
|||
Changes
in Fair Value Due to Market Fluctuations During the Period
(b)
|
4,918
|
|||
Changes
in Fair Value Allocated to Regulated Jurisdictions (c)
|
938
|
|||
Total
MTM Risk Management Contract Net Assets
|
53,176
|
|||
Net
Cash Flow & Fair Value Hedge Contracts
|
(5,029
|
)
|
||
DETM
Assignment (d)
|
(11,510
|
)
|
||
Total
MTM Risk Management Contract Net Assets at March 31, 2007
|
$
|
36,637
|
(a)
|
Reflects
fair value on long-term contracts which are typically with customers
that
seek fixed pricing to limit their risk against fluctuating energy
prices.
Inception value is only recorded if observable market data can
be obtained
for valuation inputs for the entire contract term. The contract
prices are
valued against market curves associated with the delivery location
and
delivery term.
|
(b)
|
Market
fluctuations are attributable to various factors such as supply/demand,
weather, storage, etc.
|
(c)
|
“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 liabilities/assets for those subsidiaries that
operate in
regulated jurisdictions.
|
(d)
|
See
“Natural Gas Contracts with DETM” section of Note 16 of the 2006 Annual
Report.
|
·
|
The
method of measuring fair value used in determining the carrying
amount of
our total MTM asset or liability (external sources or modeled
internally).
|
·
|
The
maturity, by year, of our net assets/liabilities to give an indication
of
when these MTM amounts will settle and generate
cash.
|
Remainder
2007
|
2008
|
2009
|
2010
|
2011
|
After
2011
|
Total
|
||||||||||||||||
Prices
Actively Quoted - Exchange Traded
Contracts
|
$
|
15,650
|
$
|
(644
|
)
|
$
|
706
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
15,712
|
|||||||
Prices
Provided by Other External Sources
-
OTC Broker Quotes (a)
|
3,482
|
13,908
|
11,448
|
4,542
|
-
|
-
|
33,380
|
|||||||||||||||
Prices
Based on Models and Other Valuation
Methods (b)
|
(3,723
|
)
|
(2,358
|
)
|
1,822
|
5,482
|
1,235
|
1,626
|
4,084
|
|||||||||||||
Total
|
$
|
15,409
|
$
|
10,906
|
$
|
13,976
|
$
|
10,024
|
$
|
1,235
|
$
|
1,626
|
$
|
53,176
|
(a)
|
“Prices
Provided by Other External Sources - OTC Broker Quotes” reflects
information obtained from over-the-counter brokers, industry
services, or
multiple-party on-line platforms.
|
(b)
|
“Prices
Based on Models and Other Valuation Methods” is used in absence of pricing
information from external sources. Modeled information is derived
using
valuation models developed by the reporting entity, reflecting
when
appropriate, option pricing theory, discounted cash flow concepts,
valuation adjustments, etc. and may require projection of prices
for
underlying commodities beyond the period that prices are available
from
third-party sources. In addition, where external pricing information
or
market liquidity are limited, such valuations are classified
as modeled.
The determination of the point at which a market is no longer
liquid for
placing it in the modeled category varies by market.
|
Contract
values that are measured using models or valuation methods other
than
active quotes or OTC broker quotes (because of the lack of such
data for
all delivery quantities, locations and periods) incorporate in
the model
or other valuation methods, to the extent possible, OTC broker
quotes and
active quotes for deliveries in years and at locations for which
such
quotes are available.
|
Power
|
Foreign
Currency
|
Interest
Rate
|
Total
|
||||||||||
Beginning
Balance in AOCI December 31, 2006
|
$
|
5,332
|
$
|
(164
|
)
|
$
|
(7,715
|
)
|
$
|
(2,547
|
)
|
||
Changes
in Fair Value
|
(5,612
|
)
|
-
|
-
|
(5,612
|
)
|
|||||||
Reclassifications
from AOCI to Net Income for
Cash
Flow Hedges
Settled
|
(2,221
|
)
|
2
|
347
|
(1,872
|
)
|
|||||||
Ending
Balance in AOCI March 31, 2007
|
$
|
(2,501
|
)
|
$
|
(162
|
)
|
$
|
(7,368
|
)
|
$
|
(10,031
|
)
|
Three
Months Ended
March
31, 2007
|
Twelve
Months Ended
December
31, 2006
|
||||||||||||||||
(in
thousands)
|
(in
thousands)
|
||||||||||||||||
End
|
High
|
Average
|
Low
|
End
|
High
|
Average
|
Low
|
||||||||||
$712
|
$2,328
|
$1,037
|
$282
|
$756
|
$1,915
|
$658
|
$358
|
2007
|
2006
|
||||||
REVENUES
|
|||||||
Electric
Generation, Transmission and Distribution
|
$
|
601,546
|
$
|
559,993
|
|||
Sales
to AEP Affiliates
|
61,545
|
71,772
|
|||||
Other
|
2,637
|
2,676
|
|||||
TOTAL
|
665,728
|
634,441
|
|||||
EXPENSES
|
|||||||
Fuel
and Other Consumables Used for Electric Generation
|
171,186
|
166,853
|
|||||
Purchased
Electricity for Resale
|
35,950
|
27,616
|
|||||
Purchased
Electricity from AEP Affiliates
|
127,601
|
122,399
|
|||||
Other
Operation
|
67,629
|
69,901
|
|||||
Maintenance
|
45,753
|
37,839
|
|||||
Depreciation
and Amortization
|
59,160
|
48,268
|
|||||
Taxes
Other Than Income Taxes
|
21,275
|
23,092
|
|||||
TOTAL
|
528,554
|
495,968
|
|||||
OPERATING
INCOME
|
137,174
|
138,473
|
|||||
Other
Income (Expense):
|
|||||||
Interest
Income
|
639
|
951
|
|||||
Carrying
Costs Income
|
3,166
|
6,011
|
|||||
Allowance
for Equity Funds Used During Construction
|
2,777
|
2,476
|
|||||
Interest
Expense
|
(31,823
|
)
|
(30,268
|
)
|
|||
INCOME
BEFORE INCOME TAXES
|
111,933
|
117,643
|
|||||
Income
Tax Expense
|
41,706
|
44,049
|
|||||
NET
INCOME
|
70,227
|
73,594
|
|||||
Preferred
Stock Dividend Requirements including Capital Stock Expense
|
238
|
238
|
|||||
EARNINGS
APPLICABLE TO COMMON STOCK
|
$
|
69,989
|
$
|
73,356
|
Common
Stock
|
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other Comprehensive Income (Loss)
|
Total
|
||||||||||||
DECEMBER
31, 2005
|
$
|
260,458
|
$
|
924,837
|
$
|
635,016
|
$
|
(16,610
|
)
|
$
|
1,803,701
|
|||||
Common
Stock Dividends
|
(2,500
|
)
|
(2,500
|
)
|
||||||||||||
Preferred
Stock Dividends
|
(200
|
)
|
(200
|
)
|
||||||||||||
Capital
Stock Expense
|
38
|
(38
|
)
|
-
|
||||||||||||
TOTAL
|
1,801,001
|
|||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||
Other
Comprehensive Income, Net of Taxes:
|
||||||||||||||||
Cash
Flow Hedges, Net of Tax of
$7,144
|
13,268
|
13,268
|
||||||||||||||
NET
INCOME
|
73,594
|
73,594
|
||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
86,862
|
|||||||||||||||
MARCH
31, 2006
|
$
|
260,458
|
$
|
924,875
|
$
|
705,872
|
$
|
(3,342
|
)
|
$
|
1,887,863
|
|||||
DECEMBER
31, 2006
|
$
|
260,458
|
$
|
1,024,994
|
$
|
805,513
|
$
|
(54,791
|
)
|
$
|
2,036,174
|
|||||
FIN
48 Adoption, Net of Tax
|
(2,685
|
)
|
(2,685
|
)
|
||||||||||||
Common
Stock Dividends
|
(15,000
|
)
|
(15,000
|
)
|
||||||||||||
Preferred
Stock Dividends
|
(200
|
)
|
(200
|
)
|
||||||||||||
Capital
Stock Expense
|
38
|
(38
|
)
|
-
|
||||||||||||
TOTAL
|
2,018,289
|
|||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||
Other
Comprehensive Loss, Net of Taxes:
|
||||||||||||||||
Cash
Flow Hedges, Net of Tax of $4,030
|
(7,484
|
)
|
(7,484
|
)
|
||||||||||||
NET
INCOME
|
70,227
|
70,227
|
||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
62,743
|
|||||||||||||||
MARCH
31, 2007
|
$
|
260,458
|
$
|
1,025,032
|
$
|
857,817
|
$
|
(62,275
|
)
|
$
|
2,081,032
|
2007
|
2006
|
||||||
CURRENT
ASSETS
|
|||||||
Cash
and Cash Equivalents
|
$
|
1,987
|
$
|
2,318
|
|||
Accounts
Receivable:
|
|||||||
Customers
|
199,112
|
180,190
|
|||||
Affiliated
Companies
|
85,919
|
98,237
|
|||||
Accrued
Unbilled Revenues
|
29,618
|
46,281
|
|||||
Miscellaneous
|
4,849
|
3,400
|
|||||
Allowance
for Uncollectible Accounts
|
(4,573
|
)
|
(4,334
|
)
|
|||
Total Accounts Receivable
|
314,925
|
323,774
|
|||||
Fuel
|
72,075
|
77,077
|
|||||
Materials
and Supplies
|
69,428
|
56,235
|
|||||
Risk
Management Assets
|
67,463
|
105,376
|
|||||
Accrued
Tax Benefits
|
9,189
|
3,748
|
|||||
Regulatory
Asset for Under-Recovered Fuel Costs
|
17,789
|
29,526
|
|||||
Prepayments
and Other
|
15,682
|
20,126
|
|||||
TOTAL
|
568,538
|
618,180
|
|||||
PROPERTY,
PLANT AND EQUIPMENT
|
|||||||
Electric:
|
|||||||
Production
|
3,363,911
|
2,844,803
|
|||||
Transmission
|
1,640,046
|
1,620,512
|
|||||
Distribution
|
2,276,327
|
2,237,887
|
|||||
Other
|
342,014
|
339,450
|
|||||
Construction
Work in Progress
|
512,388
|
957,626
|
|||||
Total
|
8,134,686
|
8,000,278
|
|||||
Accumulated
Depreciation and Amortization
|
2,470,106
|
2,476,290
|
|||||
TOTAL
- NET
|
5,664,580
|
5,523,988
|
|||||
OTHER
NONCURRENT ASSETS
|
|||||||
Regulatory
Assets
|
612,352
|
622,153
|
|||||
Long-term
Risk Management Assets
|
85,987
|
88,906
|
|||||
Deferred
Charges and Other
|
167,913
|
163,089
|
|||||
TOTAL
|
866,252
|
874,148
|
|||||
TOTAL
ASSETS
|
$
|
7,099,370
|
$
|
7,016,316
|
2007
|
2006
|
||||||
CURRENT
LIABILITIES
|
(in
thousands)
|
||||||
Advances
from Affiliates
|
$
|
82,860
|
$
|
34,975
|
|||
Accounts
Payable:
|
|||||||
General
|
286,892
|
296,437
|
|||||
Affiliated
Companies
|
77,642
|
105,525
|
|||||
Long-term
Debt Due Within One Year - Nonaffiliated
|
324,169
|
324,191
|
|||||
Risk
Management Liabilities
|
57,818
|
81,114
|
|||||
Customer
Deposits
|
54,193
|
56,364
|
|||||
Accrued
Taxes
|
87,864
|
60,056
|
|||||
Accrued
Interest
|
55,787
|
30,617
|
|||||
Other
|
119,509
|
142,326
|
|||||
TOTAL
|
1,146,734
|
1,131,605
|
|||||
NONCURRENT
LIABILITIES
|
|||||||
Long-term
Debt - Nonaffiliated
|
2,174,951
|
2,174,473
|
|||||
Long-term
Debt - Affiliated
|
100,000
|
100,000
|
|||||
Long-term
Risk Management Liabilities
|
58,995
|
64,909
|
|||||
Deferred
Income Taxes
|
933,703
|
957,229
|
|||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
307,018
|
309,724
|
|||||
Deferred
Credits and Other
|
279,174
|
224,439
|
|||||
TOTAL
|
3,853,841
|
3,830,774
|
|||||
TOTAL
LIABILITIES
|
5,000,575
|
4,962,379
|
|||||
Cumulative
Preferred Stock Not Subject to Mandatory Redemption
|
17,763
|
17,763
|
|||||
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
|
1,025,032
|
1,024,994
|
|||||
Retained
Earnings
|
857,817
|
805,513
|
|||||
Accumulated
Other Comprehensive Income (Loss)
|
(62,275
|
)
|
(54,791
|
)
|
|||
TOTAL
|
2,081,032
|
2,036,174
|
|||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
7,099,370
|
$
|
7,016,316
|
2007
|
2006
|
||||||
OPERATING
ACTIVITIES
|
|||||||
Net
Income
|
$
|
70,227
|
$
|
73,594
|
|||
Adjustments
for Noncash Items:
|
|||||||
Depreciation
and Amortization
|
59,160
|
48,268
|
|||||
Deferred
Income Taxes
|
(3,901
|
)
|
(11,423
|
)
|
|||
Carrying
Costs Income
|
(3,166
|
)
|
(6,011
|
)
|
|||
Mark-to-Market
of Risk Management Contracts
|
(401
|
)
|
(5,696
|
)
|
|||
Change
in Other Noncurrent Assets
|
(12,747
|
)
|
4,020
|
||||
Change
in Other Noncurrent Liabilities
|
30,172
|
5,848
|
|||||
Changes
in Certain Components of Working Capital:
|
|||||||
Accounts
Receivable, Net
|
8,849
|
75,278
|
|||||
Fuel,
Materials and Supplies
|
(1,034
|
)
|
13,028
|
||||
Accounts
Payable
|
(19,891
|
)
|
(30,148
|
)
|
|||
Customer
Deposits
|
(2,171
|
)
|
(13,530
|
)
|
|||
Accrued
Taxes, Net
|
29,539
|
56,180
|
|||||
Accrued
Interest
|
21,608
|
15,511
|
|||||
Fuel
Over/Under Recovery, Net
|
12,987
|
7,832
|
|||||
Other
Current Assets
|
3,899
|
(1,718
|
)
|
||||
Other
Current Liabilities
|
(17,101
|
)
|
(20,053
|
)
|
|||
Net
Cash Flows From Operating Activities
|
176,029
|
210,980
|
|||||
INVESTING
ACTIVITIES
|
|||||||
Construction
Expenditures
|
(202,007
|
)
|
(196,561
|
)
|
|||
Change
in Other Cash Deposits, Net
|
(29
|
)
|
-
|
||||
Proceeds
from Sales of Assets
|
1,142
|
1,664
|
|||||
Net
Cash Flows Used For Investing Activities
|
(200,894
|
)
|
(194,897
|
)
|
|||
FINANCING
ACTIVITIES
|
|||||||
Issuance
of Long-term Debt - Nonaffiliated
|
-
|
49,677
|
|||||
Change
in Advances from Affiliates, Net
|
47,885
|
(29,941
|
)
|
||||
Retirement
of Long-term Debt - Nonaffiliated
|
(3
|
)
|
(100,003
|
)
|
|||
Principal
Payments for Capital Lease Obligations
|
(1,112
|
)
|
(1,483
|
)
|
|||
Funds
From Amended Coal Contract
|
-
|
68,078
|
|||||
Amortization
of Funds From Amended Coal Contract
|
(7,036
|
)
|
-
|
||||
Dividends
Paid on Common Stock
|
(15,000
|
)
|
(2,500
|
)
|
|||
Dividends
Paid on Cumulative Preferred Stock
|
(200
|
)
|
(200
|
)
|
|||
Net
Cash Flows From (Used For) Financing Activities
|
24,534
|
(16,372
|
)
|
||||
Net
Decrease in Cash and Cash Equivalents
|
(331
|
)
|
(289
|
)
|
|||
Cash
and Cash Equivalents at Beginning of Period
|
2,318
|
1,741
|
|||||
Cash
and Cash Equivalents at End of Period
|
$
|
1,987
|
$
|
1,452
|
SUPPLEMENTARY
INFORMATION
|
|||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$
|
7,084
|
$
|
14,686
|
|||
Net
Cash Paid for Income Taxes
|
7,775
|
1,771
|
|||||
Noncash
Acquisitions Under Capital Leases
|
444
|
1,184
|
|||||
Construction
Expenditures Included in Accounts Payable at March 31,
|
113,021
|
83,682
|
Footnote
Reference
|
|
Significant
Accounting Matters
|
Note
1
|
New
Accounting Pronouncements
|
Note
2
|
Rate
Matters
|
Note
3
|
Commitments,
Guarantees and Contingencies
|
Note
4
|
Benefit
Plans
|
Note
6
|
Business
Segments
|
Note
7
|
Income
Taxes
|
Note
8
|
Financing
Activities
|
Note
9
|
First
Quarter of 2006
|
$
|
51
|
|||||
Changes
in Gross Margin:
|
|||||||
Retail
Margins
|
27
|
||||||
Off-system
Sales
|
(11
|
)
|
|||||
Transmission
Revenues
|
(7
|
)
|
|||||
Other
|
(4
|
)
|
|||||
Total
Change in Gross Margin
|
5
|
||||||
Changes
in Operating Expenses and Other:
|
|||||||
Other
Operation and Maintenance
|
(10
|
)
|
|||||
Depreciation
and Amortization
|
(4
|
)
|
|||||
Taxes
Other Than Income Taxes
|
(1
|
)
|
|||||
Interest
Expense
|
2
|
||||||
Other
|
1
|
||||||
Total
Change in Operating Expenses and Other
|
(12
|
)
|
|||||
Income
Tax Expense
|
3
|
||||||
First
Quarter of 2007
|
$
|
47
|
·
|
Retail
Margins increased $27 million primarily due to:
|
|
·
|
An
$11 million increase in residential and commercial revenue
primarily due
to a 27% increase in heating degree days.
