AMERICAN ELECTRIC POWER CO INC (Form: 10-K, Received: 02/20/2015 17:22:48)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)



x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2014



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from __________ to_________



Commission File Number	Registrants; States of Incorporation; Address and Telephone Number	I.R.S. Employer Identification Nos.
1-3525	AMERICAN ELECTRIC POWER COMPANY, INC. (A New York Corporation)	13-4922640
1-3457	APPALACHIAN POWER COMPANY (A Virginia Corporation)	54-0124790
1-3570	INDIANA MICHIGAN POWER COMPANY (An Indiana Corporation)	35-0410455
1-6543	OHIO POWER COMPANY (An Ohio Corporation)	31-4271000
0-343	PUBLIC SERVICE COMPANY OF OKLAHOMA (An Oklahoma Corporation)	73-0410895
1-3146	SOUTHWESTERN ELECTRIC POWER COMPANY (A Delaware Corporation) 1 Riverside Plaza, Columbus, Ohio 43215 Telephone (614) 716-1000	72-0323455

Securities registered pursuant to Section 12(b) of the Act:



Registrant	Title of each class	Name of Each Exchange on Which Registered
American Electric Power Company, Inc.	Common Stock, $6.50 par value	New York Stock Exchange
Appalachian Power Company	None
Indiana Michigan Power Company	None
Ohio Power Company	None
Public Service Company of Oklahoma	None
Southwestern Electric Power Company	None

Securities registered pursuant to Section 12(g) of the Act: None



Indicate by check mark if the registrant American Electric Power Company, Inc. is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.	Yes x	No o

Indicate by check mark if the registrants Appalachian Power Company, Indiana Michigan Power Company, Ohio Power Company, Public Service Company of Oklahoma and Southwestern Electric Power Company, are well-known seasoned issuers, as defined in Rule 405 of the Securities Act.	Yes o	No x

Indicate by check mark if the registrants are not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.	Yes o	No x

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 o

Indicate by check mark whether American Electric Power Company, Inc., Appalachian Power Company, Indiana Michigan Power Company, Ohio Power Company, Public Service Company of Oklahoma and Southwestern Electric Power Company have submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).	Yes x	No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein and will not be contained, to the best of registrants’ knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.	x

Indicate by check mark whether American Electric Power Company, Inc. is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of ‘large accelerated filer’, ‘accelerated filer’ and ‘smaller reporting company’ in Rule 12b-2 of the Exchange Act. (Check One)



Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	o



Indicate by check mark whether Appalachian Power Company, Indiana Michigan Power Company, Ohio Power Company, Public Service Company of Oklahoma and Southwestern Electric Power Company are large accelerated filers, accelerated filers, non-accelerated filers or smaller reporting companies. See definitions of ‘large accelerated filer’, ‘accelerated filer’ and ‘smaller reporting company’ in Rule 12b-2 of the Exchange Act. (Check One)
Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x (Do not check if a smaller reporting company)	Smaller reporting company	o



Indicate by check mark if the registrants are shell companies, as defined in Rule 12b-2 of the Exchange Act.	Yes o	No x

Appalachian Power Company, Indiana Michigan Power Company, Ohio Power Company, Public Service Company of Oklahoma and Southwestern Electric Power Company meet the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and are therefore filing this Form 10-K with the reduced disclosure format specified in General Instruction I(2) to such Form 10-K.



	Aggregate Market Value of Voting and Non-Voting Common Equity Held by Non-Affiliates of the Registrants as of June 30, 2014 the Last Trading Date of the Registrants' Most Recently Completed Second Fiscal Quarter	Number of Shares of Common Stock Outstanding of the Registrants as of December 31, 2014
American Electric Power Company, Inc.	$27,293,981,162	489,402,567
		($6.50 par value)
Appalachian Power Company	None	13,499,500
		(no par value)
Indiana Michigan Power Company	None	1,400,000
		(no par value)
Ohio Power Company	None	27,952,473
		(no par value)
Public Service Company of Oklahoma	None	9,013,000
		($15 par value)
Southwestern Electric Power Company	None	7,536,640
		($18 par value)

Note On Market Value Of Common Equity Held By Non-Affiliates

American Electric Power Company, Inc. owns all of the common stock of Appalachian Power Company, Indiana Michigan Power Company, Ohio Power Company, Public Service Company of Oklahoma and Southwestern Electric Power Company (see Item 12 herein).

Documents Incorporated By Reference



Description		Part of Form 10-K into which Document is Incorporated

Portions of Annual Reports of the following companies for the fiscal year ended December 31, 2014:		Part II
American Electric Power Company, Inc.
Appalachian Power Company
Indiana Michigan Power Company
Ohio Power Company
Public Service Company of Oklahoma
Southwestern Electric Power Company

Portions of Proxy Statement of American Electric Power Company, Inc. for 2015 Annual Meeting of Shareholders.		Part III

This combined Form 10-K is separately filed by American Electric Power Company, Inc., Appalachian Power Company, Indiana Michigan Power Company, Ohio Power Company, Public Service Company of Oklahoma and Southwestern Electric Power Company. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf. Except for American Electric Power Company, Inc., each registrant makes no representation as to information relating to the other registrants.

You can access financial and other information at AEP’s website, including AEP’s Principles of Business Conduct (which also serves as a code of ethics applicable to Item 10 of this Form 10-K), certain committee charters and Principles of Corporate Governance. The address is www.AEP.com. AEP makes available, free of charge on its website, copies of its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the SEC.

TABLE OF CONTENTS



Item Number		Page Number
	Glossary of Terms	i
	Forward-Looking Information	iii

PART I
1	Business
	General	1
	Business Segments	14
	Vertically Integrated Utilities	14
	Transmission and Distribution Utilities	23
	Generation & Marketing	24
	AEP Transmission Holdco	27
	AEP River Operations	31
	Executive Officers of AEP	32
1A	Risk Factors	34
1B	Unresolved Staff Comments	45
2	Properties	45
	Generation Facilities	45
	Transmission and Distribution Facilities	49
	Title to Property	49
	System Transmission Lines and Facility Siting	50
	Construction Program	50
	Potential Uninsured Losses	50
3	Legal Proceedings	50
4	Mine Safety Disclosure	50

PART II
5	Market for Registrants' Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	51
6	Selected Financial Data	51
7	Management's Discussion and Analysis of Financial Condition and Results of Operations	51
7A	Quantitative and Qualitative Disclosures about Market Risk	52
8	Financial Statements and Supplementary Data	52
9	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	52
9A	Controls and Procedures	52
9B	Other Information	52

	PART III
10	Directors, Executive Officers and Corporate Governance	53
11	Executive Compensation	53
12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	54
13	Certain Relationships and Related Transactions and Director Independence	54
14	Principal Accounting Fees and Services	55

PART IV
15	Exhibits and Financial Statement Schedules	56
	Financial Statements	56
	Signatures	57
	Index of Financial Statement Schedules	S-1
	Reports of Independent Registered Public Accounting Firm	S-2
	Exhibit Index	E-1

GLOSSARY OF TERMS

When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below:



Term		Meaning

AEGCo		AEP Generating Company, an AEP electric utility subsidiary.
AEP or Parent		American Electric Power Company, Inc., an electric utility holding company.
AEP East Companies		APCo, I&M, KPCo and OPCo.
AEP River Operations		AEP’s inland river transportation subsidiary, AEP River Operations LLC, operating primarily on the Ohio, Illinois and lower Mississippi rivers.
AEP System		American Electric Power System, an electric system, owned and operated by AEP subsidiaries.
AEP Utilities		AEP Utilities, Inc., a subsidiary of AEP, and a holding company for TCC, TNC and our interest in ETT.
AEP West Companies		PSO, SWEPCo, TCC and TNC.
AEPSC		American Electric Power Service Corporation, an AEP service subsidiary providing management and professional services to AEP and its subsidiaries.
AEPTCo		AEP Transmission Company, LLC, a subsidiary of AEPTHCo, an intermediate holding company that owns seven wholly-owned transmission companies.
AEPTHCo		AEP Transmission Holding Company, LLC, a subsidiary of AEP, an intermediate holding company that owns our transmission operations joint ventures and AEPTCo.
AFUDC		Allowance for Funds Used During Construction.
AGR		AEP Generation Resources Inc., a nonregulated AEP subsidiary in the Generation & Marketing segment.
APCo		Appalachian Power Company, an AEP electric utility subsidiary.
APSC		Arkansas Public Service Commission.
CAA		Clean Air Act.
CO ₂		Carbon dioxide and other greenhouse gases.
Cook Plant		Donald C. Cook Nuclear Plant, a two-unit, 2,191 MW nuclear plant owned by I&M.
CRES provider		Competitive Retail Electric Service providers under Ohio law that target retail customers by offering alternative generation service.
CSPCo		Columbus Southern Power Company, a former AEP electric utility subsidiary that was merged into OPCo effective December 31, 2011.
EPACT		The Energy Policy Act of 2005.
ERCOT		Electric Reliability Council of Texas regional transmission organization.
ESP		Electric Security Plans, a PUCO requirement for electric utilities to adjust their rates by filing with the PUCO.
ETT		Electric Transmission Texas, LLC, an equity interest joint venture between AEP and Berkshire Hathaway Energy Company formed to own and operate electric transmission facilities in ERCOT.
Federal EPA		United States Environmental Protection Agency.
FERC		Federal Energy Regulatory Commission.
I&M		AEP Indiana Michigan Power Company, Inc.
IMTCo		Indiana Michigan Transmission Company Inc.
Interconnection Agreement		An agreement by and among APCo, I&M, KPCo and OPCo, which defined the sharing of costs and benefits associated with their respective generation plants. This agreement was terminated January 1, 2014.
IURC		Indiana Utility Regulatory Commission.
KGPCo		Kingsport Power Company, an AEP electric utility subsidiary.
KPCo		Kentucky Power Company, an AEP electric utility subsidiary.
kV		Kilovolt.
MISO		Midwest Independent Transmission System Operator.
MMBtu		Million British Thermal Units.
MPSC		Michigan Public Service Commission.



Term		Meaning

MW		Megawatt.
NO _x		Nitrogen oxide.
Nonutility Money Pool		Centralized funding mechanism AEP uses to meet the short-term cash requirements of certain nonutility subsidiaries.
NRC		Nuclear Regulatory Commission.
OATT		Open Access Transmission Tariff.
OCC		Corporation Commission of the State of Oklahoma.
OHTCo		AEP Ohio Transmission Company, Inc.
OKTCo		AEP Oklahoma Transmission Company, Inc.
OPCo		Ohio Power Company, an AEP electric utility subsidiary.
OVEC		Ohio Valley Electric Corporation, which is 43.47% owned by AEP.
PJM		Pennsylvania – New Jersey – Maryland regional transmission organization.
PM		Particulate Matter.
PSO		Public Service Company of Oklahoma, an AEP electric utility subsidiary.
PUCO		Public Utilities Commission of Ohio.
PUCT		Public Utility Commission of Texas.
REP		Texas Retail Electric Provider.
Rockport Plant		A generation plant, consisting of two 1,310 MW coal-fired generating units near Rockport, Indiana. AEGCo and I&M jointly-own Unit 1. In 1989, AEGCo and I&M entered into a sale-and-leaseback transaction with Wilmington Trust Company, an unrelated, unconsolidated trustee for Rockport Plant, Unit 2.
RTO		Regional Transmission Organization, responsible for moving electricity over large interstate areas.
Sabine		Sabine Mining Company, a lignite mining company that is a consolidated variable interest entity for AEP and SWEPCo.
SEC		U.S. Securities and Exchange Commission.
SO ₂		Sulfur dioxide.
SPP		Southwest Power Pool regional transmission organization.
SWEPCo		Southwestern Electric Power Company, an AEP electric utility subsidiary.
TA		Transmission Agreement, effective November 2010, among APCo, CSPCo, I&M, KGPCo, KPCo, OPCo and WPCo with AEPSC as agent.
TCA		Transmission Coordination Agreement dated January 1, 1997, by and among, PSO, SWEPCo and AEPSC, in connection with the operation of the transmission assets of the two public utility subsidiaries.
TCC		AEP Texas Central Company, an AEP electric utility subsidiary.
TNC		AEP Texas North Company, an AEP electric utility subsidiary.
Utility Money Pool		Centralized funding mechanism AEP uses to meet the short-term cash requirements of certain utility subsidiaries.
Virginia SCC		Virginia State Corporation Commission.
WPCo		Wheeling Power Company, an AEP electric utility subsidiary.
WVPSC		Public Service Commission of West Virginia.

FORWARD-LOOKING INFORMATION

This report made by AEP and its Registrant Subsidiaries contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Many forward-looking statements appear in “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but there are others throughout this document which may be identified by words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “will,” “should,” “could,” “would,” “project,” “continue” and similar expressions, and include statements reflecting future results or guidance and statements of outlook. These matters are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Forward-looking statements in this document are presented as of the date of this document. Except to the extent required by applicable law, we undertake no obligation to update or revise any forward-looking statement. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are:



Ÿ	The economic climate, growth or contraction within and changes in market demand and demographic patterns in our service territory.
Ÿ	Inflationary or deflationary interest rate trends.
Ÿ	Volatility in the financial markets, particularly developments affecting the availability of capital on reasonable terms and developments impairing our ability to finance new capital projects and refinance existing debt at attractive rates.
Ÿ	The availability and cost of funds to finance working capital and capital needs, particularly during periods when the time lag between incurring costs and recovery is long and the costs are material.
Ÿ	Electric load, customer growth and the impact of competition, including competition for retail customers.
Ÿ	Weather conditions, including storms and drought conditions, and our ability to recover significant storm restoration costs.
Ÿ	Available sources and costs of, and transportation for, fuels and the creditworthiness and performance of fuel suppliers and transporters.
Ÿ	Availability of necessary generation capacity and the performance of our generation plants.
Ÿ	Our ability to recover increases in fuel and other energy costs through regulated or competitive electric rates.
Ÿ	Our ability to build or acquire generation capacity and transmission lines and facilities (including our ability to obtain any necessary regulatory approvals and permits) when needed at acceptable prices and terms and to recover those costs.
Ÿ	New legislation, litigation and government regulation, including oversight of nuclear generation, energy commodity trading and new or heightened requirements for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances or additional regulation of fly ash and similar combustion products that could impact the continued operation, cost recovery and/or profitability of our generation plants and related assets.
Ÿ	Evolving public perception of the risks associated with fuels used before, during and after the generation of electricity, including nuclear fuel.
Ÿ	A reduction in the federal statutory tax rate could result in an accelerated return of deferred federal income taxes to customers.
Ÿ	Timing and resolution of pending and future rate cases, negotiations and other regulatory decisions, including rate or other recovery of new investments in generation, distribution and transmission service and environmental compliance.
Ÿ	Resolution of litigation.
Ÿ	Our ability to constrain operation and maintenance costs.
Ÿ	Our ability to develop and execute a strategy based on a view regarding prices of electricity and other energy-related commodities.
Ÿ	Prices and demand for power that we generate and sell at wholesale.
Ÿ	Changes in technology, particularly with respect to new, developing, alternative or distributed sources of generation.
Ÿ	Our ability to recover through rates or market prices any remaining unrecovered investment in generation units that may be retired before the end of their previously projected useful lives.
Ÿ	Volatility and changes in markets for capacity and electricity, coal and other energy-related commodities, particularly changes in the price of natural gas and capacity auction returns.

iii



Ÿ	Changes in utility regulation and the allocation of costs within regional transmission organizations, including ERCOT, PJM and SPP.
Ÿ	The transition to market for generation in Ohio, including the implementation of ESPs and our ability to recover investments in our Ohio generation assets.
Ÿ	Our ability to successfully and profitably manage our separate competitive generation assets.
Ÿ	Changes in the creditworthiness of the counterparties with whom we have contractual arrangements, including participants in the energy trading market.
Ÿ	Actions of rating agencies, including changes in the ratings of our debt.
Ÿ	The impact of volatility in the capital markets on the value of the investments held by our pension, other postretirement benefit plans, captive insurance entity and nuclear decommissioning trust and the impact of such volatility on future funding requirements.
Ÿ	Accounting pronouncements periodically issued by accounting standard-setting bodies.
Ÿ	Other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes, cyber security threats and other catastrophic events.

The forward looking statements of AEP and its Registrant Subsidiaries speak only as of the date of this report or as of the date they are made. AEP and its Registrant Subsidiaries expressly disclaim any obligation to update any forward-looking information. For a more detailed discussion of these factors, see “Risk Factors” in Part I of this report.

PART I

ITEM 1. BUSINESS

GENERAL

Overview and Description of Material Subsidiaries

AEP was incorporated under the laws of the State of New York in 1906 and reorganized in 1925. It is a public utility holding company that owns, directly or indirectly, all of the outstanding common stock of its public utility subsidiaries and varying percentages of other subsidiaries.

The service areas of AEP’s public utility subsidiaries cover portions of the states of Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia. The transmission facilities of AEP’s public utility subsidiaries are interconnected and their operations are coordinated. Transmission networks are interconnected with extensive distribution facilities in the territories served. The public utility subsidiaries of AEP have traditionally provided electric service, consisting of generation, transmission and distribution, on an integrated basis to their retail customers. Restructuring laws in Michigan, Ohio and the ERCOT area of Texas have caused AEP public utility subsidiaries in those states to unbundle previously integrated regulated rates for their retail customers. In Ohio, AEP’s regulated utility operates its distribution and transmission assets while its former generation assets are owned and operated by a competitive generation affiliate.

The member companies of the AEP System have contractual, financial and other business relationships with the other member companies, such as participation in the AEP System savings and retirement plans and tax returns, sales of electricity and transportation and handling of fuel. The companies of the AEP System also obtain certain accounting, administrative, information systems, engineering, financial, legal, maintenance and other services at cost from a common provider, AEPSC.

As of December 31, 2014 , the subsidiaries of AEP had a total of 18,529 employees. Because it is a holding company rather than an operating company, AEP has no employees. The material subsidiaries of AEP are:

APCo

Organized in Virginia in 1926, APCo is engaged in the generation, transmission and distribution of electric power to approximately 959,000 retail customers in the southwestern portion of Virginia and southern West Virginia, and in supplying and marketing electric power at wholesale to other electric utility companies, municipalities and other market participants. APCo owns 7,877 MW of generating capacity. APCo uses its generation to serve its retail and other customers. As of December 31, 2014 , APCo had 1,902 employees. Among the principal industries served by APCo are paper, rubber, coal mining, textile mill products and stone, clay and glass products. APCo is a member of PJM. APCo is part of AEP’s Vertically Integrated Utilities segment.

I&M

Organized in Indiana in 1907, I&M is engaged in the generation, transmission and distribution of electric power to approximately 588,000 retail customers in northern and eastern Indiana and southwestern Michigan, and in supplying and marketing electric power at wholesale to other electric utility companies, rural electric cooperatives, municipalities and other market participants. I&M owns or leases 4,518 MW of generating capacity, which it uses to serve its retail and other customers. As of December 31, 2014 , I&M had 2,551 employees. Among the principal industries served are primary metals, transportation equipment, electrical and electronic machinery, fabricated metal products, rubber and chemicals and allied products, rubber products and transportation equipment. I&M is a member of PJM. I&M is part of AEP’s Vertically Integrated Utilities segment.

KPCo

Organized in Kentucky in 1919, KPCo is engaged in the generation, transmission and distribution of electric power to approximately 171,000 retail customers in eastern Kentucky, and in supplying and marketing electric power at wholesale to other electric utility companies, municipalities and other market participants. KPCo owns 1,858 MW of generating capacity. KPCo uses its generation to serve its retail and other customers. As of December 31, 2014 , KPCo had 595 employees. Among the principal industries served are petroleum refining, coal mining and chemical production. KPCo is a member of PJM. KPCo is part of AEP’s Vertically Integrated Utilities segment.

KGPCo

Organized in Virginia in 1917, KGPCo provides electric service to approximately 47,000 retail customers in Kingsport and eight neighboring communities in northeastern Tennessee. KGPCo does not own any generating facilities and is a member of PJM. It purchases electric power from APCo for distribution to its customers. As of December 31, 2014 , KGPCo had 49 employees. KGPCo is part of AEP’s Vertically Integrated Utilities segment.

OPCo

Organized in Ohio in 1907 and re-incorporated in 1924, OPCo is engaged in the transmission and distribution of electric power to approximately 1,466,000 retail customers in Ohio. Following corporate separation of OPCo's generation assets in December 2013, OPCo purchases energy and capacity to serve generation service customers. As of December 31, 2014 , OPCo had 1,516 employees. Among the principal industries served by OPCo are primary metals, chemicals and allied products, health services, electronic machinery, petroleum refining, and rubber and plastic products. OPCo is a member of PJM. OPCo is part of AEP’s Transmission and Distribution Utilities segment.

PSO

Organized in Oklahoma in 1913, PSO is engaged in the generation, transmission and distribution of electric power to approximately 542,000 retail customers in eastern and southwestern Oklahoma, and in supplying and marketing electric power at wholesale to other electric utility companies, municipalities, rural electric cooperatives and other market participants. PSO owns 4,436 MW of generating capacity, which it uses to serve its retail and other customers. As of December 31, 2014 , PSO had 1,133 employees. Among the principal industries served by PSO are paper manufacturing and timber products, natural gas and oil extraction, transportation, non-metallic mineral production, oil refining and steel processing. PSO is a member of SPP. PSO is part of AEP’s Vertically Integrated Utilities segment.

SWEPCo

Organized in Delaware in 1912, SWEPCo is engaged in the generation, transmission and distribution of electric power to approximately 528,000 retail customers in northeastern and panhandle of Texas, northwestern Louisiana and western Arkansas and in supplying and marketing electric power at wholesale to other electric utility companies, municipalities, rural electric cooperatives and other market participants. SWEPCo owns 5,779 MW of generating capacity, which it uses to serve its retail and other customers. As of December 31, 2014 , SWEPCo had 1,468 employees. Among the principal industries served by SWEPCo are natural gas and oil production, petroleum refining, manufacturing of pulp and paper, chemicals, food processing and metal refining. The territory served by SWEPCo also includes several military installations, colleges and universities. SWEPCo also owns and operates a lignite coal mining operation. SWEPCo is a member of SPP. SWEPCo is part of AEP’s Vertically Integrated Utilities segment.

TCC

Organized in Texas in 1945, TCC is engaged in the transmission and distribution of electric power to approximately 817,000 retail customers through REPs in southern Texas. As of December 31, 2014 , TCC had 1,056 employees. Among the principal industries served by TCC are chemical and petroleum refining, chemicals and allied products, oil and natural gas extraction, food processing, metal refining, plastics and machinery equipment. TCC is a member of ERCOT. TCC is part of AEP’s Transmission and Distribution Utilities segment.

TNC

Organized in Texas in 1927, TNC is engaged in the transmission and distribution of electric power to approximately 189,000 retail customers through REPs in west and central Texas. TNC’s generating capacity has been transferred to an affiliate at TNC’s cost pursuant to an agreement effective through 2027. As of December 31, 2014 , TNC had 323 employees. Among the principal industries served by TNC are petroleum refining, agriculture and the manufacturing or processing of cotton seed products, oil products, precision and consumer metal products, meat products and gypsum products. The territory served by TNC also includes several military installations and correctional facilities. TNC is a member of ERCOT. TNC is part of AEP’s Transmission and Distribution Utilities segment.

WPCo

Organized in West Virginia in 1883 and reincorporated in 1911, WPCo provides electric service to approximately 41,000 retail customers in northern West Virginia. As of December 31, 2014, WPCo did not own any generating facilities. On January 31, 2015, WPCo acquired an interest in a 780 MW generating unit owned by AGR. WPCo is a member of PJM. Prior to acquiring the 780 MW generating unit interest, WPCo purchased electric power from AGR for distribution to its customers. As of December 31, 2014 , WPCo had 53 employees. WPCo is part of AEP’s Vertically Integrated Utilities segment.

AEGCo

Organized in Ohio in 1982, AEGCo is an electric generating company. AEGCo owns 2,496 MW of generating capacity. AEGCo sells power at wholesale to AGR, I&M and KPCo. As of December 31, 2014 , AEGCo had 70 employees. AEGCo is part of AEP’s Vertically Integrated Utilities segment.

AGR

Organized in Delaware in 2011, AGR is a competitive generation company that generates power and sells it into the market. AGR also engages in power trading activities. Pursuant to a Power Supply Agreement (PSA) between AGR and OPCo, AGR supplies capacity for OPCo’s switched and non-switched retail load for the period January 1, 2014 through May 31, 2015. AGR also supplied the energy needs of OPCo’s non-switched retail load that was not acquired through auctions in 2014 under the PSA. Following the transfer to WPCo of the 780MW generating unit interest on January 31, 2015, AGR owns 9,159 MW of generating capacity, with rights to an additional 1,186 MW pursuant to a unit power agreement with AEGCo through 2017. As of December 31, 2014 , AGR had 917 employees. AGR is part of AEP’s Generation & Marketing segment.

AEPTHCo

Organized in Delaware in 2012, AEPTHCo is a holding company for AEP’s transmission operations joint ventures. AEPTHCo also owns AEPTCo, a holding company for seven FERC-regulated transmission-only electric utilities, each of which is geographically aligned with our existing utility operating companies. The transmission companies develop and own new transmission assets that are physically connected to AEP’s system. Individual transmission companies have obtained the approvals necessary to operate in Indiana, Kentucky, Michigan, Ohio, Oklahoma and West Virginia, subject to any applicable siting requirements, and are authorized to submit projects for

commission approval in Virginia. The application for regulatory approval to operate in Louisiana is under consideration, while the application for regulatory approval to operate in Arkansas was denied. Neither AEPTCo nor the transmission companies have any employees. Instead, AEPSC and certain of our utility subsidiaries provide the services required by these entities. AEPTCo is part of the AEP Transmission Holdco segment.

Service Company Subsidiary

AEP also owns a service company subsidiary, AEPSC. AEPSC provides accounting, administrative, information systems, engineering, financial, legal, maintenance and other services at cost to the AEP affiliated companies. The executive officers of AEP and certain of its public utility subsidiaries are employees of AEPSC. As of December 31, 2014 , AEPSC had 5,569 employees.

The following table illustrates certain regulatory information with respect to the states in which the public utility subsidiaries of AEP operate:



Jurisdiction	Percentage of AEP System Retail Revenues (a)	AEP Utility Subsidiaries Operating in that Jurisdiction	Authorized Return on Equity (b)
Ohio	25%	OPCo	10.20%

Texas	14%	TCC	9.96%
		TNC	9.96%
		SWEPCo	9.65%

Virginia	13%	APCo	9.70%

West Virginia	11%	APCo	10.00%
		WPCo	10.00%

Oklahoma	11%	PSO	10.15%

Indiana	10%	I&M	10.20%

Louisiana	5%	SWEPCo	10.00%

Kentucky	5%	KPCo	10.50%

Arkansas	3%	SWEPCo	10.25%

Michigan	2%	I&M	10.20%

Tennessee	1%	KGPCo	12.00%


(a)	Represents the percentage of public utility subsidiaries revenue from sales to retail customers to total public utility subsidiaries revenue for the year ended December 31, 2014 .


(b)	Identifies the predominant authorized return on equity and may not include other, less significant, permitted recovery. Actual return on equity varies from authorized return on equity.

CLASSES OF SERVICE

The principal classes of service from which the public utility subsidiaries of AEP derive revenues and the amount of such revenues during the years ended December 31, 2014 , 2013 and 2012 are as follows:



	Years Ended December 31,
Description	2014			2013			2012
	(in millions)
Vertically Integrated Utilities Segment
Retail Revenues
Residential Sales	$	3,329		$	3,216		$	2,993
Commercial Sales	2,032			2,002			1,886
Industrial Sales	2,125			2,029			1,951
PJM Net Charges	(62		)	10			(25		)
Provision for Rate Refund	(2		)	(16		)	(3		)
Other Retail Sales	182			172			164
Total Retail Revenues	7,604			7,413			6,966
Wholesale Revenues
Off-System Sales	1,530			1,671			1,583
Transmission	113			133			103
Total Wholesale Revenues	1,643			1,804			1,686
Other Electric Revenues	125			90			98
Other Operating Revenues	25			39			35
Sales to Affiliates	87			646			633
Total Revenues Vertically Integrated Utilities Segment	9,484			9,992			9,418

Transmission and Distribution Utilities Segment
Retail Revenues
Residential Sales	2,313			2,164			2,121
Commercial Sales	1,178			1,161			1,331
Industrial Sales	503			549			821
PJM Net Charges	48			21			22
Provision for Rate Refund	(12		)	22			(3		)
Other Retail Sales	40			39			41
Total Retail Revenues	4,070			3,956			4,333
Wholesale Revenues
Off-System Sales	143			31			57
Transmission	278			228			205
Total Wholesale Revenues	421			259			262
Other Electric Revenues	51			56			58
Other Operating Revenues	11			8			6
Sales to Affiliates	261			199			159
Total Revenues Transmission and Distribution Utilities Segment	4,814			4,478			4,818

AEP Transmission Holdco Segment
Transmission Revenues	74			27			7
Sales to Affiliates	118			51			17
Total Revenues AEP Transmission Holdco Segment	192			78			24

Generation & Marketing Segment
Generation Revenues
Affiliated	1,307			2,457			2,584
Nonaffiliated	1,397			314			282
Trading, Marketing and Retail Revenues
Affiliated	159			—			1
Nonaffiliated	962			868			572
Wind Generation Revenues
Nonaffiliated	25			26			28
Total Revenues Generation & Marketing Segment	$	3,850		$	3,665		$	3,467

APCo



	Years Ended December 31,
Description	2014			2013		2012
	(in thousands)
Retail Revenues
Residential Sales	$	1,257,273		$	1,219,649	$	1,159,576
Commercial Sales	585,929			583,835		576,153
Industrial Sales	690,432			697,043		701,603
PJM Net Charges	13,447			4,998		(13,049		)
Provision for Rate Refund	(6,085		)	—		—
Other Retail Sales	82,484			77,182		72,455
Total Retail Revenues	2,623,480			2,582,707		2,496,738
Wholesale Revenues
Off-System Sales	191,194			433,575		409,527
Transmission	26,898			21,049		14,059
Total Wholesale Revenues	218,092			454,624		423,586
Other Electric Revenues	57,830			22,246		28,438
Total Electric Generation, Transmission and Distribution Revenues	2,899,402			3,059,577		2,948,762
Sales to Affiliates	144,437			347,484		318,199
Other Revenues	9,239			10,345		9,970
Total Revenues	$	3,053,078		$	3,417,406	$	3,276,931

I&M



	Years Ended December 31,
Description	2014			2013		2012
	(in thousands)
Retail Revenues
Residential Sales	$	588,445		$	565,822	$	505,142
Commercial Sales	390,439			400,810		377,302
Industrial Sales	462,982			455,067		430,042
PJM Net Charges	(60,912		)	3,318		(9,003		)
Provision for Rate Refund	(592		)	—		—
Other Retail Sales	6,895			6,945		6,508
Total Retail Revenues	1,387,257			1,431,962		1,309,991
Wholesale Revenues
Off-System Sales	759,531			571,802		481,000
Transmission	(9,444		)	4,145		2,092
Total Wholesale Revenues	750,087			575,947		483,092
Other Electric Revenues	11,765			14,348		16,986
Total Electric Generation, Transmission and Distribution Revenues	2,149,109			2,022,257		1,810,069
Sales to Affiliates	98,577			341,686		385,460
Other Revenues	2,048			2,916		4,582
Total Revenues	$	2,249,734		$	2,366,859	$	2,200,111

OPCo



	Years Ended December 31,
Description	2014			2013		2012
	(in thousands)
Retail Revenues
Residential Sales	$	1,768,143		$	1,676,138	$	1,636,808
Commercial Sales	732,227			763,820		945,233
Industrial Sales	405,742			468,358		742,235
PJM Net Charges	47,532			6,916		(18,831		)
Provision for Rate Refund	(11,937		)	22,091		(2,577		)
Other Retail Sales	14,887			15,881		18,113
Total Retail Revenues	2,956,594			2,953,204		3,320,981
Wholesale Revenues
Off-System Sales	143,037			563,040		661,513
Transmission	78,510			17,699		10,114
Total Wholesale Revenues	221,547			580,739		671,627
Other Electric Revenues	26,785			28,281		29,508
Total Electric Generation, Transmission and Distribution Revenues	3,204,926			3,562,224		4,022,116
Sales to Affiliates	165,216			1,184,994		886,695
Other Revenues	6,778			15,397		19,385
Total Revenues	$	3,376,920		$	4,762,615	$	4,928,196

PSO



	Years Ended December 31,
Description	2014		2013		2012
	(in thousands)
Retail Revenues
Residential Sales	$	561,175	$	530,446	$	512,372
Commercial Sales	375,535		351,521		331,125
Industrial Sales	260,380		234,072		209,446
Other Retail Sales	78,666		73,649		70,894
Total Retail Revenues	1,275,756		1,189,688		1,123,837
Wholesale Revenues
Off-System Sales	13,790		34,636		37,484
Transmission	36,540		36,393		30,669
Total Wholesale Revenues	50,330		71,029		68,153
Other Electric Revenues	14,221		16,994		14,593
Total Electric Generation, Transmission and Distribution Revenues	1,340,307		1,277,711		1,206,583
Sales to Affiliates	7,054		14,246		22,603
Other Revenues	4,215		3,565		3,752
Total Revenues	$	1,351,576	$	1,295,522	$	1,232,938

SWEPCo



	Year Ended December 31,
Description	2014		2013			2012
	(in thousands)
Retail Revenues
Residential Sales	$	580,367	$	586,517		$	512,578
Commercial Sales	457,217		472,264			404,204
Industrial Sales	348,901		316,282			298,604
Provision for Rate Refund	4,976		(16,110		)	(1,207		)
Other Retail Sales	8,341		8,360			8,074
Total Retail Revenues	1,399,802		1,367,313			1,222,253
Wholesale Revenues
Off-System Sales	339,286		294,594			247,118
Transmission	55,095		59,097			48,404
Total Wholesale Revenues	394,381		353,691			295,522
Other Electric Revenues	23,680		21,571			20,758
Total Electric Generation, Transmission and Distribution Revenues	1,817,863		1,742,575			1,538,533
Sales to Affiliates	26,278		51,812			37,441
Other Revenues	2,256		1,416			1,860
Total Revenues	$	1,846,397	$	1,795,803		$	1,577,834

FINANCING

General

Companies within the AEP System generally use short-term debt to finance working capital needs. Short-term debt may also be used to finance acquisitions, construction and redemption or repurchase of outstanding securities until such needs can be financed with long-term debt. In recent history, short-term funding needs have been provided for by cash on hand, borrowing under AEP's revolving credit agreements and AEP’s commercial paper program. Funds are made available to subsidiaries under the AEP corporate borrowing program. Certain public utility subsidiaries of AEP also sell accounts receivable to provide liquidity. See Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in the 2014 Annual Reports, under the heading entitled Financial Condition for additional information concerning short-term funding and our access to bank lines of credit, commercial paper and capital markets.

AEP’s revolving credit agreements (which backstop the commercial paper program) include covenants and events of default typical for this type of facility, including a maximum debt/capital test. In addition, the acceleration of AEP’s payment obligations, or the obligations of certain of our major subsidiaries, prior to maturity under any other agreement or instrument relating to debt outstanding in excess of $50 million, would cause an event of default under these credit agreements. As of December 31, 2014 , AEP was in compliance with its debt covenants. With the exception of a voluntary bankruptcy or insolvency, any event of default has either or both a cure period or notice requirement before termination of the agreements. A voluntary bankruptcy or insolvency of AEP or one of its significant subsidiaries would be considered an immediate termination event. See Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in the 2014 Annual Reports, under the heading entitled Financial Condition for additional information with respect to AEP’s credit agreements.

AEP’s subsidiaries have also utilized, and expect to continue to utilize, additional financing arrangements, such as securitization financings and leasing arrangements, including the leasing of coal transportation equipment and facilities.

ENVIRONMENTAL AND OTHER MATTERS

General

AEP’s subsidiaries are currently subject to regulation by federal, state and local authorities with regard to air and water-quality control and other environmental matters, and are subject to zoning and other regulation by local authorities. The environmental issues that we believe are potentially material to the AEP system are outlined below.

Clean Water Act Requirements

Our operations are subject to the Federal Clean Water Act, which prohibits the discharge of pollutants into waters of the United States except pursuant to appropriate permits, and regulates systems that withdraw surface water for use in our power plants. In 2014, the Federal EPA issued a final rule setting forth standards for existing power plants that is intended to reduce mortality of aquatic organisms pinned against a plant’s cooling water intake screen (impingement) or entrained in the cooling water. The standards affect all plants withdrawing more than two million gallons of cooling water per day and establish specific intake design and intake velocity standards meant to allow fish to avoid or escape impingement. Compliance with this standard is required within eight years of the effective date of the final rule. The standard for entrainment for existing facilities requires a site-specific evaluation of the available measures for reducing entrainment. Challenges to this final rule have been consolidated in the U.S. Court of Appeals for the Second Circuit, and additional changes could be made to this rule as a result of review by the court.

The Federal EPA is also engaged in rulemaking to update the technology-based standards that govern discharges from new and existing power plants under the Clean Water Act’s National Pollutant Discharge Elimination System program. These standards were last updated over 20 years ago, and the Federal EPA proposed revised standards in 2013. A final rule is expected in September 2015. For additional information, see Management’s Discussion and Analysis of Financial Condition and Results of Operations under the headings entitled Environmental Issues.

Coal Ash Regulation

Our operations produce a number of different coal combustion products, including fly ash, bottom ash, gypsum and other materials. In December 2008, the breach of a dike at the Tennessee Valley Authority’s Kingston Station resulted in a spill of several million cubic yards of ash into a nearby river and onto private properties, prompting federal and state reviews of ash storage and disposal practices at many coal-fired electric generating facilities, including ours. AEP operates 37 ash ponds, and we manage these ponds in a manner that complies with state and local requirements, including dam safety rules designed to assure the structural integrity of these facilities. We also operate a number of dry disposal facilities in accordance with state standards, including ground water monitoring and other applicable standards. In December 2014, the Federal EPA signed a rule to regulate the disposal and beneficial re-use of coal combustion residuals, including fly ash and bottom ash generated at coal-fired electric generating units. The final rule requires certain standards for location, groundwater monitoring and dam stability to be met at landfills and certain surface impoundments at operating facilities on a schedule spanning approximately four years after publication of the final rule in the Federal Register. If existing disposal facilities cannot meet these standards, they will be required to close, but the time frame for closure may be extended if adequate alternative disposal options are not available. Extensions are available for completion of certain activities. For additional information regarding the Federal EPA action taken to regulate the disposal and beneficial re-use of coal combustion residuals and the potential impact on our operations, see Management’s Discussion and Analysis of Financial Condition and Results of Operations under the headings entitled Environmental Issues-Coal Combustion Residual Rule.

Clean Air Act Requirements

The CAA establishes a comprehensive program to protect and improve the nation’s air quality and control mobile and stationary sources of air emissions. The major CAA programs affecting our power plants are described below. The states implement and administer many of these programs and could impose additional or more stringent requirements.

The Acid Rain Program

The 1990 Amendments to the CAA include a cap-and-trade emission reduction program for SO ₂ emissions from power plants. By 2000, the program established a nationwide cap on power plant SO ₂ emissions of 8.9 million tons per year and required further reductions in 2010. The 1990 Amendments also contain requirements for power plants to reduce NO _x emissions through the use of available combustion controls.

The success of the SO ₂ cap-and-trade program encouraged the Federal EPA and the states to use it as a model for other emission reduction programs. We continue to meet our obligations under the Acid Rain Program through the installation of controls, use of alternate fuels and participation in the emissions allowance markets. Subsequent programs developed by the Federal EPA have imposed more stringent SO ₂ and NO _x emission reduction requirements than the Acid Rain Program on many of our facilities. We have installed additional controls and taken other actions to achieve compliance with these programs.

National Ambient Air Quality Standards

The CAA requires the Federal EPA to review the available scientific data for criteria pollutants periodically and establish a concentration level in the ambient air for those substances that is adequate to protect the public health and welfare with an extra safety margin. The Federal EPA also can list additional pollutants and develop concentration levels for them. These concentration levels are known as national ambient air quality standards (NAAQS).

Each state identifies the areas within its boundaries that meet the NAAQS (attainment areas) and those that do not (nonattainment areas). Each state must develop a state implementation plan (SIP) to bring nonattainment areas into compliance with the NAAQS and maintain good air quality in attainment areas. All SIPs are submitted to the Federal EPA for approval. If a state fails to develop adequate plans, the Federal EPA develops and implements a plan. As the Federal EPA reviews the NAAQS and establishes new concentration levels, the attainment status of areas can change and states may be required to develop new SIPs. In 2008, the Federal EPA issued revised NAAQS for both ozone and fine particulate matter (PM _2.5 ). The PM _2.5 standard was remanded by the D.C. Circuit Court of Appeals, and a new

rule was signed by the administrator in December 2012 that lowers the annual standard. A new ozone standard was proposed in 2014. The Federal EPA also adopted a new short-term standard for SO ₂ in 2010, a lower standard for NO _x in 2010, and confirmed the existing standard for lead in 2014. The existing standard for carbon monoxide was retained in 2011. The states are in the process of developing new SIPs for the SO ₂ , NO _x and PM _2.5 standards, which could result in more stringent emission limitations being imposed on our facilities. Additional designations of SO ₂ nonattainment areas and finalization of a more stringent ozone standard could also lead to the imposition of more stringent emission limitations on our facilities.

In 2005, the Federal EPA issued the Clean Air Interstate Rule (CAIR), which requires additional reductions in SO ₂ and NO _x emissions from power plants and assists states developing new SIPs to meet the NAAQS. In August 2011, the Federal EPA issued a final rule to replace CAIR (the Cross State Air Pollution Rule (CSAPR)) that contains more stringent requirements to control SO ₂ and NO _x emissions from fossil fuel-fired electric generating units in 27 states and the District of Columbia. Petitions for review were filed with the U.S. Court of Appeals for the District of Columbia Circuit, and CSAPR was vacated. That decision was subsequently reversed by the U.S. Supreme Court and remanded back to the U.S. Court of Appeals for further proceedings. The Federal EPA filed a motion to lift the stay and allow Phase I of CSAPR to take effect on January 1, 2015 and Phase II to take effect on January 1, 2017. The court granted the Federal EPA's motion, an interim final rule has been issued, and further consideration of the petitions for review on CSAPR will continue during 2015 while Phase I is in effect. For additional information regarding CAIR and CSAPR, see Management’s Discussion and Analysis of Financial Condition and Results of Operations under the headings entitled Environmental Issues-Clean Air Act Requirements.

Hazardous Air Pollutants

As a result of the 1990 Amendments to the CAA, the Federal EPA investigated hazardous air pollutant (HAP) emissions from the electric utility sector and submitted a report to Congress, identifying mercury emissions from coal-fired power plants as warranting further study. In 2011, the Federal EPA issued a final rule setting Maximum Achievable Control Technology (MACT) standards for new and existing coal and oil-fired utility units and New Source Performance Standards (NSPS) for emissions from new and modified power plants. Petitions for review of the MACT standards were denied by the U.S. Court of Appeals for the D.C. Circuit, but in 2014 the U.S. Supreme Court granted certiorari to determine whether Federal EPA should have considered costs in determining if it was appropriate and necessary to regulate hazardous air pollutant emissions from electric generating units. For additional information regarding MACT, see Management’s Discussion and Analysis of Financial Condition and Results of Operations under the headings entitled Environmental Issues-Clean Air Act Requirements.