|
|
·
|
A
$10 million increase in rate revenues related to a $4 million
increase in
our RSP, a $3 million increase related to rate recovery of storm
costs and
a $3 million increase related to rate recovery of IGCC preconstruction
costs (see “Ohio Rate Matters” section of Note 3). The
increase in rate recovery of storm costs was offset by the amortization
of
deferred expenses in Other Operation and Maintenance. The increase
in rate
recovery of IGCC preconstruction costs was offset by the amortization
of
deferred expenses in Depreciation and
Amortization.
|
|
·
|
A
$7 million increase in industrial revenue due to the addition
of Ormet, a
major industrial customer (see “Ormet” section of Note
3).
|
|
·
|
Margins
from Off-system Sales decreased $11 million primarily due to
an $8 million
decrease in physical sales margins and a $4 million decrease
in margins
from optimization activities.
|
|
·
|
Transmission
Revenues decreased $7 million primarily due to the elimination
of SECA
revenues as of April 1, 2006. See the “Transmission Rate Proceedings at
the FERC” section of Note 3.
|
|
·
|
Other
revenues decreased $4 million primarily due to lower gains on
sales of
emission allowances.
|
·
|
Other
Operation and Maintenance expenses increased $10 million primarily
due
to:
|
|
·
|
A
$5 million increase in overhead line expenses due in part to
the
amortization of deferred storm expenses recovered through a cost-recovery
rider. The increase in amortization of deferred storm expenses
was offset
by a corresponding increase in Retail Margins.
|
|
·
|
A
$3 million increase in our net allocated transmission costs related
to the
Transmission Equalization Agreement as a result of the addition
of APCo’s
Wyoming-Jacksons Ferry 765 kV line, which was energized and placed
in
service in June 2006.
|
|
·
|
Depreciation
and Amortization increased $4 million primarily due to the
amortization of
IGCC preconstruction costs of $3 million in the first quarter
of 2007. The
increase in amortization of IGCC preconstruction costs was
offset by a
corresponding increase in Retail Margins.
|
|
·
|
Interest
Expense decreased $2 million primarily due to an increase in
allowance for
borrowed funds used during
construction.
|
2007
|
2006
|
||||||
REVENUES
|
|||||||
Electric
Generation, Transmission and Distribution
|
$
|
423,466
|
$
|
413,669
|
|||
Sales
to AEP Affiliates
|
23,013
|
13,769
|
|||||
Other
|
1,433
|
1,330
|
|||||
TOTAL
|
447,912
|
428,768
|
|||||
EXPENSES
|
|||||||
Fuel
and Other Consumables Used for Electric Generation
|
75,862
|
69,820
|
|||||
Purchased
Electricity for Resale
|
31,311
|
24,765
|
|||||
Purchased
Electricity from AEP Affiliates
|
83,541
|
82,477
|
|||||
Other
Operation
|
61,159
|
55,945
|
|||||
Maintenance
|
22,564
|
17,934
|
|||||
Depreciation
and Amortization
|
50,297
|
45,828
|
|||||
Taxes
Other Than Income Taxes
|
40,582
|
39,502
|
|||||
TOTAL
|
365,316
|
336,271
|
|||||
OPERATING
INCOME
|
82,596
|
92,497
|
|||||
Other
Income (Expense):
|
|||||||
Interest
Income
|
422
|
455
|
|||||
Carrying
Costs Income
|
1,092
|
716
|
|||||
Allowance
for Equity Funds Used During Construction
|
772
|
464
|
|||||
Interest
Expense
|
(15,281
|
)
|
(17,520
|
)
|
|||
INCOME
BEFORE INCOME TAXES
|
69,601
|
76,612
|
|||||
Income
Tax Expense
|
22,620
|
25,275
|
|||||
NET INCOME | 46,981 | 51,337 | |||||
Capital
Stock Expense
|
39
|
39
|
|||||
EARNINGS APPLICABLE TO COMMON STOCK | $ | 46,942 | $ | 51,298 |
Common
Stock
|
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other Comprehensive Income (Loss)
|
Total
|
||||||||||||
DECEMBER
31, 2005
|
$
|
41,026
|
$
|
580,035
|
$
|
361,365
|
$
|
(880
|
)
|
$
|
981,546
|
|||||
Common
Stock Dividends
|
(22,500
|
)
|
(22,500
|
)
|
||||||||||||
Capital
Stock Expense
|
39
|
(39
|
)
|
-
|
||||||||||||
TOTAL
|
959,046
|
|||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||
Other
Comprehensive Income, Net of Taxes:
|
||||||||||||||||
Cash
Flow Hedges, Net of Tax of $2,176
|
4,041
|
4,041
|
||||||||||||||
NET
INCOME
|
51,337
|
51,337
|
||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
55,378
|
|||||||||||||||
MARCH
31, 2006
|
$
|
41,026
|
$
|
580,074
|
$
|
390,163
|
$
|
3,161
|
$
|
1,014,424
|
||||||
DECEMBER
31, 2006
|
$
|
41,026
|
$
|
580,192
|
$
|
456,787
|
$
|
(21,988
|
)
|
$
|
1,056,017
|
|||||
FIN
48 Adoption, Net of Tax
|
(3,022
|
)
|
(3,022
|
)
|
||||||||||||
Common
Stock Dividends
|
(20,000
|
)
|
(20,000
|
)
|
||||||||||||
Capital
Stock Expense
|
39
|
(39
|
)
|
-
|
||||||||||||
TOTAL
|
1,032,995
|
|||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||
Other
Comprehensive Loss, Net of Taxes:
|
||||||||||||||||
Cash
Flow Hedges, Net of Tax of $2,841
|
(5,276
|
)
|
(5,276
|
)
|
||||||||||||
NET
INCOME
|
46,981
|
46,981
|
||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
41,705
|
|||||||||||||||
MARCH
31, 2007
|
$
|
41,026
|
$
|
580,231
|
$
|
480,707
|
$
|
(27,264
|
)
|
$
|
1,074,700
|
2007
|
2006
|
||||||
CURRENT
ASSETS
|
|||||||
Cash
and Cash Equivalents
|
$
|
237
|
$
|
1,319
|
|||
Advances
to Affiliates
|
922
|
-
|
|||||
Accounts
Receivable:
|
|||||||
Customers
|
59,380
|
49,362
|
|||||
Affiliated
Companies
|
35,351
|
62,866
|
|||||
Accrued
Unbilled Revenues
|
8,011
|
11,042
|
|||||
Miscellaneous
|
5,626
|
4,895
|
|||||
Allowance
for Uncollectible Accounts
|
(588
|
)
|
(546
|
)
|
|||
Total Accounts Receivable
|
107,780
|
127,619
|
|||||
Fuel
|
31,320
|
37,348
|
|||||
Materials
and Supplies
|
34,575
|
31,765
|
|||||
Emission
Allowances
|
8,971
|
3,493
|
|||||
Risk
Management Assets
|
36,969
|
66,238
|
|||||
Accrued
Tax Benefits
|
-
|
4,763
|
|||||
Prepayments
and Other
|
11,734
|
16,107
|
|||||
TOTAL
|
232,508
|
288,652
|
|||||
PROPERTY,
PLANT AND EQUIPMENT
|
|||||||
Electric:
|
|||||||
Production
|
1,954,377
|
1,896,073
|
|||||
Transmission
|
481,875
|
479,119
|
|||||
Distribution
|
1,496,080
|
1,475,758
|
|||||
Other
|
190,645
|
191,103
|
|||||
Construction
Work in Progress
|
269,771
|
294,138
|
|||||
Total
|
4,392,748
|
4,336,191
|
|||||
Accumulated
Depreciation and Amortization
|
1,629,386
|
1,611,043
|
|||||
TOTAL
- NET
|
2,763,362
|
2,725,148
|
|||||
OTHER
NONCURRENT ASSETS
|
|||||||
Regulatory
Assets
|
277,251
|
298,304
|
|||||
Long-term
Risk Management Assets
|
46,978
|
56,206
|
|||||
Deferred
Charges and Other
|
131,818
|
152,379
|
|||||
TOTAL
|
456,047
|
506,889
|
|||||
TOTAL
ASSETS
|
$
|
3,451,917
|
$
|
3,520,689
|
2007
|
2006
|
||||||
CURRENT
LIABILITIES
|
(in
thousands)
|
||||||
Advances
from Affiliates
|
$
|
-
|
$
|
696
|
|||
Accounts
Payable:
|
|||||||
General
|
97,767
|
112,431
|
|||||
Affiliated
Companies
|
51,552
|
59,538
|
|||||
Long-term
Debt Due Within One Year - Nonaffiliated
|
52,000
|
-
|
|||||
Risk
Management Liabilities
|
31,365
|
49,285
|
|||||
Customer
Deposits
|
37,563
|
34,991
|
|||||
Accrued
Taxes
|
144,223
|
166,551
|
|||||
Accrued
Interest
|
17,698
|
20,868
|
|||||
Other
|
34,767
|
37,143
|
|||||
TOTAL
|
466,935
|
481,503
|
|||||
NONCURRENT
LIABILITIES
|
|||||||
Long-term
Debt - Nonaffiliated
|
1,045,422
|
1,097,322
|
|||||
Long-term
Debt - Affiliated
|
100,000
|
100,000
|
|||||
Long-term
Risk Management Liabilities
|
32,396
|
40,477
|
|||||
Deferred
Income Taxes
|
462,516
|
475,888
|
|||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
168,597
|
179,048
|
|||||
Deferred
Credits and Other
|
101,351
|
90,434
|
|||||
TOTAL
|
1,910,282
|
1,983,169
|
|||||
TOTAL
LIABILITIES
|
2,377,217
|
2,464,672
|
|||||
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
|
580,231
|
580,192
|
|||||
Retained
Earnings
|
480,707
|
456,787
|
|||||
Accumulated
Other Comprehensive Income (Loss)
|
(27,264
|
)
|
(21,988
|
)
|
|||
TOTAL
|
1,074,700
|
1,056,017
|
|||||
TOTAL
LIABILITIES AND SHAREHOLDER’S EQUITY
|
$
|
3,451,917
|
$
|
3,520,689
|
2007
|
2006
|
||||||
OPERATING
ACTIVITIES
|
|||||||
Net
Income
|
$
|
46,981
|
$
|
51,337
|
|||
Adjustments
for Noncash Items:
|
|||||||
Depreciation
and Amortization
|
50,297
|
45,828
|
|||||
Deferred
Income Taxes
|
(716
|
)
|
3,816
|
||||
Carrying
Costs Income
|
(1,092
|
)
|
(716
|
)
|
|||
Mark-to-Market
of Risk Management Contracts
|
4,400
|
(3,624
|
)
|
||||
Deferred
Property Taxes
|
18,954
|
10,884
|
|||||
Change
in Other Noncurrent Assets
|
(912
|
)
|
(11,325
|
)
|
|||
Change
in Other Noncurrent Liabilities
|
(15,510
|
)
|
5,800
|
||||
Changes
in Certain Components of Working Capital:
|
|||||||
Accounts
Receivable, Net
|
19,839
|
33,295
|
|||||
Fuel,
Materials and Supplies
|
3,218
|
(7,431
|
)
|
||||
Accounts
Payable
|
(7,659
|
)
|
12,540
|
||||
Customer
Deposits
|
2,572
|
(7,901
|
)
|
||||
Accrued
Taxes, Net
|
(8,651
|
)
|
(7,873
|
)
|
|||
Accrued
Interest
|
(5,658
|
)
|
(4,127
|
)
|
|||
Other
Current Assets
|
5,694
|
(728
|
)
|
||||
Other
Current Liabilities
|
(5,056
|
)
|
(6,571
|
)
|
|||
Net
Cash Flows From Operating Activities
|
106,701
|
113,204
|
|||||
INVESTING
ACTIVITIES
|
|||||||
Construction
Expenditures
|
(85,641
|
)
|
(65,032
|
)
|
|||
Change
in Other Cash Deposits, Net
|
(20
|
)
|
(1,151
|
)
|
|||
Change
in Advances to Affiliates, Net
|
(922
|
)
|
(6,867
|
)
|
|||
Proceeds
from Sale of Assets
|
189
|
531
|
|||||
Net
Cash Flows Used For Investing Activities
|
(86,394
|
)
|
(72,519
|
)
|
|||
FINANCING
ACTIVITIES
|
|||||||
Change
in Advances from Affiliates, Net
|
(696
|
)
|
(17,609
|
)
|
|||
Principal
Payments for Capital Lease Obligations
|
(693
|
)
|
(759
|
)
|
|||
Dividends
Paid on Common Stock
|
(20,000
|
)
|
(22,500
|
)
|
|||
Net
Cash Flows Used For Financing Activities
|
(21,389
|
)
|
(40,868
|
)
|
|||
Net
Decrease in Cash and Cash Equivalents
|
(1,082
|
)
|
(183
|
)
|
|||
Cash
and Cash Equivalents at Beginning of Period
|
1,319
|
940
|
|||||
Cash
and Cash Equivalents at End of Period
|
$
|
237
|
$
|
757
|
SUPPLEMENTARY
INFORMATION
|
|||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$
|
20,132
|
$
|
22,320
|
|||
Net
Cash Paid (Received) for Income Taxes
|
(2,907
|
)
|
2,533
|
||||
Noncash
Acquisitions Under Capital Leases
|
275
|
1,102
|
|||||
Construction
Expenditures Included in Accounts Payable at March 31,
|
20,636
|
12,054
|
Footnote
Reference
|
|
Significant
Accounting Matters
|
Note
1
|
New
Accounting Pronouncements
|
Note
2
|
Rate
Matters
|
Note
3
|
Commitments,
Guarantees and Contingencies
|
Note
4
|
Acquisitions,
Dispositions and Assets Held for Sale
|
Note
5
|
Benefit
Plans
|
Note
6
|
Business
Segments
|
Note
7
|
Income
Taxes
|
Note
8
|
Financing
Activities
|
Note
9
|
First
Quarter of 2006
|
$
|
58
|
|||||
Changes
in Gross Margin:
|
|||||||
Retail
Margins
|
(24
|
)
|
|||||
FERC
Municipals and Cooperatives
|
9
|
||||||
Off-system
Sales
|
(4
|
)
|
|||||
Transmission
Revenues
|
(2
|
)
|
|||||
Other
|
(7
|
)
|
|||||
Total
Change in Gross Margin
|
(28
|
)
|
|||||
Changes
in Operating Expenses and Other:
|
|||||||
Other
Operation and Maintenance
|
(6
|
)
|
|||||
Depreciation
and Amortization
|
(7
|
)
|
|||||
Other
Income
|
(1
|
)
|
|||||
Interest
Expense
|
(2
|
)
|
|||||
Total
Change in Operating Expenses and Other
|
(16
|
)
|
|||||
Income
Tax Expense
|
15
|
||||||
First
Quarter of 2007
|
$
|
29
|
·
|
Retail
Margins decreased $24 million primarily due to a reduction in capacity
settlement revenues of $23 million under the Interconnection Agreement
reflecting our new peak demand in July 2006.
|
·
|
FERC
Municipals and Cooperatives margins increased $9 million due to
the
addition of new municipal contracts including new rates and increased
demand effective July 2006 and January 2007.
|
·
|
Margins
from Off-system Sales decreased $4 million primarily due to an
$11 million
decrease in physical sales margins partially offset by a $6 million
increase in margins from optimization activities.
|
·
|
Transmission
Revenues decreased $2 million primarily due to the elimination
of SECA
revenues as of April 1, 2006. See the “Transmission Rate Proceedings at
the FERC” section of Note 3.