Regional Haze

The CAA establishes visibility goals for certain federally designated areas, including national parks, and requires states to submit SIPs that will demonstrate reasonable progress toward preventing impairment of visibility in these areas (Regional Haze program). In 2005, the Federal EPA issued its Clean Air Visibility Rule (CAVR), detailing how the CAA’s best available retrofit technology requirements will be applied to facilities built between 1962 and 1977 that emit more than 250 tons per year of certain pollutants in specific industrial categories, including power plants.

PSO is in the process of implementing a settlement with the Federal EPA in order to comply with the Regional Haze program requirements in Oklahoma. Federal EPA is likely to issue a Federal Implementation Plan for Arkansas in 2015. For additional information regarding CAVR and the Regional Haze program requirements, see Management’s Discussion and Analysis of Financial Condition and Results of Operations under the headings entitled Environmental Issues-Clean Air Act Requirements.

Climate Change

We continue to support a federal legislative approach to energy policy as the most effective means of reducing emissions of CO ₂ and other greenhouse gases (generally referred to as CO ₂ ) that recognizes that a reliable and affordable electricity supply is vital to economic recovery and growth. We do not believe regulating CO ₂ emissions under the CAA is the appropriate solution. In the past decade, we have taken voluntary actions to reduce and offset our CO ₂ emissions, and have complied with state energy policies designed to reduce carbon emissions through increasing reliance on renewable resources and expanding our energy efficiency programs.

AEP's total CO ₂ emissions in 2014 (not including our ownership in the Kyger Creek and Clifty Creek plants) were approximately 120 million metric tons. This represents a reduction of 18% compared to our 2005 CO ₂ emission of approximately 146 million metric tons. We expect minor variations in CO ₂ emissions in the near-term as potential sales and emission increases from rebounding economic activity to be offset by expected changes in generation sources.

We expect our emissions to continue to decline over time as we diversify our generating sources and operate fewer coal units. The projected decline in coal-fired generation is due to a number of factors, including the ongoing cost of operating older units, the relative cost of coal and natural gas as fuel sources, increasing environmental regulations requiring significant capital investments and changing commodity market fundamentals. Our strategy for this transformation includes diversifying our fuel portfolio and generating more electricity from natural gas, increasing energy efficiency and investing in renewable resources, where there is regulatory support.

In the absence of comprehensive climate change legislation, the Federal EPA has taken action to regulate CO ₂ emissions under the existing provisions of the CAA. Such actions are being legally challenged by numerous parties and final regulatory outcomes remain uncertain. For additional information regarding the Federal EPA action taken to regulate CO ₂ emissions, see Management’s Discussion and Analysis of Financial Condition and Results of Operations under the headings entitled Environmental Issues – Climate Change, CO ₂ Regulation and Energy Policy.

Our fossil fuel-fired generating units are large sources of CO ₂ emissions. If substantial CO ₂ emission reductions are required, there will be significant increases in capital expenditures and operating costs which would hasten the ultimate retirement of older, less-efficient, coal-fired units. To the extent we install additional controls on our generation plants to limit CO ₂ emissions and receive regulatory approvals to increase our rates, return on capital investment would have a positive effect on future earnings. Prudently incurred capital investments made by our subsidiaries in rate-regulated jurisdictions to comply with legal requirements and benefit customers are generally included in rate base for recovery and earn a return on investment. We would expect these principles to apply to investments made to address new environmental requirements. However, requests for rate increases reflecting these costs can affect us adversely because our regulators could limit the amount or timing of increased costs that we would recover through higher rates. For our sales of energy into the markets, however, there is no such recovery mechanism.

Renewable Sources of Energy

Some of the states we serve have established mandatory or voluntary programs to increase the use of energy efficiency, alternative energy, or renewable energy sources (Arkansas, Indiana, Louisiana, Michigan, Ohio, Oklahoma, Texas, Virginia and West Virginia). During 2014 in support of our goals or requirements, our operating companies procured rights to an additional 199 MW of wind power and at the end of 2014 our operating companies had long-term contracts for 2,183 MW of wind and 10 MW of solar power. In addition, the Indiana Utility Regulatory Commission has approved I&M's proposal for a self-build Clean Energy Solar Pilot Project (15.7 MW). When the additional projects under construction and/or pending regulatory approval are added and netted against one wind contract that is expiring at the end of 2015, the total renewable portfolio will be 2,715 MW to serve our regulated operating company customers. We actively manage our compliance position and are on pace to meet the relevant requirements or benchmarks in each applicable jurisdiction.

End Use Energy Efficiency

Beginning in 2008, AEP ramped up efforts to reduce energy consumption and peak demand through the introduction of additional energy efficiency and demand response programs. These programs, commonly and collectively referred to as demand side management, were implemented in jurisdictions where appropriate cost recovery was available. Since that time, AEP operating companies have implemented over 100 programs across the AEP service territory and in most of the states we serve. For the period 2008 through 2014, these programs have reduced annual consumption by over 5.2 million megawatt hours and peak demand by over 1,500 MW. To achieve these levels, AEP operating companies invested approximately $700 million during the same period. These results are preliminary and subject to independent third party evaluation and verification of savings, as required.

Energy efficiency and demand reduction programs have received regulatory support in most of the states we serve, and appropriate cost recovery will be essential for us to continue and expand these consumer offerings. Appropriate recovery of program costs, lost revenues, and an opportunity to earn a reasonable return ensures that energy efficiency programs are considered equally with supply side investments. Going forward, we will work closely with regulators to ensure that plans are in place to meet specific regulatory and legislative energy efficiency and/or demand reduction targets present in the respective jurisdictions.

Corporate Governance

In response to environmental issues and in connection with its assessment of our strategic plan, our Board of Directors continually reviews the risks posed by our actions. The Board of Directors is informed of any new material issues, including changes to environmental regulations and proposed regulation or legislation that could affect the Company. The Board’s Committee on Directors and Corporate Governance oversees the Company’s annual Corporate Accountability Report, which includes information about the Company’s environmental, financial and social performance.

Other Environmental Issues and Matters

The Comprehensive Environmental Response, Compensation and Liability Act of 1980 imposes costs for environmental remediation upon owners and previous owners of sites, as well as transporters and generators of hazardous material disposed of at such sites. See Note 6 to the consolidated financial statements entitled Commitments, Guarantees and Contingencies, included in the 2014 Annual Reports, under the heading entitled The Comprehensive Environmental Response Compensation and Liability Act (Superfund) and State Remediation for further information.

Environmental Investments

Investments related to improving AEP System plants’ environmental performance and compliance with air and water quality standards during 2012 , 2013 and 2014 and the current estimates for 2015 , 2016 and 2017 are shown below, in each case including debt AFUDC. Estimated construction expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints, environmental regulations, business opportunities, market volatility, economic trends and the ability to access capital. AEP expects to make substantial investments in future years in addition to the amounts set forth below in connection with the modification and addition of facilities at generation plants for environmental quality controls. Such future investments are needed in order to comply with air and water quality standards that have been adopted and have deadlines for compliance after 2014 or have been proposed and may be adopted. Future investments could be significantly greater if emissions reduction requirements are accelerated or otherwise become more onerous or if CO ₂ becomes regulated at existing facilities. The cost of complying with applicable environmental laws, regulations and rules is expected to be material to the AEP System. We typically recover costs of complying with environmental standards from customers through rates in regulated jurisdictions. For our sales of energy into the markets, however, there is no such recovery mechanism. Failure to recover these costs could reduce our future net income and cash flows and possibly harm our financial condition. See Management’s Discussion and Analysis of Financial Condition and Results of Operations under the heading entitled Environmental Issues and Note 6 to the consolidated financial statements, entitled Commitments, Guarantees and Contingencies, included in the 2014 Annual Reports, for more information regarding environmental expenditures in general.



Historical and Projected Environmental Investments

	2012		2013		2014		2015		2016		2017
	Actual		Actual		Actual		Estimate		Estimate		Estimate
	(in thousands)
Total AEP (a)	$	241,000	$	424,200	$	539,800	$	661,000	$	401,000	$	531,000
APCo	52,400		44,800		31,300		70,000		53,000		151,000
I&M	30,000		28,300		51,400		40,000		49,000		84,000
OPCo (b)	70,300		129,300		—		—		—		—
PSO	26,300		56,100		72,100		85,000		49,000		9,000
SWEPCo	24,200		135,700		225,300		316,000		86,000		66,000


(a)	Includes expenditures of the subsidiaries shown and other subsidiaries not shown. The figures reflect construction expenditures, not investments in subsidiary companies. Excludes discontinued operations.


(b)	OPCo transferred all of its generation assets on December 31, 2013.

BUSINESS SEGMENTS

Our reportable segments and their related business activities are outlined below. See Note 9 to the consolidated financial statements entitled Business Segments, included in the 2014 Annual Reports, for additional information on our operating segments.

Vertically Integrated Utilities


•	Generation, transmission and distribution of electricity for sale to retail and wholesale customers through assets owned and operated by AEGCo, APCo, I&M, KGPCo, KPCo, PSO, SWEPCo and WPCo.

Transmission and Distribution Utilities


•	Transmission and distribution of electricity for sale to retail and wholesale customers through assets owned and operated by OPCo, TCC and TNC.


•	OPCo purchases energy and capacity to serve remaining generation service customers.

AEP Transmission Holdco


•	Development, construction and operation of transmission facilities through investments in our wholly-owned transmission only subsidiaries and transmission only joint ventures. These investments have PUCT-approved or FERC-approved returns on equity.

Generation & Marketing


•	Nonregulated generation in ERCOT and PJM.


•	Marketing, risk management and retail activities in ERCOT, PJM and MISO.

AEP River Operations


•	Commercial barging operations that transport liquid, coal and dry bulk commodities primarily on the Ohio, Illinois and lower Mississippi Rivers.

VERTICALLY INTEGRATED UTILITIES

GENERAL

AEP’s vertically integrated utility operations are engaged in the generation, transmission and distribution of electricity for sale to retail and wholesale customers through assets owned and operated by AEGCo, APCo, I&M, KGPCo, KPCo, PSO, SWEPCo and WPCo. AEPSC, as agent for AEP’s public utility subsidiaries, performs marketing, generation dispatch, fuel procurement and power-related risk management and trading activities on behalf of each of these subsidiaries.

ELECTRIC GENERATION

Facilities and Coordination

As of December 31, 2014 , AEP’s vertically integrated public utility subsidiaries owned or leased approximately 26,900 MW of domestic generation. See Item 2 – Properties for more information regarding the generation capacity of vertically integrated public utility subsidiaries.

Counterparty Risk Management

Counterparties and exchanges may require cash or cash related instruments to be deposited on transactions as margin against open positions. As of December 31, 2014 , counterparties posted approximately $9 million in cash, cash equivalents or letters of credit with AEPSC for the benefit of AEP’s public utility subsidiaries (while, as of that date, AEP’s public utility subsidiaries posted approximately $53 million with counterparties and exchanges). Since open trading contracts are valued based on market prices of various commodities, exposures change daily. See Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in the 2014 Annual Reports, under the heading entitled Quantitative and Qualitative Disclosures About Market Risk for additional information.

Fuel Supply

The 2012 and 2013 results include fuel used and transported by OPCo, a utility subsidiary that is not part of the Vertically Integrated Utilities segment. OPCo’s results appear here because it retained its generation until year-end 2013 at which point all of its generation was transferred to AGR which transferred portions to APCo and KPCo.

The table shows the sources of fuel used by the Vertically Integrated Utilities:



	2014	2013	2012
Coal and Lignite	72%	75%	71%
Nuclear	16%	11%	11%
Natural Gas	11%	13%	17%
Hydroelectric and other	1%	<1%	<1%

A price increase/decrease in one or more fuel sources relative to other fuels may result in the decreased/increased use of other fuels. AEP’s overall 2014 fossil fuel costs for the Vertically Integrated Utilities were relatively unchanged on a dollar per MMBtu basis from 2013. A slight decline in the cost of coal was offset by an increase in natural gas prices, during the first half of 2014.

Coal and Lignite

AEP’s Vertically Integrated Utilities procure coal and lignite under a combination of purchasing arrangements including long-term contracts, affiliate operations and spot agreements with various producers and coal trading firms. Coal consumption in 2014 was higher than 2013 due to strong demand in the East during the first half of the year, but coal inventories ended the year at target levels on a system basis.

Management believes that the Vertically Integrated Utilities will be able to secure and transport coal and lignite of adequate quality and in adequate quantities to operate their coal and lignite-fired units. Through subsidiaries, AEP owns, leases or controls more than 4,990 railcars, approximately 509 barges, 12 towboats, and a coal handling terminal with approximately 18 million tons of annual capacity to move and store coal for use in our generating facilities. See AEP River Operations for a discussion of AEP’s for-profit liquid, coal and other dry-bulk commodity transportation operations that are not part of this segment.

Spot market prices for coal decreased throughout 2014. The decreased spot coal prices during the year can be attributed to weak European coal demand, and relatively inexpensive natural gas, in the second half of 2014. Approximately half of the coal purchased by AEP is procured through term contracts. As those contracts expire, they are replaced with contracts at current market prices. The price impact of this process is reflected in subsequent periods. The price paid for coal delivered in 2014 decreased from the prior year primarily due to a decrease in spot coal prices and heavier reliance on shorter term contracts.

The following table shows the amount of coal and lignite delivered to the Vertically Integrated Utilities plants during the past three years and the average delivered price of coal purchased by the Vertically Integrated Utilities:



	2014		2013		2012
Total coal delivered to the plants (thousands of tons)	41,001		51,057		60,054
Average cost per ton of coal delivered	$	46.65	$	51.31	$	49.22

The coal supplies at the Vertically Integrated Utilities plants vary from time to time depending on various factors, including, but not limited to, demand for electric power, unit outages, transportation infrastructure limitations, space limitations, plant coal consumption rates, availability of acceptable coals, labor issues and weather conditions, which may interrupt production or deliveries. As of December 31, 2014, the Vertically Integrated Utilities coal inventory was approximately 31 days of full load burn.

Natural Gas

The Vertically Integrated Utilities consumed over 96 billion cubic feet of natural gas during 2014 for generating power. This represents a decrease of 15% from 2013; 96.1 billion cubic feet in 2014 as compared to 112.4 billion cubic feet in 2013, excluding OPCo usage. While AEP’s natural gas-fired generating capacity has increased over the past several years with the addition of the Stall and Dresden units, the implementation of the SPP Market and change in the dispatch of AEP’s natural gas fleet resulted in a decreased natural gas-fired generation. Despite the availability of natural gas due to the increased shale supply, the U.S. pipeline infrastructure remains a limiting factor in the expansion of natural gas-fired generation. Several of AEP’s natural gas-fired power plants are connected to at least two pipelines, however, which allow greater access to competitive supplies and improves delivery reliability. A portfolio of term, monthly, seasonal firm and daily peaking purchase and transportation agreements (that are entered into on a competitive basis and based on market prices) supplies natural gas requirements for each plant, as appropriate.

The following table shows the amount of natural gas delivered to the Vertically Integrated Utilities plants during the past three years and the average delivered price of natural gas purchased by the Vertically Integrated Utilities. Results for 2013 and 2012 include natural gas delivered to OPCo, while results for 2014 do not.



	2014		2013		2012
Total natural gas delivered to the plants (billion cubic feet)	96.1		158.3		220.0
Average price per MMBtu of purchased natural gas	$	4.70	$	4.01	$	3.01

Nuclear

I&M has made commitments to meet the current nuclear fuel requirements of the Cook Plant. I&M has made and will make purchases of uranium in various forms in the spot, short-term and mid-term markets. I&M also continues to lease a portion of its nuclear fuel.

For purposes of the storage of high-level radioactive waste in the form of spent nuclear fuel, I&M completed modifications to its spent nuclear fuel storage pool more than 10 years ago. I&M entered into an agreement to provide for onsite dry cask storage of spent nuclear fuel to permit normal operations to continue. I&M is scheduled to conduct further dry cask loading and storage projects on an ongoing periodic basis. I&M completed its initial loading of spent nuclear fuel into the dry casks in 2012, which consisted of 12 casks (32 spent nuclear fuel assemblies contained within each). The second loading of spent nuclear fuel into dry casks is expected to be completed in 2015.

Nuclear Waste and Decommissioning

As the owner of the Cook Plant, I&M has a significant future financial commitment to dispose of spent nuclear fuel and decommission and decontaminate the plant safely. The cost to decommission a nuclear plant is affected by NRC regulations and the spent nuclear fuel disposal program. The most recent decommissioning cost study was completed in 2012. In it, the estimated cost of decommissioning and disposal of low-level radioactive waste for the Cook Plant ranged from $1.3 billion to $1.7 billion in 2012 non-discounted dollars. As of December 31, 2014 , the total decommissioning trust fund balance for the Cook Plant was approximately $1.8 billion. The balance of funds available to decommission Cook Plant will differ based on contributions and investment returns. The ultimate cost of retiring the Cook Plant may be materially different from estimates and funding targets as a result of the:


•	Type of decommissioning plan selected.


•	Escalation of various cost elements (including, but not limited to, general inflation and the cost of energy).


•	Further development of regulatory requirements governing decommissioning.


•	Technology available at the time of decommissioning differing significantly from that assumed in studies.


•	Availability of nuclear waste disposal facilities.


•	Availability of a United States Department of Energy facility for permanent storage of spent nuclear fuel.

Accordingly, management is unable to provide assurance that the ultimate cost of decommissioning the Cook Plant will not be significantly different than current projections. We will seek recovery from customers through our regulated rates if actual decommissioning costs exceed our projections. See Note 6 to the consolidated financial statements, entitled Commitments, Guarantees and Contingencies under the heading Nuclear Contingencies, included in the 2014 Annual Reports, for information with respect to nuclear waste and decommissioning.

Low-Level Radioactive Waste

The Low-Level Waste Policy Act of 1980 mandates that the responsibility for the disposal of low-level radioactive waste rests with the individual states. Low-level radioactive waste consists largely of ordinary refuse and other items that have come in contact with radioactive materials. Michigan does not currently have a disposal site for such waste available. I&M cannot predict when such a site may be available. However the states of Utah and Texas have licensed low level radioactive waste disposal sites which currently accept low level radioactive waste from Michigan waste generators. There is currently no set date limiting I&M’s access to either of these facilities. The Cook Plant has a facility onsite designed specifically for the storage of low level radioactive waste. In the event that low level radioactive waste disposal facility access becomes unavailable, then low level radioactive waste can be stored onsite at this facility.

Certain Power Agreements

I&M

The Unit Power Agreement between AEGCo and I&M, dated March 31, 1982, provides for the sale by AEGCo to I&M of all the capacity (and the energy associated therewith) available to AEGCo at the Rockport Plant. Whether or not power is available from AEGCo, I&M is obligated to pay a demand charge for the right to receive such power (and an energy charge for any associated energy taken by I&M). The agreement will continue in effect until the last of the lease terms of Unit 2 of the Rockport Plant has expired (currently December 2022) unless extended in specified circumstances.

Pursuant to an assignment between I&M and KPCo, and a unit power agreement between AEGCo and KPCo, AEGCo sells KPCo 30% of the capacity (and the energy associated therewith) available to AEGCo from both units of the Rockport Plant. KPCo has agreed to pay to AEGCo the amounts that I&M would have paid AEGCo under the terms of the Unit Power Agreement between AEGCo and I&M for such entitlement. The KPCo unit power agreement expires in December 2022.

OVEC

AEP and several nonaffiliated utility companies jointly own OVEC. The aggregate equity participation of AEP in OVEC is 43.47%. Until 2001, OVEC supplied from its generation capacity the power requirements of a uranium enrichment plant near Portsmouth, Ohio owned by the United States Department of Energy. The sponsoring companies are entitled to receive and are obligated to pay for all OVEC capacity (approximately 2,200 MW) in proportion to their respective power participation ratios. The aggregate power participation ratio of APCo, I&M and OPCo is 43.47%. The proceeds from the sale of power by OVEC are designed to be sufficient for OVEC to meet its operating expenses and fixed costs and to provide a return on its equity capital. The Inter-Company Power Agreement, which defines the rights of the owners and sets the power participation ratio of each, was extended by the owners in 2011 from the termination date of March 2026 until June 2040. AEP and the other owners have authorized environmental investments related to their ownership interests. OVEC financed capital expenditures totaling $1.3 billion in connection with the engineering and construction of flue gas desulfurization projects and the associated scrubber waste disposal landfills at its two generation plants through debt issuances, including tax-advantaged debt issuances. Both OVEC generation plants are operating with the new environmental controls in service. OPCo attempted to assign its rights and obligations under the Inter-Company Power Agreement to an affiliate as part of its transfer of its generation assets and liabilities in keeping with corporate separation required by Ohio law. OPCo failed to obtain the consent to assignment from the other owners of OVEC and therefore filed a request with the PUCO seeking authorization to maintain its ownership of OVEC. In December 2013, the PUCO approved OPCo’s request, subject to the condition that energy from the OVEC entitlements are sold into the day-ahead or real-time PJM energy markets, or on a forward basis through a bilateral arrangemen t. OPCo has filed an application with the PUCO to approve a purchased power agreement (PPA) rider that would allow retail customers to receive a rate stabilizing charge or credit by hedging market-based prices with a cost-based purchase power agreement. The PPA would initially be based upon OPCo's contractual entitlement under the Inter-Company Agreement which is approximately 20% of OVEC's capacity .

ELECTRIC DELIVERY

General

Other than AEGCo, AEP’s vertically integrated public utility subsidiaries own and operate transmission and distribution lines and other facilities to deliver electric power. See Item 2 – Properties for more information regarding the transmission and distribution lines. Most of the transmission and distribution services are sold to retail customers of AEP’s vertically integrated public utility subsidiaries in their service territories. These sales are made at rates approved by the state utility commissions of the states in which they operate, and in some instances, approved by the FERC. See Item 1 – Vertically Integrated Utilities – Regulation – Rates. The FERC regulates and approves the rates for both wholesale transmission transactions and wholesale generation contracts. See Item 1 – Vertically Integrated Utilities – Regulation – FERC. As discussed below, some transmission services also are separately sold to non-affiliated companies.

Other than AEGCo, AEP’s vertically integrated public utility subsidiaries hold franchises or other rights to provide electric service in various municipalities and regions in their service areas. In some cases, these franchises provide the utility with the exclusive right to provide electric service. These franchises have varying provisions and expiration dates. In general, the operating companies consider their franchises to be adequate for the conduct of their business. For a discussion of competition in the sale of power, see Item 1 – Vertically Integrated Utilities – Competition.

The use and the recovery of costs associated with the transmission assets of the AEP vertically integrated public utility subsidiaries are subject to the rules, principles, protocols and agreements in place with PJM, SPP and ERCOT, and as approved by the FERC.

Transmission Agreement

APCo, I&M, KGPCo, KPCo and WPCo own and operate transmission facilities that are used to provide transmission service under the PJM OATT and are parties to the TA. OPCo, a subsidiary in our Transmission and Distribution Utilities segment, is also a party to the TA. The TA defines how the parties to the agreement share the revenues associated with their transmission facilities and the costs of transmission service provided by PJM. The TA has been approved by the FERC.

The following table shows the net charges allocated among the certain parties to the TA during the years ended December 31, 2014 , 2013 and 2012 :



	Years Ended December 31,
Company	2014		2013		2012
	(in thousands)
APCo	$	84,667	$	40,609	$	20,264
I&M	39,707		19,947		5,689

TCA, OATT, and ERCOT Protocols

PSO, SWEPCo and AEPSC are parties to the TCA. Under the TCA, a coordinating committee is charged with the responsibility of (a) overseeing the coordinated planning of the transmission facilities of the parties to the agreement, including the performance of transmission planning studies, (b) the interaction of such subsidiaries with independent system operators and other regional bodies interested in transmission planning and (c) compliance with the terms of the OATT filed with the FERC and the rules of the FERC relating to such tariff. Pursuant to the TCA, AEPSC has responsibility for monitoring the reliability of their transmission systems and administering the OATT on behalf of the other parties to the agreement. The TCA also provides for the allocation among the parties of revenues collected for transmission and ancillary services provided under the OATT. These allocations have been determined by the FERC-approved OATT for the SPP.

The following table shows the net (credits) or charges allocated pursuant to the TCA and SPP OATT protocols as described above for the years ended December 31, 2014 , 2013 and 2012 :



	Years Ended December 31,
	2014			2013			2012
	(in thousands)
PSO	$	14,100		$	14,700		$	12,300
SWEPCo	(14,100		)	(14,700		)	(12,300		)

Transmission Services for Non-Affiliates

In addition to providing transmission services in connection with their own power sales, AEP’s vertically integrated public utility subsidiaries through RTOs also provide transmission services for non-affiliated companies. See Item 1 – Vertically Integrated Utilities – Electric Transmission and Distribution – Regional Transmission Organizations, below. Transmission of electric power by AEP’s public utility subsidiaries is regulated by the FERC.

Coordination of East and West Zone Transmission

AEP’s System Transmission Integration Agreement was terminated effective June 1, 2014. It provided for the integration and coordination of the planning, operation and maintenance of the transmission facilities of AEP East Companies and AEP West Companies. The System Transmission Integration Agreement functioned as an umbrella agreement in addition to the TA and the TCA. AEP’s System Transmission Integration Agreement contained two service schedules that governed:


•	The allocation of transmission costs and revenues.


•	The allocation of third-party transmission costs and revenues and System dispatch costs.

The System Transmission Integration Agreement contemplated that additional service schedules may be added as circumstances warrant.

Regional Transmission Organizations

AEGCo, APCo, I&M, KGPCo, KPCo and WPCo are members of PJM, and PSO and SWEPCo are members of the SPP (both FERC-approved RTOs). RTOs operate, plan and control utility transmission assets in a manner designed to provide open access to such assets in a way that prevents discrimination between participants owning transmission assets and those that do not.

REGULATION

General

AEP’s vertically integrated public utility subsidiaries’ retail rates and certain other matters are subject to traditional cost-based regulation by the state utility commissions. AEP’s vertically integrated public utility subsidiaries are also subject to regulation by the FERC under the Federal Power Act with respect to wholesale power and transmission service transactions. I&M is subject to regulation by the NRC under the Atomic Energy Act of 1954, as amended, with respect to the operation of the Cook Plant. AEP and its vertically integrated public utility subsidiaries are also subject to the regulatory provisions of EPACT, much of which is administered by the FERC.

Rates

Historically, state utility commissions have established electric service rates on a cost-of-service basis, which is designed to allow a utility an opportunity to recover its cost of providing service and to earn a reasonable return on its investment used in providing that service. A utility’s cost of service generally reflects its operating expenses, including operation and maintenance expense, depreciation expense and taxes. State utility commissions periodically adjust rates pursuant to a review of (a) a utility’s adjusted revenues and expenses during a defined test period and (b) such utility’s level of investment. Absent a legal limitation, such as a law limiting the frequency of rate changes or capping rates for a period of time, a state utility commission can review and change rates on its own initiative. Some states may initiate reviews at the request of a utility, customer, governmental or other representative of a group of customers. Such parties may, however, agree with one another not to request reviews of or changes to rates for a specified period of time.

Public utilities have traditionally financed capital investments until the new asset is placed in service. Provided the asset was found to be a prudent investment, it was then added to rate base and entitled to a return through rate recovery. Given long lead times in construction, the high costs of plant and equipment and volatile capital markets, we are actively pursuing strategies to accelerate rate recognition of investments and cash flow. AEP representatives continue to engage our state commissioners and legislators on alternative ratemaking options to reduce regulatory lag and enhance certainty in the process. These options include pre-approvals, a return on construction work in progress, rider/trackers, formula rates and the inclusion of future test-year projections into rates.

The rates of AEP’s vertically integrated public utility subsidiaries are generally based on the cost of providing traditional bundled electric service (i.e., generation, transmission and distribution service). Historically, the state regulatory frameworks in the service area of the AEP vertically integrated public utility subsidiaries reflected specified fuel costs as part of bundled (or, more recently, unbundled) rates or incorporated fuel adjustment clauses in a utility’s rates and tariffs. Fuel adjustment clauses permit periodic adjustments to fuel cost recovery from customers and therefore provide protection against exposure to fuel cost changes.

The following state-by-state analysis summarizes the regulatory environment of certain major jurisdictions in which AEP operates. Several public utility subsidiaries operate in more than one jurisdiction. See Note 4 to the consolidated financial statements, entitled Rate Matters, included in the 2014 Annual Reports, for more information regarding pending rate matters.

Indiana

I&M provides retail electric service in Indiana at bundled rates approved by the IURC, with rates set on a cost-of-service basis. Indiana provides for timely fuel and purchased power cost recovery through a fuel cost recovery mechanism.

Oklahoma

PSO provides retail electric service in Oklahoma at bundled rates approved by the OCC. PSO’s rates are set on a cost-of-service basis. Fuel and purchased energy costs above or below the amount included in base rates are recovered or refunded by applying fuel adjustment and other factors to retail kilowatt-hour sales. The factors are generally adjusted annually and are based upon forecasted fuel and purchased energy costs. Over or under collections of fuel and purchased energy costs for prior periods are returned to or recovered from customers in the year following when new annual factors are established.

Virginia

APCo currently provides retail electric service in Virginia at unbundled rates approved by the Virginia SCC. Virginia generally allows for timely recovery of fuel costs through a fuel adjustment clause. Transmission services are provided at OATT rates based on rates established by the FERC. In addition to base rates and fuel cost recovery, APCo is permitted to recover a variety of costs through rate adjustment clauses.

West Virginia

APCo and WPCo provide retail electric service at bundled rates approved by the WVPSC, with rates set on a cost-of-service basis. West Virginia generally allows for timely recovery of fuel costs through an expanded net energy cost which trues-up to actual expenses.

FERC

Under the Federal Power Act, the FERC regulates rates for interstate power sales at wholesale, transmission of electric power, accounting and other matters, including construction and operation of hydroelectric projects. The FERC regulations require AEP’s vertically integrated public utility subsidiaries to provide open access transmission service at FERC-approved rates. The FERC also regulates unbundled transmission service to retail customers. The FERC also regulates the sale of power for resale in interstate commerce by (a) approving contracts for wholesale sales to municipal and cooperative utilities and (b) granting authority to public utilities to sell power at wholesale at market-based rates upon a showing that the seller lacks the ability to improperly influence market prices. AEP’s vertically integrated public utility subsidiaries have market-based rate authority from the FERC, under which much of their wholesale marketing activity takes place. The FERC requires each public utility that owns or controls interstate transmission facilities to, directly or through an RTO, to file an open access network and point-to-point transmission tariff that offers services comparable to the utility’s own uses of its transmission system. The FERC also requires all

transmitting utilities, directly or through an RTO, to establish an Open Access Same-time Information System, which electronically posts transmission information such as available capacity and prices, and requires utilities to comply with Standards of Conduct that prohibit utilities’ transmission employees from providing non-public transmission information to the utility’s marketing employees.

The FERC oversees RTOs, entities created to operate, plan and control utility transmission assets. Order 2000 also prescribes certain characteristics and functions of acceptable RTO proposals. AEGCo, APCo, I&M, KGPCo, KPCo and WPCo are members of PJM. PSO and SWEPCo are members of SPP.

The FERC has jurisdiction over the issuances of securities of most of our public utility subsidiaries, the acquisition of securities of utilities, the acquisition or sale of certain utility assets and mergers with another electric utility or holding company. In addition, both the FERC and state regulators are permitted to review the books and records of any company within a holding company system. EPACT gives the FERC increased utility merger oversight.

COMPETITION

The vertically integrated public utility subsidiaries of AEP, like the electric industry generally, face competition in the sale of available power on a wholesale basis, primarily to other public utilities and power marketers. The Energy Policy Act of 1992 was designed, among other things, to foster competition in the wholesale market by creating a generation market with fewer barriers to entry and mandating that all generators have equal access to transmission services. As a result, there are more generators able to participate in this market. The principal factors in competing for wholesale sales are price (including fuel costs), availability of capacity and power and reliability of service.

AEP’s vertically integrated public utility subsidiaries also compete with self-generation and with distributors of other energy sources, such as natural gas, fuel oil and coal, within their service areas. The primary factors in such competition are price, reliability of service and the capability of customers to utilize sources of energy other than electric power. With respect to competing generators and self-generation, the public utility subsidiaries of AEP believe that they generally maintain a competitive position. With respect to alternative sources of energy, the vertically integrated public utility subsidiaries of AEP believe that the reliability of their service and the limited ability of customers to substitute other cost-effective sources for electric power place them in a favorable competitive position, even though their prices may be higher than the costs of some other sources of energy.

Significant changes in the global economy have led to increased price competition for industrial customers in the United States, including those served by the AEP System. Some of these industrial customers have requested price reductions from their suppliers of electric power. In addition, industrial customers that are downsizing or reorganizing often close a facility based upon its costs, which may include, among other things, the cost of electric power. The vertically integrated public utility subsidiaries of AEP cooperate with such customers to meet their business needs through, for example, providing various off-peak or interruptible supply options pursuant to tariffs filed with, and approved by, the various state commissions. Occasionally, these rates are negotiated with the customer, and then filed with the state commissions for approval.

SEASONALITY

The sale of electric power is generally a seasonal business. In many parts of the country, demand for power peaks during the hot summer months, with market prices also peaking at that time. In other areas, power demand peaks during the winter. The pattern of this fluctuation may change due to the nature and location of AEP’s facilities and the terms of power sale contracts into which AEP enters. In addition, AEP has historically sold less power, and consequently earned less income, when weather conditions are milder. Unusually mild weather in the future could diminish AEP’s results of operations and may impact its financial condition. Conversely, unusually extreme weather conditions could increase AEP’s results of operations.

TRANSMISSION AND DISTRIBUTION UTILITIES

GENERAL

This segment consists of the transmission and distribution of electricity for sale to retail and wholesale customers through assets owned and operated by OPCo, TCC and TNC. OPCo is engaged in the transmission and distribution of electric power to approximately 1,466,000 retail customers in Ohio. TCC is engaged in the transmission and distribution of electric power to approximately 817,000 retail customers through REPs in southern Texas. TNC is engaged in the transmission and distribution of electric power to approximately 189,000 retail customers through REPs in west and central Texas.

AEP’s transmission and distribution utility subsidiaries own and operate transmission and distribution lines and other facilities to deliver electric power. See Item 2 – Properties for more information regarding the transmission and distribution lines. Most of the transmission and distribution services are sold to retail customers of AEP’s transmission and distribution utility subsidiaries in their service territories. These sales are made at rates approved by the PUCT for TCC and TNC and by the PUCO and the FERC for OPCo. The FERC regulates and approves the rates for wholesale transmission transactions. As discussed below, some transmission services also are separately sold to non-affiliated companies.

AEP’s transmission and distribution utility subsidiaries hold franchises or other rights to provide electric service in various municipalities and regions in their service areas. In some cases, these franchises provide the utility with the exclusive right to provide electric service. These franchises have varying provisions and expiration dates. In general, the operating companies consider their franchises to be adequate for the conduct of their business.

The use and the recovery of costs associated with the transmission assets of the AEP transmission and distribution utility subsidiaries are subject to the rules, protocols and agreements in place with PJM and ERCOT, and as approved by the FERC. In addition to providing transmission services in connection with power sales in their service areas, AEP’s transmission and distribution utility subsidiaries through RTOs also provide transmission services for non-affiliated companies.

Transmission Agreement

OPCo, together with APCo, I&M, KGPCo, KPCo and WPCo, is a party to the TA. The TA defines how the parties to the agreement share the cost of their transmission facilities. The TA has been approved by the FERC. OPCo’s net charges allocated to it under the TA during the years ended December 31, 2014 , 2013 and 2012 were $17 million, $8.9 million and $6.1 million, respectively.

Regional Transmission Organizations

OPCo is a member of PJM, a FERC-approved RTO. RTOs operate, plan and control utility transmission assets in a manner designed to provide open access to such assets in a way that prevents discrimination between participants owning transmission assets and those that do not. TCC and TNC are members of ERCOT.

REGULATION

OPCo provides distribution and transmission services to retail customers within its service territory at cost-based rates approved by the PUCO or by the FERC. TCC and TNC provide transmission and distribution service on a cost-of-service basis at rates approved by the PUCT and wholesale transmission service under tariffs approved by the FERC consistent with PUCT rules. Transmission and distribution rates are established on a cost-of-service basis, which is designed to allow a utility an opportunity to recover its cost of providing service and to earn a reasonable return on its investment used in providing that service. The cost of service generally reflects operating expenses, including operation and maintenance expense, depreciation expense and taxes. Utility commissions periodically adjust rates pursuant to a review of (a) a utility’s adjusted revenues and expenses during a defined test period and (b) such utility’s level of investment.

FERC

Under the Federal Power Act, the FERC regulates rates for transmission of electric power, accounting and other matters. The FERC regulations require AEP to provide open access transmission service at FERC-approved rates. The FERC also regulates unbundled transmission service to retail customers. The FERC requires each public utility that owns or controls interstate transmission facilities to, directly or through an RTO, file an open access network and point-to-point transmission tariff that offers services comparable to the utility’s own uses of its transmission system. The FERC also requires all transmitting utilities, directly or through an RTO, to establish an Open Access Same-time Information System, which electronically posts transmission information such as available capacity and prices, and requires utilities to comply with Standards of Conduct that prohibit utilities’ transmission employees from providing non-public transmission information to the utility’s marketing employees. In addition, both the FERC and state regulators are permitted to review the books and records of any company within a holding company system. EPACT gives the FERC increased utility merger oversight.

SEASONALITY

The delivery of electric power is generally a seasonal business. In many parts of the country, demand for power peaks during the hot summer months. In other areas, power demand peaks during the winter months. The pattern of this fluctuation may change due to the nature and location of AEP’s transmission and distribution facilities. In addition, AEP transmission and distribution has historically delivered less power, and consequently earned less income, when weather conditions are milder. Unusually mild weather in the future could diminish AEP transmission and distribution’s results of operations and may impact its financial condition. Conversely, unusually extreme weather conditions could increase AEP transmission and distribution’s results of operations.

GENERATION & MARKETING

GENERAL

Our Generation & Marketing segment subsidiaries consist of competitive nonutility generating assets, a wholesale energy trading and marketing business and a retail supply and energy management business. The largest subsidiary in our Generation & Marketing segment is AGR. On December 31, 2013, AGR acquired the generation assets and related liabilities at net book value of OPCo in a series of transactions approved by the PUCO and the FERC. AGR transferred a portion of the generation assets and liabilities at net book value that it received to APCo and KPCo, and, in 2015 to WPCo. As a result of these transactions, AGR owns 9,159 MW of generating capacity, with rights to an additional 1,186 MW pursuant to a unit power agreement (see below). Other subsidiaries in this segment own or have the right to receive power from additional generation assets. See Item 2 – Properties for more information regarding the generation assets of the Generation & Marketing segment. AGR is a competitive generation subsidiary.

With respect to our wholesale energy trading and marketing business, we enter into short and long-term transactions to buy or sell capacity, energy and ancillary services primarily in ERCOT, MISO and PJM. We sell power into the market and engage in power, natural gas, coal and emissions allowances risk management and trading activities.

These activities primarily involve the purchase and sale of electricity (and to a lesser extent, natural gas, coal and emissions allowances) under forward contracts at fixed and variable prices. These contracts include physical transactions, exchange-traded futures, and to a lesser extent, over-the-counter swaps and options. The majority of forward contracts are typically settled by entering into offsetting contracts. These transactions are executed with numerous counterparties or on exchanges.

With respect to our retail supply and energy management business, our subsidiary AEP Energy is a retail energy supplier that supplies electricity to residential, commercial, and industrial customers. AEP Energy provides an array of energy solutions and is operating in Illinois, Pennsylvania, Delaware, Maryland, New Jersey, Ohio and Washington, D.C. AEP Energy also provides demand-side management solutions nationwide. AEP Energy had approximately 240,000 customer accounts as of December 31, 2014 .

REGULATION

AGR is a public utility under the Federal Power Act, and is subject to FERC’s exclusive ratemaking jurisdiction over wholesale sales of electricity and the transmission of electricity in interstate commerce. Under the Federal Power Act, FERC has the authority to grant or deny market-based rates for sales of energy, capacity and ancillary services to ensure that such sales are just and reasonable. FERC granted AGR market-based rate authority in December 2013. FERC’s jurisdiction over ratemaking also includes the authority to suspend the market-based rates of utilities (including AGR, which is a public utility as defined by the FERC) and set cost-based rates if FERC subsequently determines that such utility can exercise market power, create barriers to entry or engage in abusive affiliate transactions. As a condition to the order granting AGR market-based rate authority, every three years AGR is required to file a market power update to show that it continues to meet FERC’s standards with respect to generation market power and other criteria used to evaluate whether it continues to qualify for market-based rates. Other matters subject to FERC jurisdiction include, but are not limited to, review of mergers; and dispositions of jurisdictional facilities and acquisitions of securities of another public utility or an existing operational generating facility.

Specific operations of AGR are also subject to the jurisdiction of various other Federal, state, regional and local agencies, including Federal and state environmental protection agencies. We are also regulated by the PUCT for transactions inside ERCOT. Additionally, AGR is subject to mandatory reliability standards promulgated by the North American Electric Reliability Corporation, with the approval of FERC.

COMPETITION

The generation and marketing subsidiaries of AEP face competition for the sale of available power, capacity and ancillary services. The principal factors impacting us are electricity and fuel prices, new market entrants, construction or retirement of generating assets by others and technological advances in power generation. It is possible that changes in regulatory policies or advances in newer technologies for batteries or energy storage, fuel cells, microturbines, windmills and photovoltaic solar cells will reduce costs of new technology to levels that are equal to or below that of most central station electricity production. Our ability to maintain relatively low cost, efficient and reliable operations is a significant determinate of our competitiveness.

With over 70% of our generation fleet fueled by coal, our overall competitive position is impacted by the price of natural gas relative to coal. While higher relative natural gas prices generally favor our competitive position, lower relative natural gas prices will favor our competitors that have a higher concentration of natural gas fueled generation. Other factors impacting our competitiveness include environmental regulation, transmission congestion or transportation constraints at or near our generation facilities, inoperability or inefficiencies, outages and deactivations and retirements at our generation facilities.

SEASONALITY

Counterparty Risk Management

Counterparties and exchanges may require cash or cash related instruments to be deposited on these transactions as margin against open positions. As of December 31, 2014 , counterparties posted approximately $26 million in cash, cash equivalents or letters of credit with AEP for the benefit of AEP’s generation and marketing subsidiaries (while, as of that date, AEP’s generation and marketing subsidiaries posted approximately $220 million with counterparties and exchanges). Since open trading contracts are valued based on market prices of various commodities, exposures change daily. See Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in the 2014 Annual Reports, under the heading entitled Quantitative and Qualitative Disclosures About Market Risk for additional information.

Fuel Supply

The table shows the sources of fossil fuel used, on a heat basis, by AGR:



	2014
Coal	88%
Natural Gas	12%
Fuel Oil and other	< 1%

A price increase/decrease in one or more fuel sources relative to other fuels may result in the decreased/increased use of other fuels.

Coal and Consumables

AGR procures coal and consumables needed to burn the coal under a combination of purchasing arrangements including long-term and spot contracts with various producers and coal trading firms. As contracts expire, they are replaced, as needed, with contracts at market prices. Coal and consumable inventories remain adequate to meet generation requirements.

Management believes that AGR will be able to secure and transport coal and consumables of adequate quality and in adequate quantities to operate their coal fired units. AGR, through contracts, ownership and leases has the ability to adequately move and store coal and consumables for use in our generating facilities. AGR plants consumed 16.1 million tons of coal in 2014.

The coal supplies at AGR plants vary from time to time depending on various factors, including, but not limited to, demand for electric power, unit outages, transportation infrastructure limitations, space limitations, plant coal consumption rates, coal quality, availability of acceptable coals, labor issues and weather conditions, which may interrupt production or deliveries. As of December 31, 2014, AGR’s coal inventory was adequate to meet the generation demand of the coal fleet.