|
·
|
Other
revenues
decreased
$7 million primarily due to decreased River Transportation Division
(RTD)
revenues for barging coal and decreased gains on sales of emission
allowances. RTD related expenses which offset the RTD revenue decrease
are
included in Other Operation on the Condensed Consolidated Statements
of
Income resulting in our earning only a return approved under regulatory
order.
|
·
|
Other
Operation and Maintenance expenses increased $6 million primarily
due to a
$5 million increase in transmission expense due to our reduced
credits
under the Transmission Equalization Agreement. Our credits decreased
due
to our July 2006 peak and due to APCo’s addition of the Wyoming-Jacksons
Ferry 765 kV line, which was energized and placed in service in
June 2006
thus decreasing our share of the transmission investment
pool.
|
·
|
Depreciation
and Amortization expense increased $7 million primarily due to a $5
million increase in depreciation related to capital additions
and a $2 million increase in amortization related to capitalized
software
development costs.
|
·
|
Interest
Expense increased $2 million primarily due to an increase in outstanding
long-term debt and higher interest
rates.
|
2007
|
2006
|
||||||
REVENUES
|
|||||||
Electric
Generation, Transmission and Distribution
|
$
|
405,164
|
$
|
403,769
|
|||
Sales
to AEP Affiliates
|
67,429
|
88,534
|
|||||
Other
- Affiliated
|
12,667
|
15,094
|
|||||
Other
- Nonaffiliated
|
7,609
|
8,382
|
|||||
TOTAL
|
492,869
|
515,779
|
|||||
EXPENSES
|
|||||||
Fuel
and Other Consumables Used for Electric Generation
|
96,117
|
89,452
|
|||||
Purchased
Electricity for Resale
|
17,940
|
11,010
|
|||||
Purchased
Electricity from AEP Affiliates
|
77,513
|
86,422
|
|||||
Other
Operation
|
120,733
|
111,617
|
|||||
Maintenance
|
42,430
|
45,219
|
|||||
Depreciation
and Amortization
|
56,307
|
49,715
|
|||||
Taxes
Other Than Income Taxes
|
17,994
|
18,906
|
|||||
TOTAL
|
429,034
|
412,341
|
|||||
OPERATING
INCOME
|
63,835
|
103,438
|
|||||
Other
Income (Expense):
|
|||||||
Interest
Income
|
588
|
694
|
|||||
Allowance
for Equity Funds Used During Construction
|
265
|
1,924
|
|||||
Interest
Expense
|
(19,821
|
)
|
(17,533
|
)
|
|||
INCOME
BEFORE INCOME TAXES
|
44,867
|
88,523
|
|||||
Income
Tax Expense
|
15,404
|
30,645
|
|||||
NET
INCOME
|
29,463
|
57,878
|
|||||
Preferred
Stock Dividend Requirements
|
85
|
85
|
|||||
EARNINGS
APPLICABLE TO COMMON STOCK
|
$
|
29,378
|
$
|
57,793
|
Common
Stock
|
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other Comprehensive Income (Loss)
|
Total
|
||||||||||||
DECEMBER
31, 2005
|
$
|
56,584
|
$
|
861,290
|
$
|
305,787
|
$
|
(3,569
|
)
|
$
|
1,220,092
|
|||||
Common
Stock Dividends
|
(10,000
|
)
|
(10,000
|
)
|
||||||||||||
Preferred
Stock Dividends
|
(85
|
)
|
(85
|
)
|
||||||||||||
TOTAL
|
1,210,007
|
|||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||
Other
Comprehensive Income, Net
of Taxes:
|
||||||||||||||||
Cash
Flow Hedges, Net of Tax of $2,265
|
4,207
|
4,207
|
||||||||||||||
NET
INCOME
|
57,878
|
57,878
|
||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
62,085
|
|||||||||||||||
MARCH
31, 2006
|
$
|
56,584
|
$
|
861,290
|
$
|
353,580
|
$
|
638
|
$
|
1,272,092
|
||||||
DECEMBER
31, 2006
|
$
|
56,584
|
$
|
861,290
|
$
|
386,616
|
$
|
(15,051
|
)
|
$
|
1,289,439
|
|||||
FIN
48 Adoption, Net of Tax
|
327
|
327
|
||||||||||||||
Common
Stock Dividends
|
(10,000
|
)
|
(10,000
|
)
|
||||||||||||
Preferred
Stock Dividends
|
(85
|
)
|
(85
|
)
|
||||||||||||
TOTAL
|
1,279,681
|
|||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||
Other
Comprehensive Loss, Net of Taxes:
|
||||||||||||||||
Cash
Flow Hedges, Net of Tax of $2,850
|
(5,293
|
)
|
(5,293
|
)
|
||||||||||||
NET
INCOME
|
29,463
|
29,463
|
||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
24,170
|
|||||||||||||||
MARCH
31, 2007
|
$
|
56,584
|
$
|
861,290
|
$
|
406,321
|
$
|
(20,344
|
)
|
$
|
1,303,851
|
2007
|
2006
|
||||||
CURRENT
ASSETS
|
|||||||
Cash
and Cash Equivalents
|
$
|
753
|
$
|
1,369
|
|||
Accounts
Receivable:
|
|||||||
Customers
|
86,128
|
82,102
|
|||||
Affiliated
Companies
|
66,155
|
108,288
|
|||||
Accrued
Unbilled Revenues
|
806
|
2,206
|
|||||
Miscellaneous
|
2,571
|
1,838
|
|||||
Allowance
for Uncollectible Accounts
|
(616
|
)
|
(601
|
)
|
|||
Total Accounts Receivable
|
155,044
|
193,833
|
|||||
Fuel
|
47,818
|
64,669
|
|||||
Materials
and Supplies
|
136,373
|
129,953
|
|||||
Risk
Management Assets
|
39,175
|
69,752
|
|||||
Accrued
Tax Benefits
|
8,680
|
27,378
|
|||||
Prepayments
and Other
|
13,500
|
15,170
|
|||||
TOTAL
|
401,343
|
502,124
|
|||||
PROPERTY,
PLANT AND EQUIPMENT
|
|||||||
Electric:
|
|||||||
Production
|
3,383,343
|
3,363,813
|
|||||
Transmission
|
1,052,730
|
1,047,264
|
|||||
Distribution
|
1,143,815
|
1,102,033
|
|||||
Other
(including nuclear fuel and coal mining)
|
516,972
|
529,727
|
|||||
Construction
Work in Progress
|
144,856
|
183,893
|
|||||
Total
|
6,241,716
|
6,226,730
|
|||||
Accumulated
Depreciation, Depletion and Amortization
|
2,949,796
|
2,914,131
|
|||||
TOTAL
- NET
|
3,291,920
|
3,312,599
|
|||||
OTHER
NONCURRENT ASSETS
|
|||||||
Regulatory
Assets
|
292,704
|
314,805
|
|||||
Spent
Nuclear Fuel and Decommissioning Trusts
|
1,262,960
|
1,248,319
|
|||||
Long-term
Risk Management Assets
|
49,470
|
59,137
|
|||||
Deferred
Charges and Other
|
117,384
|
109,453
|
|||||
TOTAL
|
1,722,518
|
1,731,714
|
|||||
TOTAL
ASSETS
|
$
|
5,415,781
|
$
|
5,546,437
|
2007
|
2006
|
||||||
CURRENT
LIABILITIES
|
(in
thousands)
|
||||||
Advances
from Affiliates
|
$
|
45,759
|
$
|
91,173
|
|||
Accounts
Payable:
|
|||||||
General
|
99,223
|
146,733
|
|||||
Affiliated
Companies
|
57,940
|
65,497
|
|||||
Long-term
Debt Due Within One Year - Nonaffiliated
|
50,000
|
50,000
|
|||||
Risk
Management Liabilities
|
33,643
|
52,083
|
|||||
Customer
Deposits
|
31,436
|
34,946
|
|||||
Accrued
Taxes
|
76,087
|
59,652
|
|||||
Other
|
115,714
|
128,461
|
|||||
TOTAL
|
509,802
|
628,545
|
|||||
NONCURRENT
LIABILITIES
|
|||||||
Long-term
Debt - Nonaffiliated
|
1,508,695
|
1,505,135
|
|||||
Long-term
Risk Management Liabilities
|
34,243
|
42,641
|
|||||
Deferred
Income Taxes
|
311,584
|
335,000
|
|||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
739,972
|
753,402
|
|||||
Asset
Retirement Obligations
|
820,371
|
809,853
|
|||||
Deferred
Credits and Other
|
179,181
|
174,340
|
|||||
TOTAL
|
3,594,046
|
3,620,371
|
|||||
TOTAL
LIABILITIES
|
4,103,848
|
4,248,916
|
|||||
Cumulative
Preferred Stock Not Subject to Mandatory Redemption
|
8,082
|
8,082
|
|||||
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
|
861,290
|
861,290
|
|||||
Retained
Earnings
|
406,321
|
386,616
|
|||||
Accumulated
Other Comprehensive Income (Loss)
|
(20,344
|
)
|
(15,051
|
)
|
|||
TOTAL
|
1,303,851
|
1,289,439
|
|||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
5,415,781
|
$
|
5,546,437
|
2007
|
2006
|
||||||
OPERATING
ACTIVITIES
|
|||||||
Net
Income
|
$
|
29,463
|
$
|
57,878
|
|||
Adjustments
for Noncash Items:
|
|||||||
Depreciation
and Amortization
|
56,307
|
49,715
|
|||||
Deferred
Income Taxes
|
(3,638
|
)
|
3,493
|
||||
Amortization
(Deferral) of Incremental Nuclear Refueling Outage Expenses,
Net
|
12,191
|
(1,639
|
)
|
||||
Amortization
of Nuclear Fuel
|
16,372
|
13,596
|
|||||
Mark-to-Market
of Risk Management Contracts
|
4,897
|
(4,060
|
)
|
||||
Deferred
Property Taxes
|
(10,836
|
)
|
(9,839
|
)
|
|||
Change
in Other Noncurrent Assets
|
5,729
|
4,381
|
|||||
Change
in Other Noncurrent Liabilities
|
(1,971
|
)
|
18,839
|
||||
Changes
in Certain Components of Working Capital:
|
|||||||
Accounts
Receivable, Net
|
38,789
|
43,019
|
|||||
Fuel,
Materials and Supplies
|
14,985
|
(7,194
|
)
|
||||
Accounts
Payable
|
(38,233
|
)
|
(7,010
|
)
|
|||
Customer
Deposits
|
(3,510
|
)
|
(8,031
|
)
|
|||
Accrued
Taxes, Net
|
39,525
|
42,871
|
|||||
Accrued
Rent - Rockport Plant Unit 2
|
18,464
|
18,464
|
|||||
Other
Current Assets
|
1,959
|
428
|
|||||
Other
Current Liabilities
|
(35,720
|
)
|
(20,797
|
)
|
|||
Net
Cash Flows From Operating Activities
|
144,773
|
194,114
|
|||||
INVESTING
ACTIVITIES
|
|||||||
Construction
Expenditures
|
(62,252
|
)
|
(89,411
|
)
|
|||
Purchases
of Investment Securities
|
(204,874
|
)
|
(150,239
|
)
|
|||
Sales
of Investment Securities
|
183,927
|
134,258
|
|||||
Acquisitions
of Nuclear Fuel
|
(5,366
|
)
|
(34,427
|
)
|
|||
Proceeds
from Sales of Assets and Other
|
248
|
1,384
|
|||||
Net
Cash Flows Used For Investing Activities
|
(88,317
|
)
|
(138,435
|
)
|
|||
FINANCING
ACTIVITIES
|
|||||||
Change
in Advances from Affiliates, Net
|
(45,414
|
)
|
(44,565
|
)
|
|||
Principal
Payments for Capital Lease Obligations
|
(1,573
|
)
|
(1,274
|
)
|
|||
Dividends
Paid on Common Stock
|
(10,000
|
)
|
(10,000
|
)
|
|||
Dividends
Paid on Cumulative Preferred Stock
|
(85
|
)
|
(85
|
)
|
|||
Net
Cash Flows Used For Financing Activities
|
(57,072
|
)
|
(55,924
|
)
|
|||
Net
Decrease in Cash and Cash Equivalents
|
(616
|
)
|
(245
|
)
|
|||
Cash
and Cash Equivalents at Beginning of Period
|
1,369
|
854
|
|||||
Cash
and Cash Equivalents at End of Period
|
$
|
753
|
$
|
609
|
SUPPLEMENTARY
INFORMATION
|
|||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$
|
15,048
|
$
|
4,776
|
|||
Net
Cash Paid (Received) for Income Taxes
|
(2,768
|
)
|
1,324
|
||||
Noncash
Acquisitions Under Capital Leases
|
369
|
2,218
|
|||||
Construction
Expenditures Included in Accounts Payable at March 31,
|
20,243
|
27,624
|
Footnote
Reference
|
|
Significant
Accounting Matters
|
Note
1
|
New
Accounting Pronouncements
|
Note
2
|
Rate
Matters
|
Note
3
|
Commitments,
Guarantees and Contingencies
|
Note
4
|
Benefit
Plans
|
Note
6
|
Business
Segments
|
Note
7
|
Income
Taxes
|
Note
8
|
Financing
Activities
|
Note
9
|
First
Quarter of 2006
|
$
|
10
|
|||||
Changes
in Gross Margin:
|
|||||||
Retail
Margins
|
17
|
||||||
Off-system
Sales
|
(2
|
)
|
|||||
Transmission
Revenues
|
(3
|
)
|
|||||
Other
|
(1
|
)
|
|||||
Total
Change in Gross Margin
|
11
|
||||||
Other
Operation and Maintenance
|
(3
|
)
|
|||||
Income
Tax Expense
|
(3
|
)
|
|||||
First
Quarter of 2007
|
$
|
15
|
·
|
Retail
Margins increased $17 million primarily due to rate relief of $14
million
from the March 2006 approval of the settlement agreement in our
base rate
case.
|
·
|
Transmission
Revenues decreased $3 million primarily due to the elimination
of SECA
revenues as of April 1, 2006. See the “Transmission Rate Proceedings at
the FERC” section of Note 3.
|
2007
|
2006
|
||||||
REVENUES
|
|||||||
Electric
Generation, Transmission and Distribution
|
$
|
140,486
|
$
|
137,620
|
|||
Sales
to AEP Affiliates
|
13,461
|
13,968
|
|||||
Other
|
149
|
259
|
|||||
TOTAL
|
154,096
|
151,847
|
|||||
EXPENSES
|
|||||||
Fuel
and Other Consumables Used for Electric Generation
|
38,304
|
43,966
|
|||||
Purchased
Electricity for Resale
|
3,305
|
973
|
|||||
Purchased
Electricity from AEP Affiliates
|
43,257
|
49,526
|
|||||
Other
Operation
|
15,886
|
13,726
|
|||||
Maintenance
|
8,210
|
7,141
|
|||||
Depreciation
and Amortization
|
11,796
|
11,479
|
|||||
Taxes
Other Than Income Taxes
|
2,803
|
2,512
|
|||||
TOTAL
|
123,561
|
129,323
|
|||||
OPERATING
INCOME
|
30,535
|
22,524
|
|||||
Other
Income (Expense):
|
|||||||
Interest
Income
|
112
|
166
|
|||||
Allowance
for Equity Funds Used During Construction
|
14
|
101
|
|||||
Interest
Expense
|
(7,011
|
)
|
(7,296
|
)
|
|||
INCOME
BEFORE INCOME TAXES
|
23,650
|
15,495
|
|||||
Income
Tax Expense
|
8,439
|
5,665
|
|||||
NET
INCOME
|
$
|
15,211
|
$
|
9,830
|
Common
Stock
|
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other Comprehensive Income
(Loss)
|
Total
|
||||||||||||
DECEMBER
31, 2005
|
$
|
50,450
|
$
|
208,750
|
$
|
88,864
|
$
|
(223
|
)
|
$
|
347,841
|
|||||
Common
Stock Dividends
|
(2,500
|
)
|
(2,500
|
)
|
||||||||||||
TOTAL
|
345,341
|
|||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||
Other
Comprehensive Income, Net
of Taxes:
|
||||||||||||||||
Cash
Flow Hedges, Net of Tax of $873
|
1,621
|
1,621
|
||||||||||||||
NET
INCOME
|
9,830
|
9,830
|
||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
11,451
|
|||||||||||||||
MARCH
31, 2006
|
$
|
50,450
|
$
|
208,750
|
$
|
96,194
|
$
|
1,398
|
$
|
356,792
|
||||||
DECEMBER
31, 2006
|
$
|
50,450
|
$
|
208,750
|
$
|
108,899
|
$
|
1,552
|
$
|
369,651
|
||||||
FIN
48 Adoption, Net of Tax
|
(786
|
)
|
(786
|
)
|
||||||||||||
Common
Stock Dividends
|
(5,000
|
)
|
(5,000
|
)
|
||||||||||||
TOTAL
|
363,865
|
|||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||
Other
Comprehensive Loss, Net of Taxes:
|
||||||||||||||||
Cash
Flow Hedges, Net of Tax of $1,100
|
(2,042
|
)
|
(2,042
|
)
|
||||||||||||
NET
INCOME
|
15,211
|
15,211
|
||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
13,169
|
|||||||||||||||
MARCH
31, 2007
|
$
|
50,450
|
$
|
208,750
|
$
|
118,324
|
$
|
(490
|
)
|
$
|
377,034
|
2007
|
2006
|
||||||
CURRENT
ASSETS
|
|||||||
Cash
and Cash Equivalents
|
$
|
775
|
$
|
702
|
|||
Accounts
Receivable:
|
|||||||
Customers
|
30,027
|
30,112
|
|||||
Affiliated
Companies
|
9,142
|
10,540
|
|||||
Accrued
Unbilled Revenues
|
6,093
|
3,602
|
|||||
Miscellaneous
|
684
|
327
|
|||||
Allowance
for Uncollectible Accounts
|
(242
|
)
|
(227
|
)
|
|||
Total Accounts Receivable
|
45,704
|
44,354
|
|||||
Fuel
|
12,852
|
16,070
|
|||||
Materials
and Supplies
|
10,277
|
8,726
|
|||||
Risk
Management Assets
|
16,110
|
25,624
|
|||||
Accrued
Tax Benefits
|
-
|
1,021
|
|||||
Margin
Deposits
|
1,458
|
2,923
|
|||||
Prepayments
and Other
|
2,637
|
2,425
|
|||||
TOTAL
|
89,813
|
101,845
|
|||||
PROPERTY,
PLANT AND EQUIPMENT
|
|||||||
Electric:
|
|||||||
Production
|
480,501
|
478,955
|
|||||
Transmission
|
395,646
|
394,419
|
|||||
Distribution
|
480,690
|
481,083
|
|||||
Other
|
60,047
|
61,089
|
|||||
Construction
Work in Progress
|
27,705
|
29,587
|
|||||
Total
|
1,444,589
|
1,445,133
|
|||||
Accumulated
Depreciation and Amortization
|
441,565
|
442,778
|
|||||
TOTAL
- NET
|
1,003,024
|
1,002,355
|
|||||
OTHER
NONCURRENT ASSETS
|
|||||||
Regulatory
Assets
|
135,241
|
136,139
|
|||||
Long-term
Risk Management Assets
|
19,313
|
21,282
|
|||||
Deferred
Charges and Other
|
46,953
|
48,944
|
|||||
TOTAL
|
201,507
|
206,365
|
|||||
TOTAL
ASSETS
|
$
|
1,294,344
|
$
|
1,310,565
|
2007
|
2006
|
||||||
CURRENT
LIABILITIES
|
(in
thousands)
|
||||||
Advances
from Affiliates
|
$
|
20,769
|
$
|
30,636
|
|||
Accounts
Payable:
|
|||||||
General
|
33,876
|
31,490
|
|||||
Affiliated
Companies
|
17,615
|
23,658
|
|||||
Long-term
Debt Due Within One Year - Nonaffiliated
|
322,554
|
322,048
|
|||||
Risk
Management Liabilities
|
14,167
|
20,001
|
|||||
Customer
Deposits
|
15,273
|
16,095
|
|||||
Accrued
Taxes
|
18,933
|
18,775
|
|||||
Other
|
22,759
|
26,303
|
|||||
TOTAL
|
465,946
|
489,006
|
|||||
NONCURRENT
LIABILITIES
|
|||||||
Long-term
Debt - Nonaffiliated
|
104,944
|
104,920
|
|||||
Long-term
Debt - Affiliated
|
20,000
|
20,000
|
|||||
Long-term
Risk Management Liabilities
|
13,464
|
15,426
|
|||||
Deferred
Income Taxes
|
239,776
|
242,133
|
|||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
47,426
|
49,109
|
|||||
Deferred
Credits and Other
|
25,754
|
20,320
|
|||||
TOTAL
|
451,364
|
451,908
|
|||||
TOTAL
LIABILITIES
|
917,310
|
940,914
|
|||||
Commitments
and Contingencies (Note 4)
|
|||||||
COMMON
SHAREHOLDER’S EQUITY
|
|||||||
Common
Stock - $50 Par Value Per Share:
|
|||||||
Authorized
- 2,000,000 Shares
|
|||||||
Outstanding
- 1,009,000 Shares
|
50,450
|
50,450
|
|||||
Paid-in
Capital
|
208,750
|
208,750
|
|||||
Retained
Earnings
|
118,324
|
108,899
|
|||||
Accumulated
Other Comprehensive Income (Loss)
|
(490
|
)
|
1,552
|
||||
TOTAL
|
377,034
|
369,651
|
|||||
TOTAL
LIABILITIES AND SHAREHOLDER’S EQUITY
|
$
|
1,294,344
|
$
|
1,310,565
|
2007
|
2006
|
||||||
OPERATING
ACTIVITIES
|
|||||||
Net
Income
|
$
|
15,211
|
$
|
9,830
|
|||
Adjustments
for Noncash Items:
|
|||||||
Depreciation
and Amortization
|
11,796
|
11,479
|
|||||
Deferred
Income Taxes
|
956
|
2,217
|
|||||
Mark-to-Market
of Risk Management Contracts
|
1,092
|
(1,378
|
)
|
||||
Change
in Other Noncurrent Assets
|
980
|
2,518
|
|||||
Change
in Other Noncurrent Liabilities
|
(78
|
)
|
1,845
|
||||
Changes
in Certain Components of Working Capital:
|
|||||||
Accounts
Receivable, Net
|
(1,350
|
)
|
16,149
|
||||
Fuel,
Materials and Supplies
|
3,609
|
(2,808
|
)
|
||||
Accounts
Payable
|
(2,557
|
)
|
(6,212
|
)
|
|||
Customer
Deposits
|
(822
|
)
|
(3,127
|
)
|
|||
Accrued
Taxes, Net
|
1,447
|
2,676
|
|||||
Other
Current Assets
|
1,012
|
2,069
|
|||||
Other
Current Liabilities
|
(3,348
|
)
|
(1,480
|
)
|
|||
Net
Cash Flows From Operating Activities
|
27,948
|
33,778
|
|||||
INVESTING
ACTIVITIES
|
|||||||
Construction
Expenditures
|
(13,001
|
)
|
(19,376
|
)
|
|||
Change
in Advances to Affiliates, Net
|
-
|
(5,923
|
)
|
||||
Proceeds
from Sale of Assets
|
231
|
301
|
|||||
Net
Cash Flows Used For Investing Activities
|
(12,770
|
)
|
(24,998
|
)
|
|||
FINANCING
ACTIVITIES
|
|||||||
Change
in Advances from Affiliates, Net
|
(9,867
|
)
|
(6,040
|
)
|
|||
Principal
Payments for Capital Lease Obligations
|
(238
|
)
|
(343
|
)
|
|||
Dividends
Paid on Common Stock
|
(5,000
|
)
|
(2,500
|
)
|
|||
Net
Cash Flows Used For Financing Activities
|
(15,105
|
)
|
(8,883
|
)
|
|||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
73
|
(103
|
)
|
||||
Cash
and Cash Equivalents at Beginning of Period
|
702
|
526
|
|||||
Cash
and Cash Equivalents at End of Period
|
$
|
775
|
$
|
423
|
SUPPLEMENTARY
INFORMATION
|
|||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$
|
5,371
|
$
|
4,156
|
|||
Net
Cash Paid for Income Taxes
|
738
|
214
|
|||||
Noncash
Acquisitions Under Capital Leases
|
139
|
224
|
|||||
Construction
Expenditures Included in Accounts Payable at March 31,
|
2,257
|
3,079
|
Footnote
Reference
|
|
Significant
Accounting Matters
|
Note
1
|
New
Accounting Pronouncements
|
Note
2
|
Rate
Matters
|
Note
3
|
Commitments,
Guarantees and Contingencies
|
Note
4
|
Benefit
Plans
|
Note
6
|
Business
Segments
|
Note
7
|
Income
Taxes
|
Note
8
|
Financing
Activities
|
Note
9
|
First
Quarter of 2006
|
$
|
95
|
|||||
Changes
in Gross Margin:
|
|||||||
Retail
Margins
|
59
|
||||||
Off-system
Sales
|
(22
|
)
|
|||||
Transmission
Revenues
|
(9
|
)
|
|||||
Other
|
(10
|
)
|
|||||
Total
Change in Gross Margin
|
18
|
||||||
Changes
in Operating Expenses and Other:
|
|||||||
Other
Operation and Maintenance
|
(28
|
)
|
|||||
Depreciation
and Amortization
|
(5
|
)
|
|||||
Taxes
Other Than Income Taxes
|
(1
|
)
|
|||||
Interest
Expense
|
(3
|
)
|
|||||
Total
Change in Operating Expenses and Other
|
(37
|
)
|
|||||
Income
Tax Expense
|
3
|
||||||
First
Quarter of 2007
|
$
|
79
|
·
|
Retail
Margins increased $59 million primarily due to the
following:
|
|
·
|
A
$25 million increase in capacity settlements under the Interconnection
Agreement related to certain of our affiliates’ peaks and the expiration
of our supplemental capacity and energy obligation to Buckeye Power,
Inc.
under the Cardinal Station Agreement.
|
|
·
|
A
$14 million increase in rate revenues related to an $8 million
increase in
our RSP, a $3 million increase related to rate recovery of storm
costs and
a $3 million increase related to rate recovery of IGCC preconstruction
costs (see “Ohio Rate Matters” section of Note 3). The
increase in rate recovery of storm costs was offset by the amortization
of
deferred expenses in Other Operation and Maintenance. The increase
in rate
recovery of IGCC preconstruction costs was offset by the amortization
of
deferred expenses in Depreciation and
Amortization.
|
|
·
|
A
$9 million increase in fuel margins.
|
|
·
|
A
$7 million increase in industrial revenue due to the addition of
Ormet, a
major industrial customer (see “Ormet” section of Note
3).
|
|
·
|
A
$6 million increase in residential revenue primarily due to a 25%
increase
in heating degree days.
|
|
These
increases were partially offset by:
|
||
·
|
A
$9 million decrease in revenues associated with SO2
allowances received in 2006 from Buckeye Power, Inc. under the
Cardinal
Station Allowances Agreement.
|
|
·
|
Margins
from Off-system Sales decreased $22 million due to a $19 million
decrease
in physical sales margins and a $4 million decrease in margins
from
optimization activities.
|
|
·
|
Transmission
Revenues decreased $9 million primarily due to the elimination
of SECA
revenues as of April 1, 2006 (see the “Transmission Rate Proceedings at
the FERC” section of Note 3).
|
|
·
|
Other
revenues decreased $10 million primarily due to a $4 million decrease
related to the expiration of an obligation to sell supplemental
capacity
and energy to Buckeye Power, Inc. under the Cardinal Station Agreement,
a
$3 million decrease in gains on sales of emission allowances and
a $2
million decrease in revenue associated with Cook Coal
Terminal.
|
·
|
Other
Operation and Maintenance expenses increased $28 million primarily
due to
a $19 million increase in maintenance and removal costs related
to planned
and forced outages at the Gavin, Muskingum, Mitchell and Cardinal
plants
and a $5 million increase due to the prior period adjustment of
liabilities related to sold coal companies.
|
·
|
Depreciation
and Amortization increased $5 million primarily due to the amortization
of
IGCC preconstruction costs of $3 million in the first quarter
of 2007 and
a $1 million increase in depreciation related to environmental
improvements placed in service at the Mitchell plant. The increase
in
amortization of IGCC preconstruction costs was offset by a corresponding
increase in Retail Margins.
|
·
|
Interest
Expense increased $3 million primarily due to a $5 million increase
related to long-term debt issuances since June 2006 and a $3 million
increase related to higher borrowings from the Utility Money Pool
partially offset by a $6 million increase in allowance for borrowed
funds
used during construction.
|
Moody’s
|
S&P
|
Fitch
|
|||
Senior
Unsecured Debt
|
A3
|
BBB
|
BBB+
|
2007
|
2006
|
||||||
(in
thousands)
|
|||||||
Cash
and Cash Equivalents at Beginning of Period
|
$
|
1,625
|
$
|
1,240
|
|||
Cash
Flows From (Used For):
|
|||||||
Operating
Activities
|
96,864
|
182,002
|
|||||
Investing
Activities
|
(306,826
|
)
|
(221,862
|
)
|
|||
Financing
Activities
|
209,598
|
39,577
|
|||||
Net
Decrease in Cash and Cash Equivalents
|
(364
|
)
|
(283
|
)
|
|||
Cash
and Cash Equivalents at End of Period
|
$
|
1,261
|
$
|
957
|
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
|
MTM
Risk Management Contracts
|
Cash
Flow Hedges
|
DETM
Assignment (a)
|
Total
|
||||||||||
Current
Assets
|
$
|
49,092
|
$
|
756
|
$
|
-
|
$
|
49,848
|
|||||
Noncurrent
Assets
|
57,316
|
96
|
-
|
57,412
|
|||||||||
Total
MTM Derivative Contract Assets
|
106,408
|
852
|
-
|
107,260
|
|||||||||
Current
Liabilities
|
(42,532
|
)
|
(3,980
|
)
|
(2,071
|
)
|
(48,583
|
)
|
|||||
Noncurrent
Liabilities
|
(35,731
|
)
|
(312
|
)
|
(5,493
|
)
|
(41,536
|
)
|
|||||
Total
MTM Derivative Contract Liabilities
|
(78,263
|
)
|
(4,292
|
)
|
(7,564
|
)
|
(90,119
|
)
|
|||||
Total
MTM Derivative Contract Net Assets
(Liabilities)
|
$
|
28,145
|
$
|
(3,440
|
)
|
$
|
(7,564
|
)
|
$
|
17,141
|
(a)
|
See
“Natural Gas Contracts with DETM” section of Note 16 in the 2006 Annual
Report.
|
Total
MTM Risk Management Contract Net Assets at December 31,
2006
|
$
|
33,042
|
||
(Gain)
Loss from Contracts Realized/Settled During the Period and Entered
in a
Prior Period
|
(4,433
|
)
|
||
Fair
Value of New Contracts at Inception When Entered During the Period
(a)
|
311
|
|||
Net
Option Premiums Paid/(Received) for Unexercised or Unexpired Option
Contracts Entered During the Period
|
(23
|
)
|
||
Change
in Fair Value Due to Valuation Methodology Changes on Forward
Contracts
|
-
|
|||
Changes
in Fair Value Due to Market Fluctuations During the Period
(b)
|
(317
|
)
|
||
Changes
in Fair Value Allocated to Regulated Jurisdictions (c)
|
(435
|
)
|
||
Total
MTM Risk Management Contract Net Assets
|
28,145
|
|||
Net
Cash Flow Hedge Contracts
|
(3,440
|
)
|
||
DETM
Assignment (d)
|
(7,564
|
)
|
||
Total
MTM Risk Management Contract Net Assets at March 31, 2007
|
$
|
17,141
|
(a)
|
Reflects
fair value on long-term contracts which are typically with customers
that
seek fixed pricing to limit their risk against fluctuating energy
prices.
Inception value is only recorded if observable market data can
be obtained
for valuation inputs for the entire contract term. The contract
prices are
valued against market curves associated with the delivery location
and
delivery term.
|
(b)
|
Market
fluctuations are attributable to various factors such as supply/demand,
weather, storage, etc.
|
(c)
|
“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 liabilities/assets for those subsidiaries that operate
in
regulated jurisdictions.
|
(d)
|
See
“Natural Gas Contracts with DETM” section of Note 16 in our 2006 Annual
Report.
|
·
|
The
method of measuring fair value used in determining the carrying
amount of
our total MTM asset or liability (external sources or modeled
internally).
|
·
|
The
maturity, by year, of our net assets/liabilities to give an indication
of
when these MTM amounts will settle and generate
cash.
|
Remainder
2007
|
2008
|
2009
|
2010
|
2011
|
After
2011
|
Total
|
||||||||||||||||
Prices
Actively Quoted - Exchange Traded Contracts
|
$
|
11,122
|
$
|
(399
|
)
|
$
|
464
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
11,187
|
|||||||
Prices
Provided by Other External Sources
- OTC Broker
Quotes (a)
|
(621
|
)
|
9,668
|
7,524
|
2,985
|
-
|
-
|
19,556
|
||||||||||||||
Prices
Based on Models and Other Valuation Methods (b)
|
(5,725
|
)
|
(3,527
|
)
|
1,165
|
3,608
|
812
|
1,069
|
(2,598
|
)
|
||||||||||||
Total
|
$
|
4,776
|
$
|
5,742
|
$
|
9,153
|
$
|
6,593
|
$
|
812
|
$
|
1,069
|
$
|
28,145
|
(a)
|
“Prices
Provided by Other External Sources - OTC Broker Quotes” reflects
information obtained from over-the-counter brokers, industry services,
or
multiple-party on-line platforms.
|
(b)
|
“Prices
Based on Models and Other Valuation Methods” is used in absence of pricing
information from external sources. Modeled information is derived
using
valuation models developed by the reporting entity, reflecting
when
appropriate, option pricing theory, discounted cash flow concepts,
valuation adjustments, etc. and may require projection of prices
for
underlying commodities beyond the period that prices are available
from
third-party sources. In addition, where external pricing information
or
market liquidity are limited, such valuations are classified as
modeled.