Natural Gas

Despite the availability of natural gas due to the increased shale supply, the U.S. pipeline infrastructure remains a limiting factor in the expansion of natural gas-fired generation. A portfolio of term, monthly, seasonal firm and daily peaking purchase and transportation agreements (that are entered into on a competitive basis and based on market prices) supplies natural gas requirements for each plant, as appropriate. AGR plants consumed 50 billion cubic feet of natural gas in 2014, an increase of approximately 9% from 2013.

Certain Power Agreements

AEGCo

The Unit Power Agreement between AEGCo and AGR (assigned from OPCo) dated March 15, 2007, provides for the sale by AEGCo to AGR of all the capacity and associated unit contingent energy and ancillary services available to AGR from the Lawrenceburg Plant, a 1,186 MW natural gas-fired unit owned by AEGCo. AGR is obligated to pay a capacity charge (whether or not power is available from the Lawrenceburg Plant), and the fuel, operating and maintenance charges associated with the energy dispatched by AGR, and to reimburse AEGCo for other costs associated with the operation and ownership of the Lawrenceburg Plant. The agreement will continue in effect until December 31, 2017 unless extended.

OPCo

Pursuant to a Power Supply Agreement (PSA) between AGR and OPCo, AGR supplies capacity for OPCo’s switched and non-switched retail load for the period January 1, 2014 through May 31, 2015. AGR also supplied the energy needs of OPCo’s non-switched retail load that was not acquired through auctions from January 1, 2014 through December 31, 2014 under the PSA.

Other

As of December 31, 2014 , the assets utilized in this segment included approximately 310 MW of company-owned domestic wind power facilities, 177 MW of domestic wind power from long-term purchase power agreements and 355 MW of coal-fired capacity which was obtained through an agreement effective through 2027 that transfers TNC’s interest in the Oklaunion power station to AEP Energy Partners, Inc. The power obtained from the Oklaunion power station is marketed and sold in ERCOT.

AEP TRANSMISSION HOLDCO (AEPTHCO)

GENERAL

AEPTHCo is a holding company for (a) AEP’s transmission joint ventures and (b) AEPTCo, which is the direct holding company for the seven wholly-owned FERC-regulated transmission-only electric utilities (Transcos) listed below, each of which is geographically aligned with our existing utility operating companies.

AEPTCo TRANSCOS

AEP East Transmission Companies (all located within PJM)


•	AEP Appalachian Transmission Company, Inc. (APTCo) (covering Virginia)


•	AEP Indiana Michigan Transmission Company, Inc. (IMTCo)


•	AEP Kentucky Transmission Company, Inc. (KTCo)


•	AEP Ohio Transmission Company, Inc. (OHTCo)


•	AEP West Virginia Transmission Company, Inc. (WVTCo)

AEP West Transmission Companies (all located within SPP)


•	AEP Oklahoma Transmission Company, Inc. (OKTCo)


•	AEP Southwestern Transmission Company, Inc. (SWTCo) (covering Louisiana)

Transmission development through the Transcos is primarily driven by:


•	Improvements to local area reliability by upgrading, rebuilding or replacing existing, aging infrastructure.


•	Construction of new facilities to support customer points of delivery, generation interconnections, new facilities to provide transmission service directed by the RTOs, and new facilities required to maintain grid reliability.


•	Projects assigned as a result of the regional planning initiatives conducted by PJM and SPP. PJM and SPP identify the need for transmission in support of regional reliability, congestion reduction and the integration of and retirement of generation facilities.

The Transcos develop, own and operate transmission assets that are physically connected to AEP’s existing system. They are regulated for rate-making purposes exclusively by the FERC and employ a forward-looking formula rate tariff design. The Transcos are independent of but overlay AEP’s existing vertically integrated utility operating companies and the transmission operations of OPCo. APTCo, IMTCo, KTCo, OHTCo, OKTCo and WVTCo have received approvals for formation or did not require state commission approval to operate. IMTCo, KTCo, OHTCo, OKTCo and WVTCo currently own and operate transmission assets or have assets under construction. APTCo requires approval from the Virginia SCC on a project by project basis. The APSC has denied SWTCo's application to operate in Arkansas. An application for regulatory approval for SWTCo is under consideration in Louisiana. As of December 31, 2014, AEPTCo had $1.8 billion of transmission assets in-service with plans to construct approximately $3 billion of additional transmission assets through 2017.

JOINT VENTURE INITIATIVES

AEP has established joint ventures with other electric utility companies for the purpose of developing, building, and owning transmission assets that seek to improve reliability and market efficiency and provide transmission access to remote generation sources in North America.

We are currently participating in the following joint venture initiatives:

Joint Venture Name

Location

Projected or Actual Completion Date

Owners

(Ownership %)

Total Estimated Project Costs at Completion

AEP's Investment as of December 31, 2014 (h)

Approved Return on Equity

(in thousands)

ETT

Texas

(a)

Berkshire Hathaway

3,100,000

(a)

503,910

9.96

(ERCOT)

Energy (50%)

AEP (50%)

Prairie Wind

Kansas

2014

Westar Energy (50%)

161,500

18,071

12.8

Berkshire Hathaway Energy

(25%) (b)

AEP (25%) (b)

Pioneer

Indiana

2018

(c)

Duke Energy (50%)

1,100,000

(c)

4,943

12.54

AEP (50%)

RITELine IN

Indiana

2026

Exelon (12.5%) (d)

400,000

(e)

11.43

AEP (87.5%) (d)

RITELine IL

Illinois

2026

Commonwealth

1,200,000

(e)

11.43

Edison (75%)

Exelon (12.5%) (d)

AEP (12.5%) (d)

Transource

Missouri

2017

Great Plains Energy

398,000

(g)

26,295

11.1

(g)

Missouri

(13.5%) (f)

AEP (86.5%) (f)


(a)	ETT is undertaking multiple projects and the completion dates will vary for those projects. ETT’s investment in completed, current and future projects in ERCOT over the next ten years is expected to be $3.1 billion. Future projects will be evaluated on a case-by-case basis.


(b)	AEP owns 25% of Prairie Wind Transmission, LLC (Prairie Wind) through its ownership interest in ETA. ETA is a 50/50 joint venture with Berkshire Hathaway Energy (formerly known as MidAmerican Energy) and AEP.

(c)

The Pioneer project consists of approximately 286 miles of new 765 kV transmission lines, which is estimated to cost $1.1 billion at completion. Pioneer is developing the first 66-mile segment jointly with Northern Indiana Public Service Company at a total estimated cost of $350 million. The projected completion date for the first 66-mile segment is 2018. The projected completion dates for the remaining segments have not been determined.


(d)	AEP owns 87.5% of RITELine Indiana, LLC (RITELine IN) through its ownership interest in RITELine Transmission Development, LLC (RTD) and AEP Transmission Holding Company, LLC (AEPTHCo). AEP owns 12.5% of RITELine Illinois, LLC (RITELine IL) through its ownership interest in RTD. RTD is a 50/50 joint venture with Exelon Transmission Company, LLC and AEPTHCo.


(e)	RITELine IN is a consolidated variable interest entity. RTD received an order from the FERC in October 2011 granting incentives for the RITELine IN and RITELine IL projects. The projects and other segments that are electrically equivalent in nature are currently under consideration for inclusion in the interregional planning process between PJM and MISO.


(f)	AEP owns 86.5% of Transource Missouri through its ownership interest in Transource Energy, LLC (Transource). Transource is a joint venture with AEPTHCo and Great Plains Energy formed to pursue competitive transmission projects. AEPTHCo and Great Plains Energy own 86.5% and 13.5% of Transource, respectively.


(g)	The ROE represents the weighted average approved return on equity based on the projected costs of two projects currently under development by Transource Missouri: the $65 million Iatan-Nashua project (10.3%) and the $333 million Sibley-Nebraska City project (11.3%).


(h)	RITELine IN and Transource Missouri are consolidated joint ventures by AEP. Therefore, the investment value listed reflects applicable income taxes that are the responsibility of AEP. All other investments in this schedule are joint ventures that are not consolidated by AEP. Therefore, these investment values listed do not reflect income taxes that are the responsibility of AEP.

Our joint ventures do not have employees. Business services for the joint ventures are provided by AEPSC and other AEP subsidiaries and the joint venture partners. During 2014 approximately 665 AEPSC employees and 260 operating company employees provided service to one or more joint ventures. The amount of service provided was equal to the service of approximately 195 full-time employees.

REGULATION

The Transcos and joint ventures located outside of ERCOT establish transmission rates annually through forward looking formula rate filings with the FERC pursuant to FERC-approved implementation protocols. The protocols include a transparent, formal review process to ensure the updated transmission rates are prudently incurred and reasonably calculated.

The Transcos’ and joint ventures’ (where applicable) rates are included in the respective OATT for PJM and SPP. An OATT is the FERC rate schedule that provides the terms and conditions for transmission and related services on a transmission provider’s transmission system. The FERC requires transmission providers such as PJM and SPP to offer transmission service to all eligible customers (for example, load-serving entities, power marketers, generators and customers) on a non-discriminatory basis.

The FERC-approved formula rates establish the annual transmission revenue requirement (ATRR) and transmission service rates for transmission owners in annual rate base filings with FERC. The formula rates establish rates for a one-year period based on the current projects in-service and proposed projects for a defined timeframe. The formula rates also include a true-up calculation for the previous year’s billings, allowing for over- and under-recovery of the transmission owner’s ATRR. PJM and SPP pay the transmission owners their ATRR for use of their facilities and bill transmission customers taking service under the PJM and SPP OATTs, based on the terms and conditions in the respective OATT for the service taken.

The formula rate mechanism allows for a return on equity of 11.49% based on a capital structure of up to 50% equity for the AEP East Transmission Companies. The AEP West Transmission Companies are allowed a return on equity of 11.20% based on a capital structure of up to 50% equity. The authorized returns on equity for the Transcos are commensurate with the FERC-authorized returns on equity in the PJM and SPP OATTs, respectively, for AEP’s utility subsidiaries.

In the annual rate based filings described above, the Transcos in aggregate filed rate base totals of $1,448 million in 2014, $776 million for 2013 and $283 million for 2012. The total transmission revenue requirement filed in the ATRR, including prior year over/under recovery of revenue and associated carrying charges, for 2014, 2013 and 2012 was $229 million, $107 million and $35 million, respectively.

The rates of ETT, which is located in ERCOT, are determined by the PUCT. ETT sets its rates through a combination of base rate cases and interim Transmission Costs of Services (TCOS) filings. ETT may file interim TCOS filings semi-annually to update its rates to reflect changes in its net invested capital.

Our joint ventures have approved returns on equity ranging from 9.96% to 12.8% based on equity capital structures ranging from 40% to 60%.

COMPETITION

One of the most significant provisions of FERC Order No. 1000 is the removal of the federal right of first refusal for incumbent utilities within tariffs and agreements for certain regional transmission projects. Historically, vertically integrated public utilities had the right to build and own transmission lines proposed by the region’s planning processes when those lines connected to facilities within their respective retail service territories. FERC Order No. 1000 eliminates the federal right of first refusal in regional transmission organization (RTO) tariffs for incumbent utilities to construct certain regional transmission projects within their own service territories, thereby creating the opportunity for any qualified entity to build and own regional transmission facilities in any service territory. Transource was created to respond to FERC Order No. 1000 competitive processes at the RTO level.

AEP RIVER OPERATIONS

Our AEP River Operations segment transports liquid, coal and dry bulk commodities primarily on the Ohio, Illinois and lower Mississippi rivers. Almost all of our customers are nonaffiliated third parties who obtain the transport of coal and dry bulk commodities for various uses. We charge these customers market rates for the purpose of making a profit. Depending on market conditions and other factors, including barge availability, we permit AEP utility subsidiary affiliates to use certain of our equipment at rates that reflect our cost. Our affiliated utility customers procure the transport of coal for use as fuel in their respective generation plants. AEP River Operations includes approximately 2,300 barges, 37 towboats and 18 harbor boats that we own or lease. In 2015, River Operations will operate its current fleet of 40 ten thousand barrel tank barges and may add an additional 40 ten thousand barrel tank barges throughout the year. These assets are separate from the barges and towboats dedicated exclusively to transporting coal for use as fuel in our own generating facilities discussed under the prior segment. See Item 1 – Vertically Integrated Utilities – Electric Generation – Fuel Supply – Coal and Lignite.

Competition within the barging industry for major commodity contracts is intense, with a number of companies offering transportation services in the waterways we serve. We compete with other carriers primarily on the basis of commodity shipping rates, but also with respect to customer service, available routes, value-added services (including scheduling convenience and flexibility). The industry continues to experience consolidation. The resulting companies increasingly offer the widespread geographic reach necessary to support major national customers. Demand for barging services can be seasonal, particularly with respect to the movement of harvested agricultural commodities (beginning in the late summer and extending through the fall). Cold winter weather, water levels and inefficient older river locks may also limit our operations when certain of the waterways we serve are closed or commercial traffic is limited.

Our transportation operations are subject to regulation by the U.S. Coast Guard, federal laws, state laws and certain international conventions. Legislation has been proposed that could make our towboats subject to inspection by the U.S. Coast Guard.

EXECUTIVE OFFICERS OF AEP as of February 20, 2015

The following persons are executive officers of AEP. Their ages are given as of February 1, 2015 . The officers are appointed annually for a one-year term by the board of directors of AEP.

Nicholas K. Akins

Chairman of the Board, President and Chief Executive Officer

Age 54

Chairman of the Board since January 2014, President since January 2011 and Chief Executive Officer since November 2011. Was Executive Vice President – Generation from September 2006 to December 2010.

Lisa M. Barton

Executive Vice President – Transmission

Age 49

Executive Vice President – Transmission of AEPSC since August 2011. Was Senior Vice President – Transmission Strategy and Business Development of AEPSC from November 2010 to July 2011, Vice President – Transmission Strategy and Business Development of AEPSC from October 2007 to November 2010.

David M. Feinberg

Executive Vice President, General Counsel and Secretary

Age 45

Executive Vice President since January 2013. Was Senior Vice President, General Counsel and Secretary from January 2012 to December 2012 and Senior Vice President and General Counsel of AEPSC from May 2011 to December 2011. Previously served as Vice President, General Counsel and Secretary of Allegheny Energy, Inc. from 2006 to 2011.

Lana L. Hillebrand

Senior Vice President and Chief Administrative Officer

Age 54

Senior Vice President and Chief Administrative Officer since December 2012. Previously served as South Region leader – Senior Partner at Aon Hewitt since 2010. Was U.S. Consulting Client Development leader – managing principal at Aon Hewitt from 2008-2010.

Mark C. McCullough

Executive Vice President – Generation

Age 55

Executive Vice President – Generation of AEPSC since January 2011. Was Senior Vice President – Fossil & Hydro Generation of AEPSC from February 2008 to December 2010.

Robert P. Powers

Executive Vice President and Chief Operating Officer

Age 61

Executive Vice President and Chief Operating Officer since November 2011. Was President – Utility Group from April 2009 to November 2011.

Brian X. Tierney

Executive Vice President and Chief Financial Officer

Age 47

Executive Vice President and Chief Financial Officer since October 2009.

Dennis E. Welch

Executive Vice President and Chief External Officer

Age 63

Executive Vice President and Chief External Officer since January 2013. Was Executive Vice President and Chief Administrative Officer from October 2011 to December 2012. Was Executive Vice President – Environment, Safety & Health and Facilities from January 2008 to September 2011.

Charles E. Zebula

Executive Vice President – Energy Supply

Age 54

Executive Vice President – Energy Supply since January 2013. Was Senior Vice President – Investor Relations and Treasurer from September 2008 to December 2012.

ITEM 1A. RISK FACTORS

GENERAL RISKS OF OUR REGULATED OPERATIONS

We may not be able to recover the costs of our substantial planned investment in capital improvements and additions. – Affecting each Registrant

Our business plan calls for extensive investment in capital improvements and additions, including the installation of environmental upgrades and retrofits, construction of additional transmission facilities, modernizing existing infrastructure as well as other initiatives. Our public utility subsidiaries currently provide service at rates approved by one or more regulatory commissions. If these regulatory commissions do not approve adjustments to the rates we charge, we would not be able to recover the costs associated with our planned extensive investment. This would cause our financial results to be diminished.

Our regulated electric revenues, earnings and results are dependent on state regulation that may limit our ability to recover costs and other amounts. – Affecting each Registrant

The rates our customers pay to our regulated utility businesses are subject to approval by the FERC and the respective state utility commissions of Ohio, Texas, Virginia, West Virginia, Oklahoma, Indiana, Louisiana, Kentucky, Arkansas, Michigan and Tennessee. If our regulated utility earnings exceed the returns established by the relevant commissions, retail electric rates may be subject to review and possible reduction by the commissions, which may decrease our future earnings. Additionally, if regulatory bodies do not allow recovery of costs incurred in providing service on a timely basis, it could reduce future net income and cash flows and impact financial condition. Similarly, if recovery or other rate relief authorized in the past is overturned or reversed on appeal, our future earnings could be negatively impacted. Any regulatory action or litigation outcome that triggers a reversal of a regulatory asset or deferred cost, including fuel and related costs, generally results in an impairment to the balance sheet and a charge to the income statement of the company involved.

Our transmission investment strategy and execution bears certain risks associated with these activities. – Affecting each Registrant

We expect that a growing portion of our earnings in the future will derive from the transmission investments and activities of AEPTCo and our transmission joint ventures. FERC policy currently favors the expansion and updating of the transmission infrastructure within its jurisdiction. If FERC were to adopt a different policy, if states were to limit or restrict such policies, or if transmission needs do not continue or develop as projected, our strategy of investing in transmission could be curtailed. We believe our experience with transmission facilities construction and operation gives us an advantage over other competitors in securing authorization to install, construct and operate new transmission lines and facilities. However, there can be no assurance that PJM, SPP or other RTOs will authorize any new transmission projects or will award any such projects to us. If the FERC were to lower the rate of return it has authorized for our transmission investments and facilities, or if one or more states were to successfully limit FERC jurisdiction on recovery of costs on transmission investment and its return, it could reduce future net income and cash flows and impact financial condition.

We may not recover costs incurred to begin construction on projects that are canceled. – Affecting each Registrant

Our business plan for the construction of new projects involves a number of risks, including construction delays, nonperformance by equipment and other third party suppliers, and increases in equipment and labor costs. To limit the risks of these construction projects, we enter into equipment purchase orders and construction contracts and incur engineering and design service costs in advance of receiving necessary regulatory approvals and/or siting or environmental permits. If any of these projects is canceled for any reason, including our failure to receive necessary regulatory approvals and/or siting or environmental permits, we could incur significant cancellation penalties under the equipment purchase orders and construction contracts. In addition, if we have recorded any construction work or investments as an asset, we may need to impair that asset in the event the project is canceled.

We are exposed to nuclear generation risk. – Affecting AEP and I&M

Through I&M, we own the Cook Plant. It consists of two nuclear generating units for a rated capacity of 2,191 MW, or about 6% of the generating capacity in the AEP System. We are, therefore, subject to the risks of nuclear generation, which include the following:


•	The potential harmful effects on the environment and human health resulting from the operation of nuclear facilities and the storage, handling and disposal of radioactive materials such as spent nuclear fuel.


•	Limitations on the amounts and types of insurance commercially available to cover losses that might arise in connection with our nuclear operations.


•	Uncertainties with respect to contingencies and assessment amounts triggered by a loss event (federal law requires owners of nuclear units to purchase the maximum available amount of nuclear liability insurance and potentially contribute to the losses of others).


•	Uncertainties with respect to the technological and financial aspects of decommissioning nuclear plants at the end of their licensed lives.

There can be no assurance that I&M’s preparations or risk mitigation measures will be adequate if and when these risks are triggered.

The NRC has broad authority under federal law to impose licensing and safety-related requirements for the operation of nuclear generation facilities. In the event of non-compliance, the NRC has the authority to impose fines or shut down a unit, or both, depending upon its assessment of the severity of the situation, until compliance is achieved. Revised safety requirements promulgated by the NRC could necessitate substantial capital expenditures at nuclear plants such as ours. In addition, although we have no reason to anticipate a serious nuclear incident at our plants, if an incident did occur, it could harm our results of operations or financial condition. A major incident at a nuclear facility anywhere in the world could cause the NRC to limit or prohibit the operation or licensing of any domestic nuclear unit. Moreover, a major incident at any nuclear facility in the U.S. could require us to make material contributory payments.

Costs associated with the operation (including fuel), maintenance and retirement of nuclear plants continue to be more significant and less predictable than costs associated with other sources of generation, in large part due to changing regulatory requirements and safety standards, availability of nuclear waste disposal facilities and experience gained in the operation of nuclear facilities. Costs also may include replacement power, any unamortized investment at the end of the useful life of the Cook Plant (whether scheduled or premature), the carrying costs of that investment and retirement costs. Our ability to obtain adequate and timely recovery of costs associated with the Cook Plant is not assured.

The different regional power markets in which we compete or will compete in the future have changing market and transmission structures, which could affect our performance in these regions. – Affecting each Registrant

Our results are likely to be affected by differences in the market and transmission structures in various regional power markets. The rules governing the various regional power markets, including SPP and PJM, may also change from time to time which could affect our costs or revenues. Because the manner in which RTOs will evolve remains unclear, we are unable to assess fully the impact that changes in these power markets may have on our business.

We could be subject to higher costs and/or penalties related to mandatory reliability standards. – Affecting each Registrant

As a result of EPACT, owners and operators of the bulk power transmission system are subject to mandatory reliability standards promulgated by the North American Electric Reliability Corporation and enforced by the FERC. The standards are based on the functions that need to be performed to ensure the bulk power system operates reliably and are guided by reliability and market interface principles. Compliance with new reliability standards may subject us to higher operating costs and/or increased capital expenditures. While we expect to recover costs and expenditures from customers through regulated rates, there can be no assurance that the applicable commissions will approve full recovery in a timely manner. If we were found not to be in compliance with the mandatory reliability standards, we could be subject to sanctions, including substantial monetary penalties, which likely would not be recoverable from customers through regulated rates.

RISKS RELATED TO MARKET, ECONOMIC OR FINANCIAL VOLATILITY AND OTHER RISKS

Our financial performance may be adversely affected if we are unable to successfully operate our facilities or perform certain corporate functions. – Affecting each Registrant

Our performance is highly dependent on the successful operation of our generation, transmission and distribution facilities. Operating these facilities involves many risks, including:


•	Operator error and breakdown or failure of equipment or processes.


•	Operating limitations that may be imposed by environmental or other regulatory requirements.


•	Labor disputes.


•	Compliance with mandatory reliability standards, including mandatory cyber security standards.


•	Information technology failure that impairs our information technology infrastructure or disrupts normal business operations.


•	Information technology failure that affects our ability to access customer information or causes us to lose confidential or proprietary data that materially and adversely affects our reputation or exposes us to legal claims.


•	Fuel or water supply interruptions caused by transportation constraints, adverse weather such as drought, non-performance by our suppliers and other factors.


•	Catastrophic events such as fires, earthquakes, explosions, hurricanes, tornados, ice storms, terrorism (including cyber-terrorism), floods or other similar occurrences.

Hostile cyber intrusions could severely impair our operations, lead to the disclosure of confidential information and damage our reputation. – Affecting each Registrant

We own assets deemed as critical infrastructure, the operation of which is dependent on information technology systems. Further, the computer systems that run our facilities are not completely isolated from external networks. Parties that wish to disrupt the U.S. bulk power system or our operations could view our computer systems, software or networks as targets for cyber attack. In addition, our business requires that we collect and maintain sensitive customer data, as well as confidential employee and shareholder information, which is subject to electronic theft or loss.

A successful cyber attack on the systems that control our generation, transmission, distribution or other assets could severely disrupt business operations, preventing us from serving customers or collecting revenues. The breach of certain business systems could affect our ability to correctly record, process and report financial information. A major cyber incident could result in significant expenses to investigate and repair security breaches or system damage and could lead to litigation, fines, other remedial action, heightened regulatory scrutiny and damage to our reputation. In addition, the misappropriation, corruption or loss of personally identifiable information and other confidential data could lead to significant breach notification expenses and mitigation expenses such as credit monitoring. We maintain cyber insurance to cover liabilities and losses directly arising from a potential cyber event. We also maintain property and casualty insurance that may cover certain resultant physical damage or third-party injuries caused by potential cyber events. However, damage and claims arising from such incidents may exceed the amount of any insurance available and other damage and claims arising from such incidents may not be covered at all. For these reasons, a significant cyber incident could reduce future net income and cash flows and impact financial condition.

In an effort to reduce the likelihood and severity of cyber intrusions, we have a comprehensive cyber security program designed to protect and preserve the confidentiality, integrity and availability of data and systems. In addition, we are subject to mandatory cyber security regulatory requirements. However, cyber threats continue to evolve and adapt, and, as a result, there is a risk that we could experience a successful cyber attack despite our current security posture and regulatory compliance efforts.

If we are unable to access capital markets on reasonable terms, it could reduce future net income and cash flows and impact financial condition. – Affecting each Registrant

We rely on access to capital markets as a significant source of liquidity for capital requirements not satisfied by operating cash flows. Volatility and reduced liquidity in the financial markets could affect our ability to raise capital and fund our capital needs, including construction costs and refinancing maturing indebtedness. In addition, if capital is available only on less than reasonable terms or to borrowers whose creditworthiness is better than ours, capital costs could increase materially. Restricted access to capital markets and/or increased borrowing costs could reduce future net income and cash flows and impact financial condition.

Downgrades in our credit ratings could negatively affect our ability to access capital and/or to operate our power trading businesses. – Affecting each Registrant

The credit ratings agencies periodically review our capital structure and the quality and stability of our earnings. Any negative ratings actions could constrain the capital available to us and could limit our access to funding for our operations. Our business is capital intensive, and we are dependent upon our ability to access capital at rates and on terms we determine to be attractive. In periods of market turmoil, access to capital is difficult for all borrowers. If our ability to access capital becomes significantly constrained, our interest costs will likely increase and could reduce future net income and cash flows and impact financial condition.

Our power trading business relies on the investment grade ratings of our individual public utility subsidiaries’ senior unsecured long-term debt or on the investment grade ratings of AEP. Most of our counterparties require the creditworthiness of an investment grade entity to stand behind transactions. If those ratings were to decline below investment grade, our ability to operate our power trading business profitably would be diminished because we would likely have to deposit cash or cash-related instruments which would reduce future net income and cash flows and impact financial condition.

AEP has no income or cash flow apart from dividends paid or other obligations due it from its subsidiaries. – Affecting AEP

AEP is a holding company and has no operations of its own. Its ability to meet its financial obligations associated with its indebtedness and to pay dividends on its common stock is primarily dependent on the earnings and cash flows of its operating subsidiaries, primarily its regulated utilities, and the ability of its subsidiaries to pay dividends to, or repay loans from, AEP. Its subsidiaries are separate and distinct legal entities that have no obligation (apart from loans

from AEP) to provide AEP with funds for its payment obligations, whether by dividends, distributions or other payments. Payments to AEP by its subsidiaries are also contingent upon their earnings and business considerations. AEP indebtedness and common stock dividends are structurally subordinated to all subsidiary indebtedness.

Our operating results may fluctuate on a seasonal or quarterly basis and with general economic and weather conditions. – Affecting each Registrant

Electric power generation is generally a seasonal business. In many parts of the country, demand for power peaks during the hot summer months, with market prices also peaking at that time. In other areas, power demand peaks during the winter. As a result, our overall operating results in the future may fluctuate substantially on a seasonal basis. The pattern of this fluctuation may change depending on the terms of power sale contracts that we enter into. In addition, we have historically sold less power, and consequently earned less income, when weather conditions are milder. Unusually mild weather in the future could reduce future net income and cash flows and impact financial condition. Conversely, unusually extreme weather conditions could increase AEP’s results of operations in a manner that would not likely be sustainable.

Further, deteriorating economic conditions generally result in reduced consumption by our customers, particularly industrial customers who may curtail operations or cease production entirely, while an expanding economic environment generally results in increased revenues. As a result, prevailing economic conditions may reduce our future net income and cash flows and impact financial condition.

Failure to attract and retain an appropriately qualified workforce could harm our results of operations. – Affecting each Registrant

Certain events, such as an aging workforce without appropriate replacements, mismatch of skillset or complement to future needs, or unavailability of contract resources may lead to operating challenges and increased costs. The challenges include lack of resources, loss of knowledge and a lengthy time period associated with skill development. In this case, costs, including costs for contractors to replace employees, productivity costs and safety costs, may rise. Failure to hire and adequately train replacement employees, including the transfer of significant internal historical knowledge and expertise to the new employees, or the future availability and cost of contract labor may adversely affect the ability to manage and operate our business. If we are unable to successfully attract and retain an appropriately qualified workforce, our future net income and cash flows may be reduced.

Changes in commodity prices and the costs of transport may increase our cost of producing power or decrease the amount we receive from selling power, harming our financial performance. – Affecting each Registrant

We are exposed to changes in the price and availability of coal and the price and availability to transport coal. We have existing contracts of varying durations for the supply of coal, but as these contracts end or otherwise are not honored, we may not be able to purchase coal on terms as favorable as the current contracts. Similarly, we are exposed to changes in the price and availability of emission allowances. We use emission allowances based on the amount of coal we use as fuel and the reductions achieved through emission controls and other measures. As long as current environmental programs remain in effect, we have sufficient emission allowances to cover the majority of our projected needs for the next two years and beyond. If the Federal EPA is able to create a replacement rule to reduce interstate transport, and it is acceptable by the courts, additional costs may be incurred either to acquire additional allowances or to achieve further reductions in emissions. If we need to obtain allowances under a replacement rule, those purchases may not be on as favorable terms as those under the current environmental programs. Our risks relative to the price and availability to transport coal include the volatility of the price of diesel which is the primary fuel used in transporting coal by barge.

We also own natural gas-fired facilities which exposes us to market prices of natural gas. Historically, natural gas prices have tended to be more volatile than prices for other fuel sources. Recently however, the availability of natural gas from shale production has lessened price volatility. Our ability to make sales at a profit is highly dependent on the price of natural gas. As the price of natural gas falls, other market participants that utilize natural gas-fired generation will be able to offer electricity at increasingly competitive prices relative to our sales prices, so the margins we realize from sales will be lower and, on occasion, we may need to curtail operation of marginal plants. We expect the availability of shale natural gas and issues related to its accessibility will have a long-term material effect on the price and volatility of natural gas.

Prices for coal, natural gas and emission allowances have shown material upward and downward swings in the past. Changes in the cost of coal, emission allowances or natural gas and changes in the relationship between such costs and the market prices of power could reduce future net income and cash flows and impact financial condition.

In addition, actual power prices and fuel costs will differ from those assumed in financial projections used to value our trading and marketing transactions, and those differences may be material. As a result, as those transactions are marked to market, those transactions may reduce future results of operations and cash flows and impact financial condition.

Our AEP River Operations segment is subject to risks that are beyond our control. – Affecting AEP

Our AEP River Operations segment transports liquid, coal and dry bulk commodities primarily on the Ohio, Illinois and lower Mississippi rivers. These activities can be hazardous and depend on natural conditions and forces. Our river transport operations could result in an environmental event such as a serious spill or release. In addition, if drought conditions or other factors cause the water levels of one or more of these rivers to drop below the amount necessary to permit commercial barging traffic, it would prevent our AEP River Operations from transporting cargo on the affected river. Conversely, if unusually high amounts of precipitation or other factors cause the water levels of one or more of these rivers to be too high to permit commercial barging traffic, it would prevent our AEP River Operations from transporting cargo on the affected river. Extreme water levels that do not close river basin commercial traffic can still harm our business if the levels curtail the total volume permitted to move on the affected river. The levels on portions of the Mississippi River in 2013 were near the lowest since the levels caused by severe drought in 1988. Water levels during 2014 were improved and generally considered favorable for barge operations. Any reduction in the commercial activities of our AEP River Operations due to extreme water levels could reduce future net income and cash flows.

We are subject to physical and financial risks associated with climate change. – Affecting each Registrant

Climate change creates physical and financial risk. Physical risks from climate change include an increase in sea level and changes in weather conditions, such as changes in precipitation and extreme weather events. Our customers’ energy needs vary with weather conditions, primarily temperature and humidity. For residential customers, heating and cooling represent their largest energy use. To the extent weather conditions are affected by climate change, customers’ energy use could increase or decrease depending on the duration and magnitude of the changes.

Increased energy use due to weather changes may require us to invest in additional generating assets, transmission and other infrastructure to serve increased load. Decreased energy use due to weather changes may affect our financial condition, through decreased revenues. Extreme weather conditions in general require more system backup, adding to costs, and can contribute to increased system stress, including service interruptions. Weather conditions outside of our service territory could also have an impact on our revenues. We buy and sell electricity depending upon system needs and market opportunities. Extreme weather conditions creating high energy demand on our own and/or other systems may raise electricity prices as we buy short-term energy to serve our own system, which would increase the cost of energy we provide to our customers.

Severe weather impacts our service territories, primarily when thunderstorms, tornadoes, hurricanes and snow or ice storms occur. To the extent the frequency of extreme weather events increases, this could increase our cost of providing service. Changes in precipitation resulting in droughts or water shortages could adversely affect our operations, principally our fossil generating units. A negative impact to water supplies due to long-term drought conditions could adversely impact our ability to provide electricity to customers, as well as increase the price they pay for energy. We may not recover all costs related to mitigating these physical and financial risks.

To the extent climate change impacts a region’s economic health, it may also impact our revenues. Our financial performance is tied to the health of the regional economies we serve. The price of energy, as a factor in a region’s cost of living as well as an important input into the cost of goods and services, has an impact on the economic health of our communities.

We cannot predict the outcome of the legal proceedings relating to our business activities. – Affecting each Registrant

We are involved in legal proceedings, claims and litigation arising out of our business operations, the most significant of which are summarized in Note 6 of the Notes to Consolidated Financial Statements entitled Commitments, Guarantees and Contingencies. Adverse outcomes in these proceedings could require significant expenditures that could reduce future net income and cash flows and impact financial condition.

RISKS RELATING TO STATE RESTRUCTURING

Customers are choosing alternative electric generation service providers, as allowed by Ohio law and regulation. – Affecting AEP

Under current Ohio law, electric generation is sold in a competitive market in Ohio and native load customers in Ohio have the ability to switch to alternative suppliers for their electric generation service. CRES providers are targeting retail customers by offering alternative generation service. As customer switching in Ohio continues, it could reduce AGR’s future net income and cash flows and impact financial condition.

Collection of our revenues in Texas is concentrated in a limited number of REPs. – Affecting AEP

Our revenues from the distribution of electricity in the ERCOT area of Texas are collected from REPs that supply the electricity we distribute to their customers. Currently, we do business with approximately one hundred REPs. In 2014, TCC’s largest REP accounted for 25% of its operating revenue and its second largest REP accounted for 23% of its operating revenue; TNC’s largest REP accounted for 11% of its operating revenues, and its second largest REP accounted for 9% of its operating revenues. Adverse economic conditions, structural problems in the Texas market or financial difficulties of one or more REPs could impair the ability of these REPs to pay for our services or cause them to delay such payments. We depend on these REPs for timely remittance of payments. Any delay or default in payment could reduce future cash flows and impact financial condition.

RISKS RELATED TO OWNING AND OPERATING GENERATION ASSETS AND SELLING POWER

Our costs of compliance with existing environmental laws are significant. – Affecting each Registrant

Our operations are subject to extensive federal, state and local environmental statutes, rules and regulations relating to air quality, water quality, waste management, natural resources and health and safety. Approximately 90% of the electricity generated by the AEP System is produced by the combustion of fossil fuels. Emissions of nitrogen and sulfur oxides, mercury and particulates from fossil fueled generation plants are subject to increased regulations, controls and mitigation expenses. Compliance with these legal requirements requires us to commit significant capital toward environmental monitoring, installation of pollution control equipment, emission fees and permits at all of our facilities and could cause us to retire generating capacity prior to the end of its estimated useful life. These expenditures have been significant in the past, and we expect that they will continue to be significant in order to comply with the current and proposed regulations. Costs of compliance with environmental regulations could reduce future net income and

impact financial condition, especially if emission and/or discharge limits are tightened, more extensive permitting requirements are imposed or additional substances become regulated. If we retire generation plants prior to the end of their estimated useful life, there can be no assurance that we will recover the remaining costs associated with such plants. We typically recover our expenditures for pollution control technologies, replacement generation, undepreciated plant balances and associated operating costs from customers through regulated rates in regulated jurisdictions. Failure to recover these costs could reduce our future net income and cash flows and possibly harm our financial condition. For our sales of energy from our competitive units, there is no such cost-recovery mechanism. As a result, we may not recover our costs through the market and we may be forced to shut competitive units down. The costs of compliance for our competitive units could reduce our future net income and cash flows and possibly harm our financial condition.

Regulation of CO ₂ emissions could materially increase costs to us and our customers or cause some of our electric generating units to be uneconomical to operate or maintain. – Affecting each Registrant

The U.S. Congress has not taken any significant steps toward enacting legislation to control CO ₂ emissions since 2009. In December 2009, the Federal EPA issued a final endangerment finding under the CAA regarding emissions from motor vehicles. The Federal EPA finalized CO ₂ emission standards for new motor vehicles and issued a rule that implements a permitting program for new and modified stationary sources of CO ₂ emissions in a phased manner. Several groups have filed challenges to the endangerment finding and the Federal EPA’s subsequent rulemakings. The Supreme Court agreed to review whether the Federal EPA reasonably determined that establishing standards for new motor vehicles automatically triggered regulation of stationary sources through the prevention of significant deterioration and Title V permitting programs, and determined that the Federal EPA was neither compelled nor authorized to automatically regulate stationary sources of CO ₂ emissions under these programs, but that the Federal EPA could establish requirements for best available control technology reviews of CO ₂ emissions for sources otherwise required to obtain a Prevention of Significant Deterioration permit if their emissions exceed a reasonable level. The Federal EPA must undertake additional rulemaking to establish such requirements and a reasonable level.

In 2012, the Federal EPA issued a proposed CO ₂ emissions standard for new power generation sources. In response to the comments submitted on this proposed rule, and in accordance with a directive from the President, the Federal EPA withdrew the April 2012 proposed rule and has issued a new proposal. This proposed rule includes separate, but equivalent, standards for natural gas and coal-fired units, based on the use of partial carbon capture and storage at coal units. In June 2014, the Federal EPA issued standards for modified and reconstructed units, and a guideline for the development of state implementation plans that would reduce carbon emissions from existing utility units. The guidelines for existing sources include aggressive emission rate goals that are composed of a number of measures. Management believes some policy approaches being discussed would have significant and widespread negative consequences for the national economy and major U.S. industrial enterprises, including AEP and our customers.

CO ₂ standards could require significant increases in capital expenditures and operating costs and could impact the dates for retirement of our coal-fired units. We typically recover costs of complying with new requirements such as the potential CO ₂ and other greenhouse gases emission standards from customers through regulated rates in regulated jurisdictions. For our sales of energy into the markets, however, there is no such recovery mechanism. Failure to recover these costs, should they arise, could reduce our future net income and cash flows and possibly harm our financial condition.

We may be harmed if our merchant generation fleet is not profitable or loses value. – Affecting AEP

We are evaluating strategic alternatives for our merchant generation fleet, which primarily includes AGR’s generation fleet which operates in PJM and a 54.7% interest in the Oklaunion Plant which operates in ERCOT. Potential alternatives may include, but are not limited to, continued operation of the merchant generation fleet, executing a PPA with a regulated affiliate for certain merchant generation units in Ohio, a spin-off of the merchant generation fleet or a sale of the merchant generation fleet. We have not made a decision regarding the potential alternatives, nor have we set a specific timeframe for a decision. Certain of these alternatives could result in a loss which could reduce future net income and cash flow and impact financial condition.

Amounts we receive from the results of PJM capacity auctions associated with our nonregulated generation assets could fail to adequately compensate us. – Affecting AEP

Financial returns on AGR’s generation capacity are subject to the results of annual PJM capacity auctions. Recent auction results indicate a great deal of volatility and the possibility of clearing prices substantially lower than the cost of such capacity. We expect a significant decline in AGR capacity revenues after May 2015 when the Power Supply Agreement between AGR and OPCo ends. Additionally, we expect a decline in AGR capacity revenues from June 2016 through May 2017 based upon the decrease in the PJM base auction price. PJM recently proposed at FERC a set of supplemental auctions for 2016/17 and 2017/18. Those auctions may mitigate the decline in capacity revenues. However, this proposal has not yet been accepted at FERC and we can give no assurance that the FERC will approve the proposal. If the PJM capacity auctions continue to result in clearing prices lower than the cost of our capacity, it could reduce our future net income and cash flows and impact financial condition.

Courts adjudicating nuisance and other similar claims in the future may order us to pay damages or to limit or reduce our emissions. – Affecting each Registrant

In the past, there have been several cases seeking damages based on allegations of federal and state common law nuisance in which we, among others, were defendants. In general, the actions allege that emissions from the defendants’ power plants constitute a public nuisance. The plaintiffs in these actions generally seek recovery of damages and other relief. If future actions are resolved against us, substantial modifications of our existing coal-fired power plants could be required and we might be required to limit or reduce emissions. Such remedies could require us to purchase power from third parties to fulfill our commitments to supply power to our customers. This could have a material impact on our costs. In addition, we could be required to invest significantly in additional emission control equipment, accelerate the timing of capital expenditures, pay damages or penalties and/or halt operations. While management believes such costs should be recoverable from customers as costs of doing business in our jurisdictions where generation rates are set on a cost of service basis, without such recovery, those costs could reduce our future net income and cash flows and harm our financial condition. Moreover, our results of operations and financial position could be reduced due to the timing of recovery of these investments and the expense of ongoing litigation.

Changes in technology and regulatory policies may lower the value of our generating facilities. – Affecting each Registrant

We primarily generate electricity at large central facilities. This method results in economies of scale and lower costs than (a) newer technologies such as fuel cells, microturbines, wind turbines and photovoltaic solar cells and (b) distributed generation using either new or existing technology. Other technologies, such as light emitting diodes (LEDs), increase the efficiency of electricity and, as a result, lower the demand for it. It is possible that advances in technologies, the availability of distributed generation or changes in regulatory policies will lower the demand for electricity or reduce the costs of new technology to levels that are equal to or below that of most central station electricity production, either of which could have a material adverse effect on our results of operations.

Our profitability is impacted by our continued authorization to sell power at market-based rates. – Affecting each Registrant

FERC has granted AGR, APCo, I&M, KPCo, OPCo, PSO and SWEPCo authority to sell electricity at market-based rates. FERC reserves the right to revoke or revise this market-based rate authority if it subsequently determines that one or more of these companies can exercise market power in transmission or generation, create barriers to entry or engage in abusive affiliate transactions. Each company that has obtained market-based rate authority from FERC must file a market power update every three years to show that they continue to meet FERC’s standards with respect to generation market power and other criteria used to evaluate whether entities qualify for market-based rates. The loss of market-based rate authority by any of these entities, especially by AGR, could have a material adverse effect on our results of operations.

Our revenues and results of operations from selling power are subject to market risks that are beyond our control. – Affecting each Registrant

We sell power from our generation facilities into the spot market and other competitive power markets on a contractual basis. We also enter into contracts to purchase and sell electricity, natural gas, emission allowances and coal as part of our power marketing and energy trading operations. With respect to such transactions, the rate of return on our capital investments is not determined through mandated rates, and our revenues and results of operations are likely to depend, in large part, upon prevailing market prices for power in our regional markets and other competitive markets. These market prices can fluctuate substantially over relatively short periods of time. Trading margins may erode as markets mature and there may be diminished opportunities for gain should volatility decline. In addition, the FERC, which has jurisdiction over wholesale power rates, as well as RTOs that oversee some of these markets, may impose price limitations, bidding rules and other mechanisms to address some of the volatility in these markets. Power supply and other similar agreements entered into during extreme market conditions may subsequently be held to be unenforceable by a reviewing court or the FERC. Fuel and emissions prices may also be volatile, and the price we can obtain for power sales may not change at the same rate as changes in fuel and/or emissions costs. These factors could reduce our margins and therefore diminish our revenues and results of operations. Volatility in market prices for fuel and power may result from:


•	Weather conditions, including storms.