The determination of the point at which a market is no longer liquid
for
placing it in the modeled category varies by market.
|
Contract
values that are measured using models or valuation methods other
than
active quotes or OTC broker quotes (because of the lack of such
data for
all delivery quantities, locations and periods) incorporate in
the model
or other valuation methods, to the extent possible, OTC broker
quotes and
active quotes for deliveries in years and at locations for which
such
quotes are available.
|
Power
|
Foreign
Currency
|
Interest
Rate
|
Total
|
||||||||||
Beginning
Balance in AOCI December 31, 2006
|
$
|
4,040
|
$
|
(331
|
)
|
$
|
3,553
|
$
|
7,262
|
||||
Changes
in Fair Value
|
(4,677
|
)
|
-
|
-
|
(4,677
|
)
|
|||||||
Reclassifications
from AOCI to Net Income for
Cash
Flow Hedges Settled
|
(1,595
|
)
|
3
|
(202
|
)
|
(1,794
|
)
|
||||||
Ending
Balance in AOCI March 31, 2007
|
$
|
(2,232
|
)
|
$
|
(328
|
)
|
$
|
3,351
|
$
|
791
|
Three
Months Ended March 31, 2007
|
Twelve
Months Ended December 31, 2006
|
||||||||||||||||
(in
thousands)
|
(in
thousands)
|
||||||||||||||||
End
|
High
|
Average
|
Low
|
End
|
High
|
Average
|
Low
|
||||||||||
$678
|
$2,054
|
$924
|
$255
|
$573
|
$1,451
|
$500
|
$271
|
2007
|
2006
|
||||||
REVENUES
|
|||||||
Electric
Generation, Transmission and Distribution
|
$
|
492,534
|
$
|
544,639
|
|||
Sales
to AEP Affiliates
|
178,894
|
149,259
|
|||||
Other
- Affiliated
|
4,038
|
3,709
|
|||||
Other
- Nonaffiliated
|
3,975
|
4,999
|
|||||
TOTAL
|
679,441
|
702,606
|
|||||
EXPENSES
|
|||||||
Fuel
and Other Consumables Used for Electric Generation
|
198,293
|
235,130
|
|||||
Purchased
Electricity for Resale
|
24,854
|
21,714
|
|||||
Purchased
Electricity from AEP Affiliates
|
20,966
|
28,572
|
|||||
Other
Operation
|
102,987
|
86,629
|
|||||
Maintenance
|
59,148
|
47,524
|
|||||
Depreciation
and Amortization
|
84,276
|
78,821
|
|||||
Taxes
Other Than Income Taxes
|
48,385
|
47,153
|
|||||
TOTAL
|
538,909
|
545,543
|
|||||
OPERATING
INCOME
|
140,532
|
157,063
|
|||||
Other
Income (Expense):
|
|||||||
Interest
Income
|
412
|
637
|
|||||
Carrying
Costs Income
|
3,541
|
3,383
|
|||||
Allowance
for Equity Funds Used During Construction
|
571
|
738
|
|||||
Interest
Expense
|
(25,931
|
)
|
(23,414
|
)
|
|||
INCOME
BEFORE INCOME TAXES
|
119,125
|
138,407
|
|||||
Income
Tax Expense
|
39,864
|
43,375
|
|||||
NET
INCOME
|
79,261
|
95,032
|
|||||
Preferred
Stock Dividend Requirements
|
183
|
183
|
|||||
EARNINGS
APPLICABLE TO COMMON STOCK
|
$
|
79,078
|
$
|
94,849
|
Common
Stock
|
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other Comprehensive Income (Loss)
|
Total
|
||||||||||||
DECEMBER
31, 2005
|
$
|
321,201
|
$
|
466,637
|
$
|
979,354
|
$
|
755
|
$
|
1,767,947
|
||||||
Capital
Contribution From Parent
|
35,000
|
35,000
|
||||||||||||||
Preferred
Stock Dividends
|
(183
|
)
|
(183
|
)
|
||||||||||||
TOTAL
|
1,802,764
|
|||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||
Other
Comprehensive Income, Net of Taxes:
|
||||||||||||||||
Cash
Flow Hedges, Net of Tax of $3,326
|
6,176
|
6,176
|
||||||||||||||
NET
INCOME
|
95,032
|
95,032
|
||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
101,208
|
|||||||||||||||
MARCH
31, 2006
|
$
|
321,201
|
$
|
501,637
|
$
|
1,074,203
|
$
|
6,931
|
$
|
1,903,972
|
||||||
DECEMBER
31, 2006
|
$
|
321,201
|
$
|
536,639
|
$
|
1,207,265
|
$
|
(56,763
|
)
|
$
|
2,008,342
|
|||||
FIN
48 Adoption, Net of Tax
|
(5,380
|
)
|
(5,380
|
)
|
||||||||||||
Preferred
Stock Dividends
|
(183
|
)
|
(183
|
)
|
||||||||||||
TOTAL
|
2,002,779
|
|||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||
Other
Comprehensive Loss, Net of Taxes:
|
||||||||||||||||
Cash
Flow Hedges, Net of Tax of $3,485
|
(6,471
|
)
|
(6,471
|
)
|
||||||||||||
NET
INCOME
|
79,261
|
79,261
|
||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
72,790
|
|||||||||||||||
MARCH
31, 2007
|
$
|
321,201
|
$
|
536,639
|
$
|
1,280,963
|
$
|
(63,234
|
)
|
$
|
2,075,569
|
2007
|
2006
|
||||||
CURRENT
ASSETS
|
|||||||
Cash
and Cash Equivalents
|
$
|
1,261
|
$
|
1,625
|
|||
Accounts
Receivable:
|
|||||||
Customers
|
114,608
|
86,116
|
|||||
Affiliated
Companies
|
109,029
|
108,214
|
|||||
Accrued
Unbilled Revenues
|
17,082
|
10,106
|
|||||
Miscellaneous
|
3,620
|
1,819
|
|||||
Allowance
for Uncollectible Accounts
|
(838
|
)
|
(824
|
)
|
|||
Total Accounts Receivable
|
243,501
|
205,431
|
|||||
Fuel
|
139,950
|
120,441
|
|||||
Materials
and Supplies
|
78,866
|
74,840
|
|||||
Emission
Allowances
|
12,302
|
10,388
|
|||||
Risk
Management Assets
|
49,848
|
86,947
|
|||||
Accrued
Tax Benefits
|
3,181
|
22,909
|
|||||
Prepayments
and Other
|
28,395
|
18,416
|
|||||
TOTAL
|
557,304
|
540,997
|
|||||
PROPERTY,
PLANT AND EQUIPMENT
|
|||||||
Electric:
|
|||||||
Production
|
4,747,459
|
4,413,340
|
|||||
Transmission
|
1,038,642
|
1,030,934
|
|||||
Distribution
|
1,336,874
|
1,322,103
|
|||||
Other
|
300,054
|
299,637
|
|||||
Construction
Work in Progress
|
1,226,985
|
1,339,631
|
|||||
Total
|
8,650,014
|
8,405,645
|
|||||
Accumulated
Depreciation and Amortization
|
2,867,416
|
2,836,584
|
|||||
TOTAL
- NET
|
5,782,598
|
5,569,061
|
|||||
OTHER
NONCURRENT ASSETS
|
|||||||
Regulatory
Assets
|
387,201
|
414,180
|
|||||
Long-term
Risk Management Assets
|
57,412
|
70,092
|
|||||
Deferred
Charges and Other
|
209,873
|
224,403
|
|||||
TOTAL
|
654,486
|
708,675
|
|||||
TOTAL
ASSETS
|
$
|
6,994,388
|
$
|
6,818,733
|
2007
|
2006
|
||||||
CURRENT
LIABILITIES
|
(in
thousands)
|
||||||
Advances
from Affiliates
|
$
|
397,127
|
$
|
181,281
|
|||
Accounts
Payable:
|
|||||||
General
|
225,809
|
250,025
|
|||||
Affiliated
Companies
|
116,297
|
145,197
|
|||||
Short-term
Debt - Nonaffiliated
|
4,503
|
1,203
|
|||||
Long-term
Debt Due Within One Year - Nonaffiliated
|
17,854
|
17,854
|
|||||
Risk
Management Liabilities
|
48,583
|
73,386
|
|||||
Customer
Deposits
|
31,547
|
31,465
|
|||||
Accrued
Taxes
|
148,057
|
165,338
|
|||||
Accrued
Interest
|
34,561
|
35,497
|
|||||
Other
|
126,845
|
123,631
|
|||||
TOTAL
|
1,151,183
|
1,024,877
|
|||||
NONCURRENT
LIABILITIES
|
|||||||
Long-term
Debt - Nonaffiliated
|
2,176,601
|
2,183,887
|
|||||
Long-term
Debt - Affiliated
|
200,000
|
200,000
|
|||||
Long-term
Risk Management Liabilities
|
41,536
|
52,929
|
|||||
Deferred
Income Taxes
|
891,761
|
911,221
|
|||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
173,946
|
185,895
|
|||||
Deferred
Credits and Other
|
249,254
|
219,127
|
|||||
TOTAL
|
3,733,098
|
3,753,059
|
|||||
TOTAL
LIABILITIES
|
4,884,281
|
4,777,936
|
|||||
Minority
Interest
|
17,910
|
15,825
|
|||||
Cumulative
Preferred Stock Not Subject to Mandatory Redemption
|
16,628
|
16,630
|
|||||
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
|
536,639
|
536,639
|
|||||
Retained
Earnings
|
1,280,963
|
1,207,265
|
|||||
Accumulated
Other Comprehensive Income (Loss)
|
(63,234
|
)
|
(56,763
|
)
|
|||
TOTAL
|
2,075,569
|
2,008,342
|
|||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
6,994,388
|
$
|
6,818,733
|
2007
|
2006
|
||||||
OPERATING
ACTIVITIES
|
|||||||
Net
Income
|
$
|
79,261
|
$
|
95,032
|
|||
Adjustments
for Noncash Items:
|
|||||||
Depreciation
and Amortization
|
84,276
|
78,821
|
|||||
Deferred
Income Taxes
|
2,851
|
3,604
|
|||||
Carrying
Costs Income
|
(3,541
|
)
|
(3,383
|
)
|
|||
Mark-to-Market
of Risk Management Contracts
|
3,958
|
(3,616
|
)
|
||||
Deferred
Property Taxes
|
17,920
|
17,331
|
|||||
Change
in Other Noncurrent Assets
|
(4,406
|
)
|
2,455
|
||||
Change
in Other Noncurrent Liabilities
|
(4,434
|
)
|
13,855
|
||||
Changes
in Certain Components of Working Capital:
|
|||||||
Accounts
Receivable, Net
|
(38,070
|
)
|
101,866
|
||||
Fuel,
Materials and Supplies
|
(23,535
|
)
|
(18,238
|
)
|
|||
Accounts
Payable
|
(25,807
|
)
|
(60,411
|
)
|
|||
Customer
Deposits
|
82
|
(12,497
|
)
|
||||
Accrued
Taxes, Net
|
6,360
|
3,116
|
|||||
Accrued
Interest
|
(2,986
|
)
|
(10,998
|
)
|
|||
Other
Current Assets
|
1,706
|
(739
|
)
|
||||
Other
Current Liabilities
|
3,229
|
(24,196
|
)
|
||||
Net
Cash Flows From Operating Activities
|
96,864
|
182,002
|
|||||
INVESTING
ACTIVITIES
|
|||||||
Construction
Expenditures
|
(301,635
|
)
|
(222,600
|
)
|
|||
Change
in Other Cash Deposits, Net
|
(7,988
|
)
|
(1,651
|
)
|
|||
Proceeds
from Sale of Assets
|
2,797
|
2,389
|
|||||
Net
Cash Flows Used For Investing Activities
|
(306,826
|
)
|
(221,862
|
)
|
|||
FINANCING
ACTIVITIES
|
|||||||
Capital
Contributions from Parent Company
|
-
|
35,000
|
|||||
Change
in Short-term Debt, Net - Nonaffiliated
|
3,300
|
636
|
|||||
Change
in Advances from Affiliates, Net
|
215,846
|
10,972
|
|||||
Retirement
of Long-term Debt - Nonaffiliated
|
(7,463
|
)
|
(4,713
|
)
|
|||
Principal
Payments for Capital Lease Obligations
|
(1,902
|
)
|
(2,135
|
)
|
|||
Dividends
Paid on Cumulative Preferred Stock
|
(183
|
)
|
(183
|
)
|
|||
Net
Cash Flows From Financing Activities
|
209,598
|
39,577
|
|||||
Net
Decrease in Cash and Cash Equivalents
|
(364
|
)
|
(283
|
)
|
|||
Cash
and Cash Equivalents at Beginning of Period
|
1,625
|
1,240
|
|||||
Cash
and Cash Equivalents at End of Period
|
$
|
1,261
|
$
|
957
|
SUPPLEMENTARY
INFORMATION
|
|||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$
|
29,646
|
$
|
29,152
|
|||
Net
Cash Paid (Received) for Income Taxes
|
(8,899
|
)
|
922
|
||||
Noncash
Acquisitions Under Capital Leases
|
608
|
927
|
|||||
Construction
Expenditures Included in Accounts Payable at March 31,
|
98,653
|
82,024
|
Footnote
Reference
|
|
Significant
Accounting Matters
|
Note
1
|
New
Accounting Pronouncements
|
Note
2
|
Rate
Matters
|
Note
3
|
Commitments,
Guarantees and Contingencies
|
Note
4
|
Benefit
Plans
|
Note
6
|
Business
Segments
|
Note
7
|
Income
Taxes
|
Note
8
|
Financing
Activities
|
Note
9
|
First
Quarter of 2006
|
$
|
(5
|
)
|
||||
Changes
in Gross Margin:
|
|||||||
Retail
and Off-system Sales Margins
|
5
|
||||||
Transmission
Revenues
|
1
|
||||||
Other
|
(1
|
)
|
|||||
Total
Change in Gross Margin
|
5
|
||||||
Changes
in Operating Expenses and Other:
|
|||||||
Other
Operation and Maintenance
|
(27
|
)
|
|||||
Depreciation
and Amortization
|
(2
|
)
|
|||||
Interest
Expense
|
(2
|
)
|
|||||
Total
Change in Operating Expenses and Other
|
(31
|
)
|
|||||
Income
Tax Credit
|
11
|
||||||
First
Quarter of 2007
|
$
|
(20
|
)
|
·
|
Other
Operation and Maintenance expenses increased $27 million due to:
|
|
·
|
A
$21 million increase in distribution maintenance expense primarily
due to
a January 2007 ice storm.
|
|
·
|
A
$2 million increase in administrative and general expenses, mostly
due to
increased employee-related expenses.
|
|
·
|
Interest
Expense increased $2 million primarily due to increased
borrowings.
|
2007
|
2006
|
||||||
REVENUES
|
|||||||
Electric
Generation, Transmission and Distribution
|
$
|
290,080
|
$
|
339,601
|
|||
Sales
to AEP Affiliates
|
24,593
|
14,068
|
|||||
Other
|
640
|
1,060
|
|||||
TOTAL
|
315,313
|
354,729
|
|||||
EXPENSES
|
|||||||
Fuel
and Other Consumables Used for Electric Generation
|
142,515
|
213,173
|
|||||
Purchased
Electricity for Resale
|
67,409
|
33,217
|
|||||
Purchased
Electricity from AEP Affiliates
|
13,484
|
21,231
|
|||||
Other
Operation
|
41,007
|
36,756
|
|||||
Maintenance
|
43,085
|
20,307
|
|||||
Depreciation
and Amortization
|
22,706
|
21,132
|
|||||
Taxes
Other Than Income Taxes
|
10,294
|
10,076
|
|||||
TOTAL
|
340,500
|
355,892
|
|||||
OPERATING
LOSS
|
(25,187
|
)
|
(1,163
|
)
|
|||
Other
Income (Expense):
|
|||||||
Interest
Income
|
646
|
569
|
|||||
Interest
Expense
|
(11,383
|
)
|
(9,135
|
)
|
|||
LOSS
BEFORE INCOME TAXES
|
(35,924
|
)
|
(9,729
|
)
|
|||
Income
Tax Credit
|
(15,498
|
)
|
(4,372
|
)
|
|||
NET
LOSS
|
(20,426
|
)
|
(5,357
|
)
|
|||
Preferred
Stock Dividend Requirements
|
53
|
53
|
|||||
LOSS
APPLICABLE TO COMMON STOCK
|
$
|
(20,479
|
)
|
$
|
(5,410
|
)
|
Common
Stock
|
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other Comprehensive Income (Loss)
|
Total
|
||||||||||||
DECEMBER
31, 2005
|
$
|
157,230
|
$
|
230,016
|
$
|
162,615
|
$
|
(1,264
|
)
|
$
|
548,597
|
|||||
Preferred
Stock Dividends
|
(53
|
)
|
(53
|
)
|
||||||||||||
TOTAL
|
548,544
|
|||||||||||||||
COMPREHENSIVE
LOSS
|
||||||||||||||||
Other
Comprehensive Income, Net
of Taxes:
|
||||||||||||||||
Cash
Flow Hedges, Net of Tax of $749
|
1,391
|
1,391
|
||||||||||||||
NET
LOSS
|
(5,357
|
)
|
(5,357
|
)
|
||||||||||||
TOTAL
COMPREHENSIVE LOSS
|
(3,966
|
)
|
||||||||||||||
MARCH
31, 2006
|
$
|
157,230
|
$
|
230,016
|
$
|
157,205
|
$
|
127
|
$
|
544,578
|
||||||
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 Company
|
20,000
|
20,000
|
||||||||||||||
Preferred
Stock Dividends
|
(53
|
)
|
(53
|
)
|
||||||||||||
TOTAL
|
604,999
|
|||||||||||||||
COMPREHENSIVE
LOSS
|
||||||||||||||||
Other
Comprehensive Income, Net of Taxes:
|
||||||||||||||||
Cash
Flow Hedges, Net of Tax of $24
|
45
|
45
|
||||||||||||||
NET
LOSS
|
(20,426
|
)
|
(20,426
|
)
|
||||||||||||
TOTAL
COMPREHENSIVE LOSS
|
(20,381
|
)
|
||||||||||||||
MARCH
31, 2007
|
$
|
157,230
|
$
|
250,016
|
$
|
178,397
|
$
|
(1,025
|
)
|
$
|
584,618
|
2007
|
2006
|
||||||
CURRENT
ASSETS
|
|||||||
Cash
and Cash Equivalents
|
$
|
1,584
|
$
|
1,651
|
|||
Accounts
Receivable:
|
|||||||
Customers
|
51,680
|
70,319
|
|||||
Affiliated
Companies
|
73,191
|
73,318
|
|||||
Miscellaneous
|
13,004
|
10,270
|
|||||
Allowance
for Uncollectible Accounts
|
(89
|
)
|
(5
|
)
|
|||
Total Accounts Receivable
|
137,786
|
153,902
|
|||||
Fuel
|
19,028
|
20,082
|
|||||
Materials
and Supplies
|
52,951
|
48,375
|
|||||
Risk
Management Assets
|
56,139
|
100,802
|
|||||
Accrued
Tax Benefits
|
25,206
|
4,679
|
|||||
Regulatory
Asset for Under-Recovered Fuel Costs
|
-
|
7,557
|
|||||
Margin
Deposits
|
22,705
|
35,270
|
|||||
Prepayments
and Other
|
5,718
|
5,732
|
|||||
TOTAL
|
321,117
|
378,050
|
|||||
PROPERTY,
PLANT AND EQUIPMENT
|
|||||||
Electric:
|
|||||||
Production
|
1,095,466
|
1,091,910
|
|||||
Transmission
|
505,326
|
503,638
|
|||||
Distribution
|
1,248,077
|
1,215,236
|
|||||
Other
|
237,383
|
234,227
|
|||||
Construction
Work in Progress
|
158,637
|
141,283
|
|||||
Total
|
3,244,889
|
3,186,294
|
|||||
Accumulated
Depreciation and Amortization
|
1,200,212
|
1,187,107
|
|||||
TOTAL
- NET
|
2,044,677
|
1,999,187
|
|||||
OTHER
NONCURRENT ASSETS
|
|||||||
Regulatory
Assets
|
138,815
|
142,905
|
|||||
Long-term
Risk Management Assets
|
13,748
|
17,066
|
|||||
Employee
Benefits and Pension Assets
|
29,761
|
30,161
|
|||||
Deferred
Charges and Other
|
34,237
|
11,677
|
|||||
TOTAL
|
216,561
|
201,809
|
|||||
TOTAL
ASSETS
|
$
|
2,582,355
|
$
|
2,579,046
|
2007
|
2006
|
||||||
CURRENT
LIABILITIES
|
(in
thousands)
|
||||||
Advances
from Affiliates
|
$
|
135,694
|
$
|
76,323
|
|||
Accounts
Payable:
|
|||||||
General
|
173,021
|
165,618
|
|||||
Affiliated
Companies
|
68,782
|
65,134
|
|||||
Risk
Management Liabilities
|
46,530
|
88,469
|
|||||
Customer
Deposits
|
41,404
|
51,335
|
|||||
Accrued
Taxes
|
35,144
|
19,984
|
|||||
Regulatory
Liability for Over-Recovered Fuel Costs
|
9,015
|
-
|
|||||
Other
|
29,898
|
58,651
|
|||||
TOTAL
|
539,488
|
525,514
|
|||||
NONCURRENT
LIABILITIES
|
|||||||
Long-term
Debt - Nonaffiliated
|
670,042
|
669,998
|
|||||
Long-term
Risk Management Liabilities
|
8,514
|
11,448
|
|||||
Deferred
Income Taxes
|
407,365
|
414,197
|
|||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
306,194
|
315,584
|
|||||
Deferred
Credits and Other
|
60,872
|
51,605
|
|||||
TOTAL
|
1,452,987
|
1,462,832
|
|||||
TOTAL
LIABILITIES
|
1,992,475
|
1,988,346
|
|||||
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
|
250,016
|
230,016
|
|||||
Retained
Earnings
|
178,397
|
199,262
|
|||||
Accumulated
Other Comprehensive Income (Loss)
|
(1,025
|
)
|
(1,070
|
)
|
|||
TOTAL
|
584,618
|
585,438
|
|||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
2,582,355
|
$
|
2,579,046
|
2007
|
2006
|
||||||
OPERATING
ACTIVITIES
|
|||||||
Net
Loss
|
$
|
(20,426
|
)
|
$
|
(5,357
|
)
|
|
Adjustments
for Noncash Items:
|
|||||||
Depreciation
and Amortization
|
22,706
|
21,132
|
|||||
Deferred
Income Taxes
|
1,039
|
(23,436
|
)
|
||||
Mark-to-Market
of Risk Management Contracts
|
3,108
|
9,106
|
|||||
Deferred
Property Taxes
|
(24,809
|
)
|
(24,295
|
)
|
|||
Change
in Other Noncurrent Assets
|
4,393
|
11,118
|
|||||
Change
in Other Noncurrent Liabilities
|
(11,269
|
)
|
(20,806
|
)
|
|||
Changes
in Certain Components of Working Capital:
|
|||||||
Accounts
Receivable, Net
|
16,116
|
33,852
|
|||||
Fuel,
Materials and Supplies
|
(3,513
|
)
|
(26
|
)
|
|||
Margin
Deposits
|
12,565
|
5,065
|
|||||
Accounts
Payable
|
6,941
|
(77,217
|
)
|
||||
Customer
Deposits
|
(9,931
|
)
|
(13,056
|
)
|
|||
Accrued
Taxes, Net
|
(4,378
|
)
|
34,196
|
||||
Fuel
Over/Under Recovery, Net
|
16,572
|
74,281
|
|||||
Other
Current Assets
|
(139
|
)
|
1,021
|
||||
Other
Current Liabilities
|
(26,677
|
)
|
(23,048
|
)
|
|||
Net
Cash Flows From (Used for) Operating Activities
|
(17,702
|
)
|
2,530
|
||||
INVESTING
ACTIVITIES
|
|||||||
Construction
Expenditures
|
(61,301
|
)
|
(45,539
|
)
|
|||
Change
in Other Cash Deposits, Net
|
(29
|
)
|
6
|
||||
Proceeds
from Sales of Assets
|
17
|
-
|
|||||
Net
Cash Flows Used For Investing Activities
|
(61,313
|
)
|
(45,533
|
)
|
|||
FINANCING
ACTIVITIES
|
|||||||
Capital
Contributions from Parent Company
|
20,000
|
-
|
|||||
Change
in Advances from Affiliates, Net
|
59,371
|
42,932
|
|||||
Principal
Payments for Capital Lease Obligations
|
(370
|
)
|
(206
|
)
|
|||
Dividends
Paid on Cumulative Preferred Stock
|
(53
|
)
|
(53
|
)
|
|||
Net
Cash Flows From Financing Activities
|
78,948
|
42,673
|
|||||
Net
Decrease in Cash and Cash Equivalents
|
(67
|
)
|
(330
|
)
|
|||
Cash
and Cash Equivalents at Beginning of Period
|
1,651
|
1,520
|
|||||
Cash
and Cash Equivalents at End of Period
|
$
|
1,584
|
$
|
1,190
|
SUPPLEMENTARY
INFORMATION
|
|||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$
|
12,921
|
$
|
8,681
|
|||
Net
Cash Paid for Income Taxes
|
2,623
|
575
|
|||||
Noncash
Acquisitions Under Capital Leases
|
283
|
564
|
|||||
Construction
Expenditures Included in Accounts Payable at March 31,
|
19,038
|
6,052
|
Footnote
Reference
|
|
Significant
Accounting Matters
|
Note
1
|
New
Accounting Pronouncements
|
Note
2
|
Rate
Matters
|
Note
3
|
Commitments,
Guarantees and Contingencies
|
Note
4
|
Benefit
Plans
|
Note
6
|
Business
Segments
|
Note
7
|
Income
Taxes
|
Note
8
|
Financing
Activities
|
Note
9
|
First
Quarter of 2006
|
$
|
18
|
|||||
Changes
in Gross Margin:
|
|||||||
Retail
and Off-system Sales Margins (a)
|
(1
|
)
|
|||||
Other
|
(4
|
)
|
|||||
Total
Change in Gross Margin
|
(5
|
)
|
|||||
Changes
in Operating Expenses and Other:
|
|||||||
Other
Operation and Maintenance
|
(6
|
)
|
|||||
Depreciation
and Amortization
|
(1
|
)
|
|||||
Other
Income
|
1
|
||||||
Interest
Expense
|
(3
|
)
|
|||||
Total
Change in Operating Expenses and Other
|
(9
|
)
|
|||||
Income
Tax Expense
|
6
|
||||||
First
Quarter of 2007
|
$
|
10
|
(a)
|
Includes
firm wholesale sales to municipals and
cooperatives.
|
·
|
Other
Operation and Maintenance expenses increased $6 million primarily
due to a
$2 million increase in generation operation and maintenance, a
$1 million
increase in transmission expenses due to higher SPP administration
fees
and a $1 million increase in administrative and general expenses,
primarily associated with outside services and employee-related
expenses.
|
·
|
Interest
Expense increased $3 million primarily due to increased long-term
debt.
|
Moody’s
|
S&P
|
Fitch
|
|||
First
Mortgage Bonds
|
A3
|
A-
|
A
|
||
Senior
Unsecured Debt
|
Baa1
|
BBB
|
A-
|
2007
|
2006
|
||||||
(in
thousands)
|
|||||||
Cash
and Cash Equivalents at Beginning of Period
|
$
|
2,618
|
$
|
3,049
|
|||
Cash
Flows From (Used For):
|
|||||||
Operating
Activities
|
65,590
|
41,293
|
|||||
Investing
Activities
|
(120,639
|
)
|
(54,294
|
)
|
|||
Financing
Activities
|
54,331
|
12,501
|
|||||
Net
Decrease in Cash and Cash Equivalents
|
(718
|
)
|
(500
|
)
|
|||
Cash
and Cash Equivalents at End of Period
|
$
|
1,900
|
$
|
2,549
|
Principal
Amount
Paid
|
Interest
|
Due
|
|||||
Type
of Debt
|
Rate
|
Date
|
|||||
(in
thousands)
|
(%)
|
||||||
Senior
Unsecured Notes
|
$
|
250,000
|
5.55
|
2017
|
Principal
Amount
Paid
|
Interest
|
Due
|
|||||
Type
of Debt
|
Rate
|
Date
|
|||||
(in
thousands)
|
(%)
|
||||||
Notes
Payable - Nonaffiliated
|
$
|
1,645
|
4.47
|
2011
|
|||
Notes
Payable - Nonaffiliated
|
4,000
|
6.36
|
2007
|
||||
Notes
Payable - Nonaffiliated
|
750
|
Variable
|
2008
|
MTM
Risk Management Contracts
|
Cash
Flow Hedges
|
Total
|
||||||||
Current
Assets
|
$
|
66,352
|
$
|
582
|
$
|
66,934
|
||||
Noncurrent
Assets
|
16,264
|
37
|
16,301
|
|||||||
Total
MTM Derivative Contract Assets
|
82,616
|
619
|
83,235
|
|||||||
Current
Liabilities
|
(55,257
|
)
|
(6
|
)
|
(55,263
|
)
|
||||
Noncurrent
Liabilities
|
(10,158
|
)
|
(16
|
)
|
(10,174
|
)
|
||||
Total
MTM Derivative Contract Liabilities
|
(65,415
|
)
|
(22
|
)
|
(65,437
|
)
|
||||
Total
MTM Derivative Contract Net Assets (Liabilities)
|
$
|
17,201
|
$
|
597
|
$
|
17,798
|
Total
MTM Risk Management Contract Net Assets at December 31,
2006
|
$
|
20,166
|
||
(Gain)
Loss from Contracts Realized/Settled During the Period and Entered
in a
Prior Period
|
(1,013
|
)
|
||
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
|
-
|
|||
Changes
in Fair Value Due to Market Fluctuations During the Period
(b)
|
21
|
|||
Changes
in Fair Value Allocated to Regulated Jurisdictions (c)
|
(1,973
|
)
|
||
Total
MTM Risk Management Contract Net Assets
|
17,201
|
|||
Net
Cash Flow Hedge Contracts
|
597
|
|||
Total
MTM Risk Management Contract Net Assets at March 31,
2007
|
$
|
17,798
|
(a)
|
Reflects
fair value on long-term contracts which are typically with customers
that
seek fixed pricing to limit their risk against fluctuating energy
prices.
Inception value is only recorded if observable market data can
be obtained
for valuation inputs for the entire contract term. The contract
prices are
valued against market curves associated with the delivery location
and
delivery term.
|
(b)
|
Market
fluctuations are attributable to various factors such as supply/demand,
weather, etc.
|
(c)
|
“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 liabilities/assets for those subsidiaries that operate
in
regulated jurisdictions.
|
·
|
The
method of measuring fair value used in determining the carrying
amount of
our total MTM asset or liability (external sources or modeled
internally).
|
·
|
The
maturity, by year, of our net assets/liabilities to give an indication
of
when these MTM amounts will settle and generate
cash.
|
Remainder
2007
|
2008
|
2009
|
2010
|
2011
|
After
2011
|
Total
|
||||||||||||||||
Prices
Actively Quoted - Exchange Traded
Contracts
|
$
|
(16,029
|
)
|
$
|
1,742
|
$
|
(283
|
)
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
(14,570
|
)
|
|||||
Prices
Provided by Other External
Sources
- OTC Broker Quotes (a)
|
29,194
|
4,143
|
(813
|
)
|
-
|
-
|
-
|
32,524
|
||||||||||||||
Prices
Based on Models and Other
Valuation
Methods (b)
|
(2,551
|
)
|
335
|
1,461
|
2
|
-
|
-
|
(753
|
)
|
|||||||||||||
Total
|
$
|
10,614
|
$
|
6,220
|
$
|
365
|
$
|
2
|
$
|
-
|
$
|
-
|
$
|
17,201
|
(a)
|
“Prices
Provided by Other External Sources - OTC Broker Quotes” reflects
information obtained from over-the-counter brokers, industry services,
or
multiple-party on-line platforms.
|
(b)
|
“Prices
Based on Models and Other Valuation Methods” is used in absence of pricing
information from external sources. Modeled information is derived
using
valuation models developed by the reporting entity, reflecting
when
appropriate, option pricing theory, discounted cash flow concepts,
valuation adjustments, etc. and may require projection of prices
for
underlying commodities beyond the period that prices are available
from
third-party sources. In addition, where external pricing information
or
market liquidity are limited, such valuations are classified as
modeled.