•	Economic conditions.


•	Outages of major generation or transmission facilities.


•	Seasonality.


•	Power usage.


•	Illiquid markets.


•	Transmission or transportation constraints or inefficiencies.


•	Availability of competitively priced alternative energy sources.


•	Demand for energy commodities.


•	Natural gas, crude oil and refined products and coal production levels.


•	Natural disasters, wars, embargoes and other catastrophic events.


•	Federal, state and foreign energy and environmental regulation and legislation and/or incentives.

Commodity trading and marketing activities are subject to inherent risks which can be reduced and controlled but not eliminated. – Affecting each Registrant

We attempt to manage the exposure of or power trading activities by establishing and enforcing risk limits and risk management procedures. These risk limits and risk management procedures may not work as planned and cannot eliminate the risks associated with these activities. As a result, we cannot predict the impact that our energy trading and risk management decisions may have on our business, operating results or financial position.

We routinely have open trading positions in the market, within guidelines we set, resulting from the management of our trading portfolio. To the extent open trading positions exist, fluctuating commodity prices can improve or diminish our financial results and financial position.

Our power trading risk management activities, including our power sales agreements with counterparties, rely on projections that depend heavily on judgments and assumptions by management of factors such as the future market prices and demand for power and other energy-related commodities. These factors become more difficult to predict and the calculations become less reliable the further into the future these estimates are made. Even when our policies and procedures are followed and decisions are made based on these estimates, results of operations may be diminished if the judgments and assumptions underlying those calculations prove to be inaccurate.

We may not successfully manage the uncertainty involved with our power trading (including coal, natural gas and emission allowances trading and power marketing). – Affecting each Registrant

Our power trading activities also expose us to risks of commodity price movements. To the extent that our power trading does not hedge the price risk associated with the generation it owns, or controls, through long-term power purchase agreements, we would be exposed to the risk of rising and falling spot market prices.

For example, the use of new technologies to recover natural gas from shale deposits has increased natural gas supply and reserves, placing further downward pressure on natural gas prices, and has reduced the need for our coal-fired generation. Further, in the event that alternative generation resources, such as wind and solar, are mandated or otherwise subsidized or encouraged through climate legislation or regulation and added to the available generation supply, such resources could displace a higher marginal cost fossil plant, which could reduce the price at which market participants sell their electricity. This occurrence could then reduce the market price at which all generators in that region would be able to sell their output. These events could adversely affect our financial condition, results of operations and cash flows, and could also result in an impairment of certain long-lived assets.

In connection with these trading activities, we routinely enter into financial contracts, including futures and options, over-the counter options, financially-settled swaps and other derivative contracts. These activities expose us to risks from price movements. If the values of the financial contracts change in a manner we do not anticipate, it could harm our financial position or reduce the financial contribution of our trading operations.

Parties with whom we have contracts may fail to perform their obligations, which could harm our results of operations. – Affecting each Registrant

We are exposed to the risk that counterparties that owe us money or power could breach their obligations. Should the counterparties to these arrangements fail to perform, we may be forced to enter into alternative hedging arrangements or honor underlying commitments at then-current market prices that may exceed our contractual prices, which would cause our financial results to be diminished and we might incur losses. Although our estimates take into account the expected probability of default by a counterparty, our actual exposure to a default by a counterparty may be greater than the estimates predict.

We rely on electric transmission facilities that we do not own or control. If these facilities do not provide us with adequate transmission capacity, we may not be able to deliver our wholesale electric power to the purchasers of our power. – Affecting each Registrant

We depend on transmission facilities owned and operated by other nonaffiliated power companies to deliver the power we sell at wholesale. This dependence exposes us to a variety of risks. If transmission is disrupted, or transmission capacity is inadequate, we may not be able to sell and deliver our wholesale power. If a region’s power transmission infrastructure is inadequate, our recovery of wholesale costs and profits may be limited. If restrictive transmission price regulation is imposed, the transmission companies may not have sufficient incentive to invest in expansion of transmission infrastructure.

The FERC has issued electric transmission initiatives that require electric transmission services to be offered unbundled from commodity sales. Although these initiatives are designed to encourage wholesale market transactions, access to transmission systems may in fact not be available if transmission capacity is insufficient because of physical constraints or because it is contractually unavailable. We also cannot predict whether transmission facilities will be expanded in specific markets to accommodate competitive access to those markets.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

GENERATION FACILITIES

As of December 31, 2014 the AEP System owned (or leased where indicated) generation plants, all situated in the states in which our electric utilities serve retail customers, where applicable, with net maximum power capabilities (winter rating) shown in the following tables:

Vertically Integrated Utilities Segment



AEGCo
Plant Name	Units	State	Fuel Type	Net Maximum Capacity (MWs)	Year Plant or First Unit Commissioned
Rockport, Units 1 and 2 – 50% of each (a)	2	IN	Steam - Coal	1,310	1984
Lawrenceburg (b)	6	IN	Natural Gas	1,186	2004
Total MWs				2,496


(a)	Rockport, Unit 2 is leased.


(b)	The capacity and output of this plant is under contract to (and its financial impact is included with) AGR through 2017.



APCo
Plant Name	Units	State	Fuel Type	Net Maximum Capacity (MWs)	Year Plant or First Unit Commissioned
Buck	3	VA	Hydro	9	1912
Byllesby	4	VA	Hydro	22	1912
Claytor	4	VA	Hydro	76	1939
Leesville	2	VA	Hydro	50	1964
London	3	WV	Hydro	14	1935
Marmet	3	WV	Hydro	14	1935
Niagara	2	VA	Hydro	2	1906
Reusens	5	VA	Hydro	13	1904
Winfield	3	WV	Hydro	15	1938
Ceredo	6	WV	Natural Gas	516	2001
Dresden	3	OH	Natural Gas	613	2012
Smith Mountain	5	VA	Pumped Storage	586	1965
Amos	3	WV	Steam - Coal	2,900	1971
Clinch River	3	VA	Steam - Coal	705	1958
Glen Lyn	2	VA	Steam - Coal	322	1918
Kanawha River	2	WV	Steam - Coal	400	1953
Mountaineer	1	WV	Steam - Coal	1,320	1980
Sporn	2	WV	Steam - Coal	300	1950
Total MWs				7,877



I&M
Plant Name	Units	State	Fuel Type	Net Maximum Capacity (MWs)	Year Plant or First Unit Commissioned
Berrien Springs	12	MI	Hydro	7	1908
Buchanan	10	MI	Hydro	4	1919
Constantine	4	MI	Hydro	1	1921
Elkhart	3	IN	Hydro	3	1913
Mottville	4	MI	Hydro	2	1923
Twin Branch	6	IN	Hydro	5	1904
Rockport (Units 1 and 2, 50% of each) (a)	2	IN	Steam - Coal	1,310	1984
Tanners Creek	4	IN	Steam - Coal	995	1951
Cook	2	MI	Steam - Nuclear	2,191	1975
Total MWs				4,518


(a)	Rockport, Unit 2 is leased.

The following table provides operating information related to the Cook Plant:



	Cook Plant
	Unit 1		Unit 2
Year Placed in Operation	1975		1978
Year of Expiration of NRC License	2034		2037
Nominal Net Electrical Rating in Kilowatts	1,084,000		1,107,000
Annual Capacity Utilization
2014	87.4	%	96.3	%
2013	82.7	%	86.9	%
2012	96.9	%	87.4	%
2011	81.3	%	99.4	%



KPCo
Plant Name	Units	State	Fuel Type	Net Maximum Capacity (MWs)	Year Plant or First Unit Commissioned
Big Sandy	2	KY	Steam - Coal	1,078	1963
Mitchell (a)	2	WV	Steam - Coal	780	1971
Total MWs				1,858


(a)	KPCo owns a 50% interest in the Mitchell Units. As of December 31, 2014, AGR owned the remaining 50% which it transferred to WPCo on January 31, 2015.



PSO
Plant Name	Units	State	Fuel Type	Net Maximum Capacity (MWs)	Year Plant or First Unit Commissioned
Comanche	3	OK	Natural Gas	266	1973
Riverside, Units 3 and 4	2	OK	Natural Gas	152	2008
Southwestern, Units 4 and 5	2	OK	Natural Gas	170	2008
Tulsa	2	OK	Natural Gas	318	1956
Weleetka	3	OK	Natural Gas	198	1975
Northeastern, Units 3 and 4	2	OK	Steam - Coal	937	1979
Oklaunion (a)	1	TX	Steam - Coal	102	1986
Northeastern, Units 1 and 2	2	OK	Steam - Natural Gas	923	1961
Riverside, Units 1 and 2	2	OK	Steam - Natural Gas	908	1974
Southwestern, Units 1, 2 and 3	3	OK	Steam - Natural Gas	462	1952
Total MWs				4,436


(a)	Jointly-owned with TNC and non-affiliated entities. Figures presented reflect only the portion owned by PSO.



SWEPCo
Plant Name	Units	State	Fuel Type	Net Maximum Capacity (MWs)	Year Plant or First Unit Commissioned
Mattison	4	AR	Natural Gas	313	2007
Stall	1	LA	Natural Gas	534	2010
Flint Creek (a)	1	AR	Steam - Coal	264	1978
Turk (a)	1	AR	Steam - Coal	477	2012
Welsh	3	TX	Steam - Coal	1,584	1977
Dolet Hills (a)	1	LA	Steam - Lignite	257	1986
Pirkey (a)	1	TX	Steam - Lignite	580	1985
Arsenal Hill	1	LA	Steam - Natural Gas	110	1960
Knox Lee	4	TX	Steam - Natural Gas	475	1950
Lieberman (b)	4	LA	Steam - Natural Gas	242	1947
Lone Star	1	TX	Steam - Natural Gas	50	1954
Wilkes	3	TX	Steam - Natural Gas	893	1964
Total MWs				5,779


(a)	Jointly-owned with nonaffiliated entity(ies). Figures presented reflect only the portion owned by SWEPCo.


(b)	Unit 1 was inactive in 2014.

Generation & Marketing Segment



AGR (formerly owned by OPCo)
Plant Name	Units	State	Fuel Type	Net Maximum Capacity (MWs)	Year Plant or First Unit Commissioned
Racine	2	OH	Hydro	48	1982
Darby	6	OH	Natural Gas	507	2001
Waterford	4	OH	Natural Gas	840	2003
Cardinal	1	OH	Steam - Coal	595	1967
Conesville (a)	3	OH	Steam - Coal	1,159	1957
Gavin	2	OH	Steam - Coal	2,670	1974
Kammer	3	WV	Steam - Coal	630	1958
Mitchell (b)	2	WV	Steam - Coal	780	1971
Muskingum River	5	OH	Steam - Coal	1,380	1953
Picway	1	OH	Steam - Coal	100	1926
Sporn	2	WV	Steam - Coal	300	1950
Stuart (a)	4	OH	Steam - Coal	600	1971
Zimmer (a)	1	OH	Steam - Coal	330	1991
Total MWs (c)				9,939


(a)	Jointly-owned with nonaffiliated entities. Figures presented reflect only the portion owned by AGR.


(b)	As of December 31, 2014, AGR owned a 50% interest in the Mitchell Units which it transferred to WPCo on January 31, 2015. KPCo owns the remaining 50%.


(c)	AGR has contractual rights through 2017 to a natural gas-fired 1,186 MW generating unit located in Lawrenceburg, IN.



Domestic Independent Power
Plant Name	Units	State	Fuel Type	Net Maximum Capacity (MWs)	Year Plant Commissioned
Trent Mesa	100	TX	Wind	150	2001
Desert Sky	107	TX	Wind	161	2001
Total MWs				311

In addition to the AGR and Domestic Independent Power generation set forth above, a subsidiary in the Generation & Marketing segment has contractual rights through 2027 from TNC to 355 MWs from the Oklaunion Generating Plant, a coal-fired unit located in Vernon, TX. TNC co-owns the Oklaunion Generating Plant with PSO and several non-affiliated entities.

TRANSMISSION AND DISTRIBUTION FACILITIES

The following table sets forth the total overhead circuit miles of transmission and distribution lines of the AEP System and its operating companies and that portion of the total representing 765kV lines:

Vertically Integrated Utilities Segment



	Total Overhead Circuit Miles of Transmission and Distribution Lines	Circuit Miles of 765kV Lines
APCo	51,612	733
I&M	21,868	616
KGPCo	1,401	—
KPCo	11,171	257
PSO	20,877	—
SWEPCo	27,434	—
WPCo	1,731	—
Total Circuit Miles	136,094	1,606

Transmission and Distribution Utilities Segment



	Total Overhead Circuit Miles of Transmission and Distribution Lines	Circuit Miles of 765kV Lines
OPCo (a)	45,486	507
TCC	29,515	—
TNC	17,127	—
Total Circuit Miles	92,128	507


(a)	Includes 766 miles of 345,000 volt jointly owned lines.

AEP Transmission Holdco Segment

The following table sets forth the total overhead circuit miles of transmission lines of ETT, IMTCo, OHTCo, and OKTCo, none of which own 765 kV lines:



	Total Overhead Circuit Miles of Transmission Lines
ETT	1,528
IMTCo	30
OHTCo	161
OKTCo	256
Total Circuit Miles	1,975

TITLE TO PROPERTY

The AEP System’s generating facilities are generally located on lands owned in fee simple. The greater portion of the transmission and distribution lines of the AEP System has been constructed over lands of private owners pursuant to easements or along public highways and streets pursuant to appropriate statutory authority. The rights of AEP’s public utility subsidiaries in the realty on which their facilities are located are considered adequate for use in the conduct of their business. Minor defects and irregularities customarily found in title to properties of like size and character may exist, but such defects and irregularities do not materially impair the use of the properties affected thereby. AEP’s public utility subsidiaries generally have the right of eminent domain which permits them, if necessary, to acquire, perfect or secure titles to or easements on privately held lands used or to be used in their utility operations. Recent legislation in Ohio and Virginia has restricted the right of eminent domain previously granted for power generation purposes.

SYSTEM TRANSMISSION LINES AND FACILITY SITING

Laws in the states of Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Tennessee, Texas, Virginia and West Virginia require prior approval of sites of generating facilities and/or routes of high-voltage transmission lines. We have experienced delays and additional costs in constructing facilities as a result of proceedings conducted pursuant to such statutes and in proceedings in which our operating companies have sought to acquire rights-of-way through condemnation. These proceedings may result in additional delays and costs in future years.

CONSTRUCTION PROGRAM

With input from its state utility commissions, the AEP System continuously assesses the adequacy of its generation, transmission, distribution and other facilities to plan and provide for the reliable supply of electric power and energy to its customers. In this assessment process, assumptions are continually being reviewed as new information becomes available and assessments and plans are modified, as appropriate. AEP forecasts approximately $4.5 billion of construction expenditures for 2015 , including debt AFUDC and assets acquired under leases. Estimated construction expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints, environmental regulations, business opportunities, market volatility, economic trends, weather, legal reviews and the ability to access capital. For additional information on our construction program, see Combined Management’s Narrative Discussion and Analysis under the heading entitled Budgeted Construction Expenditures for each Registrant.

POTENTIAL UNINSURED LOSSES

Some potential losses or liabilities may not be insurable or the amount of insurance carried may not be sufficient to meet potential losses and liabilities, including liabilities relating to damage to our generation plants and costs of replacement power. Unless allowed to be recovered through rates, future losses or liabilities which are not completely insured could reduce net income and impact the financial conditions of AEP and other AEP System companies. For risks related to owning a nuclear generating unit, see Note 6 to the consolidated financial statements entitled Commitments, Guarantees and Contingencies under the heading Nuclear Contingencies for information with respect to nuclear incident liability insurance.

ITEM 3. LEGAL PROCEEDINGS

For a discussion of material legal proceedings, see Note 6 to the consolidated financial statements, entitled Commitments, Guarantees and Contingencies, incorporated by reference in Item 8.

ITEM 4. MINE SAFETY DISCLOSURE

The Federal Mine Safety and Health Act of 1977 (Mine Act) imposes stringent health and safety standards on various mining operations. The Mine Act and its related regulations affect numerous aspects of mining operations, including training of mine personnel, mining procedures, equipment used in mine emergency procedures, mine plans and other matters. SWEPCo, through its ownership of Dolet Hills Lignite Company (DHLC), a wholly-owned lignite mining subsidiary of SWEPCo, and AGR, through its use of the Conner Run fly ash impoundment, is subject to the provisions of the Mine Act.

The Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder require companies that operate mines to include in their periodic reports filed with the SEC, certain mine safety information covered by the Mine Act. Exhibit 95 “Mine Safety Disclosure Exhibit” contains the notices of violation and proposed assessments received by DHLC and Conner Run under the Mine Act for the quarter ended December 31, 2014 .

PART II

ITEM 5. MARKET FOR REGISTRANTS’ COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

AEP

In addition to the discussion below, the remaining information required by this item is incorporated herein by reference to the material under AEP Common Stock and Dividend Information and Note 14 to the consolidated financial statements entitled Financing Activities under the heading Dividend Restrictions in the 2014 Annual Report.

APCo, I&M, OPCo, PSO and SWEPCo

The common stock of these companies is held solely by AEP. The information regarding the amounts of cash dividends on common stock paid by these companies to AEP during 2014 , 2013 and 2012 are incorporated by reference to the material under Statements of Changes in Common Shareholder’s Equity and Note 14 to the consolidated financial statements entitled Financing Activities under the heading Dividend Restrictions in the 2014 Annual Reports.

During the quarter ended December 31, 2014 , neither AEP nor its publicly-traded subsidiaries purchased equity securities that are registered by AEP or its publicly-traded subsidiaries pursuant to Section 12 of the Exchange Act.

ITEM 6. SELECTED FINANCIAL DATA

AEP

The information required by this item is incorporated herein by reference to the material under Selected Consolidated Financial Data in the 2014 Annual Reports.

APCo, I&M, OPCo, PSO and SWEPCo

Omitted pursuant to Instruction I(2)(a). Management’s narrative analysis of the results of operations and other information required by Instruction I(2)(a) is incorporated herein by reference to the material under Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2014 Annual Reports.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

AEP

The information required by this item is incorporated herein by reference to the material under Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2014 Annual Reports.

APCo, I&M, OPCo, PSO and SWEPCo

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

AEP, APCo, I&M, OPCo, PSO and SWEPCo

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

AEP, APCo, I&M, OPCo, PSO and SWEPCo

The information required by this item is incorporated herein by reference to the financial statements and financial statement schedules described under Item 15 herein.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

AEP, APCo, I&M, OPCo, PSO and SWEPCo

None.

ITEM 9A. CONTROLS AND PROCEDURES

During 2014 , management, including the principal executive officer and principal financial officer of each of American Electric Power Company, Inc. (“AEP”), Appalachian Power Company, Indiana Michigan Power Company, Ohio Power Company, Public Service Company of Oklahoma and Southwestern Electric Power Company (each a “Registrant” and collectively the “Registrants”) evaluated each respective Registrant’s disclosure controls and procedures. Disclosure controls and procedures are defined as controls and other procedures of the Registrant that are designed to ensure that information required to be disclosed by the Registrants in the reports that they file or submit under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Registrants in the reports that they file or submit under the Exchange Act is accumulated and communicated to each Registrant’s management, including the principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

As of December 31, 2014 , these officers concluded that the disclosure controls and procedures in place are effective and provide reasonable assurance that the disclosure controls and procedures accomplished their objectives. The Registrants continually strive to improve their disclosure controls and procedures to enhance the quality of their financial reporting and to maintain dynamic systems that change as events warrant.

There have been no changes in the Registrants’ internal control over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter 2014 that materially affected, or is reasonably likely to materially affect, the Registrants’ internal control over financial reporting

Management assessed and reported on the effectiveness of its internal control over financial reporting as of December 31, 2014 . As a result of that assessment, management determined that there were no material weaknesses as of December 31, 2014 and, therefore, concluded that each Registrant’s internal control over financial reporting was effective.

Additional information required by this item of the Registrants is incorporated by reference to Management’s Report on Internal Control over Financial Reporting, included in the 2014 Annual Report of each Registrant.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

APCo, I&M, OPCo, PSO and SWEPCo

Omitted pursuant to Instruction I(2)(c).

AEP

Directors, Director Nomination Process and Audit Committee

Certain of the information called for in this Item 10, including the information relating to directors, is incorporated herein by reference to AEP's definitive proxy information statement (which will be filed with the SEC pursuant to Regulation 14A under the Exchange Act) relating to 2015 Annual Meeting of Shareholders (the 2015 Annual Meeting) including under the captions “Election of Directors,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “AEP’s Board of Directors and Committees,” “Directors,” “Involvement by Mr. Hoaglin in Certain Legal Proceedings” and “Shareholder Nominees for Directors.”

Executive Officers

Reference also is made to the information under the caption Executive Officers of the Registrants in Part I, Item 4 of this report.

Code of Ethics

AEP’s Principles of Business Conduct is the code of ethics that applies to AEP’s Chief Executive Officer, Chief Financial Officer and principal accounting officer. The Principles of Business Conduct is available on AEP’s website at www.aep.com. The Principles of Business Conduct will be made available, without charge, in print to any shareholder who requests such document from Investor Relations, American Electric Power Company, Inc., 1 Riverside Plaza, Columbus, Ohio 43215.

If any substantive amendments to the Principles of Business Conduct are made or any waivers are granted, including any implicit waiver, from a provision of the Principles of Business Conduct, to its Chief Executive Officer, Chief Financial Officer or principal accounting officer, AEP will disclose the nature of such amendment or waiver on AEP’s website, www.aep.com, or in a report on Form 8-K.

Section 16(a) Beneficial Ownership Reporting Compliance

The information required by this item is incorporated herein by reference to information contained in the definitive proxy statement of AEP for the 2015 Annual Meeting.

ITEM 11. EXECUTIVE COMPENSATION

APCo, I&M, OPCo, PSO and SWEPCo

Omitted pursuant to Instruction I(2)(c).

AEP

The information called for by this Item 11 is incorporated herein by reference to AEP’s definitive proxy statement (which will be filed with the SEC pursuant to Regulation 14A under the Exchange Act) relating to the 2015 Annual Meeting including under the captions “Compensation Discussion and Analysis,” “Executive Compensation”, “Director

Compensation” and “ 2014 Director Compensation Table”. The information set forth under the subcaption “Human Resources Committee Report” and “Audit Committee Report” should not be deemed filed nor should it be incorporated by reference into any other filing under the Securities Act of 1933, as amended, or the Exchange Act except to the extent we specifically incorporate such report by reference therein.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

APCo, I&M, OPCo, PSO and SWEPCo

Omitted pursuant to Instruction I(2)(c).

AEP

The information relating to Security Ownership of Certain Beneficial Owners is incorporated herein by reference to AEP’s definitive proxy statement (which will be filed with the SEC pursuant to Regulation 14A under the Exchange Act) relating to 2015 Annual Meeting under the caption “Share Ownership of Certain Beneficial Owners and Management” and “Share Ownership of Directors and Executive Officers.”

EQUITY COMPENSATION PLAN INFORMATION

The following table summarizes the ability of AEP to issue common stock pursuant to equity compensation plans as of December 31, 2014:



Plan Category	Number of Securities to be Issued upon Exercise of Outstanding Options Warrants and Rights	Weighted Average Exercise Price of Outstanding Options, Warrants and Rights	Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (a)
Equity Compensation Plans Approved by Security Holders	—	NA	15,825,643
Equity Compensation Plans Not Approved by Security Holders	—	—	—
Total	—	NA	15,825,643

(a)

AEP deducts equity compensation granted in stock units that are paid in cash, rather than AEP common shares, such as AEP’s performance units and deferred stock units, from the number of shares available for future grants under the Amended and Restated American Electric Power System Long-Term Incentive Plan. The number of shares available under this plan would be 2,809,209 higher if equity compensation that is paid in cash were not deducted from this column.

NA Not applicable.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

APCo, I&M, OPCo, PSO and SWEPCo

Omitted pursuant to Instruction I(2)(c).

AEP

The information called for by this Item 13 is incorporated herein by reference to AEP’s definitive proxy statement (which will be filed with the SEC pursuant to Regulation 14A under the Exchange Act) relating to the 2015 Annual Meeting under the captions “Transactions with Related Persons” and “Director Independence.”

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

AEP

The information called for by this Item 14 is incorporated herein by reference to AEP’s definitive proxy statement (which will be filed with the SEC pursuant to Regulation 14A under the Exchange Act) relating to the 2015 Annual Meeting under the captions “Audit and Non-Audit Fees,” “Audit Committee Report” and “Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of the Independent Auditor.”

APCo, I&M, OPCo, PSO and SWEPCo

Each of the above is a wholly-owned subsidiary of AEP and does not have a separate audit committee. A description of the AEP Audit Committee pre-approval policies, which apply to these companies, is contained in the definitive proxy statement of AEP for the 2015 Annual Meeting of shareholders. The following table presents directly billed fees for professional services rendered by Deloitte & Touche LLP for the audit of these companies’ annual financial statements for the years ended December 31, 2014 and 2013 , and fees directly billed for other services rendered by Deloitte & Touche LLP during those periods. Deloitte & Touche LLP also provides additional professional and other services to the AEP System, the cost of which may ultimately be allocated to these companies though not billed directly to them. For a description of these fees and services, see the description of principal accounting fees and services for AEP, above.



	APCo				I&M				OPCo
	2014		2013		2014		2013		2014		2013
Audit Fees	$	2,103,482	$	2,342,744	$	1,563,434	$	1,552,346	$	1,111,667	$	3,119,885
Audit-Related Fees	108,305		104,923		53,508		51,488		83,594		128,535
Tax Fees	26,915		22,556		21,117		16,677		15,719		278,029
Total	$	2,238,702	$	2,470,223	$	1,638,059	$	1,620,511	$	1,210,980	$	3,526,449



	PSO				SWEPCo
	2014		2013		2014		2013
Audit Fees	$	599,890	$	641,720	$	1,216,430	$	1,131,155
Audit-Related Fees	25,622		21,920		41,118		102,633
Tax Fees	8,482		7,100		15,503		12,505
Total	$	633,994	$	670,740	$	1,273,051	$	1,246,293

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are filed as a part of this report:


1.	FINANCIAL STATEMENTS:

The following financial statements have been incorporated herein by reference pursuant to Item 8.

AEP and Subsidiary Companies:

Reports of Independent Registered Public Accounting Firm; Management’s Report on Internal Control over Financial Reporting; Consolidated Statements of Income for the years ended December 31, 2014 , 2013 and 2012 ; Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2014 , 2013 and 2012 ; Consolidated Statements of Changes in Equity for the years ended December 31, 2014 , 2013 and 2012 ; Consolidated Balance Sheets as of December 31, 2014 and 2013 ; Consolidated Statements of Cash Flows for the years ended December 31, 2014 , 2013 and 2012 ; Notes to Consolidated Financial Statements.

APCo, I&M and OPCo:

Consolidated Statements of Income for the years ended December 31, 2014 , 2013 and 2012 ; Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2014 , 2013 and 2012 ; Consolidated Statements of Changes in Common Shareholder’s Equity for the years ended December 31, 2014 , 2013 and 2012 ; Consolidated Balance Sheets as of December 31, 2014 and 2013 ; Consolidated Statements of Cash Flows for the years ended December 31, 2014 , 2013 and 2012 ; Notes to Financial Statements of Registrant Subsidiaries; Report of Independent Registered Public Accounting Firm; Management’s Report on Internal Control over Financial Reporting.

PSO:

Statements of Income for the years ended December 31, 2014 , 2013 and 2012 ; Statements of Comprehensive Income (Loss) for the years ended December 31, 2014 , 2013 and 2012 ; Statements of Changes in Common Shareholder’s Equity for the years ended December 31, 2014 , 2013 and 2012 ; Balance Sheets as of December 31, 2014 and 2013 ; Statements of Cash Flows for the years ended December 31, 2014 , 2013 and 2012 ; Notes to Financial Statements of Registrant Subsidiaries; Report of Independent Registered Public Accounting Firm; Management’s Report on Internal Control over Financial Reporting.

SWEPCo:

Consolidated Statements of Income for the years ended December 31, 2014 , 2013 and 2012 ; Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2014 , 2013 and 2012 ; Consolidated Statements of Changes in Equity for the years ended December 31, 2014 , 2013 and 2012 ; Consolidated Balance Sheets as of December 31, 2014 and 2013 ; Consolidated Statements of Cash Flows for the years ended December 31, 2014 , 2013 and 2012 ; Notes to Financial Statements of Registrant Subsidiaries; Report of Independent Registered Public Accounting Firm; Management’s Report on Internal Control over Financial Reporting.



2. FINANCIAL STATEMENT SCHEDULES:		Page Number
Financial Statement Schedules are listed in the Index of Financial Statement Schedules. (Certain schedules have been omitted because the required information is contained in the notes to financial statements or because such schedules are not required or are not applicable). Reports of Independent Registered Public Accounting Firm.		S-1

3. EXHIBITS:
Exhibits for AEP, APCo, I&M, OPCo, PSO and SWEPCo are listed in the Exhibit Index beginning on page E-1 and are incorporated herein by reference.		E-1

SIGNATURES



	American Electric Power Company, Inc.

	By:	/s/ Brian X. Tierney
		(Brian X. Tierney, Executive Vice President
		and Chief Financial Officer)

Date: February 20, 2015



Signature		Title	Date

(i)	Principal Executive Officer:

	/s/ Nicholas K. Akins	Chairman of the Board, Chief Executive Officer and Director	February 20, 2015
	(Nicholas K. Akins)

(ii)	Principal Financial Officer:

	/s/ Brian X. Tierney	Executive Vice President and Chief Financial Officer	February 20, 2015
	(Brian X. Tierney)	Executive Vice President and Chief Financial Officer

(iii)	Principal Accounting Officer:

	/s/ Joseph M. Buonaiuto	Senior Vice President, Controller and Chief Accounting Officer	February 20, 2015
	(Joseph M. Buonaiuto)

(iv)	A Majority of the Directors:

	*Nicholas K. Akins
	*David J. Anderson
	* J. Barnie Beasley, Jr.
	* Ralph D. Crosby, Jr.
	*Linda A. Goodspeed
	*Thomas E. Hoaglin
	*Sandra Beach Lin
	*Richard C. Notebaert
	*Lionel L. Nowell, III
	*Stephen S. Rasmussen
	*Oliver G. Richard, III
	*Sara Martinez Tucker

*By:	/s/ Brian X. Tierney		February 20, 2015
	(Brian X. Tierney, Attorney-in-Fact)

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.



	Appalachian Power Company
	Ohio Power Company
	Public Service Company of Oklahoma
	Southwestern Electric Power Company

	By:	/s/ Brian X. Tierney
		(Brian X. Tierney, Executive Vice President and Chief Financial Officer)

Date: February 20, 2015

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.



Signature		Title	Date

(i)	Principal Executive Officer:

	/s/ Nicholas K. Akins	Chairman of the Board, Chief Executive Officer and Director	February 20, 2015
	(Nicholas K. Akins)	Chairman of the Board, Chief Executive Officer and Director

(ii)	Principal Financial Officer:

	/s/ Brian X. Tierney	Vice President, Chief Financial Officer and Director	February 20, 2015
	(Brian X. Tierney)	Vice President, Chief Financial Officer and Director

(iii)	Principal Accounting Officer:

	/s/ Joseph M. Buonaiuto	Controller and Chief Accounting Officer	February 20, 2015
	(Joseph M. Buonaiuto)	Controller and Chief Accounting Officer

(iv)	A Majority of the Directors:

	*Nicholas K. Akins
	*Lisa M. Barton
	*David M. Feinberg
	*Lana L. Hillebrand
	*Mark C. McCullough
	*Robert P. Powers
	Brian X. Tierney
	*Dennis E. Welch

*By:	/s/ Brian X. Tierney		February 20, 2015
	(Brian X. Tierney, Attorney-in-Fact)

SIGNATURES



	Indiana Michigan Power Company

	By:	/s/ Brian X. Tierney
		(Brian X. Tierney, Executive Vice President
		and Chief Financial Officer)

Date: February 20, 2015



Signature		Title	Date

(i)	Principal Executive Officer:

	/s/ Nicholas K. Akins	Chairman of the Board, Chief Executive Officer and Director	February 20, 2015
	(Nicholas K. Akins)	Chairman of the Board, Chief Executive Officer and Director

(ii)	Principal Financial Officer:

	/s/ Brian X. Tierney	Vice President, Chief Financial Officer and Director	February 20, 2015
	(Brian X. Tierney)	Vice President, Chief Financial Officer and Director

(iii)	Principal Accounting Officer:

	/s/ Joseph M. Buonaiuto	Controller and Chief Accounting Officer	February 20, 2015
	(Joseph M. Buonaiuto)	Controller and Chief Accounting Officer

(iv)	A Majority of the Directors:

	*Nicholas K. Akins
	*Lisa M. Barton
	*Paul Chodak, III
	*Thomas A. Kratt
	*Marc E. Lewis
	*David A. Lucas
	*Mark C. McCullough
	*Robert P. Powers
	*Carla E. Simpson
	Brian X. Tierney
	*Barry O. Wiard

*By:	/s/ Brian X. Tierney		February 20, 2015
	(Brian X. Tierney, Attorney-in-Fact)

INDEX OF FINANCIAL STATEMENT SCHEDULES



	Page Number
Reports of Independent Registered Public Accounting Firm	S-2

The following financial statement schedules are included in this report on the pages indicated:

American Electric Power Company, Inc. (Parent):
Schedule I – Condensed Financial Information	S-3
Schedule I – Index of Condensed Notes to Condensed Financial Information	S-7

American Electric Power Company, Inc. and Subsidiary Companies:
Schedule II – Valuation and Qualifying Accounts and Reserves	S-10

Appalachian Power Company and Subsidiaries:
Schedule II – Valuation and Qualifying Accounts and Reserves	S-10

Indiana Michigan Power Company and Subsidiaries:
Schedule II – Valuation and Qualifying Accounts and Reserves	S-10

Ohio Power Company and Subsidiaries:
Schedule II – Valuation and Qualifying Accounts and Reserves	S-11

Public Service Company of Oklahoma:
Schedule II – Valuation and Qualifying Accounts and Reserves	S-11

Southwestern Electric Power Company Consolidated:
Schedule II – Valuation and Qualifying Accounts and Reserves	S-11

S-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

American Electric Power Company, Inc.:

We have audited the consolidated financial statements of American Electric Power Company, Inc. and subsidiary companies (the “Company”) as of December 31, 2014 and 2013, and for each of the three years in the period ended December 31, 2014, and the Company's internal control over financial reporting as of December 31, 2014, and have issued our reports thereon dated February 20, 2015; such consolidated financial statements and reports are included in the Company’s 2014 Annual Report and are incorporated herein by reference. Our audits also included the financial statement schedules of the Company listed in Item 15. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

/s/ Deloitte & Touche LLP

Columbus, Ohio

February 20, 2015

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholder of

Appalachian Power Compan y

Indiana Michigan Power Company

Ohio Power Company

Public Service Company of Oklahoma

Southwestern Electric Power Company

We have audited the financial statements of Appalachian Power Company and subsidiaries, Indiana Michigan Power Company and subsidiaries, Ohio Power Company and subsidiaries, Public Service Company of Oklahoma, and Southwestern Electric Power Company Consolidated (collectively the “Companies”) as of December 31, 2014 and 2013, and for each of the three years in the period ended December 31, 2014, and have issued our reports thereon dated February 20, 2015; such financial statements and reports are included in the Companies’ 2014 Annual Reports and are incorporated herein by reference. Our audits also included the financial statement schedule of each of the Companies listed in Item 15. These financial statement schedules are the responsibility of the Companies’ management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

/s/ Deloitte & Touche LLP

Columbus, Ohio

February 20, 2015

S-2

SCHEDULE I

AMERICAN ELECTRIC POWER COMPANY, INC. (Parent)

CONDENSED FINANCIAL INFORMATION

CONDENSED STATEMENTS OF INCOME

For the Years Ended December 31, 2014 , 2013 and 2012

(in millions, except per-share and share amounts)



	Years Ended December 31,
	2014			2013			2012
REVENUES
Affiliated Revenues	$	7		$	4		$	4

EXPENSES
Other Operation	27			21			22

OPERATING LOSS	(20		)	(17		)	(18		)

Other Income (Expense):
Interest Income	7			21			22
Interest Expense	(17		)	(17		)	(90		)

LOSS BEFORE EQUITY EARNINGS	(30		)	(13		)	(86		)

Equity Earnings of Unconsolidated Subsidiaries	1,664			1,493			1,345

NET INCOME	1,634			1,480			1,259

Other Comprehensive Income	12			217			133

TOTAL COMPREHENSIVE INCOME	$	1,646		$	1,697		$	1,392

WEIGHTED AVERAGE NUMBER OF BASIC AEP COMMON SHARES OUTSTANDING	488,592,997			486,619,555			484,682,469

TOTAL BASIC EARNINGS PER SHARE ATTRIBUTABLE TO AEP COMMON SHAREHOLDERS	$	3.34		$	3.04		$	2.60

WEIGHTED AVERAGE NUMBER OF DILUTED AEP COMMON SHARES OUTSTANDING	488,899,840			487,040,956			485,084,694

TOTAL DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO AEP COMMON SHAREHOLDERS	$	3.34		$	3.04		$	2.60

See Condensed Notes to Condensed Financial Information beginning on page S-7.

S-3

SCHEDULE I

AMERICAN ELECTRIC POWER COMPANY, INC. (Parent)

CONDENSED FINANCIAL INFORMATION

CONDENSED BALANCE SHEETS

ASSETS

December 31, 2014 and 2013

(in millions)



	December 31,
	2014		2013
CURRENT ASSETS
Cash and Cash Equivalents	$	63	$	36
Other Temporary Investments	2		2
Advances to Affiliates	769		539
Accounts Receivable:
General	8		—
Affiliated Companies	13		11
Total Accounts Receivable	21		11
Prepayments and Other Current Assets	4		6
TOTAL CURRENT ASSETS	859		594

PROPERTY, PLANT AND EQUIPMENT
General	1		1
Total Property, Plant and Equipment	1		1
Accumulated Depreciation and Amortization	1		1
TOTAL PROPERTY, PLANT AND EQUIPMENT – NET	—		—

OTHER NONCURRENT ASSETS
Investments in Unconsolidated Subsidiaries	17,475		16,353
Affiliated Notes Receivable	45		80
Deferred Charges and Other Noncurrent Assets	57		57
TOTAL OTHER NONCURRENT ASSETS	17,577		16,490

TOTAL ASSETS	$	18,436	$	17,084

See Condensed Notes to Condensed Financial Information beginning on page S-7.

S-4

SCHEDULE I

AMERICAN ELECTRIC POWER COMPANY, INC. (Parent)

CONDENSED FINANCIAL INFORMATION

CONDENSED BALANCE SHEETS

LIABILITIES AND EQUITY

December 31, 2014 and 2013

(dollars in millions)



			December 31,
			2014			2013
CURRENT LIABILITIES
Advances from Affiliates			$	116		$	41
Accounts Payable:
General			1			—
Affiliated Companies			2			13
Long-term Debt Due Within One Year			3			4
Short-term Debt			602			57
Other Current Liabilities			11			5
TOTAL CURRENT LIABILITIES			735			120

NONCURRENT LIABILITIES
Long-term Debt			840			836
Deferred Credits and Other Noncurrent Liabilities			41			43
TOTAL NONCURRENT LIABILITIES			881			879

TOTAL LIABILITIES			1,616			999


COMMON SHAREHOLDERS' EQUITY
Common Stock – Par Value – $6.50 Per Share:
	2014	2013
Shares Authorized	600,000,000	600,000,000
Shares Issued	509,739,159	508,113,964
(20,336,592 Shares were Held in Treasury as of December 31, 2014 and 2013)			3,313			3,303
Paid-in Capital			6,204			6,131
Retained Earnings			7,406			6,766
Accumulated Other Comprehensive Income (Loss)			(103		)	(115		)
TOTAL AEP COMMON SHAREHOLDERS’ EQUITY			16,820			16,085

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY			$	18,436		$	17,084

See Condensed Notes to Condensed Financial Information beginning on page S-7.

S-5

SCHEDULE I

AMERICAN ELECTRIC POWER COMPANY, INC. (Parent)

CONDENSED FINANCIAL INFORMATION

CONDENSED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2014 , 2013 and 2012

(in millions)



	Years Ended December 31,
	2014			2013			2012
OPERATING ACTIVITIES
Net Income	$	1,634		$	1,480		$	1,259
Adjustments to Reconcile Net Income to Net Cash Flows from
from Operating Activities:
Equity Earnings of Unconsolidated Subsidiaries	(1,664		)	(1,493		)	(1,345		)
Cash Dividends Received from Unconsolidated Subsidiaries	956			1,027			1,294
Change in Other Noncurrent Assets	1			2			13
Change in Other Noncurrent Liabilities	16			16			22
Changes in Certain Components of Working Capital:
Accounts Receivable, Net	(10		)	96			(47		)
Accounts Payable	(10		)	(423		)	(10		)
Other Current Liabilities	6			(73		)	72
Net Cash Flows from Operating Activities	929			632			1,258

INVESTING ACTIVITIES
Change in Advances to Affiliates, Net	(230		)	111			294
Capital Contributions to Unconsolidated Subsidiaries	(523		)	(358		)	(325		)
Return of Capital Contributions from Unconsolidated Subsidiaries	123			375			—
Repayments of Notes Receivable from Affiliated Companies	35			205			5
Net Cash Flows from (Used for) Investing Activities	(595		)	333			(26		)

FINANCING ACTIVITIES
Issuance of Common Stock, Net	73			84			83
Issuance of Long-term Debt	—			199			843
Change in Short-term Debt, Net	545			(264		)	(646		)
Retirement of Long-term Debt	—			(200		)	(558		)
Change in Advances from Affiliates, Net	75			41			—
Dividends Paid on Common Stock	(992		)	(949		)	(911		)
Other Financing Activities	(8		)	(6		)	(4		)
Net Cash Flows Used for Financing Activities	(307		)	(1,095		)	(1,193		)

Net Increase (Decrease) in Cash and Cash Equivalents	27			(130		)	39
Cash and Cash Equivalents at Beginning of Period	36			166			127
Cash and Cash Equivalents at End of Period	$	63		$	36		$	166

See Condensed Notes to Condensed Financial Information beginning on page S-7.

S-6

SCHEDULE I

AMERICAN ELECTRIC POWER COMPANY, INC. (Parent)

INDEX OF CONDENSED NOTES TO CONDENSED FINANCIAL INFORMATION

1. Summary of Significant Accounting Policies

2. Commitments, Guarantees and Contingencies

3. Financing Activities

4. Related Party Transactions

S-7

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The condensed financial information of AEP (Parent) is required as a result of the restricted net assets of consolidated subsidiaries exceeding 25% of consolidated net assets as of December 31, 2014 . Parent is a public utility holding company that owns all of the outstanding common stock of its public utility subsidiaries and varying percentages of other subsidiaries, including joint ventures and equity investments. The primary source of income for Parent is equity in its subsidiaries’ earnings. Its major source of cash is dividends from the subsidiaries. Parent borrows the funds for the money pool that is used by the subsidiaries for their short-term cash needs.

Income Taxes

Parent files a consolidated federal income tax return with its subsidiaries. AEP System’s current consolidated federal income tax is allocated to AEP System companies so that their current tax expense reflects a separate return result for each company in the consolidated group. The tax benefit of Parent is allocated to its subsidiaries with taxable income.

2. COMMITMENTS, GUARANTEES AND CONTINGENCIES

Parent and its subsidiaries are parties to environmental and other legal matters. For further discussion of commitments, guarantees and contingencies, see Note 6 in the 2014 Annual Reports.

3. FINANCING ACTIVITIES

The following details long-term debt outstanding as of December 31, 2014 and 2013 :

Long-term Debt



	Weighted Average	Interest Rate Ranges as of		Outstanding as of
	Interest Rate as of	December 31,		December 31,
Type of Debt and Maturity	December 31, 2014	2014	2013	2014			2013
				(in millions)
Senior Unsecured Notes
2017-2022	2.11%	1.65%-2.95%	1.65% - 2.95%	$	850		$	850

Fair Value of Interest Rate Hedges				(6		)	(9		)
Unamortized Discount, Net				(1		)	(1		)
Total Long-term Debt Outstanding				843			840
Long-term Debt Due Within One Year				3			4
Long-term Debt				$	840		$	836

Long-term debt outstanding as of December 31, 2014 is payable as follows:



	2015		2016			2017		2018		2019		After 2019		Total
	(in millions)
Principal Amount	$	3	$	(15	)	$	556	$	—	$	—	$	300	$	844
Unamortized Discount, Net														(1		)
Total Long-term Debt Outstanding														$	843

S-8

Short-term Debt

Parent's outstanding short-term debt was as follows:



	December 31,
	2014				2013
Type of Debt	Outstanding Amount		Weighted Average Interest Rate		Outstanding Amount		Weighted Average Interest Rate
	(in millions)				(in millions)
Commercial Paper	$	602	0.59	%	$	57	0.29	%
Total Short-term Debt	$	602			$	57

4. RELATED PARTY TRANSACTIONS

Payments on Behalf of Subsidiaries

Due to occasional time sensitivity and complexity of payments, Parent makes certain insurance, tax and benefit payments on behalf of subsidiary companies. Parent is then fully reimbursed by the subsidiary companies.

Short-term Lending to Subsidiaries

Parent uses a commercial paper program to meet the short-term borrowing needs of subsidiaries. The program is used to fund both a Utility Money Pool, which funds the utility subsidiaries, and a Nonutility Money Pool, which funds the majority of the nonutility subsidiaries. In addition, the program also funds, as direct borrowers, the short-term debt requirements of other subsidiaries that are not participants in either money pool for regulatory or operational reasons. The program also allows some direct borrowers to invest excess cash with Parent.

Interest expense related to Parent’s short-term borrowing is included in Interest Expense on Parent’s statements of income. Parent incurred interest expense for amounts borrowed from subsidiaries of $413 thousand, $7 thousand and $11 thousand for the years ended December 31, 2014 , 2013 and 2012 , respectively.

Interest income related to Parent’s short-term lending is included in Interest Income on Parent’s statements of income. Parent earned interest income for amounts advanced to subsidiaries of $4 million, $4 million and $5 million for the years ended December 31, 2014 , 2013 and 2012 , respectively.

Global Borrowing Notes

Parent issued long-term debt, portions of which were loaned to its subsidiaries. Parent pays interest on the global notes, but the subsidiaries accrue interest for their share of the global borrowing and remit the interest to Parent. Interest income related to Parent’s loans to subsidiaries is included in Interest Income on Parent’s statements of income. Parent earned interest income on loans to subsidiaries of $3 million, $15 million and $15 million for the years ended December 31, 2014 , 2013 and 2012 , respectively.

S-9

SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS AND RESERVES



AEP			Additions
Description	Balance at Beginning of Period		Charged to Costs and Expenses		Charged to Other Accounts (a)		Deductions (b)		Balance at End of Period
	(in millions)
Deducted from Assets:
Accumulated Provision for Uncollectible
Accounts:
Year Ended December 31, 2014	$	60	$	51	$	9	$	99	$	21
Year Ended December 31, 2013	36		51		21		48		60
Year Ended December 31, 2012	32		53		3		52		36


(a)	Recoveries offset by reclasses to other assets and liabilities.


(b)	Uncollectible accounts written off.



APCo			Additions
Description	Balance at Beginning of Period		Charged to Costs and Expenses		Charged to Other Accounts (a)		Deductions (b)		Balance at End of Period
	(in thousands)
Deducted from Assets:
Accumulated Provision for Uncollectible
Accounts:
Year Ended December 31, 2014	$	2,443	$	8,965	$	2,526	$	11,570	$	2,364
Year Ended December 31, 2013	6,087		4,737		1,768		10,149		2,443
Year Ended December 31, 2012	5,289		15,652		1,689		16,543		6,087


(a)	Recoveries offset by reclasses to other assets and liabilities.


(b)	Uncollectible accounts written off.



I&M			Additions
Description	Balance at Beginning of Period		Charged to Costs and Expenses				Charged to Other Accounts (a)		Deductions (b)		Balance at End of Period
	(in thousands)
Deducted from Assets:
Accumulated Provision for Uncollectible
Accounts:
Year Ended December 31, 2014	$	184	$	152			$	211	$	53	$	494
Year Ended December 31, 2013	229		(40		)	(c)	—		5		184
Year Ended December 31, 2012	1,750		20				—		1,541		229


(a)	Recoveries offset by reclasses to other assets and liabilities.


(b)	Uncollectible accounts written off.


(c)	Recoveries on previous reserve balance.

S-10



OPCo			Additions								Distribution of OPCo Generation to Parent
Description	Balance at Beginning of Period		Charged to Costs and Expenses				Charged to Other Accounts (a)		Deductions (b)		Distribution of OPCo Generation to Parent			Balance at End of Period
	(in thousands)
Deducted from Assets:
Accumulated Provision for Uncollectible
Accounts:
Year Ended December 31, 2014	$	34,984	$	1,236			$	8,012	$	44,061	$	—		$	171
Year Ended December 31, 2013	129		15,722				19,191		51		(7		)	34,984
Year Ended December 31, 2012	3,563		(9		)	(c)	43		3,468		—			129


(a)	Recoveries offset by reclasses to other assets and liabilities.


(b)	Uncollectible accounts written off.


(c)	Recoveries on previous reserve balance.



PSO			Additions
Description	Balance at Beginning of Period		Charged to Costs and Expenses				Charged to Other Accounts (a)		Deductions (b)		Balance at End of Period
	(in thousands)
Deducted from Assets:
Accumulated Provision for Uncollectible
Accounts:
Year Ended December 31, 2014	$	462	$	(273	)	(c)	$	—	$	42	$	147
Year Ended December 31, 2013	872		(122		)	(c)	—		288		462
Year Ended December 31, 2012	777		95				—		—		872


(a)	Recoveries offset by reclasses to other assets and liabilities.


(b)	Uncollectible accounts written off.


(c)	Recoveries on previous reserve balance.



SWEPCo			Additions
Description	Balance at Beginning of Period		Charged to Costs and Expenses				Charged to Other Accounts (a)				Deductions (b)		Balance at End of Period
	(in thousands)
Deducted from Assets:
Accumulated Provision for Uncollectible
Accounts:
Year Ended December 31, 2014	$	1,418	$	452			$	(1,353	)	(c)	$	1	$	516
Year Ended December 31, 2013	2,041		(143		)	(c)	2				482		1,418
Year Ended December 31, 2012	989		71				981				—		2,041


(a)	Recoveries offset by reclasses to other assets and liabilities.


(b)	Uncollectible accounts written off.


(c)	Recoveries on previous reserve balance.

S-11

EXHIBIT INDEX

The documents listed below are being filed or have previously been filed on behalf of the Registrants shown and are incorporated herein by reference to the documents indicated and made a part hereof. Exhibits (“Ex”) not identified as previously filed are filed herewith. Exhibits designated with a dagger (†) are management contracts or compensatory plans or arrangements required to be filed as an Exhibit to this Form. Exhibits designated with an asterisk (*) are filed herewith.



Exhibit Designation	Nature of Exhibit	Previously Filed as Exhibit to:

AEP‡ File No. 1-3525

3(a)	Composite of the Restated Certificate of Incorporation of AEP, dated April 28, 2009.	2009 Form 10-K, Ex 3(a)

3(b)	Composite By-Laws of AEP, as amended as of September 25, 2012.	Form 8-K, Ex 3.1 dated September 26, 2012

4(a)	Indenture (for unsecured debt securities), dated as of May 1, 2001, between AEP and The Bank of New York, as Trustee.	Registration Statement No. 333-86050, Ex 4(a)(b)(c) Registration Statement No. 333-105532, Ex 4(d)(e)(f) Registration Statement No. 333-200956, Ex 4(b)

*4(b)	$1.75 Billion Second Amended and Restated Credit Agreement, dated as of November 10, 2014, among AEP, the banks, financial institutions and other institutional lenders listed on the signature pages thereof, and Barclays Bank PLC, as Administrative Agent.

*4(c)	$1.75 Billion Third Amended and Restated Credit Agreement, dated as of November 10, 2014, among AEP, the banks, financial institutions and other institutional lenders listed on the signature pages thereof, and JPMorgan Chase Bank, N.A. as Administrative Agent.

4(d)	$1 Billion Term Credit Agreement, dated as of July 17, 2013, among AEP, APCo, OPCo, AEP Generation Resources Inc., the banks, financial institutions and other institutional lenders listed on the signature pages thereof, and Wells Fargo Bank, National Association, as Administrative Agent.	Form 10-Q, Ex 4, June 30, 2013

10(a)	Interconnection Agreement, dated July 6, 1951, among APCo, CSPCo, KPCo, OPCo and I&M and with AEPSC, as amended.	Registration Statement No. 2-52910, Ex 5(a) Registration Statement No. 2-61009, Ex 5(b) 1990 Form 10-K, Ex 10(a)(3)]

10(b)	Transmission Agreement, effective November 2010, among APCo, CSPCo, I&M, KGPCo, KPCo, OPCo and WPCo with AEPSC as agent.	2013 Form 10-K, Ex 10(c)

10(c)	Transmission Coordination Agreement dated January 1, 1997, restated and amended by and among PSO, SWEPCo and AEPSC.	2009 Form 10-K, Ex 10(d)

10(d)	Amended and Restated Operating Agreement dated as of June 2, 1997, of PJM and AEPSC on behalf of APCo, CSPCo, I&M, KPCo, OPCo, KGPCo and WPCo.	2004 Form 10-K, Ex 10(e)(1)

10(d)(1)	PJM West Reliability Assurance Agreement, dated as of March 14, 2001, among Load Serving Entities in the PJM West service area.	2004 Form 10-K, Ex 10(e)(2)

E-1



Exhibit Designation	Nature of Exhibit	Previously Filed as Exhibit to:

10(d)(2)	Master Setoff and Netting Agreement among PJM and AEPSC on behalf of APCo, CSPCo, I&M, KPCo, OPCo, KGPCo and WPCo.	2004 Form 10-K, Ex 10(e)(3)

10(e)	Lease Agreements, dated as of December 1, 1989, between AEGCo or I&M and Wilmington Trust Company, as amended.	Registration Statement No. 33-32752, Ex 28(c)(1-6)(C) Registration Statement No. 33-32753, Ex 28(a)(1-6)(C) AEGCo 1993 Form 10-K, Ex 10(c)(1-6)(B) I&M 1993 Form 10-K, Ex 10(e)(1-6)(B)

10(f)	Modification No. 1 to the AEP System Interim Allowance Agreement, dated July 28, 1994, among APCo, CSPCo, I&M, KPCo, OPCo and AEPSC.	1996 Form 10-K, Ex 10(1)

10(g)	Consent Decree with U.S. District Court dated October 9, 2007, as modified.	Form 8-K, Ex 10.1 dated October 9, 2007 Form 10-Q, Ex 10, June 30, 2013

†10(h)	AEP Accident Coverage Insurance Plan for Directors.	1985 Form 10-K, Ex 10(g)

†10(i)	AEP Retainer Deferral Plan for Non-Employee Directors, effective January 1, 2005, as amended February 9, 2007.	2007 Form 10-K, Ex 10(j)(i)

†10(j)	Amended and Restated AEP Stock Unit Accumulation Plan for Non-Employee Directors effective January 1, 2013.	Form 10-Q, Ex 10, March 31, 2012

†10(k)	AEP System Excess Benefit Plan, Amended and Restated as of January 1, 2008.	2008 Form 10-K, Ex 10(l)(1)(A)

†10(k)(1)	Guaranty by AEP of AEPSC Excess Benefits Plan.	1990 Form 10-K, Ex 10(h)(1)(B)

†10(l)	AEP System Supplemental Retirement Savings Plan, Amended and Restated as of January 1, 2011 (Non-Qualified).	2010 Form 10-K, Ex 10(l)(2)

*†10(l)(1)(A)	Amendment to AEP System Supplemental Retirement Savings Plan, as Amended and Restated as of January 1, 2011 (Non-Qualified).

†10(m)	AEPSC Umbrella Trust for Executives.	1993 Form 10-K, Ex 10(g)(3)

†10(m)(1)(A)	First Amendment to AEPSC Umbrella Trust for Executives.	2008 Form 10-K, Ex 10(l)(3)(A)

†10(n)	Employment Agreement dated July 29, 1998 between AEPSC and Robert P. Powers.	2002 Form 10-K, Ex 10(m)(4)

†10(n)(1)(A)	Amendment to Employment Agreement dated December 9, 2008 between AEPSC and Robert P. Powers.	2008 Form 10-K, Ex 10(m)(4)(A)

†10(o)	AEP System Senior Officer Annual Incentive Compensation Plan amended and restated as of February 28, 2012.	Form 10-Q, Ex 10, June 30, 2012

†10(p)	AEP System Survivor Benefit Plan, effective January 27, 1998.	Form 10-Q, Ex 10, September 30, 1998

†10(p)(1)(A)	First Amendment to AEP System Survivor Benefit Plan, as amended and restated effective January 31, 2000.	2002 Form 10-K, Ex 10(o)(2)

†10(p)(2)(A)	Second Amendment to AEP System Survivor Benefit Plan, as amended and restated effective January 1, 2008.	2008 Form 10-K, Ex 10(o)(1)(B)

E-2



Exhibit Designation	Nature of Exhibit	Previously Filed as Exhibit to:

†10(q)	AEP System Incentive Compensation Deferral Plan Amended and Restated as of January 1, 2008.	2008 Form 10-K, Ex 10(p)

†10(q)(1)(A)	First Amendment to AEP System Incentive Compensation Deferral Plan as Amended and Restated as of January 1, 2008.	2011 Form 10-K, Ex 10(p)(1)(A)

*†10(q)(2)(A)	Second Amendment to AEP System Incentive Compensation Deferral Plan as Amended and Restated as of January 1, 2008.

*†10(r)	AEP Change In Control Agreement, as Revised Effective January 1, 2015.

†10(s)	Amended and Restated AEP System Long-Term Incentive Plan as of September 25, 2012.	Form 10-Q, Ex 10, September 30, 2012

†10(s)(1)(A)	Performance Share Award Agreement furnished to participants of the AEP System Long-Term Incentive Plan, as amended.	2011 Form 10-K, Ex 10(t)(1)(A)

†10(s)(2)(A)	Restricted Stock Unit Agreement furnished to participants of the AEP System Long-Term Incentive Plan Amended and Restated effective January 1, 2013.	2012 Form 10-K, Ex 10 (t)(2)(A)

†10(t)	AEP System Stock Ownership Requirement Plan Amended and Restated effective January 1, 2014.	Form 10-Q, Ex 10, June 30, 2014

*†10(t)(1)(A)	First Amendment to AEP System Stock Ownership Requirement Plan as Amended and Restated effective January 1, 2014.

†10(u)	Central and South West System Special Executive Retirement Plan Amended and Restated effective January 1, 2009.	2008 Form 10-K, Ex 10(v)

†10(v)	AEP Executive Severance Plan effective January 1, 2014.	Form 8-K, Ex 10.1 dated January 15, 2014

†10(w)	Letter Agreement dated November 20, 2012 between AEPSC and Lana Hillebrand	2013 Form 10-K, Ex 10(s)

*12	Statement re: Computation of Ratios.

*13	Copy of those portions of the AEP 2014 Annual Report (for the fiscal year ended December 31, 2014) which are incorporated by reference in this filing.

*21	List of subsidiaries of AEP.

*23	Consent of Deloitte & Touche LLP.

*24	Power of Attorney.

*31(a)	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31(b)	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*32(a)	Certification of Chief Executive Officer Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.

E-3



Exhibit Designation	Nature of Exhibit	Previously Filed as Exhibit to:

*32(b)	Certification of Chief Financial Officer Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.

101.INS	XBRL Instance Document.

101.SCH	XBRL Taxonomy Extension Schema.

101.CAL	XBRL Taxonomy Extension Calculation Linkbase.

101.DEF	XBRL Taxonomy Extension Definition Linkbase.

101.LAB	XBRL Taxonomy Extension Label Linkbase.

101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

APCo‡ File No. 1-3457

2(a)	Agreement and Plan of Merger dated as of December 31, 2013 by and between Newco Appalachian Inc. and Appalachian Power Company.	Form 8-K, Ex 2.1 dated December 31, 2013

3(a)	Composite of the Restated Articles of Incorporation of APCo, amended as of March 7, 1997.	1996 Form 10-K, Ex 3(d)

3(b)	Composite By-Laws of APCo, amended as of February 26, 2008.	2007 Form 10-K, Ex 3(b)

4(a)	Indenture (for unsecured debt securities), dated as of January 1, 1998, between APCo and The Bank of New York, As Trustee.	Registration Statement No. 333-45927, Ex 4(a)(b) Registration Statement No. 333-49071, Ex 4(b) Registration Statement No. 333-84061, Ex 4(b)(c) Registration Statement No. 333-100451, Ex 4(b)(c)(d) Registration Statement No. 333-116284, Ex 4(b)(c) Registration Statement No. 333-123348, Ex 4(b)(c) Registration Statement No. 333-136432, Ex 4(b)(c)(d) Registration Statement No. 333-161940, Ex 4(b)(c)(d) Registration Statement No. 333-182336, Ex 4(b)(c) Registration Statement No. 333-200750, Ex. 4(b)(c)

4(b)	$1 Billion Term Credit Agreement, dated as of July 17, 2013, among AEP, APCo, OPCo, AEP Generation Resources Inc., the banks, financial institutions and other institutional lenders listed on the signature pages thereof, and Wells Fargo Bank, National Association, as Administrative Agent.	Form 10Q, Ex 4, June 30, 2013

10(a)	Inter-Company Power Agreement, dated as of July 10, 1953, among OVEC and the Sponsoring Companies, as amended September 10, 2010.	2013 Form 10-K, Ex 10(a)

10(b)	Interconnection Agreement, dated July 6, 1951, among APCo, CSPCo, KPCo, OPCo and I&M and with AEPSC, as amended.	Registration Statement No. 2-52910, Ex 5(a) Registration Statement No. 2-61009, Ex 5(b) 1990 Form 10-K, Ex 10(a)(3), File No. 1-3525

10(c)	Transmission Agreement, effective November 2010, among APCo, CSPCo, I&M, KGPCo, KPCo, OPCo and WPCo with AEPSC as agent.	2013 Form 10-K, Ex 10(c)

10(d)	Amended and Restated Operating Agreement of PJM and AEPSC on behalf of APCo, CSPCo, I&M, KPCo, OPCo, KGPCo and WPCo.	2004 Form 10-K, Ex 10(d)(1)

10(d)(1)	PJM West Reliability Assurance Agreement among Load Serving Entities in the PJM West service area.	2004 Form 10-K, Ex 10(d)(2)

E-4



Exhibit Designation	Nature of Exhibit	Previously Filed as Exhibit to:

10(d)(2)	Master Setoff and Netting Agreement among PJM and AEPSC on behalf of APCo, CSPCo, I&M, KPCo, OPCo, KGPCo and WPCo.	2004 Form 10-K, Ex 10(d)(3)

10(e)	Modification No. 1 to the AEP System Interim Allowance Agreement, dated July 28, 1994, among APCo, CSPCo, I&M, KPCo, OPCo and AEPSC.	1996 Form 10-K, Ex 10(l), File No. 1-3525

10(f)	Consent Decree with U.S. District Court, as modified	Form 8-K, Ex 10.1 dated October 9, 2007 Form 10-Q, Ex 10, June 30, 2013

*12	Statement re: Computation of Ratios.

*13	Copy of those portions of the APCo 2014 Annual Report (for the fiscal year ended December 31, 2014) which are incorporated by reference in this filing.

*23	Consent of Deloitte & Touche LLP.

*24	Power of Attorney.

*31(a)	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31(b)	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*32(a)	Certification of Chief Executive Officer Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.

*32(b)	Certification of Chief Financial Officer Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.

101.INS	XBRL Instance Document.

101.SCH	XBRL Taxonomy Extension Schema.

101.CAL	XBRL Taxonomy Extension Calculation Linkbase.

101.DEF	XBRL Taxonomy Extension Definition Linkbase.

101.LAB	XBRL Taxonomy Extension Label Linkbase.

101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

I&M‡ File No. 1-3570

3(a)	Composite of the Amended Articles of Acceptance of I&M, dated of March 7, 1997.	1996 Form 10-K, Ex 3(c)

3(b)	Composite By-Laws of I&M, amended as of February 26, 2008.	2007 Form 10-K, Ex 3(b)

4(a)	Indenture (for unsecured debt securities), dated as of October 1, 1998, between I&M and The Bank of New York, as Trustee.	Registration Statement No. 333-88523, Ex 4(a)(b)(c) Registration Statement No. 333-58656, Ex 4(b)(c) Registration Statement No. 333-108975, Ex 4(b)(c)(d) Registration Statement No. 333-136538, Ex 4(b)(c) Registration Statement No. 333-156182, Ex 4(b) Registration Statement No. 333-185087, Ex 4(b)

4(b)	Company Order and Officers Certificate to The Bank of New York Mellon dated March 18, 2013 of 3.20% Series J due 2023.	Form 8-K, Ex 4(a) dated March 18, 2013

E-5



Exhibit Designation	Nature of Exhibit	Previously Filed as Exhibit to:

10(a)	Inter-Company Power Agreement, dated as of July 10, 1953, among OVEC and the Sponsoring Companies, as amended September 10, 2010.	2013 Form 10-K, Ex 10(a)

10(b)	Interconnection Agreement, dated July 6, 1951, among APCo, CSPCo, KPCo, I&M, and OPCo and with AEPSC, as amended.	Registration Statement No. 2-52910, Ex 5(a) Registration Statement No. 2-61009, Ex 5(b) 1990 Form 10-K, Ex 10(a)(3), File No. 1-3525

10(b)(1)	Unit Power Agreement dated as of March 31, 1982 between AEGCo and I&M, as amended.	Registration Statement No. 33-32752, Ex 28(b)(1)(A)(B)

10(c)	Transmission Agreement, effective November 2010, among APCo, CSPCo, I&M, KGPCo, KPCo, OPCo and WPCo with AEPSC as agent.	2013 Form 10-K, Ex 10(c)

10(d)	Amended and Restated Operating Agreement of PJM and AEPSC on behalf of APCo, CSPCo, I&M, KPCo, OPCo, KGPCo and WPCo.	2004 Form 10-K, Ex 10(d)(1)

10(d)(1)	PJM West Reliability Assurance Agreement among Load Serving Entities in the PJM West service area.	2004 Form 10-K, Ex 10(d)(2)

10(d)(2)	Master Setoff and Netting Agreement among PJM and AEPSC on behalf of APCo, CSPCo, I&M, KPCo, OPCo, KGPCo and WPCo.	2004 Form 10-K, Ex 10(d)(3)

10(e)	Modification No. 1 to the AEP System Interim Allowance Agreement, dated July 28, 1994, among APCo, CSPCo, I&M, KPCo, OPCo and AEPSC.	1996 Form 10-K, Ex 10(l), File No. 1-3525

10(f)	Consent Decree with U.S. District Court, as modified.	Form 8-K, Ex 10.1 dated October 9, 2007 Form 10-Q, Ex 10, June 30, 2013

10(g)	Lease Agreements, dated as of December 1, 1989, between I&M and Wilmington Trust Company, as amended.	Registration Statement No. 33-32753, Ex 28(a)(1-6)(C) 1993 Form 10-K, Ex 10(e)(1-6)(B)

*12	Statement re: Computation of Ratios.

*13	Copy of those portions of the I&M 2014 Annual Report (for the fiscal year ended December 31, 2014) which are incorporated by reference in this filing.

*23	Consent of Deloitte & Touche LLP.

*24	Power of Attorney.

*31(a)	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31(b)	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*32(a)	Certification of Chief Executive Officer Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.

*32(b)	Certification of Chief Financial Officer Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.

101.INS	XBRL Instance Document.

101.SCH	XBRL Taxonomy Extension Schema.

101.CAL	XBRL Taxonomy Extension Calculation Linkbase.

E-6



Exhibit Designation	Nature of Exhibit	Previously Filed as Exhibit to:

101.DEF	XBRL Taxonomy Extension Definition Linkbase.

101.LAB	XBRL Taxonomy Extension Label Linkbase.

101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

OPCo‡ File No.1-6543

2(a)	Asset Contribution Agreement effective as of December 31, 2013 by and between Ohio Power Company and AEP Generation Resources Inc.	Form 8-K, Ex 2.1 dated December 31, 2013

2(b)	Agreement and Plan of Merger of Ohio Power Company and Columbus Southern Power Company entered into as of December 31, 2012.	Form 8-K, Ex 2.1 dated January 6, 2012

3(a)	Composite of the Amended Articles of Incorporation of OPCo, dated June 3, 2002.	Form 10-Q, Ex 3(e), June 30, 2002

3(b)	Amended Code of Regulations of OPCo.	Form 10-Q, Ex 3(b), June 30, 2008

4(a)	Indenture (for unsecured debt securities), dated as of September 1, 1997, between OPCo and Bankers Trust Company (now Deutsche Bank Trust Company Americas), as Trustee.	Registration Statement No. 333-49595, Ex 4(a)(b)(c) Registration Statement No. 333-106242, Ex 4(b)(c)(d) Registration Statement No. 333-75783, Ex 4(b)(c) Registration Statement No. 333-127913, Ex 4(b)(c) Registration Statement No. 333-139802, Ex 4(a)(b)(c) Registration Statement No. 333-139802, Ex 4(b)(c)(d) Registration Statement No. 333-161537, Ex 4(b)(c)(d)

4(b)	Company Order and Officer’s Certificate to Deutsche Bank Trust Company Americas, dated September 24, 2009, establishing terms of 5.375% Senior Notes, Series M due 2021.	Form 8-K, Ex 4(a) dated September 24, 2009

4(c)	Indenture (for unsecured debt securities), dated as of February 1, 2003, between OPCo and Bank One, N.A., as Trustee.	Registration Statement No. 333-127913, Ex 4(d)(e)(f)

4(d)	Indenture (for unsecured debt securities), dated as of September 1, 1997, between CSPCo (predecessor in interest to OPCo) and Bankers Trust Company, as Trustee.	Registration Statement No. 333-54025, Ex 4(a)(b)(c)(d) Registration Statement No. 333-128174, Ex 4(b)(c)(d) Registration Statement No. 333-150603. Ex 4(b)

4(e)	Indenture (for unsecured debt securities), dated as of February 1, 2003, between CSPCo (predecessor in interest to OPCo) and Bank One, N.A., as Trustee.	Registration Statement No. 333-128174, Ex 4(e)(f)(g) Registration Statement No. 333-150603 Ex 4(b)

4(f)	First Supplemental Indenture, dated as of December 31, 2012, by and between OPCo and Deutsche Bank Trust Company Americas, as trustee, supplementing the Indenture dated as of September 1, 1997 between CSPCo (predecessor in interest to OPCo) and the trustee.	Form 8-K, Ex 4.1 dated January 6, 2012

4(g)	Third Supplemental Indenture, dated as of December 31, 2012, by and between OPCo and The Bank of New York Mellon Trust Company, N.A., as trustee, supplementing the Indenture dated as of February 14, 2003 between CSPCo (predecessor in interest to OPCo) and the trustee.	Form 8-K, Ex 4.2 dated January 6, 2012

4(h)	CSPCo (predecessor in interest to OPCo) Company Order and Officer’s Certificate to Deutsche Bank Trust Company Americas, dated May 16, 2008, establishing terms of 6.05% Senior Notes, Series G, due 2018.	Form 8-K, Ex 4(a), dated May 16, 2008

E-7



Exhibit Designation	Nature of Exhibit	Previously Filed as Exhibit to:


4(i)	$1 Billion Term Credit Agreement, dated as of July 17, 2013, among AEP, APCo, OPCo, AEP Generation Resources Inc., the banks, financial institutions and other institutional lenders listed on the signature pages thereof, and Wells Fargo Bank, National Association, as Administrative Agent.	Form 10Q, Ex 4, June 30, 2013

10(a)	Inter-Company Power Agreement, dated July 10, 1953, among OVEC and the Sponsoring Companies, as amended September 10, 2010.	2013 Form 10-K, Ex 10(a)

10(b)	Interconnection Agreement, dated July 6, 1951, among APCo, CSPCo, KPCo, I&M and OPCo and with AEPSC, as amended.	Registration Statement No. 2-52910, Ex 5(a) Registration Statement No. 2-61009, Ex 5(b) 1990 Form 10-K, Ex 10(a)(3), File 1-3525

10(c)	Transmission Agreement, effective November 2010, among APCo, CSPCo, I&M, KGPCo, KPCo, OPCo and WPCo with AEPSC as agent.	2013 Form 10-K, Ex 10(a)

10(d)	Amended and Restated Operating Agreement of PJM and AEPSC on behalf of APCo, CSPCo, I&M, KPCo, OPCo, KGPCo and WPCo.	2004 Form 10-K, Ex 10(d)(1)

10(e)	PJM West Reliability Assurance Agreement among Load Serving Entities in the PJM West service area.	2004 Form 10-K, Ex 10(d)(2)

10(f)	Master Setoff and Netting Agreement among PJM and AEPSC on behalf of APCo, CSPCo, I&M, KPCo, OPCo, KGPCo and WPCo.	2004 Form 10-K, Ex 10(d)(3)

10(g)	Modification No. 1 to the AEP System Interim Allowance Agreement, dated July 28, 1994, among APCo, CSPCo, I&M, KPCo, OPCo and AEPSC.	1996 Form 10-K, Ex 10(l), File No. 1-3525

10(h)	Consent Decree with U.S. District Court, as modified.	Form 8-K, Item Ex 10.1 dated October 9, 2007 Form 10-Q, Ex 10, June 30, 2013

*12	Statement re: Computation of Ratios.

*13	Copy of those portions of the OPCo 2014 Annual Report (for the fiscal year ended December 31, 2014) which are incorporated by reference in this filing.

*24	Power of Attorney.

*31(a)	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31(b)	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*32(a)	Certification of Chief Executive Officer Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.

*32(b)	Certification of Chief Financial Officer Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.

*95	Mine Safety Disclosure.

101.INS	XBRL Instance Document.

101.SCH	XBRL Taxonomy Extension Schema.

101.CAL	XBRL Taxonomy Extension Calculation Linkbase.

E-8



Exhibit Designation	Nature of Exhibit	Previously Filed as Exhibit to:


101.DEF	XBRL Taxonomy Extension Definition Linkbase.

101.LAB	XBRL Taxonomy Extension Label Linkbase.

101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

PSO‡ File No. 0-343

3(a)	Certificate of Amendment to Restated Certificate of Incorporation of PSO.	Form 10-Q, Ex 3(a), June 30, 2008

3(b)	Composite By-Laws of PSO amended as of February 26, 2008.	2007 Form 10-K, Ex 3 (b)

4(a)	Indenture (for unsecured debt securities), dated as of November 1, 2000, between PSO and The Bank of New York, as Trustee.	Registration Statement No. 333-100623, Ex 4(a)(b) Registration Statement No. 333-114665, Ex 4(b)(c) Registration Statement No. 333-133548, Ex 4(b)(c) Registration Statement No. 333-156319, Ex 4(b)(c)

4(b)	Eighth Supplemental Indenture, dated as of November 13, 2009 between PSO and The Bank of New York Mellon, as Trustee, establishing terms of the 5.15% Senior Notes, Series H, due 2019.	Form 8-K, Ex 4(a), dated November 13, 2009

4(c)	Ninth Supplemental Indenture, dated as of January 19, 2011 between PSO and The Bank of New York Mellon Trust Company, N.A., as Trustee, establishing terms of 4.40% Senior Notes, Series I, due 2021.	Form 8-K, Ex 4(a) dated January 20, 2011

10(a)	Third Restated and Amended Transmission Coordination Agreement Between PSO, SWEPCo and AEPSC dated February 18, 2011.	2012 Form 10-K, Ex 10(b)

*12	Statement re: Computation of Ratios.

*13	Copy of those portions of the PSO 2014 Annual Report (for the fiscal year ended December 31, 2014) which are incorporated by reference in this filing.

*24	Power of Attorney.

*31(a)	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31(b)	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*32(a)	Certification of Chief Executive Officer Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.

*32(b)	Certification of Chief Financial Officer Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.

101.INS	XBRL Instance Document.

101.SCH	XBRL Taxonomy Extension Schema.

101.CAL	XBRL Taxonomy Extension Calculation Linkbase.

101.DEF	XBRL Taxonomy Extension Definition Linkbase.

101.LAB	XBRL Taxonomy Extension Label Linkbase.

E-9



Exhibit Designation	Nature of Exhibit	Previously Filed as Exhibit to:

101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

SWEPCo‡ File No. 1-3146

3(a)	Composite of Amended Restated Certificate of Incorporation of SWEPCo.	2008 Form 10-K, Ex 3(a)

3(b)	Composite By-Laws of SWEPCo amended as of February 26, 2008.	2007 Form 10-K, Ex 3(b)

4(a)	Indenture (for unsecured debt securities), dated as of February 4, 2000, between SWEPCo and The Bank of New York, as Trustee.	Registration Statement No. 333-96213 Registration Statement No. 333-87834, Ex 4(a)(b) Registration Statement No. 333-100632, Ex 4(b) Registration Statement No. 333-108045, Ex 4(b) Registration Statement No. 333-145669, Ex 4(c)(d) Registration Statement No. 333-161539, Ex 4(b)(c) Registration Statement No. 333-194991, Ex 4(b)(c)

10(a)	Third Restated and Amended Transmission Coordination Agreement Between PSO, SWEPCo and AEPSC dated February 18, 2011.	2012 Form 10-K, Ex 10(b)

*12	Statement re: Computation of Ratios.

*13	Copy of those portions of the SWEPCo 2014 Annual Report (for the fiscal year ended December 31, 2014) which are incorporated by reference in this filing.

*24	Power of Attorney.

*31(a)	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31(b)	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*32(a)	Certification of Chief Executive Officer Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.

*32(b)	Certification of Chief Financial Officer Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.

*95	Mine Safety Disclosure.

101.INS	XBRL Instance Document.

101.SCH	XBRL Taxonomy Extension Schema.

101.CAL	XBRL Taxonomy Extension Calculation Linkbase.

101.DEF	XBRL Taxonomy Extension Definition Linkbase.

101.LAB	XBRL Taxonomy Extension Label Linkbase.

101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

‡ Certain instruments defining the rights of holders of long-term debt of the registrants included in the financial statements of registrants filed herewith have been omitted because the total amount of securities authorized thereunder does not exceed 10% of the total assets of registrants. The registrants hereby agree to furnish a copy of any such omitted instrument to the SEC upon request.

E-10

Exhibit 4(b)

CONFORMED COPY

U.S. $1,750,000,000

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of November 10, 2014

among

AMERICAN ELECTRIC POWER COMPANY, INC.

as the Borrower

THE LENDERS NAMED HEREIN

as Initial Lenders

THE LC ISSUING BANKS NAMED HEREIN

and

BARCLAYS BANK PLC

as Administrative Agent

BARCLAYS BANK PLC

CREDIT SUISSE SECURITIES (USA) LLC

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.

WELLS FARGO SECURITIES, LLC

Joint Lead Arrangers



WELLS FARGO BANK, NATIONAL ASSOCIATION Syndication Agent	THE BANK OF TOKYO-MITSUBISHI UFJ, LTD. CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH Documentation Agents

TABLE OF CONTENTS



		Page

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS		1

	SECTION 1.01. Certain Defined Terms	1
	SECTION 1.02. Computation of Time Periods	21
	SECTION 1.03. Accounting Terms	21
	SECTION 1.04. Other Interpretive Provisions	21

ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES		21

	SECTION 2.01. The Advances	21
	SECTION 2.02. Making the Advances	21
	SECTION 2.03. [Reserved]	23
	SECTION 2.04. Letters of Credit	23
	SECTION 2.05. Fees	27
	SECTION 2.06. Extension of the Termination Date	27
	SECTION 2.07. Increase of the Commitments	28
	SECTION 2.08. Termination or Reduction of the Commitments	29
	SECTION 2.09. Repayment of Advances	30
	SECTION 2.10. Evidence of Indebtedness	30
	SECTION 2.11. Interest on Advances	31
	SECTION 2.12. Interest Rate Determination	31
	SECTION 2.13. Optional Conversion of Advances	32
	SECTION 2.14. Optional Prepayments of Advances	33
	SECTION 2.15. Increased Costs	33
	SECTION 2.16. Illegality	34
	SECTION 2.17. Payments and Computations	35
	SECTION 2.18. Taxes	36
	SECTION 2.19. Sharing of Payments, Etc	40
	SECTION 2.20. Mitigation Obligations; Replacement of Lenders	40

ARTICLE III CONDITIONS PRECEDENT		42

	SECTION 3.01. Conditions Precedent to Effectiveness of this Agreement and Initial Extensions of Credit	42
	SECTION 3.02. Conditions Precedent to each Extension of Credit	44

ARTICLE IV REPRESENTATIONS AND WARRANTIES		44

	SECTION 4.01. Representations and Warranties of the Borrower	44

ARTICLE V COVENANTS OF THE BORROWER		47

	SECTION 5.01. Affirmative Covenants	47



	SECTION 5.02. Negative Covenants	50
	SECTION 5.03. Financial Covenant	52

ARTICLE VI EVENTS OF DEFAULT		52

	SECTION 6.01. Events of Default	52
	SECTION 6.02. Actions in Respect of the Letters of Credit upon Default	54

ARTICLE VII THE ADMINISTRATIVE AGENT		55

	SECTION 7.01. Authorization and Action	55
	SECTION 7.02. Agent’s Reliance, Etc.	55
	SECTION 7.03. Barclays and its Affiliates	56
	SECTION 7.04. Lender Credit Decision	56
	SECTION 7.05. Indemnification	56
	SECTION 7.06. Successor Agent	57

ARTICLE VIII MISCELLANEOUS		57

	SECTION 8.01. Amendments, Etc.	57
	SECTION 8.02. Notices, Etc.	58
	SECTION 8.03. No Waiver; Remedies	60
	SECTION 8.04. Costs and Expenses	60
	SECTION 8.05. Right of Set-off	62
	SECTION 8.06. Binding Effect	62
	SECTION 8.07. Assignments and Participations	62
	SECTION 8.08. Confidentiality	66
	SECTION 8.09. Governing Law	67
	SECTION 8.10. Severability; Survival	67
	SECTION 8.11. Execution in Counterparts	68
	SECTION 8.12. Jurisdiction, Etc	68
	SECTION 8.13. Waiver of Jury Trial	68
	SECTION 8.14. USA Patriot Act	69
	SECTION 8.15. No Fiduciary Duty	69
	SECTION 8.16. Defaulting Lenders	69
	SECTION 8.17. Cash Collateral	72
	SECTION 8.18. Reallocations	73
	SECTION 8.19. Amendment and Restatement of Existing Credit Agreement	74

EXHIBITS AND SCHEDULES



EXHIBIT A		Form of Notice of Borrowing
EXHIBIT B		Form of Request for Issuance
EXHIBIT C		Form of Assignment and Assumption
EXHIBIT D		Form of Opinion of Counsel for the Borrower
EXHIBIT E		Form of Opinion of Counsel for the Administrative Agent
EXHIBIT F-1		Form of U.S. Tax Compliance Certificate (For Foreign Lenders
		That Are Not Partnerships For U.S. Federal Income Tax Purposes)
EXHIBIT F-2		Form of U.S. Tax Compliance Certificate (For Foreign Participants
		That Are Not Partnerships For U.S. Federal Income Tax Purposes)
EXHIBIT F-3		Form of U.S. Tax Compliance Certificate (For Foreign Participants
		That Are Partnerships For U.S. Federal Income Tax Purposes)
EXHIBIT F-4		Form of U.S. Tax Compliance Certificate (For Foreign Lenders
		That Are Partnerships For U.S. Federal Income Tax Purposes)


SCHEDULE I		Schedule of Initial Lenders
SCHEDULE 4.01(m)		Schedule of Significant Subsidiaries

iii

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of November 10, 2014 (this “ Agreement ”), among AMERICAN ELECTRIC POWER COMPANY, INC., a New York corporation (the “ Borrower ”), the banks, financial institutions and other institutional lenders listed on the signatures pages hereof (the “ Initial Lenders ”), BARCLAYS BANK PLC (“ Barclays ”), as administrative agent (in such capacity, the “ Administrative Agent ”) for the Lenders (as hereinafter defined), and the LC Issuing Banks (as hereinafter defined).

PRELIMINARY STATEMENT:

The Borrower has requested that the Lenders and the LC Issuing Banks agree, on the terms and conditions set forth herein, to amend and restate in its entirety the Amended and Restated Credit Agreement, dated as of February 13, 2013 (the “ Existing Credit Agreement ”), among the Borrower, Barclays Bank PLC, as administrative agent, and the banks, financial institutions and other institutional lenders party thereto. The Lenders and the LC Issuing Banks have indicated their willingness to amend and restate the Existing Credit Agreement on the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, the parties hereto hereby agree that the Existing Credit Agreement is amended and restated in its entirety as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01. Certain Defined Terms.

As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“ Administrative Agent ” has the meaning specified in the recital of parties to this Agreement.

“ Administrative Questionnaire ” means an administrative questionnaire in a form supplied by the Administrative Agent.

“ Advance ” means an advance by a Lender to a Borrower as part of a Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance.

“ Affiliate ” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, the term “control” (including the terms “controlling”, “controlled by” and “under common control with”) of a Person means the possession, direct or indirect, of the power to direct or cause the direction of

the management and policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise.

“ Agent Parties ” has the meaning specified in Section 8.02(c).

“ Agent’s Account ” means the account of the Administrative Agent maintained by the Administrative Agent with Barclays at its office located at 745 7 ^th Avenue, New York, NY 10019, ABA Number: 026 002 574, Account Name: Clad Control Account, Account No. 050-019104, Reference: American Electric Power, or such other account of the Administrative Agent as the Administrative Agent may from time to time designate in a written notice to the Lenders and the Borrower.

“ Anti-Corruption Laws ” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or its Subsidiaries from time to time concerning or relating to bribery, money laundering or corruption.

“ Applicable Law ” means (i) all applicable common law and principles of equity and (ii) all applicable provisions of all (A) constitutions, statutes, rules, regulations and orders of governmental bodies, (B) Governmental Approvals and (C) orders, decisions, judgments and decrees of all courts (whether at law or in equity or admiralty) and arbitrators.

“ Applicable Lending Office ” means, with respect to each Lender, such Lender’s Domestic Lending Office in the case of a Base Rate Advance and such Lender’s Eurodollar Lending Office in the case of a Eurodollar Rate Advance.

“ Applicable Margin ” means, with respect to any Base Rate Advance and any Eurodollar Rate Advance, at all times during which any Applicable Rating Level set forth below is in effect, the rate per annum (except as provided below) for such Type of Advance set forth below next to such Applicable Rating Level:



Applicable Rating Level	Applicable Margin for Eurodollar Rate Advances	Applicable Margin for Base Rate Advances
1	1.000%	0.000%
2	1.125%	0.125%
3	1.250%	0.250%
4	1.500%	0.500%
5	1.750%	0.750%
6	2.000%	1.000%

provided , that the Applicable Margins set forth above shall be increased, for each Applicable Rating Level, upon the occurrence and during the continuance of any Event of Default by 2.00% per annum.