The determination of the point at which a market is no longer liquid
for
placing it in the modeled category varies by market.
|
Contract
values that are measured using models or valuation methods other
than
active quotes or OTC broker quotes (because of the lack of such
data for
all delivery quantities, locations and periods) incorporate in
the model
or other valuation methods, to the extent possible, OTC broker
quotes and
active quotes for deliveries in years and at locations for which
such
quotes are available.
|
Interest
Rate
|
Foreign
Currency
|
Total
|
||||||||
Beginning
Balance in AOCI December 31, 2006
|
$
|
(6,435
|
)
|
$
|
25
|
$
|
(6,410
|
)
|
||
Changes
in Fair Value
|
(1,019
|
)
|
509
|
(510
|
)
|
|||||
Reclassifications
from AOCI to Net Income for
Cash
Flow Hedges Settled
|
183
|
-
|
183
|
|||||||
Ending
Balance in AOCI March 31, 2007
|
$
|
(7,271
|
)
|
$
|
534
|
$
|
(6,737
|
)
|
Three
Months Ended March 31, 2007
|
Twelve
Months Ended December 31, 2006
|
||||||||||||||||
(in
thousands)
|
(in
thousands)
|
||||||||||||||||
End
|
High
|
Average
|
Low
|
End
|
High
|
Average
|
Low
|
||||||||||
$83
|
$245
|
$100
|
$25
|
$447
|
$2,171
|
$794
|
$68
|
2007
|
2006
|
||||||
REVENUES
|
|||||||
Electric
Generation, Transmission and Distribution
|
$
|
327,284
|
$
|
293,993
|
|||
Sales
to AEP Affiliates
|
16,415
|
10,765
|
|||||
Other
|
400
|
374
|
|||||
TOTAL
|
344,099
|
305,132
|
|||||
EXPENSES
|
|||||||
Fuel
and Other Consumables Used for Electric Generation
|
111,987
|
90,661
|
|||||
Purchased
Electricity for Resale
|
52,498
|
29,218
|
|||||
Purchased
Electricity from AEP Affiliates
|
22,917
|
23,337
|
|||||
Other
Operation
|
53,783
|
49,700
|
|||||
Maintenance
|
26,339
|
24,657
|
|||||
Depreciation
and Amortization
|
34,122
|
32,617
|
|||||
Taxes
Other Than Income Taxes
|
15,991
|
15,982
|
|||||
TOTAL
|
317,637
|
266,172
|
|||||
OPERATING
INCOME
|
26,462
|
38,960
|
|||||
Other
Income (Expense):
|
|||||||
Interest
Income
|
705
|
543
|
|||||
Allowance
for Equity Funds Used During Construction
|
1,391
|
185
|
|||||
Interest
Expense
|
(15,490
|
)
|
(12,771
|
)
|
|||
INCOME
BEFORE INCOME TAXES AND MINORITY
INTEREST
EXPENSE
|
13,068
|
26,917
|
|||||
Income
Tax Expense
|
2,621
|
8,823
|
|||||
Minority
Interest Expense
|
842
|
222
|
|||||
NET
INCOME
|
9,605
|
17,872
|
|||||
Preferred
Stock Dividend Requirements
|
57
|
57
|
|||||
EARNINGS
APPLICABLE TO COMMON STOCK
|
$
|
9,548
|
$
|
17,815
|
Common
Stock
|
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other Comprehensive Income (Loss)
|
Total
|
||||||||||||
DECEMBER
31, 2005
|
$
|
135,660
|
$
|
245,003
|
$
|
407,844
|
$
|
(6,129
|
)
|
$
|
782,378
|
|||||
Common
Stock Dividends
|
(10,000
|
)
|
(10,000
|
)
|
||||||||||||
Preferred
Stock Dividends
|
(57
|
)
|
(57
|
)
|
||||||||||||
TOTAL
|
772,321
|
|||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||
Other
Comprehensive Income, Net
of Taxes:
|
||||||||||||||||
Cash
Flow Hedges, Net of Tax of $930
|
1,728
|
1,728
|
||||||||||||||
NET
INCOME
|
17,872
|
17,872
|
||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
19,600
|
|||||||||||||||
MARCH
31, 2006
|
$
|
135,660
|
$
|
245,003
|
$
|
415,659
|
$
|
(4,401
|
)
|
$
|
791,921
|
|||||
DECEMBER
31, 2006
|
$
|
135,660
|
$
|
245,003
|
$
|
459,338
|
$
|
(18,799
|
)
|
$
|
821,202
|
|||||
FIN
48 Adoption, Net of Tax
|
(1,642
|
)
|
(1,642
|
)
|
||||||||||||
Preferred
Stock Dividends
|
(57
|
)
|
(57
|
)
|
||||||||||||
TOTAL
|
819,503
|
|||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||
Other
Comprehensive Loss, Net of Taxes:
|
||||||||||||||||
Cash
Flow Hedges, Net of Tax of $39
|
(327
|
)
|
(327
|
)
|
||||||||||||
NET
INCOME
|
9,605
|
9,605
|
||||||||||||||
TOTAL
COMPREHENSIVE INCOME
|
9,278
|
|||||||||||||||
MARCH
31, 2007
|
$
|
135,660
|
$
|
245,003
|
$
|
467,244
|
$
|
(19,126
|
)
|
$
|
828,781
|
2007
|
2006
|
||||||
CURRENT
ASSETS
|
|||||||
Cash
and Cash Equivalents
|
$
|
1,900
|
$
|
2,618
|
|||
Advances
to Affiliates
|
8,959
|
-
|
|||||
Accounts
Receivable:
|
|||||||
Customers
|
74,382
|
88,245
|
|||||
Affiliated
Companies
|
48,598
|
59,679
|
|||||
Miscellaneous
|
13,077
|
8,595
|
|||||
Allowance
for Uncollectible Accounts
|
(137
|
)
|
(130
|
)
|
|||
Total Accounts Receivable
|
135,920
|
156,389
|
|||||
Fuel
|
73,479
|
69,426
|
|||||
Materials
and Supplies
|
46,101
|
46,001
|
|||||
Risk
Management Assets
|
66,934
|
120,036
|
|||||
Margin
Deposits
|
19,353
|
41,579
|
|||||
Prepayments
and Other
|
28,581
|
18,256
|
|||||
TOTAL
|
381,227
|
454,305
|
|||||
PROPERTY,
PLANT AND EQUIPMENT
|
|||||||
Electric:
|
|||||||
Production
|
1,586,238
|
1,576,200
|
|||||
Transmission
|
690,384
|
668,008
|
|||||
Distribution
|
1,262,203
|
1,228,948
|
|||||
Other
|
611,255
|
595,429
|
|||||
Construction
Work in Progress
|
301,251
|
259,662
|
|||||
Total
|
4,451,331
|
4,328,247
|
|||||
Accumulated
Depreciation and Amortization
|
1,868,974
|
1,834,145
|
|||||
TOTAL
- NET
|
2,582,357
|
2,494,102
|
|||||
OTHER
NONCURRENT ASSETS
|
|||||||
Regulatory
Assets
|
153,080
|
156,420
|
|||||
Long-term
Risk Management Assets
|
16,301
|
20,531
|
|||||
Employee
Benefits and Pension Assets
|
25,302
|
26,029
|
|||||
Deferred
Charges and Other
|
68,855
|
39,581
|
|||||
TOTAL
|
263,538
|
242,561
|
|||||
TOTAL
ASSETS
|
$
|
3,227,122
|
$
|
3,190,968
|
2007
|
2006
|
||||||
CURRENT
LIABILITIES
|
(in
thousands)
|
||||||
Advances
from Affiliates
|
$
|
-
|
$
|
188,965
|
|||
Accounts
Payable:
|
|||||||
General
|
155,206
|
140,424
|
|||||
Affiliated
Companies
|
72,448
|
68,680
|
|||||
Short-term
Debt - Nonaffiliated
|
20,433
|
17,143
|
|||||
Long-term
Debt Due Within One Year - Nonaffiliated
|
97,768
|
102,312
|
|||||
Risk
Management Liabilities
|
55,263
|
109,578
|
|||||
Customer
Deposits
|
36,798
|
48,277
|
|||||
Accrued
Taxes
|
64,418
|
31,591
|
|||||
Regulatory
Liability for Over-Recovered Fuel Costs
|
33,791
|
26,012
|
|||||
Other
|
66,871
|
85,086
|
|||||
TOTAL
|
602,996
|
818,068
|
|||||
NONCURRENT
LIABILITIES
|
|||||||
Long-term
Debt - Nonaffiliated
|
822,519
|
576,694
|
|||||
Long-term
Debt - Affiliated
|
50,000
|
50,000
|
|||||
Long-term
Risk Management Liabilities
|
10,174
|
14,083
|
|||||
Deferred
Income Taxes
|
362,321
|
374,548
|
|||||
Regulatory
Liabilities and Deferred Investment Tax Credits
|
347,951
|
346,774
|
|||||
Deferred
Credits and Other
|
196,064
|
183,087
|
|||||
TOTAL
|
1,789,029
|
1,545,186
|
|||||
TOTAL
LIABILITIES
|
2,392,025
|
2,363,254
|
|||||
Minority
Interest
|
1,619
|
1,815
|
|||||
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
|
245,003
|
245,003
|
|||||
Retained
Earnings
|
467,244
|
459,338
|
|||||
Accumulated
Other Comprehensive Income (Loss)
|
(19,126
|
)
|
(18,799
|
)
|
|||
TOTAL
|
828,781
|
821,202
|
|||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
3,227,122
|
$
|
3,190,968
|
2007
|
2006
|
||||||
OPERATING
ACTIVITIES
|
|||||||
Net
Income
|
$
|
9,605
|
$
|
17,872
|
|||
Adjustments
for Noncash Items:
|
|||||||
Depreciation
and Amortization
|
34,122
|
32,617
|
|||||
Deferred
Income Taxes
|
(6,677
|
)
|
(9,101
|
)
|
|||
Mark-to-Market
of Risk Management Contracts
|
2,965
|
10,468
|
|||||
Deferred
Property Taxes
|
(28,815
|
)
|
(28,997
|
)
|
|||
Change
in Other Noncurrent Assets
|
(3,198
|
)
|
9,458
|
||||
Change
in Other Noncurrent Liabilities
|
(178
|
)
|
(19,121
|
)
|
|||
Changes
in Certain Components of Working Capital:
|
|||||||
Accounts
Receivable, Net
|
20,469
|
26,848
|
|||||
Fuel,
Materials and Supplies
|
(4,141
|
)
|
(17,521
|
)
|
|||
Margin
Deposits
|
22,226
|
7,915
|
|||||
Accounts
Payable
|
13,806
|
(15,304
|
)
|
||||
Customer
Deposits
|
(11,479
|
)
|
(15,861
|
)
|
|||
Accrued
Taxes, Net
|
36,113
|
45,238
|
|||||
Fuel
Over/Under Recovery, Net
|
4,212
|
15,216
|
|||||
Other
Current Assets
|
(2,868
|
)
|
2,821
|
||||
Other
Current Liabilities
|
(20,572
|
)
|
(21,255
|
)
|
|||
Net
Cash Flows From Operating Activities
|
65,590
|
41,293
|
|||||
INVESTING
ACTIVITIES
|
|||||||
Construction
Expenditures
|
(107,613
|
)
|
(54,238
|
)
|
|||
Change
in Advances to Affiliates, Net
|
(8,959
|
)
|
-
|
||||
Other
|
(4,067
|
)
|
(56
|
)
|
|||
Net
Cash Flows Used For Investing Activities
|
(120,639
|
)
|
(54,294
|
)
|
|||
FINANCING
ACTIVITIES
|
|||||||
Issuance
of Long-term Debt - Nonaffiliated
|
247,548
|
-
|
|||||
Change
in Short-term Debt, Net - Nonaffiliated
|
3,290
|
4,394
|
|||||
Change
in Advances from Affiliates, Net
|
(188,965
|
)
|
20,988
|
||||
Retirement
of Long-term Debt - Nonaffiliated
|
(6,395
|
)
|
(2,457
|
)
|
|||
Principal
Payments for Capital Lease Obligations
|
(1,090
|
)
|
(367
|
)
|
|||
Dividends
Paid on Common Stock
|
-
|
(10,000
|
)
|
||||
Dividends
Paid on Cumulative Preferred Stock
|
(57
|
)
|
(57
|
)
|
|||
Net
Cash Flows From Financing Activities
|
54,331
|
12,501
|
|||||
Net
Decrease in Cash and Cash Equivalents
|
(718
|
)
|
(500
|
)
|
|||
Cash
and Cash Equivalents at Beginning of Period
|
2,618
|
3,049
|
|||||
Cash
and Cash Equivalents at End of Period
|
$
|
1,900
|
$
|
2,549
|
SUPPLEMENTARY
INFORMATION
|
|||||||
Cash
Paid for Interest, Net of Capitalized Amounts
|
$
|
16,747
|
$
|
11,892
|
|||
Net
Cash Paid for Income Taxes
|
580
|
1,282
|
|||||
Noncash
Acquisitions Under Capital Leases
|
3,192
|
3,412
|
|||||
Construction
Expenditures Included in Accounts Payable at March 31,
|
32,460
|
12,800
|
Footnote
Reference
|
|
Significant
Accounting Matters
|
Note
1
|
New
Accounting Pronouncements
|
Note
2
|
Rate
Matters
|
Note
3
|
Commitments,
Guarantees and Contingencies
|
Note
4
|
Benefit
Plans
|
Note
6
|
Business
Segments
|
Note
7
|
Income
Taxes
|
Note
8
|
Financing
Activities
|
Note
9
|
The
condensed notes to condensed financial statements that follow are
a
combined presentation for the Registrant Subsidiaries. The following
list
indicates the registrants to which the footnotes apply:
|
||
1.
|
Significant
Accounting Matters
|
AEGCo,
APCo, CSPCo, I&M, KPCo, OPCo, PSO, SWEPCo, TCC, TNC
|
2.
|
New
Accounting Pronouncements
|
AEGCo,
APCo, CSPCo, I&M, KPCo, OPCo, PSO, SWEPCo, TCC, TNC
|
3.
|
Rate
Matters
|
APCo,
CSPCo, I&M, KPCo, OPCo, PSO, SWEPCo, TCC, TNC
|
4.
|
Commitments,
Guarantees and Contingencies
|
AEGCo,
APCo, CSPCo, I&M, KPCo, OPCo, PSO, SWEPCo, TCC, TNC
|
5.
|
Acquisitions,
Dispositions and Assets Held for Sale
|
AEGCo,
CSPCo, TCC
|
6.
|
Benefit
Plans
|
APCo,
CSPCo, I&M, KPCo, OPCo, PSO, SWEPCo, TCC, TNC
|
7.
|
Business
Segments
|
AEGCo,
APCo, CSPCo, I&M, KPCo, OPCo, PSO, SWEPCo, TCC, TNC
|
8.
|
Income
Taxes
|
AEGCo,
APCo, CSPCo, I&M, KPCo, OPCo, PSO, SWEPCo, TCC, TNC
|
9.
|
Financing
Activities
|
AEGCo,
APCo, CSPCo, I&M, KPCo, OPCo, PSO, SWEPCo, TCC,
TNC
|
March
31,
|
December
31,
|
||||||
2007
|
2006
|
||||||
Components
|
(in
thousands)
|
||||||
Cash
Flow Hedges:
|
|||||||
APCo
|
$
|
(10,031
|
)
|
$
|
(2,547
|
)
|
|
CSPCo
|
(1,878
|
)
|
3,398
|
||||
I&M
|
(14,255
|
)
|
(8,962
|
)
|
|||
KPCo
|
(490
|
)
|
1,552
|
||||
OPCo
|
791
|
7,262
|
|||||
PSO
|
(1,025
|
)
|
(1,070
|
)
|
|||
SWEPCo
|
(6,737
|
)
|
(6,410
|
)
|
|||
TNC
|
-
|
(702
|
)
|
||||
SFAS
158 Adoption:
|
|||||||
APCo
|
$
|
(52,244
|
)
|
$
|
(52,244
|
)
|
|
CSPCo
|
(25,386
|
)
|
(25,386
|
)
|
|||
I&M
|
(6,089
|
)
|
(6,089
|
)
|
|||
OPCo
|
(64,025
|
)
|
(64,025
|
)
|
|||
SWEPCo
|
(12,389
|
)
|
(12,389
|
)
|
|||
TNC
|
(9,457
|
)
|
(9,457
|
)
|
For
the Three Months Ended March 31, 2007
|
||||||||||
Company
|
Net
Settlement
With
AEPEP
|
Third
Party Amounts
Reclassified
to Affiliate
|
Net
Amount
included
in Sales
to
AEP Affiliates
|
|||||||
(in
thousands)
|
||||||||||
PSO
|
$
|
43,150
|
$
|
(35,837
|
)
|
$
|
7,313
|
|||
SWEPCo
|
46,876
|
(38,259
|
)
|
8,617
|
As
of March 31, 2007
|
|||||||
PSO
|
SWEPCo
|
||||||
Current
|
(in
thousands)
|
||||||
Risk
Management Assets
|
$
|
-
|
$
|
-
|
|||
Risk
Management Liabilities
|
(8,282
|
)
|
(9,758
|
)
|
|||
Noncurrent
|
|||||||
Long-term
Risk Management Assets
|
$
|
584
|
$
|
688
|
|||
Long-term
Risk Management Liabilities
|
(2,097
|
)
|
(2,471
|
)
|
Three
Months Ended
|
||||
March
31, 2006
|
||||
Company
|
(in
thousands)
|
|||
AEGCo
|
$
|
27
|
||
APCo
|
296
|
|||
I&M
|
5,589
|
Company
|
(in
thousands)
|
|||
AEGCo
|
$
|
(27
|
)
|
|
APCo
|
2,685
|
|||
CSPCo
|
3,022
|
|||
I&M
|
(327
|
)
|
||
KPCo
|
786
|
|||
OPCo
|
5,380
|
|||
PSO
|
386
|
|||
SWEPCo
|
1,642
|
|||
TCC
|
2,187
|
|||
TNC
|
557
|
·
|
The
PUCT ruling that TCC did not comply with the statute 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 it failed to determine a minimum price at which it would
reject
bids for the sale of its nuclear generating plant and it 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 cost, and
|
·
|
The
two federal matters regarding the allocation of off-system sales
related
to fuel recoveries and the potential tax normalization violation.
See
“TCC
and TNC Deferred Fuel” and“TCC
Deferred Investment Tax Credits and Excess Deferred Federal Income
Taxes”
sections below.
|
·
|
AEP/AP
proposed a Highway/Byway rate design in which:
|
|
·
|
The
cost of all transmission facilities in the PJM region operated
at 345 kV
or higher would be included in a “Highway” rate that all load serving
entities (LSEs) would pay based on peak demand. The AEP/AP proposal
would
produce about $125 million in additional revenues per year for
AEP from
users in other zones of PJM.
|
|
·
|
The
cost of transmission facilities operating at lower voltages would
be
collected in the zones where those costs are presently charged
under PJM’s
existing rate design.
|
|
·
|
Two
other utilities, Baltimore Gas & Electric Company (BG&E) and Old
Dominion Electric Cooperative (ODEC), proposed a Highway/Byway
rate that
includes transmission facilities above 200 kV, which would produce
lower
revenues for AEP than the AEP/AP proposal.
|
|
·
|
In
another competing Highway/Byway proposal, a group of LSEs proposed
rates
that would include existing 500 kV and higher voltage facilities
and new
facilities above 200 kV in the Highway rate, which would produce
considerably lower revenues for AEP than the AEP/AP proposal.
|
|
·
|
In
January 2006, the FERC staff issued testimony and exhibits supporting
a
PJM-wide flat rate or “Postage Stamp” type of rate design that would
include all transmission facilities, which would produce higher
transmission revenues for AEP than the AEP/AP
proposal.
|
·
|
In
Kentucky, KPCo settled a rate case, which provided for the recovery
of its
share of the transmission revenue reduction in new rates effective
March
30, 2006.
|
·
|
In
Ohio, CSPCo and OPCo recover their FERC-approved OATT that reflects
their
share of the full transmission revenue requirement retroactive
to April 1,
2006 under a May 2006 PUCO order.
|
·
|
In
West Virginia, APCo settled a rate case, which provided for the
recovery
of its share of the T&O/SECA transmission revenue reduction beginning
July 28, 2006.
|
·
|
In
Virginia, APCo filed a request for revised rates, which includes
recovery
of its share of the T&O/SECA transmission revenue reduction starting
October 2, 2006, subject to refund.
|
·
|
In
Indiana, I&M is precluded by a rate cap from raising its rates until
July 1, 2007.
|
·
|
In
Michigan, I&M has not filed to seek recovery of the lost transmission
revenues.
|
Year
Ended December 31,
|
||||||||||
2006
(a)
|
2005
|
2004
|
||||||||
Company
|
(in
millions)
|
|||||||||
APCo
|
$
|
13.4
|
$
|
52.4
|
$
|
4.4
|
||||
CSPCo
|
7.9
|
28.4
|
2.5
|
|||||||
I&M
|
8.1
|
30.4
|
2.8
|
|||||||
KPCo
|
3.2
|
12.4
|
1.0
|
|||||||
OPCo
|
10.4
|
39.4
|
3.5
|
(a)
|
Represents
revenues through March 31, 2006, when SECA rates expired, and excludes
all
provisions for refund.
|
Year
Ended December 31,
|
|||||||
2006
|
2005
|
||||||
Company
|
(in
millions)
|
||||||
APCo
|
$
|
11.0
|
$
|
1.0
|
|||
CSPCo
|
6.1
|
0.6
|
|||||
I&M
|
6.4
|
0.6
|
|||||
KPCo
|
2.6
|
0.2
|
|||||
OPCo
|
8.3
|
0.8
|
Maximum
Potential Loss
|
||||
Company
|
(in
millions)
|
|||
APCo
|
$
|
7
|
||
CSPCo
|
4
|
|||
I&M
|
5
|
|||
KPCo
|
2
|
|||
OPCo
|
7
|
|||
PSO
|
5
|
|||
SWEPCo
|
6
|
|||
TCC
|
6
|
|||
TNC
|
3
|
March
31,
|
December
31,
|
||||||
2007
|
2006
|
||||||
Texas
Plants (TCC)
|
(in
millions)
|
||||||
Assets:
|
|||||||
Other
Current Assets
|
$
|
-
|
$
|
1
|
|||
Property,
Plant and Equipment, Net
|
-
|
43
|
|||||
Total
Assets Held for Sale - Texas Generation Plant
|
$
|
-
|
$
|
44
|
Other
|
|||||||||||||
Postretirement
|
|||||||||||||
Pension
Plans
|
Benefit
Plans
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
(in
millions)
|
|||||||||||||
Service
Cost
|
$
|
24
|
$
|
24
|
$
|
10
|
$
|
10
|
|||||
Interest
Cost
|
59
|
57
|
26
|
25
|
|||||||||
Expected
Return on Plan Assets
|
(85
|
)
|
(83
|
)
|
(26
|
)
|
(23
|
)
|
|||||
Amortization
of Transition Obligation
|
-
|
-
|
7
|
7
|
|||||||||
Amortization
of Net Actuarial Loss
|
15
|
20
|
3
|
5
|
|||||||||
Net
Periodic Benefit Cost
|
$
|
13
|
$
|
18
|
$
|
20
|
$
|
24
|
Pension
Plans
|
Other
Postretirement
Benefit
Plans
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Company
|
(in
thousands)
|
||||||||||||
APCo
|
$
|
842
|
$
|
1,468
|
$
|
3,560
|
$
|
4,489
|
|||||
CSPCo
|
(257
|
)
|
205
|
1,491
|
1,805
|
||||||||
I&M
|
1,900
|
2,331
|
2,530
|
2,953
|
|||||||||
KPCo
|
255
|
358
|
426
|
513
|
|||||||||
OPCo
|
245
|
826
|
2,802
|
3,396
|
|||||||||
PSO
|
424
|
977
|
1,431
|
1,588
|
|||||||||
SWEPCo
|
746
|
1,225
|
1,419
|
1,578
|
|||||||||
TCC
|
101
|
773
|
1,575
|
1,696
|
|||||||||
TNC
|
70
|
325
|
631
|
715
|
Company
|
(in
thousands)
|
|||
AEGCo
|
$
|
(27
|
)
|
|
APCo
|
2,685
|
|||
CSPCo
|
3,022
|
|||
I&M
|
(327
|
)
|
||
KPCo
|
786
|
|||
OPCo
|
5,380
|
|||
PSO
|
386
|
|||
SWEPCo
|
1,642
|
|||
TCC
|
2,187
|
|||
TNC
|
557
|
Company
|
(in
millions)
|
|||
AEGCo
|
$
|
0.1
|
||
APCo
|
21.7
|
|||
CSPCo
|
25.0
|
|||
I&M
|
18.2
|
|||
KPCo
|
3.4
|
|||
OPCo
|
49.8
|
|||
PSO
|
8.9
|
|||
SWEPCo
|
7.1
|
|||
TCC
|
20.7
|
|||
TNC
|
6.9
|
Company
|
(in
millions)
|
|||
AEGCo
|
$
|
0.5
|
||
APCo
|
5.5
|
|||
CSPCo
|
9.3
|
|||
I&M
|
6.0
|
|||
KPCo
|
1.4
|
|||
OPCo
|
9.0
|
|||
PSO
|
4.4
|
|||
SWEPCo
|
2.8
|
|||
TCC
|
3.4
|
|||
TNC
|
1.6
|
Company
|
(in
millions)
|
|||
APCo
|
$
|
5.4
|
||
CSPCo
|
13.8
|
|||
I&M
|
5.4
|
|||
KPCo
|
0.6
|
|||
OPCo
|
23.4
|
|||
PSO
|
1.2
|
|||
SWEPCo
|
1.2
|
|||
TCC
|
9.3
|
|||
TNC
|
2.6
|
Company
|
(in
millions)
|
|||
AEGCo
|
$
|
0.1
|
||
APCo
|
13.7
|
|||
CSPCo
|
3.9
|
|||
I&M
|
10.3
|
|||
KPCo
|
2.5
|
|||
OPCo
|
14.2
|
|||
PSO
|
7.1
|
|||
SWEPCo
|
5.1
|
|||
TCC
|
6.4
|
|||
TNC
|
2.9
|
Company
|
(in
millions)
|
|||
AEGCo
|
$
|
0.1
|
||
APCo
|
4.6
|
|||
CSPCo
|
1.7
|
|||
I&M
|
2.8
|
|||
KPCo
|
1.2
|
|||
OPCo
|
4.3
|
|||
PSO
|
2.7
|
|||
SWEPCo
|
2.0
|
|||
TCC
|
2.5
|
|||
TNC
|
1.0
|
Company
|
Type
of Debt
|
Principal
Amount
|
Interest
Rate
|
Due
Date
|
|||||
(in
thousands)
|
(%)
|
||||||||
Issuances:
|
|||||||||
SWEPCo
|
Senior
Unsecured Notes
|
$
|
250,000
|
5.55
|
2017
|
Company
|
Type
of Debt
|
Principal
Amount
|
Interest
Rate
|
Due
Date
|
|||||
(in
thousands)
|
(%)
|
||||||||
Retirements
and
Principal Payments:
|
|||||||||
OPCo
|
Notes
Payable
|
$
|
1,463
|
6.81
|
2008
|
||||
OPCo
|
Notes
Payable
|
6,000
|
6.27
|
2009
|
|||||
SWEPCo
|
Notes
Payable
|
1,645
|
4.47
|
2011
|
|||||
SWEPCo
|
Notes
Payable
|
4,000
|
6.36
|
2007
|
|||||
SWEPCo
|
Notes
Payable
|
750
|
Variable
|
2008
|
|||||
TCC
|
Securitization
Bonds
|
32,125
|
5.01
|
2008
|
Maximum
Borrowings
from
Utility
Money
Pool
|
Maximum
Loans
to Utility Money Pool
|
Average
Borrowings
from Utility Money Pool
|
Average
Loans to Utility Money Pool
|
Loans
(Borrowings) to/from Utility Money Pool as of March 31,
2007
|
Authorized
Short-Term
Borrowing Limit
|
||||||||||||||
Company
|
(in
thousands)
|
||||||||||||||||||
AEGCo
|
$
|
75,425
|
$
|
-
|
$
|
44,340
|
$
|
-
|
$
|
(29,997
|
)
|
$
|
125,000
|
(a)
|
|||||
APCo
|
109,259
|
-
|
71,378
|
-
|
(82,860
|
)
|
600,000
|
||||||||||||
CSPCo
|
15,693
|
35,270
|
6,204
|
14,543
|
922
|
350,000
|
|||||||||||||
I&M
|
100,374
|
-
|
66,570
|
-
|
(45,759
|
)
|
500,000
|
||||||||||||
KPCo
|
46,317
|
-
|
30,845
|
-
|
(20,769
|
)
|
200,000
|
||||||||||||
OPCo
|
444,153
|
-
|
333,467
|
-
|
(397,127
|
)
|
600,000
|
||||||||||||
PSO
|
135,694
|
-
|
76,776
|
-
|
(135,694
|
)
|
300,000
|
||||||||||||
SWEPCo
|
240,786
|
48,979
|
215,207
|
30,267
|
8,959
|
350,000
|
|||||||||||||
TCC
|
-
|
394,180
|
-
|
295,542
|
216,953
|
600,000
|
|||||||||||||
TNC
(b)
|
35,191
|
3,200
|
22,179
|
2,365
|
(24,487
|
)
|
250,000
|
(a)
|
In
April 2007, limit increased by $285 million under regulatory
orders.
|
(b)
|
Does
not include short-term lending activity of TNC’s wholly-owned subsidiary,
AEP Texas North Generation Company LLC (TNGC), who is a participant
in the
Nonutility Money Pool. As of March 31, 2007, TNGC had $13.3 million
in
outstanding loans to the Nonutility Money
Pool.
|
Three
Months Ended March 31,
|
|||||||
2007
|
2006
|
||||||
Maximum
Interest Rate
|
5.43
|
%
|
4.85
|
%
|
|||
Minimum
Interest Rate
|
5.30
|
%
|
4.37
|
%
|
Average
Interest Rate for Funds
Borrowed
from the Utility Money
Pool
for
Three
Months Ended March 31,
|
Average
Interest Rate for Funds
Loaned
to the Utility Money
Pool
for
Three
Months Ended March 31,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Company
|
(in
percentage)
|
||||||||||||
AEGCo
|
5.34
|
4.57
|
-
|
-
|
|||||||||
APCo
|
5.34
|
4.60
|
-
|
-
|
|||||||||
CSPCo
|
5.35
|
4.58
|
5.33
|
4.66
|
|||||||||
I&M
|
5.34
|
4.59
|
-
|
-
|
|||||||||
KPCo
|
5.34
|
4.54
|
-
|
4.75
|
|||||||||
OPCo
|
5.34
|
4.60
|
-
|
-
|
|||||||||
PSO
|
5.34
|
4.63
|
-
|
-
|
|||||||||
SWEPCo
|
5.35
|
4.60
|
5.34
|
-
|
|||||||||
TCC
|
-
|
4.47
|
5.34
|
4.68
|
|||||||||
TNC
(a)
|
5.34
|
4.57
|
5.34
|
4.54
|
(a)
|
Does
not include short-term lending activity for TNGC, who is a participant
in
the Nonutility Money Pool. For the three months ended March 31,
2007, the
average interest rate for funds loaned to the Nonutility Money
Pool by
TNGC was 5.31%.
|
March
31, 2007
|
December
31, 2006
|
|||||||||||||||
Type
of Debt
|
Outstanding
Amount
|
Interest
Rate
|
Outstanding
Amount
|
Interest
Rate
|
||||||||||||
Company
|
(in
millions)
|
(in
millions)
|
||||||||||||||
OPCo
|
Commercial
Paper - JMG
|
$
|
5
|
5.56
|
%
|
$
|
1
|
5.56
|
%
|
|||||||
SWEPCo
|
Line
of Credit - Sabine
|
20
|
6.52
|
%
|
17
|
6.38
|
%
|
·
|
Requirements
under the Clean Air Act (CAA) to reduce emissions of sulfur dioxide
(SO2),
nitrogen oxide (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.
|
Company
|
(in
thousands)
|
|||
AEGCo
|
$
|
(27
|
)
|
|
APCo
|
2,685
|
|||
CSPCo
|
3,022
|
|||
I&M
|
(327
|
)
|
||
KPCo
|
786
|
|||
OPCo
|
5,380
|
|||
PSO
|
386
|
|||
SWEPCo
|
1,642
|
|||
TCC
|
2,187
|
|||
TNC
|
557
|
Period
|
Total
Number
of
Shares
Purchased
|
Average
Price
Paid
per Share
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans
or
Programs
|
Maximum
Number (or Approximate Dollar Value) of Shares that May Yet Be
Purchased
Under the Plans or Programs
|
||||||||||
01/01/07
- 01/31/07
|
30
|
(a)
|
$
|
79
|
-
|
$
|
-
|
|||||||
02/01/07
- 02/28/07
|
-
|
-
|
-
|
-
|
||||||||||
03/01/07
- 03/31/07
|
-
|
-
|
-
|
-
|
(a)
|
OPCo
repurchased 30 shares of its 4.40% cumulative preferred stock,
in a
privately-negotiated transaction outside of an announced
program.
|