Any change in the Applicable Margin resulting from a change in the Applicable Rating Level shall become effective upon the date of announcement of any change in the Moody’s Rating or the S&P Rating that results in such change in the Applicable Rating Level.

“ Applicable Rating Level ” at any time shall be determined in accordance with the then-applicable S&P Rating and the then-applicable Moody’s Rating as follows:



S&P Rating/Moody’s Rating	Applicable Rating Level
S&P Rating A or higher or Moody’s Rating A2 or higher	1
S&P Rating A- or Moody’s Rating A3	2
S&P Rating BBB+ or Moody’s Rating Baa1	3
S&P Rating BBB or Moody’s Rating Baa2	4
S&P Rating BBB- or Moody’s Rating Baa3	5
S&P Rating BB+ or below or Moody’s Rating Ba1 or below, or no S&P Rating or Moody’s Rating	6

The Applicable Rating Level for any day shall be determined based upon the higher of the S&P Rating and the Moody’s Rating in effect on such day. If the S&P Rating and the Moody’s Rating are not the same ( i.e. , a “split rating”), the higher of such ratings shall control, unless either rating is below BBB- or Baa3 (as applicable), in which case the lower of the two ratings shall control.

“ Approved Fund ” means any Fund that is administered or managed by (i) a Lender, (ii) an Affiliate of a Lender or (iii) an entity or an Affiliate of an entity that administers or manages a Lender.

“ Assignee Lender ” has the meaning specified in Section 8.18.

“ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 8.07), and accepted by the Administrative Agent, in substantially the form of Exhibit C hereto or any other form approved by the Administrative Agent.

“ Assignor Lender ” has the meaning specified in Section 8.18.

“ Available Commitment ” means, for each Lender at any time on any day, the unused portion of such Lender’s Commitment, computed after giving effect to all Extensions of Credit made or to be made on such day, the application of proceeds therefrom and all prepayments and repayments of Advances made on such day.

“ Available Commitments ” means the aggregate of the Lenders’ Available Commitments hereunder.

“ Bankruptcy Event ” means, with respect to any Person, such Person becomes the subject of a proceeding under any Debtor Relief Law, or has had a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets (including the Federal Deposit Insurance Corporation or any other Governmental Authority acting in a similar capacity) appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment; provided that, a Bankruptcy Event shall not result solely by virtue of any ownership interest, or acquisition of any equity interest, in such Person by a Governmental Authority so long as such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority) to reject, repudiate, disavow or disaffirm obligations under any agreement in which it commits to extend credit.

“ Barclays ” has the meaning specified in the recital of parties to this Agreement.

“ Base Rate ” means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the highest of the following rates then in effect:


(i)	the rate of interest announced publicly by Barclays in New York City, from time to time, as Barclays’ prime commercial lending rate or corporate base rate;


(ii)	1/2 of 1% per annum above the Federal Funds Rate; and


(iii)	the rate of interest per annum equal to the Eurodollar Rate as determined on such day (or if such day is not a Business Day, on the next preceding Business Day) that would be applicable to a Eurodollar Rate Advance having an Interest Period of one month, plus 1%.

“ Base Rate Advance ” means an Advance that bears interest as provided in Section 2.11(a).

“ Borrower ” has the meaning specified in the recital of parties to this Agreement.

“ Borrowing ” means a borrowing by the Borrower consisting of simultaneous Advances of the same Type, having the same Interest Period and ratably made or Converted on the same day by each of the Lenders pursuant to Section 2.02 or 2.13, as the case may be. All Advances to the Borrower of the same Type, having the same Interest Period and made or Converted on the same day shall be deemed a single Borrowing hereunder until repaid or next Converted.

“ Borrowing Date ” means the date of any Borrowing.

“ BTMU ” means The Bank of Tokyo-Mitsubishi UFJ, Ltd.

“ Business Day ” means a day of the year on which banks are not required or authorized by law to close in New York City and, if the applicable Business Day relates to any Eurodollar Rate Advances, Business Day also includes a day on which dealings are carried out in the London interbank market.

“ Cash Collateralize ” means, to pledge and deposit with or deliver to the Administrative Agent, for the benefit of one or more of the LC Issuing Banks or Lenders, as collateral for LC Outstandings or obligations of Lenders to fund participations in respect of LC Outstandings, cash or deposit account balances or, if the Administrative Agent and each applicable LC Issuing Bank shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to the Administrative Agent and each applicable LC Issuing Bank. “ Cash Collateral ” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

“ Change in Law ” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, implemented, adopted or issued.

“ Commitment ” means, for each Lender, the obligation of such Lender to make Advances to the Borrower and to acquire participations in Letters of Credit hereunder in an aggregate amount no greater than the amount set forth on Schedule I hereto or, if such Lender has entered into any Assignment and Assumption, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 8.07(c), in each such case as such amount may be reduced from time to time pursuant to Section 2.08.

“ Commitment Fee Rate ” means, at any time, the rate per annum set forth below next to the Applicable Rating Level in effect at such time:



Applicable Rating Level	Commitment Fee Rate
1	0.100%
2	0.125%
3	0.175%
4	0.225%
5	0.275%
6	0.350%

A change in the Commitment Fee Rate resulting from a change in the Applicable Rating Level shall become effective upon the date of public announcement of a change in the Moody’s Rating or the S&P Rating that results in a change in the Applicable Rating Level.

“ Commitment Percentage ” means, as to any Lender as of any date of determination, the percentage describing such Lender’s pro rata share of the Commitments set forth in the Register from time to time; provided that in the case of Section 8.16 when a Defaulting Lender shall exist, “ Commitment Percentage ” means the percentage of the total Commitments (disregarding any Defaulting Lender’s Commitment) represented by such Lender’s Commitment. If the Commitments have terminated or expired, the Commitment Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments and to any Lender’s status as a Defaulting Lender at the time of determination.

“ Commitments ” means the aggregate of the Lenders’ Commitments hereunder.

“ Communications ” has the meaning specified in Section 8.02(b).

“ Confidential Information ” means information that the Borrower furnishes to the Administrative Agent, the Joint Lead Arrangers or any Lender in a writing designated as confidential, but does not include any such information that is or becomes generally available to the public or that is or becomes available to the Administrative Agent, the Joint Lead Arrangers or such Lender from a source other than the Borrower.

“ Connection Income Taxes ” means Other Connection Taxes that are imposed on or measured by overall gross receipts or income, or net income (however denominated) or that are franchise Taxes, privilege Taxes, license Taxes or branch profits Taxes.

“ Consolidated Capital ” means the sum of (i) Consolidated Debt of the Borrower and (ii) the consolidated equity of all classes of stock (whether common, preferred, mandatorily convertible preferred or preference) of the Borrower, in each case determined in accordance with GAAP, but including Equity-Preferred Securities issued by the Borrower and its Consolidated Subsidiaries and excluding the funded pension and other postretirement benefit plans, net of tax, components of accumulated other comprehensive income (loss).

“ Consolidated Debt ” of the Borrower means the total principal amount of all Debt described in clauses (i) through (v) of the definition of Debt and Guaranties of such Debt of the Borrower and its Consolidated Subsidiaries, excluding, however, (i) Debt of AEP Credit, Inc. that is non-recourse to the Borrower, (ii) Stranded Cost Recovery Bonds, and (iii) Equity-Preferred Securities not to exceed 10% of Consolidated Capital (calculated for purposes of this clause without reference to any Equity-Preferred Securities); provided that Guaranties of Debt included in the total principal amount of Consolidated Debt shall not be added to such total principal amount.

“ Consolidated Subsidiary ” means, with respect to any Person at any time, any Subsidiary or other Person the accounts of which would be consolidated with those of such first Person in its consolidated financial statements in accordance with GAAP.

“ Consolidated Tangible Net Assets ” means, on any date of determination and with respect to any Person at any time, the total of all assets (including revaluations thereof as a result of commercial appraisals, price level restatement or otherwise) appearing on the consolidated balance sheet of such Person and its Consolidated Subsidiaries most recently delivered to the Lenders pursuant to Section 5.01(i) as of such date of determination, net of applicable reserves and deductions, but excluding goodwill, trade names, trademarks, patents, unamortized debt discount and all other like intangible assets (which term shall not be construed to include such revaluations), less the aggregate of the consolidated current liabilities of such Person and its Consolidated Subsidiaries appearing on such balance sheet.

“ Convert ”, “ Conversion ” and “ Converted ” each refers to a conversion of Advances of one Type into Advances of the other Type, or the selection of a new, or the renewal of the same, Interest Period for Eurodollar Rate Advances, pursuant to Section 2.12 or 2.13.

“ Credit Party ” means the Administrative Agent, any LC Issuing Bank or any Lender.

“ Credit Suisse ” means Credit Suisse AG, Cayman Islands Branch.

“ CS Securities ” means Credit Suisse Securities (USA) LLC.

“ Debt ” of any Person means, without duplication, (i) all indebtedness of such Person for borrowed money, (ii) all obligations of such Person for the deferred purchase price of property or services (other than trade payables not overdue by more than 60 days incurred in the ordinary course of such Person’s business), (iii) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (iv) all obligations of such Person as lessee under leases that have been, in accordance with GAAP, recorded as capital leases, including, without limitation, the leases described in clause (iv) of Section 5.02(c), (v) all obligations of such Person in respect of reimbursement agreements with respect to acceptances, letters of credit (other than trade letters of credit) or similar extensions of credit, (vi) all Guaranties and (vii) all reasonably quantifiable obligations under indemnities or under support or capital contribution

agreements, and other reasonably quantifiable obligations (contingent or otherwise) to purchase or otherwise to assure a creditor against loss in respect of, or to assure an obligee against loss in respect of, all Debt of others referred to in clauses (i) through (vi) above guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (A) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (B) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (C) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (D) otherwise to assure a creditor against loss.

“ Debtor Relief Laws ” means the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect.

“ Declining Lender ” has the meaning specified in Section 2.06(b).

“ Default ” means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

“ Defaulting Lender ” means, subject to Section 8.16(b), any Lender that (i) has failed to (A) fund all or any portion of its Advances within two Business Days of the date such Advances were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s good faith determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable Default, shall be specifically identified in such writing) has not been satisfied, or (B) pay to any Credit Party any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit) within two Business Days of the date when due, (ii) has notified the Borrower or any Credit Party in writing that it does not intend to comply with its funding obligations hereunder or generally under other agreements in which it commits to extend credit, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund an Advance hereunder and states that such position is based on such Lender’s good faith determination that a condition precedent to funding (which condition precedent, together with any applicable Default, shall be specifically identified in such writing or public statement) cannot be satisfied), (iii) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder ( provided that, such Lender shall cease to be a Defaulting Lender pursuant to this clause (iii) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (iv) has become the subject of a Bankruptcy Event. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of

clauses (i) through (iv) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 8.16(b)) upon delivery of written notice of such determination to the Borrower, each LC Issuing Bank, and each Lender.

“Departing Lender” means each “Lender” under the Existing Credit Agreement that is not continuing as an Initial Lender under this Agreement upon the effectiveness of this Agreement on the Restatement Effective Date.

“ Designated Lender ” has the meaning specified in Section 2.07(a).

“ Disclosure Documents ” means the Borrower’s Report on Form 10-K, as filed with the SEC, for the fiscal year ended December 31, 2013, the Borrower’s Quarterly Reports on Form 10-Q, as filed with the SEC, for the periods ended March 31, 2014, June 30, 2014 and September 30, 2014, and the Borrower’s Current Reports on Form 8-K, as filed with the SEC after the date of filing the Borrower’s Quarterly Report on Form 10-Q for the period ended September 30, 2014 but prior to the date hereof.

“ Dollars ” and the symbol “$” mean lawful currency of the United States of America.

“ Domestic Lending Office ” means, with respect to any Lender, the office of such Lender specified as its “Domestic Lending Office” on such Lender’s Administrative Questionnaire or in the Assignment and Assumption pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify in writing to the Borrower and the Administrative Agent.

“ Eligible Assignee ” means any Person that meets the requirements to be an assignee under Section 8.07(b)(iii), (v) and (vi) (subject to such consents, if any, as may be required under Section 8.07(b)(iii)).

“ Environmental Action ” means any action, suit, demand, demand letter, claim, notice of non-compliance or violation, notice of liability or potential liability, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law, Environmental Permit or Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment, including, without limitation, (i) by any Governmental Authority for enforcement, cleanup, removal, response, remedial or other actions or damages and (ii) by any Governmental Authority or any third party for damages, contribution, indemnification, cost recovery, compensation or injunctive relief.

“ Environmental Law ” means any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, judgment, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials.

“ Environmental Permit ” means any permit, approval, identification number, license or other authorization required under any Environmental Law.

“ Equity-Preferred Securities ” means (i) debt or preferred securities that are mandatorily convertible or mandatorily exchangeable into common shares of the Borrower and (ii) any other securities, however denominated, including but not limited to hybrid capital and trust originated preferred securities, (A) issued by the Borrower or any Consolidated Subsidiary of the Borrower, (B) that are not subject to mandatory redemption or the underlying securities, if any, of which are not subject to mandatory redemption, (C) that are perpetual or mature no less than 30 years from the date of issuance, (D) the indebtedness issued in connection with which, including any guaranty, is subordinate in right of payment to the unsecured and unsubordinated indebtedness of the issuer of such indebtedness or guaranty, and (E) the terms of which permit the deferral of the payment of interest or distributions thereon to a date occurring after the Termination Date.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ ERISA Affiliate ” means, with respect to any Person, each trade or business (whether or not incorporated) that is considered to be a single employer with such entity within the meaning of Section 414(b), (c), (m) or (o) the Internal Revenue Code.

“ ERISA Event ” means (i) the termination of or withdrawal from any Plan by the Borrower or any of its ERISA Affiliates, (ii) the failure by the Borrower or any of its ERISA Affiliates to comply with ERISA or the related provisions of the Internal Revenue Code with respect to any Plan or (iii) the failure by the Borrower or any of its Subsidiaries to comply with Applicable Law with respect to any Foreign Plan.

“ Eurocurrency Liabilities ” has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

“ Eurodollar Lending Office ” means, with respect to any Lender, the office of such Lender specified as its “Eurodollar Lending Office” on such Lender’s Administrative Questionnaire or in the Assignment and Assumption pursuant to which it became a Lender (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender as such Lender may from time to time specify in writing to the Borrower and the Administrative Agent.

successor or substitute Reuters page or screen that displays such rate, or on the appropriate page or screen of such other comparable information service that publishes such rate from time to time as selected by the Administrative Agent in its discretion) (in each case, the “ Screen Rate ”) at approximately 11:00 A.M. (London time) two Business Days before the first day of such Interest Period, provided , that if the Screen Rate shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement, and provided, further , if the Screen Rate shall not be available at such time for such Interest Period (an “ Impacted Interest Period ”), the Eurodollar Rate for such Borrowing shall be the Interpolated Rate, provided , that if any Interpolated Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

“ Eurodollar Rate Advance ” means an Advance that bears interest as provided in Section 2.11(b).

“ Eurodollar Rate Reserve Percentage ” of any Lender for any Interest Period for each Eurodollar Rate Advance means the reserve percentage applicable to such Lender during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) then applicable to such Lender with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Eurodollar Rate Advances is determined) having a term equal to such Interest Period.

“ Events of Default ” has the meaning specified in Section 6.01.

“ Exchange Act ” has the meaning specified in Section 6.01(f).

“ Excluded Taxes ” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by overall gross receipts or income, or net income (however denominated), franchise Taxes, privilege Taxes, license Taxes or branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its Applicable Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in an Advance or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Advance or Commitment (other than pursuant to an assignment request by the Borrower under Section 2.20(b)) or (ii) such Lender changes its Applicable Lending Office, except in each case to the extent that, pursuant to Section 2.18, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Applicable Lending

Office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2.18(g) and (d) any U.S. federal withholding Taxes imposed under FATCA.

“ Existing Credit Agreement ” has the meaning specified in the Preliminary Statement in this Agreement.

“ Extension Effective Date ” has the meaning specified in Section 2.06(c).

“ Extension of Credit ” means the making of a Borrowing, the issuance of a Letter of Credit or the amendment of any Letter of Credit having the effect of extending the stated termination date thereof or increasing the maximum amount available to be drawn thereunder. For purposes of this Agreement, a Conversion shall not constitute an Extension of Credit.

“ FATCA ” means Sections 1471 through 1474 of the Internal Revenue Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code, and any intergovernmental agreement entered into in connection with such sections of the Internal Revenue Code and any legislation, law, regulation or practice enacted or promulgated pursuant to such intergovernmental agreement.

“ Federal Funds Rate ” means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

“ Foreign Lender ” means a Lender that is not a U.S. Person.

“ Foreign Plan ” has the meaning specified in Section 4.01(i).

“ Fronting Exposure ” means, at any time there is a Defaulting Lender, with respect to any LC Issuing Bank, such Defaulting Lender’s Commitment Percentage of the LC Outstandings with respect to Letters of Credit issued by such LC Issuing Bank, other than LC Outstandings as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.

“ Fund ” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit in the ordinary course of its activities.

“ GAAP ” has the meaning specified in Section 1.03.

“ GenCo ” means AEP Generation Resources Inc.

“ Governmental Approval ” means any authorization, consent, approval, license or exemption of, registration or filing with, or report or notice to, any Governmental Authority.

“ Governmental Authority ” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“ Guaranty ” of any Person means any obligation, contingent or otherwise, of such Person (i) to pay any Debt of any other Person or (ii) incurred in connection with the issuance by a third person of a Guaranty of Debt of any other Person (whether such obligation arises by agreement to reimburse or indemnify such third Person or otherwise).

“ Hazardous Materials ” means (i) petroleum and petroleum products, byproducts or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and radon gas and (ii) any other chemicals, materials or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law.

“Impacted Interest Period” has the meaning specified for such term in the definition herein of “Eurodollar Rate.”

“ Indemnified Party ” has the meaning specified in Section 8.04(b).

“ Indemnified Taxes ” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.

“ Initial Lenders ” has the meaning specified in the recital of parties to this Agreement.

“ Interest Period ” means, for each Eurodollar Rate Advance comprising part of the same Borrowing, the period commencing on the date of such Eurodollar Rate Advance or the date of the Conversion of any Base Rate Advance into such Eurodollar Rate Advance and ending on the last day of the period selected by the Borrower pursuant to the provisions below and, thereafter, with respect to Eurodollar Rate Advances, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below. The duration of each such Interest Period shall be one, two, three or six months (or, for any Borrowing, any period specified by the Borrower that is shorter than one month, if all Lenders agree), as the Borrower may, upon notice received by the

Administrative Agent not later than 11:00 A.M. on the third Business Day prior to the first day of such Interest Period, select; provided, however, that:


(i)	the Borrower may not select any Interest Period that ends after the Termination Date of any Lender;


(ii)	Interest Periods commencing on the same date for Eurodollar Rate Advances comprising part of the same Borrowing shall be of the same duration;

(iii)

whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, however, that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and


(iv)	whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month.

“ Internal Revenue Code ” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“Interpolated Rate” means, at any time, for any Interest Period, the rate per annum (rounded upward to the nearest 1/16 ^th of 1%) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the Screen Rate for the longest period for which the Screen Rate is available for the Eurodollar Rate Advance that is shorter than the Impacted Interest Period; and (b) the Screen Rate for the shortest period for which the Screen Rate is available for the Eurodollar Rate Advance that exceeds the Impacted Interest Period, in each case, at such time.

“ IRS ” means the United States Internal Revenue Service.

“ Joint Lead Arrangers ” means Barclays, CS Securities, BTMU and Wells Securities.

“ LC Collateral Account ” has the meaning specified in Section 2.04(b).

“ LC Fee ” has the meaning specified in Section 2.05(c).

“ LC Issuing Bank ” means, as to any Letter of Credit, Barclays, BTMU, Credit Suisse, Wells Fargo, and any Lender or Affiliate of a Lender that shall agree to issue a Letter of Credit pursuant to Section 2.04.

“ LC Outstandings ” means, on any date of determination, the sum of (i) the undrawn stated amounts of all Letters of Credit that are outstanding on such date plus (ii) the aggregate principal amount of all unpaid reimbursement obligations of the Borrower on such date with respect to payments made by any LC Issuing Bank under any Letter of Credit (excluding reimbursement obligations that have been repaid with the proceeds of any Borrowing).

“ LC Payment Notice ” has the meaning specified in Section 2.04(e).

“ Lenders ” means, at any time, collectively, (i) the Initial Lenders (other than any such Initial Lenders that have previously assigned all of their respective Advances and Commitments to other Persons in accordance with Section 8.07(b) at such time), and (ii) any other Persons that have become Lenders holding Advances and/or Commitments at such time in accordance with Section 8.07(b).

“ Letter of Credit ” means any standby letters of credit issued by an LC Issuing Bank pursuant to Section 2.04.

“ Lien ” means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property.

“ Loan Documents ” means, collectively, (i) the Commitment Letter, dated as of October 20, 2014, among the Borrower, Barclays, CS Securities, Credit Suisse, BTMU, Wells Securities and Wells Fargo, (ii) the Fee Letter, dated as of October 20, 2014, among the Borrower, Barclays, J.P. Morgan Securities LLC and JPMorgan Chase Bank, N.A., (iii) the Fee Letter, dated as of October 20, 2014, among the Borrower, Citigroup Global Markets Inc., CS Securities, Credit Suisse, KeyBank National Association, RBS Securities Inc., The Royal Bank of Scotland plc, BTMU, Wells Securities and Wells Fargo, (iv) the Fee Letter, dated as of June 21, 2011, between the Borrower and the Administrative Agent, (v) this Agreement and (vi) each promissory note issued pursuant to Section 2.10(d), in each case, as any of the foregoing may be amended, supplemented or modified from time to time.

“ Margin Regulations ” means Regulations T, U and X of the Board of Governors of the Federal Reserve System, as in effect from time to time.

“ Margin Stock ” has the meaning specified in the Margin Regulations.

“ Material Adverse Change ” means any material adverse change (i) in the business, condition (financial or otherwise) or operations of the Borrower and its Subsidiaries, taken as a whole, or (ii) that is reasonably likely to affect the legality, validity or enforceability of this Agreement against the Borrower or the ability of the Borrower to perform its obligations under this Agreement.

“ Material Adverse Effect ” means a material adverse effect (i) on the business, condition (financial or otherwise) or operations of the Borrower and its Subsidiaries,

taken as a whole, or (ii) that is reasonably likely to affect the legality, validity or enforceability of this Agreement against the Borrower or the ability of the Borrower to perform its obligations under this Agreement.

“ Minimum Collateral Amount ” means, at any time, (i) with respect to Cash Collateral consisting of cash or deposit account balances, an amount equal to 103% of the Fronting Exposure of all LC Issuing Banks with respect to Letters of Credit issued and outstanding at such time and (ii) otherwise, an amount determined by the Administrative Agent and the LC Issuing Banks in their reasonable discretion.

“ Moody’s ” means Moody’s Investors Service, Inc.

“ Moody’s Rating ” means, on any date of determination, the debt rating most recently announced by Moody’s with respect to the long-term senior unsecured debt issued by the Borrower.

“ Multiemployer Plan ” has the meaning specified in Section 4.01(i).

“ Non-Consenting Lender ” means any Lender that does not approve any consent, waiver or amendment that (i) requires the approval of all Lenders in accordance with the terms of Section 8.01 and (ii) has been approved by the Required Lenders.

“ Non-Defaulting Lender ” means, at any time, each Lender that is not a Defaulting Lender at such time.

“ non-performing Lender ” has the meaning specified in Section 2.04(f).

“ Notice of Borrowing ” has the meaning specified in Section 2.02(a).

“ Other Connection Taxes ” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Advance, Commitment or Loan Document).

“ Other Taxes ” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.20(b)).

“ Outstanding Credits ” means, on any date of determination, the sum of (i) the aggregate principal amount of all Advances outstanding on such date plus (ii) the LC Outstandings on such date.

“ Parent ” means, with respect to any Lender, any Person as to which such Lender is, directly or indirectly, a subsidiary.

“ Participant ” has the meaning specified in Section 8.07(d).

“ Participant Register ” has the meaning specified in Section 8.07(d).

“ Patriot Act ” has the meaning specified in Section 8.14.

“ Permitted Liens ” means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced: (i) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 5.01(g) hereof; (ii) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens, and other similar Liens arising in the ordinary course of business securing obligations that are not overdue for a period of more than 30 days or that are being contested in good faith by appropriate proceedings; (iii) Liens incurred or deposits made to secure obligations under workers’ compensation laws or similar legislation or to secure public or statutory obligations; (iv) easements, rights of way and other encumbrances on title to real property that do not render title to the property encumbered thereby unmarketable or materially adversely affect the use of such property for its present purposes; (v) any judgment Lien, unless an Event of Default under Section 6.01(g) shall have occurred and be continuing; (vi) any Lien on any asset of any Person existing at the time such Person is merged or consolidated with or into the Borrower or any Significant Subsidiary and not created in contemplation of such event; (vii) deposits made in the ordinary course of business to secure the performance of bids, trade contracts (other than for Debt), operating leases and surety bonds; (viii) Liens upon or in any real property or equipment acquired, constructed, improved or held by the Borrower or any Subsidiary in the ordinary course of business to secure the purchase price of such property or equipment or to secure Debt incurred solely for the purpose of financing the acquisition, construction or improvement of such property or equipment, or Liens existing on such property or equipment at the time of its acquisition (other than any such Liens created in contemplation of such acquisition that were not incurred to finance the acquisition of such property); (ix) extensions, renewals or replacements of any Lien described in clause (iii), (vi), (vii) or (viii) for the same or a lesser amount, provided, however, that no such Lien shall extend to or cover any properties not theretofore subject to the Lien being extended, renewed or replaced; and (x) any other Lien not covered by the foregoing exceptions as long as immediately after the creation of such Lien the aggregate principal amount of Debt secured by all Liens created or assumed under this clause (x) does not exceed 10% of Consolidated Tangible Net Assets of the Borrower.

“ Person ” means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or a government or any political subdivision or agency thereof.

“ Plan ” has the meaning specified in Section 4.01(i).

“ Platform ” has the meaning specified in Section 8.02(b).

“ Proposed Increased Commitment ” has the meaning specified in Section 2.07(a).

“ Recipient ” means (a) the Administrative Agent, (b) any Lender and (c) any LC Issuing Bank, as applicable.

“ Register ” has the meaning specified in Section 8.07(c).

“ Related Parties ” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.

“ Request for Issuance ” means a request made pursuant to Section 2.04 in the form of Exhibit B.

“ Required Lenders ” means at any time Lenders owed in excess of 50% of the Outstanding Credits at such time, or, if there are no Outstanding Credits, Lenders having in excess of 50% in interest of the Commitments in effect at such time. Subject to Section 8.01, the Outstanding Credits and Commitments of any Defaulting Lender shall be disregarded in determining Required Lenders at any time.

“Restatement Effective Date” has the meaning specified in Section 3.1.

“ Restructuring Law ” means Texas Senate Bill 7, as enacted by the Legislature of the State of Texas and signed into law on June 18, 1999, Ohio Senate Bill No. 3, as enacted by the General Assembly of the State of Ohio and signed into law on July 6, 1999, or any similar law applicable to the Borrower or any Subsidiary of the Borrower governing the deregulation or restructuring of the electric power industry.

“ RTO Transaction ” means the transfer of transmission facilities to a regional transmission organization or equivalent organization as approved or ordered by the Federal Energy Regulatory Commission.

“ S&P ” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc.

“ S&P Rating ” means, on any date of determination, the rating most recently announced by S&P with respect to the long-term senior unsecured debt issued by the Borrower.

“ Sanctions ” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or by the U.S. Department of State, or (b) the United Nations Security Council, the European Union, any EU member state, or Her Majesty’s Treasury of the United Kingdom.

“ Sanctioned Country ” means, at any time of determination, a country or territory which is the subject or target of any Sanctions.

“ Sanctioned Person ” means, at any time of determination, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, the United Nations Security Council, the European Union or any EU member state, (b) any Person operating, organized or resident in a Sanctioned Country, (c) any Person owned or controlled by or acting on behalf of any such Person described in the preceding clause (a) or (b), or (d) any Person with which, to the Borrower’s actual knowledge, any Lender is prohibited under Sanctions relevant to it from dealing or engaging in transactions. For purposes of the foregoing, control of a Person shall be deemed to include where a Sanctioned Person (i) owns or has power to vote 25% or more of the issued and outstanding equity interests having ordinary voting power for the election of directors of the Person or other individuals performing similar functions for the Person, or (ii) has the power to direct or cause the direction of the management and policies of the Person, whether by ownership of equity interests, contracts or otherwise.

“ SEC” means the United States Securities and Exchange Commission.

“ Significant Subsidiary ” means, at any time, any Subsidiary of the Borrower that constitutes at such time a “significant subsidiary” of the Borrower, as such term is defined in Regulation S-X of the SEC as in effect on the date hereof (17 C.F.R. Part 210) (other than GenCo and any other Subsidiary of the Borrower (other than the Existing Utility Subsidiaries (as defined below)) to which generation assets are being transferred in connection with the corporate separation of Ohio Power Company’s generation assets); provided , however , that if GenCo and the other Subsidiaries of the Borrower (excluding, solely for purposes of this calculation, the Existing Utility Subsidiaries) own, on an aggregate basis, generation assets exceeding 20% of the Borrower’s “total assets” as used in Regulation S-X, GenCo and each such Subsidiary that otherwise constitutes a “significant subsidiary” of the Borrower under Regulation S-X will be considered Significant Subsidiaries, and provided , further , that “total assets” as used in Regulation S-X shall not include securitization transition assets, phase-in cost assets or similar assets on the balance sheet of any Subsidiary resulting from the issuance of transition bonds or other asset backed securities of a similar nature. As used in this definition, “ Existing Utility Subsidiaries ” means each of AEP Generating Company, Appalachian Power Company, Indiana Michigan Power Company, Kentucky Power Company, Kingsport Power Company, Ohio Power Company, Public Service Company of Oklahoma, Southwestern Electric Power Company, Wheeling Power Company, AEP Texas North Company and AEP Texas Central Company.

“ Stranded Cost Recovery Bonds ” means securities, however denominated, that are issued by the Borrower or any Consolidated Subsidiary of the Borrower that are (i) non-recourse to the Borrower and its Significant Subsidiaries (other than for failure to collect and pay over the charges referred to in clause (ii) below) and (ii) payable solely from transition or similar charges authorized by law (including, without limitation, any

“financing order”, as such term is defined in the Texas Utilities Code) to be invoiced to customers of any Subsidiary of the Borrower or to retail electric providers.

“ Subsidiary ” of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (i) the issued and outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (ii) the interest in the capital or profits of such limited liability company, partnership or joint venture or (iii) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries.

“ Taxes ” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“ Termination Date ” means the earlier to occur of (i) July 26, 2018 or such later date that may be established for any Lender from time to time pursuant to Section 2.06 hereof, and (ii) the date of termination in whole of the Commitments available to the Borrower pursuant to Section 2.08 or 6.01.

“ Type ” refers to the distinction between Advances bearing interest at the Base Rate and Advances bearing interest at the Eurodollar Rate.

“ U.S. Person ” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Internal Revenue Code.

“ U.S. Tax Compliance Certificate ” has the meaning specified in Section 2.18(g)(ii)(B)(iii).

“ Voting Stock ” means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or Persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency.

“ Wells Fargo ” means Wells Fargo Bank, National Association.

“ Wells Securities ” means Wells Fargo Securities, LLC.

“ Withholding Agent ” means the Borrower and the Administrative Agent.

SECTION 1.02. Computation of Time Periods.

In this Agreement in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”.

SECTION 1.03. Accounting Terms.

All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01(f) (“ GAAP ”).

SECTION 1.04. Other Interpretive Provisions.

As used herein, except as otherwise specified herein, (i) references to any Person include its successors and assigns and, in the case of any Governmental Authority, any Person succeeding to its functions and capacities; (ii) references to any Applicable Law include amendments, supplements and successors thereto; (iii) references to specific sections, articles, annexes, schedules and exhibits are to this Agreement; (iv) words importing any gender include the other gender; (v) the singular includes the plural and the plural includes the singular; (vi) the words “including”, “include” and “includes” shall be deemed to be followed by the words “without limitation”; (vii) captions and headings are for ease of reference only and shall not affect the construction hereof; and (viii) references to any time of day shall be to New York City time unless otherwise specified.

ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES

SECTION 2.01. The Advances.

(a) Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make Advances to the Borrower and to participate in Letters of Credit from time to time on any Business Day during the period from the date hereof until the Termination Date in an aggregate outstanding amount not to exceed at any time such Lender’s Available Commitment at such time. Within the limits of each Lender’s Commitment and as hereinabove and hereinafter provided, the Borrower may request Borrowings hereunder, and repay or prepay Advances pursuant to Section 2.14 and utilize the resulting increase in the Available Commitments for further Borrowings in accordance with the terms hereof.

(b) In no event shall the Borrower be entitled to request or receive any Borrowing that would cause the aggregate Outstanding Credits (including such requested Borrowing) to exceed the Commitments.

SECTION 2.02. Making the Advances.

(a) Each Borrowing shall be in an amount not less than $10,000,000 (or, if less, the Available Commitments at such time) or an integral multiple of $1,000,000 in excess thereof and shall consist of Advances of the same Type made on the same day by the Lenders ratably

according to their respective Commitment Percentages. Each Borrowing shall be made on notice, given not later than 11:00 A.M. on the third Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Eurodollar Rate Advances, or not later than 1:00 P.M. on the date of the proposed Borrowing in the case of a Borrowing consisting of Base Rate Advances, by the Borrower to the Administrative Agent, which shall give to each Lender prompt written notice. Each such notice of a Borrowing under this Section 2.02 (a “ Notice of Borrowing ”) shall be by telephone, confirmed immediately in writing, or fax in substantially the form of Exhibit A hereto, specifying therein the requested (i) Borrowing Date for such Borrowing, (ii) Type of Advances comprising such Borrowing, (iii) aggregate amount of such Borrowing, and (iv) in the case of a Borrowing consisting of Eurodollar Rate Advances, the initial Interest Period for each such Advance. Each Lender shall, before 3:00 P.M. on the applicable Borrowing Date, make available for the account of its Applicable Lending Office to the Administrative Agent at the Agent’s Account, in same day funds, such Lender’s ratable portion of the Borrowing to be made on such Borrowing Date. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will promptly make such funds available to the Borrower in such manner as the Borrower shall have specified in the applicable Notice of Borrowing and as shall be reasonably acceptable to the Administrative Agent.

(b) Anything in subsection (a) above to the contrary notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for any Borrowing if the aggregate amount of such Borrowing is less than $10,000,000 or if the obligation of the Lenders to make Eurodollar Rate Advances shall then be suspended pursuant to Section 2.12(b), 2.12(e) or 2.16, and (ii) there shall be not more than 20 Borrowings at any one time outstanding.

(c) Each Notice of Borrowing shall be irrevocable and binding on the Borrower. In the case of any Borrowing that the related Notice of Borrowing specifies is to comprise Eurodollar Rate Advances, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Notice of Borrowing for such Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Advance to be made by such Lender as part of such Borrowing when such Advance, as a result of such failure, is not made on such date.

(d) Unless the Administrative Agent shall have received notice by courier or fax from a Lender prior to any Borrowing Date or, in the case of a Base Rate Advance, prior to the time of Borrowing, that such Lender will not make available to the Administrative Agent such Lender’s Advance as part of the Borrowing to be made on such Borrowing Date, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on such Borrowing Date in accordance with subsection (a) of this Section 2.02, and the Administrative Agent may (but it shall not be required to), in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such Advance available to the Administrative Agent, such Lender and the Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount, together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the

Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable at the time to Advances comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Lender’s Advance as part of such Borrowing for purposes of this Agreement.

(e) The failure of any Lender to make the Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on the date of any Borrowing.

SECTION 2.03. [Reserved].

SECTION 2.04. Letters of Credit.

(a) Each of Barclays, Wells Fargo, BTMU and Credit Suisse has severally agreed to act as an LC Issuing Bank and, in such capacity, each has severally agreed to issue Letters of Credit having an aggregate face amount not greater than $75,000,000 for each such LC Issuing Bank. The Borrower may also from time to time appoint one or more Lenders (with the consent of any such Lender, which consent may be withheld in the sole discretion of each Lender) to act, either directly or through an Affiliate of such Lender, as an LC Issuing Bank hereunder. Any such appointment and the terms thereof shall be evidenced in a separate written agreement executed by the Borrower and the relevant LC Issuing Bank, a copy of which agreement shall be delivered by the Borrower to the Administrative Agent. The Administrative Agent shall give prompt notice of any such appointment to the other Lenders. Upon such appointment, if and for so long as such Lender shall have any obligation to issue any Letters of Credit hereunder or any Letter of Credit issued by such Lender shall remain outstanding, such Lender shall be deemed to be, and shall have all the rights and obligations of, an “LC Issuing Bank” under this Agreement.

(b) Subject to the terms and conditions hereof, each Letter of Credit shall be issued (or the stated maturity thereof extended or terms thereof modified or amended) on not less than two Business Days’ prior notice thereof by delivery of a Request for Issuance to the Administrative Agent (which shall promptly distribute copies thereof to the Lenders) and the relevant LC Issuing Bank for the account of the Borrower or any of its Subsidiaries; provided that the Borrower shall be the account party for the purposes of this Agreement and shall have the reimbursement obligations with respect thereto. Each Letter of Credit shall be issued in a form acceptable to the LC Issuing Bank. Each Request for Issuance shall specify (i) the identity of the relevant LC Issuing Bank, (ii) the date (which shall be a Business Day) of issuance of such Letter of Credit (or the date of effectiveness of such extension, modification or amendment) and the stated expiry date thereof (which shall be not more than one year after the date of issuance, provided , that if the expiry date of such Letter of Credit is later than the Termination Date of any Lender, the Borrower will no later than (x) five Business Days prior to such Termination Date if the Borrower’s Applicable Rating Level is 5 or above and (y) 15 days prior to such Termination Date if the Borrower’s Applicable Rating Level is 6, deposit in an account designated with the Administrative Agent (the “ LC Collateral Account ”), in the name of the Administrative Agent and for the benefit of the applicable Lenders and the applicable LC Issuing Banks, in same day

funds, an amount equal to the product of (A) 1.03 times the aggregate undrawn stated amount of such Letter of Credit and (B) the Commitment Percentage of the Commitments expiring on such Termination Date), (iii) the proposed stated amount of such Letter of Credit (which amount shall not (A) be less than $100,000 and (B) be subject to any automatic increase provisions), (iv) the name and address of the beneficiary of such Letter of Credit and (v) a statement of drawing conditions applicable to such Letter of Credit, and if such Request for Issuance relates to an amendment or modification of a Letter of Credit, it shall be accompanied by the consent of the beneficiary of the Letter of Credit thereto. Each Request for Issuance shall be irrevocable unless modified or rescinded by the Borrower not less than two days prior to the proposed date of issuance (or effectiveness) specified therein. Not later than 12:00 noon on the proposed date of issuance (or effectiveness) specified in such Request for Issuance, and upon fulfillment of the applicable conditions precedent and the other requirements set forth herein, the relevant LC Issuing Bank shall issue (or extend, amend or modify) such Letter of Credit and provide notice and a copy thereof to the Administrative Agent, which shall, upon request by a Lender, promptly furnish copies thereof to such Lender; provided that the LC Issuing Bank shall not issue or amend any Letter of Credit if such LC Issuing Bank has received notice from the Administrative Agent that the applicable conditions precedent have not been satisfied.

(c) No Letter of Credit shall be requested or issued hereunder if, after the issuance thereof, (i) the Outstanding Credits would exceed the aggregate Commitments, or (ii) the LC Outstandings would exceed $600,000,000.

(d) The Borrower hereby agrees to pay to the Administrative Agent for the account of each LC Issuing Bank and, if they shall have purchased participations in the reimbursement obligations of the Borrower pursuant to subsection (e) below, the participating Lenders, on each date on which such LC Issuing Bank shall pay any amount under any Letter of Credit issued by such LC Issuing Bank, a sum equal to the amount so paid plus interest on such amount from the date so paid by such LC Issuing Bank until repayment to such LC Issuing Bank in full at a fluctuating interest rate per annum equal to the interest rate applicable to Base Rate Advances plus 2%. The Borrower may reimburse drawings under a Letter of Credit with an Advance. Notwithstanding anything herein to the contrary, the obligations with respect to Letters of Credit of (i) the Borrower shall survive any Termination Date and shall remain in effect until no Letters of Credit remain outstanding, (ii) each Lender shall survive to the extent that the Borrower shall fail to deposit cash collateral in the LC Collateral Account as required under subsection (b) above and (iii) each Lender shall be reinstated, to the extent any such cash collateral, the application thereof or the reimbursement in respect thereof is required to be returned to the Borrower by any LC Issuing Bank after such Termination Date.

(e) If any LC Issuing Bank shall not have been reimbursed in full for any payment made by such LC Issuing Bank under a Letter of Credit issued by such LC Issuing Bank on the date of such payment, such LC Issuing Bank may give the Administrative Agent and each Lender prompt notice thereof (an “ LC Payment Notice ”) no later than 12:00 noon on any Business Day on or after the Business Day immediately succeeding the date of such payment by such LC Issuing Bank. Each Lender severally agrees to purchase a participation in the reimbursement obligation of the Borrower to such LC Issuing Bank by paying to the Administrative Agent for the account of such LC Issuing Bank an amount equal to such Lender’s Commitment Percentage of such unreimbursed amount paid by such LC Issuing Bank, plus

interest on such amount at a rate per annum equal to the Federal Funds Rate from the date of the payment by such LC Issuing Bank to the date of payment to such LC Issuing Bank by such Lender. Each such payment by a Lender shall be made not later than 3:00 P.M. on the later to occur of (i) the Business Day immediately following the date of such payment by such LC Issuing Bank and (ii) the Business Day on which such Lender shall have received an LC Payment Notice from such LC Issuing Bank. Each Lender’s obligation to make each such payment to the Administrative Agent for the account of such LC Issuing Bank shall be several and shall not be affected by the occurrence or continuance of a Default or the failure of any other Lender to make any payment under this Section 2.04(e). Each Lender further agrees that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

(f) The failure of any Lender to make any payment to the Administrative Agent for the account of any LC Issuing Bank in accordance with subsection (e) above shall not relieve any other Lender of its obligation to make payment, but no Lender shall be responsible for the failure of any other Lender. If any Lender (a “ non-performing Lender ”) shall fail to make any payment to the Administrative Agent for the account of any LC Issuing Bank in accordance with subsection (e) above within five Business Days after the LC Payment Notice relating thereto, then, for so long as such failure shall continue, such LC Issuing Bank shall be deemed, for purposes of Sections 6.01 and 8.01 hereof, to be a Lender owed a Borrowing in an amount equal to the outstanding principal amount due and payable by such non-performing Lender to the Administrative Agent for the account of such LC Issuing Bank pursuant to subsection (e) above. Any non-performing Lender and the Borrower (without waiving any claim against such Lender for such Lender’s failure to purchase a participation in the reimbursement obligations of the Borrower under subsection (e) above) severally agree to pay to the Administrative Agent for the account of such LC Issuing Bank forthwith on demand such amount, together with interest thereon for each day from the date such Lender would have purchased its participation had it complied with the requirements of subsection (e) above until the date such amount is paid to the Administrative Agent at (i) in the case of the Borrower, the interest rate applicable at the time to Base Rate Advances plus 2%, in accordance with Section 2.04(d), and (ii) in the case of such Lender, the Federal Funds Rate.

(g) The payment obligations of each Lender under Section 2.04(e) and of the Borrower under this Agreement in respect of any payment under any Letter of Credit shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including, without limitation, the following circumstances:

(i) any lack of validity or enforceability of this Agreement or any other agreement or instrument relating thereto or to such Letter of Credit;

(ii) any amendment or waiver of, or any consent to departure from, the terms of this Agreement or such Letter of Credit;

(iii) the existence of any claim, set-off, defense or other right that the Borrower may have at any time against any beneficiary, or any transferee, of such Letter of Credit (or any Persons for whom any such beneficiary or any such transferee may be acting), any LC Issuing Bank, or any other Person, whether in connection with this Agreement,

the transactions contemplated hereby, thereby or by such Letter of Credit, or any unrelated transaction;

(iv) any statement or any other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

(v) payment in good faith by any LC Issuing Bank under the Letter of Credit issued by such LC Issuing Bank against presentation of a draft or certificate that does not comply with the terms of such Letter of Credit;

(vi) the use that may be made of any Letter of Credit by, or any act or omission of, the beneficiary of any Letter of Credit (or any Person for which the beneficiary may be acting); or

(vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.

(h) Without limiting any other provision of this Section 2.04, for purposes of this Section 2.04 any LC Issuing Bank may rely upon any oral, telephonic, telegraphic, facsimile, electronic, written or other communication believed in good faith to have been authorized by the Borrower, whether or not given or signed by an authorized Person of the Borrower.

(i) The Borrower assumes all risks of the acts and omissions of any beneficiary or transferee of any Letter of Credit. Neither any LC Issuing Bank, the Lenders nor any of their respective officers, directors, employees, agents or Affiliates shall be liable or responsible for (i) the use that may be made of such Letter of Credit or any acts or omissions of any beneficiary or transferee thereof in connection therewith; (ii) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (iii) payment by any LC Issuing Bank against presentation of documents that do not comply with the terms of such Letter of Credit, including failure of any documents to bear any reference or adequate reference to such Letter of Credit; or (iv) any other circumstances whatsoever in making or failing to make payment under such Letter of Credit, except that the Borrower and each Lender shall have the right to bring suit against each LC Issuing Bank, and each LC Issuing Bank shall be liable to the Borrower and any Lender, to the extent of any direct, as opposed to consequential, damages suffered by the Borrower or such Lender that the Borrower or such Lender proves were caused by such LC Issuing Bank’s willful misconduct or gross negligence, including, in the case of the Borrower, such LC Issuing Bank’s willful failure to make timely payment under such Letter of Credit following the presentation to it by the beneficiary thereof of a draft and accompanying certificate(s) that strictly comply with the terms and conditions of such Letter of Credit. In furtherance and not in limitation of the foregoing, each LC Issuing Bank may accept sight drafts and accompanying certificates presented under the Letter of Credit issued by such LC Issuing Bank that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and payment against such documents shall not constitute willful misconduct or gross negligence by such LC Issuing Bank.

Notwithstanding the foregoing, no Lender shall be obligated to indemnify the Borrower for damages caused by any LC Issuing Bank’s willful misconduct or gross negligence.

SECTION 2.05. Fees.

(a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee equal to the Commitment Fee Rate in effect from time to time, multiplied by the amount of such Lender’s Available Commitment (i) from the date hereof, in the case of each Initial Lender, and (ii) from the effective date specified in the Assignment and Assumption pursuant to which it became a Lender, in the case of each other Lender, in each case until the Termination Date of such Lender, payable quarterly in arrears on the last day of each March, June, September and December, commencing December 31, 2014, and ending on the Termination Date of such Lender.

(b) The Borrower shall pay to the Administrative Agent such fees as may from time to time be agreed between the Borrower and the Administrative Agent.

(c) The Borrower shall pay to the Administrative Agent for the account of each Lender a fee (the “ LC Fee ”) on the average daily aggregate principal amount of each such Lender’s Commitment Percentage of the LC Outstandings (i) from the date hereof, in the case of each Initial Lender, and (ii) from the effective date specified in the Assignment and Assumption pursuant to which it became a Lender, in the case of each other Lender, in each case until the later to occur of (x) the Termination Date of such Lender, and (y) the date on which no Letters of Credit in which such Lender is obligated to participate are outstanding, payable on the last day of each March, June, September and December (commencing on December 31, 2014), and on such later date, at a rate equal at all times to the Applicable Margin in effect from time to time for Eurodollar Rate Advances.

(d) The Borrower shall pay to each LC Issuing Bank fronting and other fees for the issuance and maintenance of Letters of Credit issued by such LC Issuing Bank and for drawings thereunder as may be separately agreed between the Borrower and such LC Issuing Bank.

SECTION 2.06 Extension of the Termination Date.

(a) Not earlier than 60 days prior to, nor later than 30 days prior to each of the first and second anniversaries of the date of this Agreement, the Borrower may request by notice made to the Administrative Agent (which shall promptly notify the Lenders thereof) a one-year extension of the Termination Date. Each Lender shall notify the Administrative Agent by the date specified by the Administrative Agent (which date shall be a Business Day and shall not be less than 15 days prior to, nor more than 30 days prior to, the Extension Effective Date) that either (A) such Lender declines to consent to extending the Termination Date or (B) such Lender consents to extending the Termination Date. Any Lender not responding within the above time period shall be deemed not to have consented to extending the Termination Date. The Administrative Agent shall, after receiving the notifications from all of the Lenders or the expiration of such period, whichever is earlier, notify the Borrower and the Lenders of the results thereof. The Borrower may request no more than two extensions pursuant to this Section.

(b) If any Lender declines, or is deemed to have declined, to consent to such request for extension (each a “ Declining Lender ”), the Borrower shall have the right to replace such Declining Lender in accordance with Section 2.20(b). Any Lender replacing a Declining Lender shall be deemed to have consented to such request for extension (regardless of when such replacement is effective) and shall not be deemed to be a Declining Lender.

(c) If the Required Lenders have consented to the extension of the Termination Date, the Termination Date shall be extended (solely with respect each Lender that consented to the extension) to the date that is one year after the then-effective Termination Date, effective as of the date to be determined by the Administrative Agent and the Borrower (the “ Extension Effective Date ”). On or prior to the Extension Effective Date, the Borrower shall deliver to the Administrative Agent, in form and substance satisfactory to the Administrative Agent, (i) the resolutions of the Borrower authorizing such extension, certified as being in effect as of the Extension Effective Date and the related incumbency certificate of the Borrower, (ii) a favorable opinion of counsel for the Borrower (which may be an attorney of American Electric Power Service Corporation), as to such matters as any Lender through the Administrative Agent may reasonably request and (iii) a certificate of the Borrower stating that on and as of such Extension Effective Date, and after giving effect to the extension to be effective on such date, all conditions precedent to an Extension of Credit are satisfied. On each Extension Effective Date, the Declining Lender shall have received payment in full of the principal amount of all Advances outstanding owing to such Declining Lender and all interest thereon and all fees and other amounts (including, without limitation, any amounts payable pursuant to Section 8.04(c)) payable to such Declining Lender accrued through such Extension Effective Date. Promptly following such Extension Effective Date, the Administrative Agent shall distribute an amended Schedule I to this Agreement (which shall thereafter be incorporated into this Agreement) to reflect any changes in the Lenders, the Commitments and each Lender’s Commitment Percentage as of such Extension Effective Date.

(d) Each LC Issuing Bank may, in its sole discretion, elect not to serve in such capacity following any extension of the Termination Date; provided that, (i) the Borrower and the Administrative Agent may appoint a replacement for such resigning LC Issuing Bank, and (ii) whether such replacement is found shall not otherwise affect the extension of the Termination Date.

SECTION 2.07. Increase of the Commitments.

(a) The Borrower may, from time to time, provided that no Default or Event of Default has occurred and is continuing, request by notice to the Administrative Agent, to increase the Commitments in minimum increments of $10,000,000, up to a maximum increase aggregate amount (for all such increases) of $500,000,000, by designating one or more Eligible Assignees (each a “ Designated Lender ”) that agree to accept all or a portion of such additional Commitments (the “ Proposed Increased Commitment ”), provided , that (i) if a Designated Lender is not a Lender, such Designated Lender shall be reasonably acceptable to the Administrative Agent and each LC Issuing Bank, and such Designated Lender’s Proposed Increased Commitment shall be at least $5,000,000; and (ii) if Designated Lender is a Lender, such Designated Lender shall be reasonably acceptable to each LC Issuing Bank, and allocations of the Proposed Increased Commitment among Designated Lenders that are Lenders shall be

based on the ratio of each existing Lender’s Proposed Increased Commitment, if any, to the aggregate of all Proposed Increased Commitments. The Borrower may elect to remove or replace any such designated Eligible Assignee at any time prior to the effective date of such increase, provided that any newly designated Eligible Assignee is reasonably acceptable to the Administrative Agent and each LC Issuing Bank.

(b) The Administrative Agent shall promptly notify the Designated Lenders of the Proposed Increased Commitment. Each Designated Lender shall notify the Administrative Agent by the date specified by the Administrative Agent (which date shall be a Business Day) that either (A) such Designated Lender declines to accept its additional Commitments or (B) such Designated Lender consents to accept its additional Commitments. Any Designated Lender not responding on or prior to the date specified by the Administrative Agent shall be deemed not to have consented to accept its additional Commitments. The Administrative Agent shall, after receiving the notifications from all of the Designated Lenders or following the date specified in the notice to such Designated Lenders, whichever is earlier, notify the Borrower and the Lenders of the results thereof and the effective date of any additional Commitments. The Borrower shall deliver (i) a certificate signed by a duly authorized officer of the Borrower to the Administrative Agent, dated as of the effective date of such additional Commitments, stating that all conditions precedent to an Extension of Credit set forth in Section 3.02 are true and correct on and as of such effective date and (ii) a favorable opinion of counsel for the Borrower (which may be an attorney of American Electric Power Service Corporation), as to such matters as any Lender through the Administrative Agent may reasonably request.

(c) Promptly following the effective date of any Commitment increase pursuant to this Section 2.07, (i) the Administrative Agent shall distribute an amended Schedule I to this Agreement (which shall thereafter be incorporated into this Agreement) to reflect any changes in Lenders, the Commitments and each Lender’s Commitment Percentage as of such effective date and (ii) the Borrower shall prepay the outstanding Borrowings (if any) in full, and shall simultaneously make new Borrowings hereunder in an amount equal to such prepayment, so that, after giving effect thereto, the Borrowings are held ratably by the Lenders in accordance with their respective Commitments (after giving effect to such Commitment increase). Prepayments made under this clause (c) shall not be subject to the notice requirements of Section 2.14.

(d) Notwithstanding any provision contained herein to the contrary, from and after the date of any Commitment increase and the making of any Advances on such date pursuant to clause (c)(ii) above, all calculations and payments of fees and of interest on the Advances shall take into account the actual Commitment of each Lender and the principal amount outstanding of each Advance made by such Lender during the relevant period of time.

SECTION 2.08. Termination or Reduction of the Commitments.

(a) The Borrower shall have the right, upon at least three Business Days’ notice to the Administrative Agent, to terminate in whole or reduce ratably in part the Available Commitments, provided that (i) each partial reduction shall be in a minimum amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and (ii) no such termination or reduction shall be made that would reduce the aggregate Commitments to an amount less than the Outstanding Credits on the date of such termination or reduction.

(b) The Borrower may terminate the Available Commitment of any Lender that is a Defaulting Lender in accordance with Section 8.16(a)(vi).

(c) The Commitment of each Lender shall automatically terminate on the Termination Date applicable to such Lender as provided in Section 2.06.

(d) Once terminated, neither a Commitment nor any portion thereof may be reinstated.

SECTION 2.09. Repayment of Advances.

(a) The Borrower shall repay to the Administrative Agent for the account of each Lender on the Termination Date with respect to such Lender the aggregate principal amount of all Advances made by such Lender to the Borrower then outstanding.

(b) If at any time (i) the aggregate principal amount of Outstanding Credits exceed the aggregate Commitments, the Borrower shall pay or prepay so much of the Borrowings and/or deposit funds in the LC Collateral Account equal to 103% of so much of the LC Outstandings as shall be necessary in order that the principal amount of Advances outstanding plus the aggregate amount of LC Outstandings not so cash collateralized will not exceed the Commitments.

SECTION 2.10. Evidence of Indebtedness.

(a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness to such Lender resulting from each Advance made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.

(b) The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Advance made hereunder, the Type of each Advance made and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.

(c) The entries made in the accounts maintained pursuant to subsections (a) and (b) of this Section 2.10 shall, to the extent permitted by Applicable Law, be prima facie evidence of the existence and amounts of the obligations therein recorded; provided , however , that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrower to repay the Advances and interest thereon in accordance with their terms.

(d) Any Lender may request that any Advances made by it be evidenced by one or more promissory notes. In such event, the Borrower shall prepare, execute and deliver to such Lender one or more promissory notes payable to such Lender (or, if requested by such Lender, to such Lender and its assignees) and in a form approved by the Administrative Agent. Thereafter, the Advances evidenced by such promissory notes and interest thereon shall at all times

(including after assignment pursuant to Section 8.07) be represented by one or more promissory notes in such form payable to the payee named therein.

SECTION 2.11. Interest on Advances.

The Borrower shall pay interest on the unpaid principal amount of each Advance from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum:

(a) Base Rate Advances . During such periods as such Advance is a Base Rate Advance, a rate per annum equal at all times to the sum of (x) the Base Rate plus (y) the Applicable Margin for Base Rate Advances in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December during such periods and on the date such Base Rate Advance shall be Converted or paid in full.

(b) Eurodollar Rate Advances . During such periods as such Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during each Interest Period for such Advance to the sum of (x) the Eurodollar Rate for such Interest Period for such Advance plus (y) the Applicable Margin for Eurodollar Rate Advances in effect from time to time, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period and on the date such Eurodollar Rate Advance shall be Converted or paid in full.

(c) Additional Interest on Eurodollar Rate Advances . The Borrower shall pay to each Lender, so long as such Lender shall be required under regulations of the Board of Governors of the Federal Reserve System to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency Liabilities, additional interest on the unpaid principal amount of each Eurodollar Rate Advance of such Lender, from the date of such Advance until such principal amount is paid in full, at an interest rate per annum equal at all times to the remainder obtained by subtracting (i) the Eurodollar Rate for the Interest Period for such Advance from (ii) the rate obtained by dividing such Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage of such Lender for such Interest Period, payable on each date on which interest is payable on such Advance. Such additional interest shall be determined by such Lender and notified to the Borrower through the Administrative Agent.

SECTION 2.12. Interest Rate Determination.

(a) The Administrative Agent shall give prompt notice to the Borrower and the Lenders of the applicable interest rate determined by the Administrative Agent for purposes of Section 2.11(a) or (b), and, if applicable, the rate for the purpose of determining the applicable interest rate under Section 2.11(c).

(b) If, with respect to any Eurodollar Rate Advances, (i) the Required Lenders notify the Administrative Agent that the Eurodollar Rate for any Interest Period for such Advances will not adequately reflect the cost to such Required Lenders of making, funding or maintaining their respective Eurodollar Rate Advances for such Interest Period, or (ii) the Administrative Agent determines that adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided for in the definition of Eurodollar Rate, the Administrative Agent shall forthwith so notify the Borrower and the Lenders, whereupon (A) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance, and (B) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist.

(c) If the Borrower shall fail to select the duration of any Interest Period for any Eurodollar Rate Advances in accordance with the provisions contained in the definition of “Interest Period” in Section 1.01, the Administrative Agent will forthwith so notify the Borrower and the Lenders and such Advances will automatically, on the last day of the then existing Interest Period therefor, Convert into Base Rate Advances.

(d) On the date on which the aggregate unpaid principal amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $10,000,000, such Advances shall automatically Convert into Base Rate Advances.

(e) Upon the occurrence and during the continuance of any Event of Default, (i) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance and (ii) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended.

SECTION 2.13. Optional Conversion of Advances.

The Borrower may on any Business Day, upon notice given to the Administrative Agent not later than 12:00 noon on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.12 and 2.16, Convert all or any part of Advances of one Type comprising the same Borrowing into Advances of the other Type or of the same Type but having a new Interest Period; provided , however , that any Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made only on the last day of an Interest Period for such Eurodollar Rate Advances, any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in an amount not less than the minimum amount specified in Section 2.02(b) and no Conversion of any Advances shall result in more separate Borrowings than permitted under Section 2.02(b). Each such notice of a Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Advances to be Converted, and (iii) if such Conversion is into Eurodollar Rate Advances, the duration of the initial Interest Period for each such Advance. Each notice of Conversion shall be irrevocable and binding on the Borrower.

SECTION 2.14. Optional Prepayments of Advances.

The Borrower may, upon at least two Business Days’ notice, in the case of Eurodollar Rate Advances, and upon notice not later than 11:00 A.M. (New York City time) on the date of prepayment, in the case of Base Rate Advances, to the Administrative Agent stating the proposed date and aggregate principal amount of the prepayment, and, if such notice is given, the Borrower shall prepay the outstanding principal amount of the Advances comprising part of the same Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided , however , that (x) each partial prepayment shall be in a minimum amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and (y) in the event of any such prepayment of a Eurodollar Rate Advance, the Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 8.04(c).

SECTION 2.15. Increased Costs.

(a) Increased Costs Generally . If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the Eurodollar Rate Reserve Percentage, in the case of Eurodollar Rate Advances) or any LC Issuing Bank;

(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

(iii) impose on any Lender or any LC Issuing Bank or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Advances made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining any Advance or of maintaining its obligation to make any such Advance, or to increase the cost to such Lender, such LC Issuing Bank or such other Recipient of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender, LC Issuing Bank or other Recipient hereunder (whether of principal, interest or any other amount) then, upon request of such Lender, LC Issuing Bank or other Recipient, the Borrower will pay to such Lender, LC Issuing Bank or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender or other Recipient, as the case may be, for such additional costs incurred or reduction suffered.

(b) Capital Requirements . If any Lender or LC Issuing Bank determines that any Change in Law affecting such Lender or LC Issuing Bank or any Applicable Lending Office of

such Lender or such Lender’s or LC Issuing Bank’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on such Lender’s or LC Issuing Bank’s capital or on the capital of such Lender’s or LC Issuing Bank’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Advances made by such Lender, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by any LC Issuing Bank, to a level below that which such Lender or LC Issuing Bank or such Lender’s or LC Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or LC Issuing Bank’s policies and the policies of such Lender’s or LC Issuing Bank’s holding company with respect to capital adequacy and liquidity), then from time to time the Borrower will pay to such Lender or LC Issuing Bank such additional amount or amounts as will compensate such Lender or LC Issuing Bank or such Lender’s or LC Issuing Bank’s holding company for any such reduction suffered.

(c) Certificates for Reimbursement . A certificate of a Lender or LC Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or LC Issuing Bank or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrower, shall be conclusive absent manifest error. The Borrower shall pay such Lender or LC Issuing Bank, as the case may be, the amount shown as due on any such certificate within ten days after receipt thereof.

(d) Delay in Requests . Failure or delay on the part of any Lender or LC Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or LC Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or LC Issuing Bank pursuant to this Section for any increased costs incurred or reductions suffered more than six months prior to the date that such Lender or LC Issuing Bank notifies the Borrower of the Change in Law giving rise to such increased costs or reductions, and of such Lender’s or LC Issuing Bank’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof).

SECTION 2.16. Illegality.

If due to any Change in Law it shall become unlawful or impossible for any Credit Party (or its Eurodollar Lending Office) to make, maintain or fund its Eurodollar Rate Advances, and such Credit Party shall so notify the Administrative Agent, the Administrative Agent shall forthwith give notice thereof to the other Credit Parties and the Borrower, whereupon, until such Credit Party notifies the Borrower and the Administrative Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Credit Party to make Eurodollar Rate Advances, or to Convert outstanding Advances into Eurodollar Rate Advances, shall be suspended. Before giving any notice to the Administrative Agent pursuant to this Section 2.16, such Credit Party shall use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions applicable to such Credit Party) to designate a different Eurodollar Lending Office if such designation would avoid the need for giving such notice and would not, in the judgment of such Credit Party, be otherwise disadvantageous to such Credit Party. If such notice is given, each Eurodollar Rate Advance of such Credit Party then outstanding shall be

converted to a Base Rate Advance either (i) on the last day of the then current Interest Period applicable to such Eurodollar Rate Advance if such Credit Party may lawfully continue to maintain and fund such Advance to such day or (ii) immediately if such Credit Party shall determine that it may not lawfully continue to maintain and fund such Advance to such day.

SECTION 2.17. Payments and Computations.

(a) The Borrower shall make each payment to be made by it hereunder not later than 1:00 P.M. on the day when due in Dollars to the Administrative Agent at the Agent’s Account in same day funds without condition or deduction for any counterclaim, defense, recoupment or setoff. The Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest or commitment fees ratably (other than amounts payable pursuant to Section 2.11(c), 2.15, 2.18, 8.04(c) or 8.16) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Assumption and recording of the information contained therein in the Register pursuant to Section 8.07(c), from and after the effective date specified in such Assignment and Assumption, the Administrative Agent shall make all payments hereunder in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Assumption shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.

(b) The Borrower hereby authorizes each Lender, if and to the extent payment owed to such Lender is not made when due hereunder, after any applicable grace period, to charge from time to time against any or all of the Borrower’s accounts with such Lender any amount so due.

(c) All computations of interest based on the rate referred to in clause (i) of the definition of the “Base Rate” contained in Section 1.01 shall be made by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Eurodollar Rate or the Federal Funds Rate and of commitment fees and LC Fees shall be made by the Administrative Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest, commitment fees or LC Fees are payable. Each determination by the Administrative Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.

(d) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or commitment fees, as the case may be; provided, however, that, if such extension would cause payment of interest on or principal of Eurodollar Rate Advances to be made in the next following calendar month or on a date after the Termination Date, such payment shall be made on the next preceding Business Day.

(e) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to a Lender hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date, and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that the Borrower shall not have so made such payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at the Federal Funds Rate.

SECTION 2.18. Taxes.

(a) Defined Terms . For purposes of this Section 2.18, the term “Lender” includes any LC Issuing Bank and the term “Applicable Law” includes FATCA.

(b) Payments Free of Taxes . Any and all payments by or on account of any obligation of the Borrower under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Law. If any Applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

(c) Payment of Other Taxes by the Borrower . The Borrower shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

(d) Indemnification by the Borrower . The Borrower shall indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 8.07(d) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this subsection (e).

(f) Evidence of Payments . As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this Section 2.18, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(g) Status of Lenders . (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.18(g)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(ii) Without limiting the generality of the foregoing,

(A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;

Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:

(i) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or W‑8BEN‑E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or W‑8BEN‑E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(ii) executed copies of IRS Form W-8ECI;

(iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Internal Revenue Code, (x) a certificate substantially in the form of Exhibit F-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Internal Revenue Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Internal Revenue Code (a “ U.S. Tax Compliance Certificate ”) and (y) executed copies of IRS Form W-8BEN or W‑8BEN‑E;

(iv) to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, W‑8BEN‑E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-2 or Exhibit F-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that, if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-4 on behalf of each such direct and indirect partner;

(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and

(D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and

at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.

(h) Treatment of Certain Refunds . If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.18 (including by the payment of additional amounts pursuant to this Section 2.18), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this subsection (h) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection (h), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this subsection (h) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

(i) FATCA Withholding . For purposes of determining withholding Taxes imposed under FATCA, from and after the Restatement Effective Date, the Borrower and the Administrative Agent shall treat (and the Lenders hereby authorize the Administrative Agent to treat) the obligations of the Borrower set forth in this Agreement as not qualifying as a “grandfathered obligation” within the meaning of Treasury Regulation Sections 1.1471-2(b)(2)(i) and 1.1471-2T(b)(2)(i).

(j) Survival . Each party’s obligations under this Section 2.18 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

SECTION 2.19. Sharing of Payments, Etc.

(a) If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the Advances owing to it or participations in Letters of Credit (other than pursuant to Section 2.11(c), 2.15, 2.18, 8.04(c) or 8.16 or in respect of Eurodollar Rate Advances converted into Base Rate Advances pursuant to Section 2.16) by the Borrower in excess of its ratable share of payments on account of the Advances to the Borrower and participations in Letters of Credit obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in such Advances owing to them and participations in Letters of Credit as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided , however , that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (i) the amount of such Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.19 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation.

(b) If any Lender shall fail to make any payment required to be made by it pursuant to Sections 2.02(d), 2.03(c), 2.04(e) or 7.05, then the Administrative Agent may, in its discretion and notwithstanding any contrary provision hereof, (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender for the benefit of the Administrative Agent and the LC Issuing Banks to satisfy such Lender’s obligations to it or them under such Section until all such unsatisfied obligations are fully paid, and/or (ii) hold any such amounts in a segregated account as cash collateral for, and application to, any future funding obligations of such Lender under any such Section, in the case of each of clauses (i) and (ii) above, in any order as determined by the Administrative Agent in its discretion.

SECTION 2.20. Mitigation Obligations; Replacement of Lenders.

(a) Designation of a Different Lending Office . If any Lender delivers a notice pursuant to Section 2.16, requests compensation under Section 2.15, or requires the Borrower to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.18, then such Lender shall (at the request of the Borrower) use reasonable efforts to designate a different Applicable Lending Office or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.18, as the case may be, in the future, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b) Replacement of Lenders . If any Lender delivers a notice pursuant to Section 2.16, requests compensation under Section 2.15, or requires the Borrower to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.18 and, in each case, such Lender has declined or is unable to designate a different Applicable Lending Office in accordance with Section 2.20(a), or if any Lender is a Declining Lender, a Defaulting Lender or a Non-Consenting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 8.07), all of its interests, rights (other than its existing rights to payments pursuant to Section 2.15 or 2.18) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if such Lender accepts such assignment); provided that:

i. the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 8.07(b)(iv);

ii. such Lender shall have received payment of an amount equal to the outstanding principal of its Advances and any participations in Letters of Credit funded pursuant to Section 2.04(e), together with all applicable accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 8.04(c)) from the assignee (to the extent of such outstanding principal amounts and accrued interest and fees) or the Borrower (in the case of all other amounts);

iii. in the case of any such assignment resulting from a claim for compensation under Section 2.15 or payments required to be made pursuant to Section 2.18, such assignment will result in a reduction in such compensation or payments thereafter;

iv. no Default shall have occurred and be continuing;

v. such assignment does not conflict with Applicable Law; and

vi. in the case of any assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

ARTICLE III

CONDITIONS PRECEDENT

SECTION 3.01. Conditions Precedent to Effectiveness of this Agreement and Initial Extensions of Credit.

This Agreement and the obligation of each Lender and each LC Issuing Bank, as applicable, to make the initial Extension of Credit to be made by it hereunder shall take effect on the date (the “Restatement Effective Date”) on which each of the following conditions precedent has been satisfied:

(a) The Administrative Agent shall have received on or before the Restatement Effective Date the following, each dated such day, in form and substance reasonably satisfactory to the Administrative Agent in sufficient copies for each Lender:

(i) Certified copies of the resolutions of the board of directors of the Borrower approving this Agreement, and of all documents evidencing other necessary corporate action and Governmental Approvals, if any, with respect to this Agreement.

(ii) A certificate of the Secretary or Assistant Secretary of the Borrower certifying the names and true signatures of the officers of the Borrower authorized to sign this Agreement and the other documents to be delivered by the Borrower hereunder.

(iii) A favorable opinion of counsel for the Borrower (which may be an attorney of American Electric Power Service Corporation), substantially in the form of Exhibit D hereto and as to such other matters as any Lender through the Administrative Agent may reasonably request.

(iv) A favorable opinion of King & Spalding LLP, counsel for the Administrative Agent, in the form of Exhibit E hereto.

(b) On the Restatement Effective Date, the following statements shall be true and the Administrative Agent shall have received for the account of each Lender a certificate signed by a duly authorized officer of the Borrower, dated such date, stating that:

(i) The representations and warranties of the Borrower contained in Section 4.01 are true and correct in all material respects on and as of the Restatement Effective Date, as though made on and as of such date, and

(ii) No event has occurred and is continuing that constitutes a Default.

(c) The Borrower shall have paid all fees and expenses of the Administrative Agent, the Joint Lead Arrangers and the Lenders then due and payable in accordance with the terms of the Loan Documents (including the fees and expenses of counsel to the Administrative Agent to the extent then due and payable).

(d) The Administrative Agent shall have received counterparts of this Agreement, executed and delivered by the Borrower and the Lenders.

(e) The Administrative Agent shall have received all promissory notes (if any) requested by the Lenders pursuant to Section 2.10(d), duly completed and executed by the Borrower and payable to such Lenders.

(f) The Administrative Agent shall have received copies of the Disclosure Documents.

(g) The Administrative Agent shall have received all documentation and information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the Patriot Act, to the extent such documentation or information is requested by the Administrative Agent on behalf of the Lenders prior to the Restatement Effective Date.

(h) The Administrative Agent shall have received a copy of an agreement among the Borrower, the Administrative Agent and each Departing Lender evidencing the termination of the “Commitment” (as defined in the Existing Credit Agreement) of such Departing Lender, and such Departing Lender shall have received payment in full of all “Advances” (as defined in the Existing Credit Agreement) of such Departing Lender outstanding as of the Restatement Effective Date, together with all interest accrued and unpaid thereon, any amounts owing in respect of such payment pursuant to Section 8.04(c) of the Existing Credit Agreement, all accrued and unpaid commitment fees and LC Fees pursuant to Sections 2.05(a) and 2.05(c) of the Existing Credit Agreement, and any other amounts then due and owing by the Borrower to such Departing Lender pursuant to the Existing Credit Agreement on the Restatement Effective Date.

(i) The Swingline Bank (as such term is defined in the Existing Credit Agreement) shall have received payment in full from the Borrower of all “Swingline Outstandings” (as such term is defined in the Existing Credit Agreement) as of the Restatement Effective Date.

(j) The LC Outstandings of each Barclays, Wells Fargo, BTMU and Credit Suisse shall not exceed $75,000,000 for each such LC Issuing Bank as of the Restatement Effective Date.

(k) The Borrower shall have paid to the Lenders all accrued and unpaid commitment fees and LC Fees pursuant to Sections 2.05(a) and 2.05(c) of the Existing Credit Agreement, and any other amounts then due and owing by Borrower to the Lenders pursuant to the Existing Credit Agreement (other than the Advances and related interest amounts that, pursuant to Section 8.18, are being reallocated and/or continuing to remain outstanding under this Agreement).

(l) The Administrative Agent shall have received copies or other evidence of such other approvals and such other opinions or documents as may be reasonably requested by the Administrative Agent or by any Lender or any LC Issuing Bank through the Administrative Agent.

SECTION 3.02. Conditions Precedent to each Extension of Credit.

The obligation of each Lender and each LC Issuing Bank, as applicable, to make each Extension of Credit to be made by it hereunder (other than in connection with any Borrowing that would not increase the aggregate principal amount of Advances outstanding immediately prior to the making of such Borrowing) shall be subject to the satisfaction of the conditions precedent set forth in Section 3.01 and on the date of such Borrowing:

(a) The following statements shall be true (and each of the giving of the applicable Notice of Borrowing and the acceptance by the Borrower of the proceeds of such Extension of Credit shall constitute a representation and warranty by the Borrower that on the date of such Extension of Credit such statements are true):

(i) The representations and warranties of the Borrower contained in Section 4.01 (other than the representation and warranty in Section 4.01(e) and the representation and warranty set forth in the last sentence of Section 4.01(f)) are true and correct in all material respects on and as of the date of such Extension of Credit, before and after giving effect to such Extension of Credit and to the application of the proceeds therefrom, as though made on and as of such date, and

(ii) No event has occurred and is continuing or would result from such Extension of Credit or from the application of the proceeds therefrom, that constitutes a Default.

(b) The Administrative Agent shall have received copies or other evidence of such other approvals and such other opinions or documents as may be reasonably requested by the Administrative Agent or by any Lender or any LC Issuing Bank through the Administrative Agent.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01 Representations and Warranties of the Borrower.

The Borrower represents and warrants as follows:

(a) The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, and each Significant Subsidiary is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated or otherwise organized.

(b) The execution, delivery and performance by the Borrower of each Loan Document, and the consummation of the transactions contemplated hereby, are within the Borrower’s corporate powers, have been duly authorized by all necessary action, and do not contravene (i) the Borrower’s certificate of incorporation or by-laws, (ii) law binding or affecting the Borrower or (iii) any contractual restriction binding on or affecting the Borrower or any of its properties.

(c) Each Loan Document has been duly executed and delivered by the Borrower. Each Loan Document is the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights in general, and except as the availability of the remedy of specific performance is subject to general principles of equity (regardless of whether such remedy is sought in a proceeding in equity or at law) and subject to requirements of reasonableness, good faith and fair dealing.

(d) No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or any other third party is required for the due execution, delivery and performance by the Borrower of any Loan Document.

(e) There is no pending or threatened action, suit, investigation, litigation or proceeding, including, without limitation, any Environmental Action, affecting the Borrower or any of its Significant Subsidiaries before any Governmental Authority or arbitrator that is reasonably likely to have a Material Adverse Effect, except as disclosed in the Disclosure Documents.

(f) The consolidated balance sheets of the Borrower and its Consolidated Subsidiaries as at December 31, 2013, March 31, 2014, June 30, 2014 and September 30, 2014, and the related consolidated statements of income and cash flows of the Borrower and its Consolidated Subsidiaries for the fiscal periods then ended (accompanied by, in the case of such financial statements for the fiscal year ended December 31, 2013, an opinion of Deloitte & Touche LLP, an independent registered public accounting firm), copies of each of which have been furnished to each Lender, fairly present (subject, in the case of such financial statements for the fiscal quarters ended March 31, 2014, June 30, 2014 and September 30, 2014, to year-end adjustments) the consolidated financial condition of the Borrower and its Consolidated Subsidiaries as at such dates and the consolidated results of the operations of the Borrower and its Consolidated Subsidiaries for the periods ended on such dates, all in accordance with generally accepted accounting principles consistently applied. Since December 31, 2013, there has been no Material Adverse Change.

(g) No written statement, information, report, financial statement, exhibit or schedule furnished by or on behalf of the Borrower to the Administrative Agent, any Lender or any LC Issuing Bank in connection with the syndication or negotiation of this Agreement or included herein or delivered pursuant hereto contained, contains, or will contain any material misstatement of fact or intentionally omitted, omits, or will omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are, or will be made, not misleading.

(h) Except as disclosed in the Disclosure Documents, the Borrower and each Significant Subsidiary is in material compliance with all laws (including ERISA and Environmental Laws) rules, regulations and orders of any Governmental Authority applicable to it.

(i) No failure to satisfy the minimum funding standard applicable to a Plan for a plan year (as described in Section 302 of ERISA and Section 412 of the Internal Revenue Code) that could reasonably be expected to have a Material Adverse Effect, whether or not waived, has occurred with respect to any Plan. The Borrower has not incurred, and does not presently expect to incur, any withdrawal liability under Title IV of ERISA with respect to any Multiemployer Plan that could reasonably be expected to have a Material Adverse Effect. The Borrower and each of its ERISA Affiliates have complied in all material respects with ERISA and the Internal Revenue Code. The Borrower and each of its Subsidiaries have complied in all material respects with foreign law applicable to its Foreign Plans, if any. As used herein, the term “ Plan ” means an “employee pension benefit plan” (as defined in Section 3 of ERISA) which is and has been established or maintained, or to which contributions are or have been made or should be made according to the terms of the plan, by the Borrower or any of its ERISA Affiliates. The term “ Multiemployer Plan ” means any Plan which is a “multiemployer plan” (as such term is defined in Section 4001(a)(3) of ERISA). The term “ Foreign Plan ” means any pension, profit-sharing, deferred compensation, or other employee benefit plan, program or arrangement maintained by any Subsidiary which, under applicable local foreign law, is required to be funded through a trust or other funding vehicle.

(j) The Borrower and its Subsidiaries have filed or caused to be filed all material Federal, state and local tax returns that are required to be filed by them, and have paid or caused to be paid all material taxes shown to be due and payable on such returns or on any assessments received by them (to the extent that such taxes and assessments have become due and payable) other than those taxes contested in good faith and for which adequate reserves have been established in accordance with GAAP.

(k) The Borrower is not engaged in the business of extending credit for the purpose of buying or carrying Margin Stock, and no proceeds of any Advance will be used to buy or carry any Margin Stock or to extend credit to others for the purpose of buying or carrying any Margin Stock. Not more than 25% of the assets of the Borrower and the Significant Subsidiaries that are subject to the restrictions of Section 5.02(a), (c) or (d) constitute Margin Stock.

(l) Neither the Borrower nor any Significant Subsidiary is an “investment company,” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company”, as such terms are defined in the Investment Company Act of 1940, as amended. Neither the making of any Extension of Credit, the application of the proceeds or repayment thereof by the Borrower nor the consummation of the other transactions contemplated hereby will violate any provision of such Act or any rule, regulation or order of the SEC thereunder.

(m) All Significant Subsidiaries as of the date hereof are listed on Schedule 4.01(m) hereto.

(n) The Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and the Borrower, its Subsidiaries and their respective directors and officers and, to the knowledge of the Borrower, its employees and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of (a) the Borrower, any Subsidiary or any of

their respective directors or officers, or (b) to the knowledge of the Borrower, any employee or agent of the Borrower or any Subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. No Borrowing, Letter of Credit, or use of proceeds thereof or other transaction contemplated by this Agreement will violate Anti-Corruption Laws or applicable Sanctions.

ARTICLE V

COVENANTS OF THE BORROWER

SECTION 5.01. Affirmative Covenants.

So long as any Advance or any other amount payable hereunder shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment hereunder, the Borrower will:

(a) Preservation of Existence, Etc. Preserve and maintain, and cause each Significant Subsidiary to preserve and maintain, its corporate, partnership or limited liability company (as the case may be) existence and all material rights (charter and statutory) and franchises; provided , however , that the Borrower and any Significant Subsidiary may consummate any merger or consolidation permitted under Section 5.02(a); and provided further that neither the Borrower nor any Significant Subsidiary shall be required to preserve any right or franchise if (i) the board of directors of the Borrower or such Significant Subsidiary, as the case may be, shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Borrower or such Significant Subsidiary, as the case may be, and that the loss thereof is not disadvantageous in any material respect to the Borrower or such Significant Subsidiary, as the case may be, or to the Lenders; (ii) required in connection with or pursuant to any Restructuring Law; or (iii) required in connection with the RTO Transaction; and provided further, that no Significant Subsidiary shall be required to preserve and maintain its corporate existence if (x) the loss thereof is not disadvantageous in any material respect to the Borrower or to the Lenders or (y) required in connection with or pursuant to any Restructuring Law or (z) required in connection with the RTO Transaction.

(b) Compliance with Laws, Etc. Comply, and cause each Significant Subsidiary to comply, in all material respects, with Applicable Law, with such compliance to include, without limitation, compliance with ERISA and Environmental Laws.

(c) Performance and Compliance with Other Agreements . Perform and comply, and cause each Significant Subsidiary to perform and comply, with the provisions of each indenture, credit agreement, contract or other agreement by which it is bound, the non-performance or non-compliance with which would result in a Material Adverse Change.

(d) Inspection Rights . At any reasonable time and from time to time, permit the Administrative Agent, any LC Issuing Bank or any Lender or any agents or representatives thereof to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Borrower and any Significant Subsidiary and to discuss the affairs, finances and accounts of the Borrower and any Significant Subsidiary with any of their officers or directors and with their independent certified public accountants.

(e) Maintenance of Properties, Etc. Maintain and preserve, and cause each Significant Subsidiary to maintain and preserve, all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted and except as required in connection with or pursuant to any Restructuring Law or in connection with RTO Transaction.

(f) Maintenance of Insurance . Maintain, and cause each Significant Subsidiary to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties; provided , however , that the Borrower and each Significant Subsidiary may self-insure to the same extent as other companies engaged in similar businesses and owning similar properties and to the extent consistent with prudent business practice.

(g) Payment of Taxes, Etc. Pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon its property and (ii) all lawful claims that, if unpaid, might by law become a Lien upon its property; provided , however , that neither the Borrower nor any of its Subsidiaries shall be required to pay or discharge any such tax, assessment, charge or claim that is being contested in good faith and by proper proceedings and as to which adequate reserves are being maintained in accordance with GAAP, unless and until any Lien resulting therefrom attaches to its property and becomes enforceable against its other creditors.

(h) Keeping of Books . Keep, and cause each Significant Subsidiary to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Borrower and each such Significant Subsidiary in accordance with GAAP.

(i) Reporting Requirements . Furnish to the Lenders:

(i) as soon as available and in any event within 60 days after the end of each of the first three quarters of each fiscal year of the Borrower, a copy of the Borrower’s Quarterly Report on Form 10-Q for such quarter, as filed with the SEC, which shall contain a consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such quarter and consolidated statements of income and cash flows of the Borrower and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, duly certified (subject to year-end audit adjustments) by the chief financial officer, chief accounting officer, treasurer or assistant treasurer of the Borrower as having been prepared in accordance with generally accepted accounting principles and a certificate of the chief financial officer, chief accounting officer, treasurer or assistant treasurer of the Borrower as to compliance with the terms of this Agreement and (A) certifying that there have been no Subsidiaries that have become Significant Subsidiaries at any time during such period, or any Subsidiaries that have ceased to be Significant Subsidiaries at any time during such period, in each case except as expressly identified in such certificate, and (B) setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 5.03, provided that in the

event of any change in GAAP used in the preparation of such financial statements, the Borrower shall also provide, if necessary for the determination of compliance with Section 5.03, a statement of reconciliation conforming such financial statements to GAAP in effect on the date hereof;

(ii) as soon as available and in any event within 120 days after the end of each fiscal year of the Borrower, a copy of the Borrower’s Annual Report on Form 10-K for such year, as filed with the SEC, which shall contain a copy of the annual audit report for such year for the Borrower and its Subsidiaries, containing a consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such fiscal year and consolidated statements of income and cash flows of the Borrower and its Subsidiaries for such fiscal year, in each case accompanied by an opinion by Deloitte & Touche LLP or another independent registered public accounting firm acceptable to the Required Lenders, and consolidating statements of income and cash flows of the Borrower and its Subsidiaries for such fiscal year, and a certificate of the chief financial officer, chief accounting officer, treasurer or assistant treasurer of the Borrower as to compliance with the terms of this Agreement and (A) certifying that there have been no Subsidiaries that have become Significant Subsidiaries at any time during such period, or any Subsidiaries that have ceased to be Significant Subsidiaries at any time during such period, in each case except as expressly identified in such certificate, and (B) setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 5.03, provided that in the event of any change in GAAP used in the preparation of such financial statements, the Borrower shall also provide, if necessary for the determination of compliance with Section 5.03, a statement of reconciliation conforming such financial statements to GAAP in effect on the date hereof;

(iii) as soon as possible and in any event within five days after the chief financial officer or treasurer of the Borrower obtains knowledge of the occurrence of each Default continuing on the date of such statement, a statement of the chief financial officer or treasurer of the Borrower setting forth details of such Default and the action that the Borrower has taken and proposes to take with respect thereto;

(iv) promptly after the sending or filing thereof, copies of all Reports on Form 8-K that the Borrower or any Significant Subsidiary files with the SEC or any national securities exchange;

(v) promptly after the commencement thereof, notice of all actions and proceedings before any Governmental Authority or arbitrator affecting the Borrower or any Significant Subsidiary of the type described in Section 4.01(e); and

(vi) such other information respecting the Borrower or any of its Subsidiaries as any LC Issuing Bank or any Lender through the Administrative Agent may from time to time reasonably request.

Notwithstanding the foregoing, the information required to be delivered pursuant to clauses (i), (ii) and (iv) shall be deemed to have been delivered if such information shall be available on the website of the SEC at http://www.sec.gov or any successor website;

provided that the compliance certificates required under clauses (i) and (ii) shall be delivered in the manner specified in Section 8.02(b).

(j) Compliance with Anti-Corruption Laws and Sanctions . Maintain in effect and enforce policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.

SECTION 5.02. Negative Covenants.

So long as any Advance or any other amount payable hereunder shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment hereunder, the Borrower agrees that it will not:

(a) Mergers, Etc. Merge or consolidate with or into any Person, or permit any Significant Subsidiary to do so, except that (i) any Subsidiary may merge or consolidate with or into any other Subsidiary of the Borrower, (ii) any Subsidiary may merge into the Borrower, (iii) any Significant Subsidiary may merge with or into any other Person so long as such Significant Subsidiary continues to be a Significant Subsidiary of the Borrower and (iv) the Borrower may merge with any other Person so long as the successor entity (if other than the Borrower) assumes, in form reasonably satisfactory to the Administrative Agent, all of the obligations of the Borrower under this Agreement and the other Loan Documents and has long-term senior unsecured debt ratings issued (and confirmed after giving effect to such merger) by S&P or Moody’s of at least BBB- and Baa3, respectively (or if no such ratings have been issued, commercial paper ratings issued (and confirmed after giving effect to such merger) by S&P and Moody’s of at least A-3 and P-3, respectively), provided , in each case, that no Default shall have occurred and be continuing at the time of such proposed transaction or would result therefrom.

(b) Stock of Significant Subsidiaries. Sell, lease, transfer or otherwise dispose of, other than (i) in connection with an RTO Transaction, but only if no Default or Event of Default has occurred and is continuing or would result from such RTO Transaction, or (ii) pursuant to the requirements of any Restructuring Law, equity interests in any Significant Subsidiary of the Borrower (other than AEP Resources, Inc., AEP Energy Services, Inc. or CSW Energy, Inc.) if such Significant Subsidiary would cease to be a Subsidiary as a result of such sale, lease, transfer or disposition.

(c) Sales, Etc. of Assets . Sell, lease, transfer or otherwise dispose of, or permit any Significant Subsidiary (other than AEP Resources, Inc., AEP Energy Services, Inc. or CSW Energy, Inc.) to sell, lease, transfer or otherwise dispose of, any assets, or grant any option or other right to purchase, lease or otherwise acquire any assets, except (i) sales in the ordinary course of its business, (ii) sales, leases, transfers or dispositions of assets to any Person that is not a wholly-owned Subsidiary of the Borrower that in the aggregate do not exceed 20% of the Consolidated Tangible Net Assets of the Borrower and its Subsidiaries, whether in one transaction or a series of transactions, (iii) other sales, leases, transfers and dispositions made in connection with an RTO Transaction or pursuant to the requirements of any Restructuring Law or to a wholly owned Subsidiary of the Borrower, or (iv) sales of pollution control assets to a state or local government or any political subdivision or agency thereof in connection with any

transaction with such Person pursuant to which such Person sells or otherwise transfers such pollution control assets back to the Borrower or a Subsidiary under an installment sale, loan or similar agreement, in each case in connection with the issuance of pollution control or similar bonds.

(d) Liens, Etc. Create or suffer to exist, or permit any Significant Subsidiary to create or suffer to exist, any Lien on or with respect to any of its properties, including, without limitation, on or with respect to equity interests in any Subsidiary of the Borrower, whether now owned or hereafter acquired, or assign, or permit any Significant Subsidiary to assign, any right to receive income (other than in connection with Stranded Cost Recovery Bonds and the sale of accounts receivable by the Borrower), other than (i) Permitted Liens, (ii) the Liens existing on the date hereof, (iii) Liens securing first mortgage bonds issued by any Subsidiary of the Borrower the rates or charges of which are regulated by the Federal Energy Regulatory Commission or any state governmental authority, provided that the aggregate principal amount of such first mortgage bonds of any such Subsidiary do not exceed 66 2/3% of the net value of plant, property and equipment of such Subsidiary and (iv) the replacement, extension or renewal of any Lien permitted by clauses (ii) and (iii) above upon or in the same property theretofore subject thereto or the replacement, extension or renewal (without increase in the amount or change in any direct or contingent obligor) of the Debt secured thereby.

(e) Restrictive Agreements . Enter into, or permit any Significant Subsidiary to enter into (except in connection with or pursuant to any Restructuring Law), any agreement after the date hereof, or amend, supplement or otherwise modify any agreement existing on the date hereof, that imposes any restriction on the ability of any Significant Subsidiary to make payments, directly or indirectly, to its shareholders by way of dividends, advances, repayment of loans or intercompany charges, expenses and accruals or other returns on investments that is more restrictive than any such restriction applicable to such Significant Subsidiary on the date hereof; provided , however , that any Significant Subsidiary may agree to a financial covenant limiting its ratio of Consolidated Debt to Consolidated Capital to no more than 0.675 to 1.000.

(f) ERISA . (i) Terminate or withdraw from, or permit any of its ERISA Affiliates to terminate or withdraw from, any Plan with respect to which the Borrower or any of its ERISA Affiliates may have any liability by reason of such termination or withdrawal, if such termination or withdrawal could have a Material Adverse Effect, (ii) incur a full or partial withdrawal, or permit any ERISA Affiliate to incur a full or partial withdrawal, from any Multiemployer Plan with respect to which the Borrower or any of its ERISA Affiliates may have any liability by reason of such withdrawal, if such withdrawal could have a Material Adverse Effect, (iii) otherwise fail, or permit any of its ERISA Affiliates to fail, to comply in all material respects with ERISA or the related provisions of the Internal Revenue Code if such noncompliances, singly or in the aggregate, could have a Material Adverse Effect, or (iv) fail, or permit any of its Subsidiaries to fail, to comply with Applicable Law with respect to any Foreign Plan if such noncompliances, singly or in the aggregate, could have a Material Adverse Effect.

(g) Margin Stock . Use the proceeds of any Extension of Credit to buy or carry Margin Stock.

(h) No Violation of Anti-Corruption Laws or Sanctions . Request any Borrowing or Letter of Credit, or use or permit any of its Subsidiaries or its or their respective directors, officers, employees and agents to use, directly or, to the actual knowledge of the Borrower or any of its Subsidiaries, indirectly, any Letter of Credit or the proceeds of any Borrowing or Letter of Credit (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (C) in any manner that would result in the violation of any Sanctions applicable to any party hereto.

SECTION 6.01. Financial Covenant.

So long as any Advance shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment hereunder, the Borrower will maintain a ratio of Consolidated Debt to Consolidated Capital, as of the last day of each March, June, September and December, of not greater than 0.675 to 1.000.

ARTICLE VI

EVENTS OF DEFAULT

SECTION 6.01. Events of Default.

If any of the following events (“ Events of Default ”) shall occur and be continuing:

(a) The Borrower shall fail to pay any principal of any Advance when the same becomes due and payable, or shall fail to pay any interest on any Advance or make any other payment of fees or other amounts payable under this Agreement within five days after the same becomes due and payable; or

(b) Any representation or warranty made by the Borrower herein or by the Borrower (or any of its officers) in connection with this Agreement shall prove to have been incorrect in any material respect when made; or

(c) (i) The Borrower shall fail to perform or observe any term, covenant or agreement contained in Section 5.01(a), 5.01(i)(iii) or 5.02 (other than Section 5.02(f)), or (ii) the Borrower shall fail to provide cash collateral in accordance with Section 2.04(b), 2.09(b), 8.16(a)(v) or 8.17, or (iii) the Borrower shall fail to perform or observe any other term, covenant or agreement contained in this Agreement or any other Loan Document if such failure shall remain unremedied for 30 days after written notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender; or

(d) Any event shall occur or condition shall exist under any agreement or instrument relating to Debt of the Borrower (but excluding Debt outstanding hereunder) or any Significant Subsidiary outstanding in a principal or notional amount of at least $50,000,000 in the aggregate if the effect of such event or condition is to accelerate or require early termination of the maturity or tenor of such Debt, or any such Debt shall be declared to be due and payable, or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), terminated, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt

shall be required to be made, in each case prior to the stated maturity or the original tenor thereof; or

(e) The Borrower or any Significant Subsidiary shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Borrower or any Significant Subsidiary seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 60 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Borrower or any Significant Subsidiary shall take any corporate action to authorize any of the actions set forth above in this subsection (e); or

(f) (i) Any entity, person (within the meaning of Section 14(d) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)) or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) that as of the date hereof was beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of less than 30% of the Borrower’s Voting Stock shall acquire a beneficial ownership (within the meaning of Rule 13d-3 of the SEC under the Exchange Act), directly or indirectly, of Voting Stock of the Borrower (or other securities convertible into such Voting Stock) representing 30% or more of the combined voting power of all Voting Stock of the Borrower; or (ii) during any period of up to 24 consecutive months, commencing after the date hereof, individuals who at the beginning of such 24-month period were directors of the Borrower shall cease for any reason to constitute a majority of the board of directors of the Borrower, provided that any person becoming a director subsequent to the date hereof, whose election, or nomination for election by the Borrower’s shareholders, was approved by a vote of at least a majority of the directors of the board of directors of the Borrower as comprised as of the date hereof (other than the election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Borrower) shall be, for purposes of this provision, considered as though such person were a member of the board as of the date hereof; or

(g) Any judgment or order for the payment of money in excess of $50,000,000 in the case of the Borrower or any Significant Subsidiary to the extent not paid or insured shall be rendered against the Borrower or any Significant Subsidiary and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

(h) (i) The termination of or withdrawal from the United Mine Workers’ of America 1974 Pension Trust by the Borrower or any of its ERISA Affiliates shall have occurred and the liability of the Borrower and its ERISA Affiliates related to such termination or withdrawal

exceeds $75,000,000 in the aggregate; or (ii) any other ERISA Event shall have occurred and the liability of the Borrower and its ERISA Affiliates related to such ERISA Event exceeds $50,000,000;

then, and in any such event, the Administrative Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the obligation of each Lender and each LC Issuing Bank to make Extensions of Credit to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the outstanding Borrowings, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the outstanding Borrowings, all such interest and all such amounts shall become and be forthwith due and payable by the Borrower, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided , however , that in the event of an actual or deemed entry of an order for relief with respect to the Borrower under the Federal Bankruptcy Code, (A) the obligation of each Lender and each LC Issuing Bank to make Extensions of Credit shall automatically be terminated and (B) the outstanding Borrowings, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower.

SECTION 6.02. Actions in Respect of the Letters of Credit upon Default.

If any Event of Default described in Section 6.01(e) shall have occurred and be continuing or the Borrowings shall have otherwise been accelerated or the Commitments terminated pursuant to Section 6.01, then the Administrative Agent may, or shall at the request of the Required Lenders, make demand upon the Borrower to, and forthwith upon such demand the Borrower will, deposit in the LC Collateral Account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders and LC Issuing Banks, in same day funds, an amount equal to 103% of the aggregate undrawn stated amounts of all Letters of Credit that are outstanding on such date. If at any time the Administrative Agent determines that any funds held in the LC Collateral Account are subject to any right or claim of any Person other than the Administrative Agent, the Lenders and the LC Issuing Banks or that the total amount of such funds is less than 103% of the aggregate undrawn stated amounts of all Letters of Credit that are outstanding on such date, the Borrower will, forthwith upon demand by the Administrative Agent, pay to the Administrative Agent, as additional funds to be deposited and held in the LC Collateral Account, an amount equal to the excess of (i) 103% of such aggregate undrawn stated amounts of all Letters of Credit that are outstanding on such date over (ii) the total amount of funds, if any, then held in the LC Collateral Account that the Administrative Agent determines to be free and clear of any such right and claim. Upon the drawing of any Letter of Credit for which funds are on deposit in the LC Collateral Account, such funds shall be applied to reimburse the relevant LC Issuing Bank or Lender holding a participation in the reimbursement obligation of the Borrower to such LC Issuing Bank to the extent permitted by applicable law.

ARTICLE VII

THE ADMINISTRATIVE AGENT

SECTION 7.01. Authorization and Action.

Each Lender and each LC Issuing Bank hereby appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto. As to any matters expressly provided for in this Agreement as being subject to the discretion of the Administrative Agent, such matters shall be subject to the sole discretion of the Administrative Agent, its directors, officers, agents and employees. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the outstanding Borrowings), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding upon all Lenders; provided , however , that the Administrative Agent shall not be required to take any action that exposes the Administrative Agent to personal liability or that is contrary to this Agreement or Applicable Law. The Administrative Agent agrees to give to each Lender prompt notice of each notice given to it by the Borrower pursuant to the terms of this Agreement.

SECTION 7.02. Agent’s Reliance, Etc.

Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their own gross negligence or willful misconduct as determined in a final, non-appealable judgment by a court of competent jurisdiction. Without limitation of the generality of the foregoing, the Administrative Agent: (i) may treat each Lender recorded in the Register as the owner of the Commitment recorded for such Lender in the Register until the Administrative Agent receives and accepts an Assignment and Assumption entered into by such Lender, as assignor, and an Eligible Assignee, as assignee, as provided in Section 8.07 and except as provided otherwise in Section 8.16; (ii) may consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of any Lender or to inspect the property (including the books and records) of any Lender; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, this Agreement or any other instrument or document furnished pursuant thereto; (vi) shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by fax) believed by it to be genuine and signed or sent by the proper party or parties; and (vii) shall not have any fiduciary duty to any other Lender.

SECTION 7.03. Barclays and its Affiliates.

With respect to its Commitments and the Advances made by it, Barclays shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Administrative Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include Barclays in its individual capacity. Barclays and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, any Lender, any of its Subsidiaries and any Person who may do business with or own securities of any Lender or any such Subsidiary, all as if Barclays were not the Administrative Agent and without any duty to account therefor to the Lenders.

SECTION 7.04. Lender Credit Decision.

Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement.

SECTION 7.05 Indemnification.

Each Lender severally agrees to indemnify the Administrative Agent (to the extent not promptly reimbursed by the Borrower and without limiting its obligation to do so) from and against such Lender’s ratable share (determined as provided below) of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the Administrative Agent under this Agreement; provided , however , that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct as determined in a final, non-appealable judgment by a court of competent jurisdiction. Without limitation of the foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon demand for its ratable share of any costs and expenses (including, without limitation, fees and reasonable expenses of counsel) payable by the Borrower under Section 8.04, to the extent that the Administrative Agent is not promptly reimbursed for such costs and expenses by the Borrower after request therefor and without limiting the Borrower’s obligation to do so. For purposes of this Section 7.05, the Lenders’ respective ratable shares of any amount shall be determined, at any time, according to the sum of (i) the aggregate principal amount of the Advances outstanding at such time and owing to the respective Lenders and (ii) the aggregate unused portions of their respective Commitments at such time. In the event that any Lender shall have failed to make any Advance as required hereunder, such Lender’s Commitment shall be considered to be unused for purposes of this Section 7.05 to the extent of the amount of such Advance. The failure of any Lender to reimburse the Administrative Agent promptly upon demand for its ratable share of any amount

required to be paid by the Lender to the Administrative Agent as provided herein shall not relieve any other Lender of its obligation hereunder to reimburse the Administrative Agent for its ratable share of such amount, but no Lender shall be responsible for the failure of any other Lender to reimburse the Administrative Agent for such other Lender’s ratable share of such amount. Without prejudice to the survival of any other agreement of any Lender hereunder, the agreement and obligations of each Lender contained in this Section 7.05 shall survive the payment in full of principal, interest and all other amounts payable hereunder.

SECTION 7.06. Successor Agent.

The Administrative Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower. Upon any such resignation, the Required Lenders shall have the right to appoint a successor Agent to the Administrative Agent that has resigned. If no successor Administrative Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent’s giving of notice of resignation, then such retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which shall be a Lender or an Affiliate of a Lender that is commercial bank organized under the laws of the United States or of any State thereof and having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Agent, such successor Administrative Agent shall succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement.

ARTICLE VIII

MISCELLANEOUS

SECTION 8.01. Amendments, Etc.

Subject to Section 8.16(a)(i), no amendment or waiver of any provision of this Agreement, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders and the Borrower, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however , that no amendment, waiver or consent shall (a) unless in writing and signed by all the Lenders (other than, in the case of the following clauses (i) through (iv), any Defaulting Lender), do any of the following: (i) amend Section 3.01 or 3.02 or waive any of the conditions specified therein, (ii) increase the aggregate amount of the Commitments (except pursuant to Section 2.07), (iii) change the definition of Required Lenders or the percentage of the Commitments or of the aggregate unpaid principal amount of the outstanding Borrowings, or the number or percentage of the Lenders, that shall be required for the Lenders or any of them to take any action hereunder, or (iv) amend or waive this Section 8.01 or any provision of this Agreement that requires pro rata treatment of the Lenders; or (b) unless in writing and signed by each Lender that is directly affected thereby, do any of the following: (1) increase the amount or extend the termination date of such Lender’s Commitment, or subject

such Lender to any additional obligations, (2) reduce the principal of, or interest on, or rate of interest applicable to, the outstanding Advances of such Lender or any fees or other amounts payable to such Lender hereunder, or (3) postpone any date fixed for any payment of principal of, or interest on, the outstanding Advances or any fees or other amounts payable to such Lender hereunder; and provided further that (x) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent or any LC Issuing Bank in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent or such LC Issuing Bank, as the case may be, under this Agreement, and (y) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent, each LC Issuing Bank and the Required Lenders, amend or waive Section 8.16. Notwithstanding the foregoing, any provision of this Agreement may be amended by an agreement in writing entered into by the Borrower, the Required Lenders and the Administrative Agent if (i) by the terms of such agreement the Commitment of each Lender and the obligations of each LC Issuing Bank not consenting to the amendment provided for therein shall terminate (but such Lender or LC Issuing Bank shall continue to be entitled to the benefits of Sections 2.15, 2.18 and 8.04) upon the effectiveness of such amendment and (ii) at the time such amendment becomes effective, each Lender or LC Issuing Bank not consenting thereto receives payment in full of the principal outstanding amount of and interest accrued on each Advance made by it or any Letter of Credit issued by it and outstanding, as the case may be, and all other amounts owing to it or accrued for its account under this Agreement and is released from its obligations hereunder.

SECTION 8.02. Notices, Etc.

(a) The Borrower hereby agrees that any notice that is required to be delivered to it hereunder shall be delivered to the Borrower as set forth in this Section 8.02. All notices and other communications provided for hereunder shall be in writing (including fax) and mailed, faxed or delivered, if to the Borrower at its address at 1 Riverside Plaza, Columbus, Ohio 43215, Attention: Treasurer (fax: (614) 716-2807; telephone: (614) 716-2885; email: jsloat@aep.com), with a copy to the General Counsel (fax: (614) 716-1687; telephone: (614) 716-2929); if to any Initial Lender, at its Domestic Lending Office specified in its Administrative Questionnaire; if to any other Lender, at its Domestic Lending Office specified in the Assignment and Assumption pursuant to which it became a Lender; if to the Administrative Agent, at its address at (i) 745 7 ^th Avenue, New York, NY 10019, Attention: Christopher Aitkin, Barclays Bank PLC (fax: (917) 522-0569; telephone: (212) 320-6564; email: xrausloanops5@barclays.com ), (ii) for notices and communications relating to compliance with the covenants hereunder, 745 7 ^th Avenue, 27th Floor, New York, NY 10019, Attention: Alicia Borys, Barclays Bank PLC (fax: 212-526-5115; telephone: 212-526-4291; email: Alicia.Borys@barclays.com ); if to any LC Issuing Bank, at 200 Park Avenue, New York, NY 10166, Attention: Letters of Credit/Dawn Townsend (fax: 212-412-5011; telephone: (201) 499-2081; email: xraletterofcredit@barclays.com ) or such address as shall be designated by such LC Issuing Bank and notified to the Lenders pursuant to Section 2.04; or, as to the Borrower or the Administrative Agent, at such other address as shall be designated by such party in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to the Borrower and the Administrative Agent. All such notices and communications shall be effective when delivered or received at the appropriate address or number to the attention of the appropriate individual or department, except that notices and communications to the Administrative Agent pursuant to Article II, III or VII shall not be effective until received by the Administrative Agent.

Delivery by fax of an executed counterpart of any amendment or waiver of any provision of this Agreement or of any Exhibit hereto to be executed and delivered hereunder shall be effective as delivery of a manually executed counterpart thereof.

(b) The Borrower and the Lenders hereby agree that the Administrative Agent may make any information required to be delivered under Section 5.01(i)(i), (ii), (iv) and (v) (the “ Communications ”) available to the Lenders by posting the Communications on Intralinks, SyndTrak or a substantially similar electronic transmission systems (the “ Platform ”). The Borrower and the Lenders hereby acknowledge that the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution.

(c) THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE AGENT PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES (COLLECTIVELY, “ AGENT PARTIES ”) HAVE ANY LIABILITY TO THE BORROWER, ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE BORROWER’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH AGENT PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

The Administrative Agent agrees that the receipt of the Communications by the Administrative Agent at its e-mail address set forth above shall constitute effective delivery of the Communications to the Administrative Agent for purposes of the Loan Documents. Each Lender agrees that notice to it (as provided in the next sentence) specifying that the Communications have been posted to the Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Loan Documents. Each Lender agrees (i) to notify the Administrative Agent in writing (including by electronic communication) from time to time of such Lender’s e-mail address to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such e-mail address.

Nothing herein shall prejudice the right of the Administrative Agent or any Lender to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.

SECTION 8.03. No Waiver; Remedies.

No failure on the part of any Lender or the Administrative Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

SECTION 8.04. Costs and Expenses.

(a) The Borrower agrees to pay promptly upon demand all reasonable out-of-pocket costs and expenses of the Administrative Agent in connection with the preparation, execution, delivery, administration, modification and amendment of this Agreement and the other documents to be delivered hereunder, including, without limitation, (i) all due diligence, syndication (including printing, distribution and bank meetings), transportation, computer, duplication, appraisal, consultant, and audit expenses and (ii) the reasonable fees and expenses of counsel for the Administrative Agent with respect thereto and with respect to advising the Administrative Agent as to its rights and responsibilities under this Agreement. The Borrower further agrees to pay promptly upon demand all costs and expenses of the Administrative Agent and the Lenders, if any (including, without limitation, counsel fees and expenses), in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement and the other documents to be delivered hereunder, including, without limitation, reasonable fees and expenses of counsel for the Administrative Agent, LC Issuing Banks and the Lenders in connection with the enforcement of rights under this Section 8.04(a).

(b) The Borrower agrees to indemnify and hold harmless each Lender, each LC Issuing Bank, and the Administrative Agent and each of their Related Parties (each, an “ Indemnified Party ”) from and against any and all claims, damages, losses and liabilities, joint or several, to which any such Indemnified Party may become subject, in each case arising out of or in connection with or relating to (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) (i) this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Extensions of Credit (ii) any error or omission in connection with posting of the data required to be delivered pursuant to Section 5.01(i)(i), (ii) or (iv) on the website of the SEC or any successor website or (iii) the actual or alleged presence of Hazardous Materials on any property of the Borrower or any of its Subsidiaries or any Environmental Action relating in any way to the Borrower or any of its Subsidiaries, and to reimburse any Indemnified Party for any and all reasonable expenses (including, without limitation, reasonable fees and expenses of counsel) as they are incurred in connection with the investigation of or preparation for or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party and whether or not such claim, action or proceeding is initiated or brought by or on behalf of the Borrower or any of its Affiliates and whether or not any of the transactions contemplated hereby are consummated or this Agreement is terminated, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 8.04(b) applies, such indemnity shall be

effective whether or not such investigation, litigation or proceeding is brought by the Borrower, its directors, shareholders or creditors or an Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. The Borrower agrees not to assert any claim against any Indemnified Party on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Extensions of Credit.

(c) If any payment of principal of, or Conversion of, any Eurodollar Rate Advance is made by the Borrower to or for the account of a Lender other than on the last day of the Interest Period for such Advance, as a result of a payment or Conversion pursuant to Section 2.09, 2.12(d), 2.15 or 2.17, acceleration of the maturity of the outstanding Borrowings pursuant to Section 6.01, the assignment of any such Advance pursuant to Section 2.20(b) or for any other reason (in the case of any such payment or Conversion), the Borrower shall, promptly upon demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that it may reasonably incur as a result of such payment or Conversion, including, without limitation, any loss (other than loss of Applicable Margin), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Advance.

(d) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in Sections 2.15 and 8.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder.

(e) The Borrower agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Borrower or its security holders or creditors related to or arising out of or in connection with this Agreement, the Extensions of Credit or the use or proposed use of the proceeds thereof, any of the transactions contemplated by any of the foregoing or in the loan documentation or the performance by an Indemnified Party of any of the foregoing (including the use by unintended recipients of any information or other materials distributed through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents) except to the extent that any loss, claim, damage, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct.

(f) In the event that an Indemnified Party is requested or required to appear as a witness in any action brought by or on behalf of or against the Borrower or any of its Affiliates in which such Indemnified Party is not named as a defendant, the Borrower agrees to reimburse such Indemnified Party for all reasonable expenses incurred by it in connection with such Indemnified Party’s appearing and preparing to appear as such a witness, including, without limitation, the fees and disbursements of its legal counsel.

SECTION 8.05. Right of Set-off.

Upon (i) the occurrence and during the continuance of any Event of Default and (ii) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Administrative Agent to declare the outstanding Borrowings due and payable pursuant to the provisions of Section 6.01, each Credit Party and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Credit Party or such Affiliate to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement held by such Credit Party, whether or not such Credit Party shall have made any demand under this Agreement and although such obligations may be unmatured; provided that, in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 8.16 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent, the LC Issuing Banks, and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the obligations of the Borrower owing to such Defaulting Lender as to which it exercised such right of setoff. Each Credit Party agrees promptly to notify the Borrower after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Credit Party and its Affiliates under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Credit Party and its Affiliates may have.

SECTION 8.06. Binding Effect.

This Agreement shall become effective upon satisfaction of the conditions precedent specified in Section 3.01 and thereafter shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent, each Lender and each LC Issuing Bank (upon its appointment pursuant to Section 2.04(a)) and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of all of the Lenders. None of the Joint Lead Arrangers nor any Person designated as a “Documentation Agent” or a “Syndication Agent” with respect to this Agreement shall have any duties under this Agreement.

SECTION 8.07. Assignments and Participations.

(a) Successors and Assigns of Lenders Generally . No Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (e) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated

hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Assignments by Lenders . Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Advances at the time owing to it); provided that any such assignment shall be subject to the following conditions:

(i) Minimum Amounts .

(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and/or the Advances at the time owing to it or contemporaneous assignments to related Approved Funds (determined after giving effect to such assignments) that equal at least the amount specified in subsection (b)(i)(B) of this Section in the aggregate or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

(B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Advances outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Advances of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if the “ Trade Date ” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $10,000,000, or an integral multiple of $1,000,000 in excess thereof, unless each of the Administrative Agent and, so long as no Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed).

(ii) Proportionate Amounts . Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Advances or the Commitment assigned.

(iii) Required Consents . No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

(A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) a Default has occurred and is continuing at the time of such assignment, or (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten Business Days after having received notice thereof;

(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments if such

assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender; and

(iv) Assignment and Assumption . The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500 (to be paid by the assigning Lender, or, in the case of an assignment pursuant to Section 2.20(b), the Borrower); provided that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment . The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

(v) No Assignment to Certain Persons . No such assignment shall be made to (A) the Borrower or any of the Borrower’s Affiliates or Subsidiaries or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute a Defaulting Lender or a Subsidiary thereof.

(vi) No Assignment to Natural Persons . No such assignment shall be made to a natural Person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person).

(vii) Certain Additional Payments . In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Advances previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent and each Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) its full pro rata share of all Advances and Commitments in accordance with its Commitment Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under Applicable Law without compliance with the provisions of this subsection, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.15, 2.18 and 8.04 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided , that except to the extent otherwise expressly agreed in writing by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

(c) Register . The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at its address referred to in Section 8.02 a copy of each Assignment and Assumption delivered to it and a register in which it shall record the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Advances owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d) Participations . Any Lender may at any time, without the consent of, or notice to, the Borrower, the Administrative Agent, or any LC Issuing Bank, sell participations to any Person (other than a natural Person, or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person, or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “ Participant ”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Advances owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (iii) the Borrower, the Administrative Agent, the LC Issuing Banks and Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 7.05 with respect to any payments made by such Lender to its Participant(s).

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in clauses (ii), (iii) or (iv) of the first sentence of Section 8.01 that affects such Participant The Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.15, 2.18, 8.04(b) and 8.04(c) (subject to the requirements and limitations therein, including the requirements under Section 2.18(g) (it being understood that the documentation required under Section 2.18(g) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had

acquired its interest by assignment pursuant to subsection (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Section 2.20(b) as if it were an assignee under subsection (b) of this Section; and (B) shall not be entitled to receive any greater payment under Sections 2.15 or 2.18, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 2.20(b) with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 8.05 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.18 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Commitments, Advances or other obligations under the Loan Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Advances, Letters of Credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Commitments, Advances, Letters of Credit or other obligations are in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

(e) Certain Pledges . Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or other central banking authority; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

SECTION 8.08. Confidentiality.

Each of the Administrative Agent, the Lenders and the LC Issuing Banks agree to maintain the confidentiality of the Confidential Information, except that Confidential Information may be disclosed (a) to its Affiliates and to its Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Confidential Information and instructed to keep such Confidential Information confidential); (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any state, federal or foreign authority or examiner regulating banks, banking or other financial institutions and any self-regulatory authority, such as the National Association of Insurance Commissioners); (c) to the extent required by Applicable Law or by any subpoena or similar legal process; (d) to any other party hereto; (e) in connection with the exercise of any remedies hereunder or under any other

Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder; (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement, (ii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrower and its obligations, this Agreement or payments hereunder or (iii) any credit insurance provider relating to the Borrower and its obligations; (g) on a confidential basis to (i) any rating agency in connection with rating the Borrower or its Subsidiaries or this Agreement or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to this Agreement; (h) with the consent of the Borrower; or (i) to the extent such Confidential Information (x) becomes publicly available other than as a result of a breach of this Section, or (y) becomes available to the Administrative Agent, any Lender, and LC Issuing Bank or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower. In addition, the Administrative Agent and the Lenders may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry and service providers to the Administrative Agent and the Lenders in connection with the administration of this Agreement, the other Loan Documents and the Commitments. Any Person required to maintain the confidentiality of Confidential Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Confidential Information as such Person would accord to its own confidential information.

SECTION 8.09. Governing Law.

This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

SECTION 8.10. Severability; Survival.

(a) In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired hereby.

(b) All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Advances and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, the LC Issuing Banks or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Advance or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated.

SECTION 8.11. Execution in Counterparts.

This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by fax shall be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 8.12. Jurisdiction, Etc.

(a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, the County of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement in the courts of any jurisdiction.

(b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York State or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

SECTION 8.13. Waiver of Jury Trial.

Each of the Borrower, the Administrative Agent, each LC Issuing Bank and each Lender hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Agreement or the actions of the Administrative Agent, any LC

Issuing Bank, the Borrower or any Lender in the negotiation, administration, performance or enforcement thereof.

SECTION 8.14. USA Patriot Act.

Each of the Lenders and the LC Issuing Banks hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law as of October 26, 2001)) (as amended, restated, modified or otherwise supplemented from time to time, the “ Patriot Act ”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or LC Issuing Bank, as the case may be, to identify the Borrower in accordance with the Patriot Act.

SECTION 8.15. No Fiduciary Duty.

Each of the Administrative Agent, each Lender and each of their respective Affiliates and their officers, directors, controlling persons, employees, agents and advisors (collectively, solely for purposes of this Section 8.15, the “Lenders”) may have economic interests that conflict with those of the Borrower. The Borrower agrees that nothing in the Loan Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between the Lenders and the Borrower, its stockholders or its Affiliates. The Borrower acknowledges and agrees that (i) the transactions contemplated by the Loan Documents are arm’s-length commercial transactions between the Lenders, on the one hand, and the Borrower, on the other, (ii) in connection therewith and with the process leading to such transaction each of the Lenders is acting solely as a principal and not the agent or fiduciary of the Borrower, its management, stockholders, creditors or any other person, (iii) no Lender has assumed an advisory or fiduciary responsibility in favor of the Borrower with respect to the transactions contemplated hereby or the process leading thereto (irrespective of whether any Lender or any of its Affiliates has advised or is currently advising the Borrower on other matters) or any other obligation to the Borrower except the obligations expressly set forth in the Loan Documents and (iv) the Borrower has consulted its own legal and financial advisors to the extent it deemed appropriate. The Borrower further acknowledges and agrees that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto. The Borrower agrees that it will not claim that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Borrower, in connection with such transaction or the process leading thereto.

SECTION 8.16. Defaulting Lenders.

(a) Defaulting Lender Adjustments . Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by Applicable Law:

(i) Waivers and Amendments . Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of Required Lenders and in Section 8.01.

(ii) Defaulting Lender Waterfall . Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VI or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 8.05 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first , to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second , to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to any LC Issuing Bank hereunder; third , to Cash Collateralize the LC Issuing Banks’ Fronting Exposure with respect to such Defaulting Lender in accordance with Section 8.17; fourth , as the Borrower may request (so long as no Default exists), to the funding of any Advance in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth , if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Advances under this Agreement and (y) Cash Collateralize the LC Issuing Banks’ future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with Section 8.17; sixth , to the payment of any amounts owing to the Lenders or the LC Issuing Banks as a result of any judgment of a court of competent jurisdiction obtained by any Lender or the LC Issuing Banks against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh , so long as no Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender's breach of its obligations under this Agreement; and eighth , to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that, if (x) such payment is a payment of the principal amount of any Advances or LC Outstandings in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Advances were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 3.02 were satisfied or waived, such payment shall be applied solely to pay the Advances of, and LC Outstandings owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Advances of, or LC Outstandings owed to, such Defaulting Lender until such time as all Advances and funded and unfunded participations in LC Outstandings are held by the Lenders pro rata in accordance with the Commitments without giving effect to Section 8.16(a)(iv). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 8.16(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(iii) Certain Fees . (A) No Defaulting Lender shall be entitled to receive any commitment fee pursuant to Section 2.05(a) for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).

(B) Each Defaulting Lender shall be entitled to receive LC Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Commitment Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 8.17.

(C) With respect to any LC Fee not required to be paid to any Defaulting Lender pursuant to clause (B) above, the Borrower shall (x) pay to each Non-Defaulting Lender that portion of any such LC Fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in LC Outstandings that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to each LC Issuing Bank the amount of any such LC Fee otherwise payable to such Defaulting Lender to the extent allocable to such LC Issuing Bank’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such LC Fee.

(iv) Reallocation of Participations to Reduce Fronting Exposure . All or any part of such Defaulting Lender’s participation in LC Outstandings shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Commitment Percentages (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that (x) such reallocation does not cause the aggregate Outstanding Credits of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Commitment and (y) such reallocation does not cause the aggregate Outstanding Credits to exceed the aggregate Commitments. No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.

(v) Cash Collateral . If the reallocation described in clause (iv) above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under law, Cash Collateralize the LC Issuing Banks’ Fronting Exposure in accordance with the procedures set forth in Section 8.17.

(vi) Reduction of Available Commitments . The Borrower may terminate the Available Commitment of any Lender that is a Defaulting Lender upon not less than three Business Days’ prior notice to the Administrative Agent (which shall promptly notify the Lenders thereof), and in such event the provisions of Section 8.16(a)(ii) will apply to all amounts thereafter paid by the Borrower for the account of such Defaulting Lender under this Agreement (whether on account of principal, interest, fees, indemnity or other amounts); provided that (i) no Event of Default shall have occurred and be continuing, and (ii) such termination shall not be deemed to be a waiver or release of any claim the Borrower, the Administrative Agent, any LC Issuing Bank, or any Lender may have against such Defaulting Lender.

(b) Defaulting Lender Cure . If the Borrower, the Administrative Agent, and each LC Issuing Bank agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Advances of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Advances and funded and unfunded participations in LC Outstandings to be held pro rata by the Lenders in accordance with the Commitments (without giving effect to Section 8.16(a)(iv)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided , further , that except to the extent otherwise expressly agreed in writing by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

(c) New Letters of Credit . So long as any Lender is a Defaulting Lender, no LC Issuing Bank shall be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto.

(d) Bankruptcy Event of a Parent Company . If (i) a Bankruptcy Event with respect to a Parent of any Lender shall occur following the date hereof and for so long as such event shall continue or (ii) any LC Issuing Bank has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, no LC Issuing Bank shall be required to issue, amend or increase any Letter of Credit, unless the LC Issuing Bank shall have entered into arrangements with the Borrower or such Lender, satisfactory to such LC Issuing Bank to defease any risk to it in respect of such Lender hereunder.

SECTION 8.17. Cash Collateral

At any time that there shall exist a Defaulting Lender, within one Business Day following the written request of the Administrative Agent or any LC Issuing Bank (with a copy to the Administrative Agent) the Borrower shall Cash Collateralize the LC Issuing Banks’ Fronting Exposure with respect to such Defaulting Lender (determined after giving effect to Section 8.16(a)(iv) and any Cash Collateral provided by such Defaulting Lender) in an amount not less than the Minimum Collateral Amount.

(i) Grant of Security Interest . The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to the Administrative Agent, for the benefit of the LC Issuing Banks, and agrees to maintain, a first priority security interest in all such Cash Collateral as security for the Defaulting Lenders’ obligation to fund participations in respect of LC Outstandings, to be applied pursuant to paragraph (ii) below. If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent and the LC Issuing Banks as herein provided, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Borrower will, promptly

upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency (after giving effect to any Cash Collateral provided by the Defaulting Lender).

(ii) Application . Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under this Section 8.17 or Section 8.16 in respect of Letters of Credit shall be applied to the satisfaction of the Defaulting Lender’s obligation to fund participations in respect of LC Outstandings (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.

(iii) Termination of Requirement . Cash Collateral (or the appropriate portion thereof) provided to reduce any LC Issuing Bank’s Fronting Exposure shall no longer be required to be held as Cash Collateral pursuant to this Section 8.17 following (i) the elimination of the applicable Fronting Exposure (including by the termination of Defaulting Lender status of the applicable Lender), or (ii) the determination by the Administrative Agent and each LC Issuing Bank that there exists excess Cash Collateral; provided that, subject to Section 8.16, the Person providing Cash Collateral and each LC Issuing Bank may agree that Cash Collateral shall be held to support future anticipated Fronting Exposure or other obligations.

SECTION 8.18. Reallocations.

The Administrative Agent, the Borrower and each Lender agree that upon the effectiveness of this Agreement on the Restatement Effective Date, the amount of such Lender’s Commitment is as set forth on Schedule I hereto. Simultaneously with the effectiveness of this Agreement on the Restatement Effective Date, the Commitments of each of the Lenders, the outstanding amount of all Advances and the participations of the Lenders in outstanding Letters of Credit shall be reallocated among the Lenders in accordance with their respective Commitment Percentages (determined in accordance with the amount of each Lender’s Commitment set forth on Schedule I hereto), and in order to effect such reallocations, each Lender whose Commitment is in an amount that exceeds the amount of its “Commitment” under the Existing Credit Agreement (each an “ Assignee Lender ”) shall be deemed to have purchased all right, title and interest in, and all obligations in respect of, the Commitments of the Lenders whose Commitments are less than their respective “Commitments” under the Existing Credit Agreement (each an “ Assignor Lender ”), so that the Commitments of each Lender will be as set forth on Schedule I hereto. Such purchases shall be deemed to have been effected by way of, and subject to the terms and conditions of, Assignment and Assumptions without the payment of any related assignment fee, and, except for any requested replacement promissory notes to be provided to the Assignor Lenders and Assignee Lenders in the principal amounts of their respective Commitments, no other documents or instruments shall be, or shall be required to be, executed in connection with such assignments (all of which are hereby waived). The Assignor Lenders and Assignee Lenders shall make such cash settlements among themselves, through the Administrative Agent, as the Administrative Agent may direct (after giving effect to any netting effected by the Administrative Agent) with respect to such reallocations and assignments.

SECTION 8.19. Amendment and Restatement of Existing Credit Agreement This Agreement continues in effect the Existing Credit Agreement, and the Existing Credit Agreement shall be amended and restated in its entirety by the terms and provisions of this Agreement, which shall supersede all terms and provisions of the Existing Credit Agreement effective from and after the Restatement Effective Date. This Agreement is not intended to, and shall not, constitute a novation of any indebtedness or other obligations owing by the Borrower under the Existing Credit Agreement or a waiver or release of any indebtedness or other obligations owing, or any “Defaults” or “Events of Default” (each as defined in the Existing Credit Agreement) existing, under the Existing Credit Agreement based on any facts or events occurring or existing at or prior to the execution and delivery of this Agreement. On the Restatement Effective Date, the credit facilities described in the Existing Credit Agreement shall be amended, supplemented, modified and restated in their entirety by the credit facilities described herein, and all “Outstanding Credits” (as defined in the Existing Credit Agreement) of the Borrower that are not being paid on such date and remain outstanding as of such date under the Existing Credit Agreement, shall be deemed to be Outstanding Credits under the corresponding facilities described herein, without further action by any Person, except as provided in Section 8.18.

[Remainder of page intentionally left blank.]

S-1

IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written.



	AMERICAN ELECTRIC POWER
	COMPANY, INC.
	as Borrower

	By:	/s/ Julia A. Sloat
	Name:	Julia A. Sloat
	Title:	Treasurer

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-2



	BARCLAYS BANK PLC
	as Administrative Agent, an LC Issuing Bank and a
	Lender

	By:	/s/ Ann E. Sutton
	Name:	Ann E. Sutton
	Title:	Director

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-3



	WELLS FARGO BANK, NATIONAL
	ASSOCIATION
	as an LC Issuing Bank and a Lender

	By:	/s/ Nick Brokke
	Name:	Nick Brokke
	Title:	Vice President

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-4



	BANK OF TOKYO-MITSUBISHI UFJ, LTD.
	as an LC Issuing Bank and a Lender


	By:	/s/ Chi-Cheng Chen
	Name:	Chi-Cheng Chen
	Title:	Director

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-5



	CREDIT SUISSE AG, CAYMAN ISLANDS
	BRANCH
	as an LC Issuing Bank and a Lender


	By:	/s/ Michael Spaight
	Name:	Michael Spaight
	Title:	Authorized Signatory


	By:	/s/ Remy Riester
	Name:	Remy Riester
	Title:	Authorized Signatory

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-6



	JPMORGAN CHASE BANK, N.A.
	as a Lender


	By:	/s/ Bridget Killackey
	Name:	Bridget Killackey
	Title:	Vice President

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-7



	CITIBANK, N.A.
	as a Lender


	By:	/s/ Amit Vasani
	Name:	Amit Vasani
	Title:	Vice President

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-8



	KEYBANK NATIONAL ASSOCIATION
	as a Lender


	By:	/s/ Sherrie I. Manson
	Name:	Sherrie I. Manson
	Title:	Senior Vice President

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-9



	THE ROYAL BANK OF SCOTLAND PLC
	as a Lender


	By:	/s/ Emily Freedman
	Name:	Emily Freedman
	Title:	Vice President

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-10



	BANK OF AMERICA, N.A.
	as a Lender


	By:	/s/ Jerry Wells
	Name:	Jerry Wells
	Title:	Vice President

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-11



	BNP PARIBAS
	as a Lendor


	By:	/s/ Dennis O'Meara
	Name:	Denis O'Meara
	Title:	Managing Director


	By:	/s/ Roberto Impeduglia
	Name:	Roberto Impeduglia
	Title:	Vice President

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-12



	CREDIT AGRICOLE CORPORATE AND
	INVESTMENT BANK
	as a Lendor


	By:	/s/ Darrell Stanley
	Name:	Darrell Stanley
	Title:	Managing Director


	By:	/s/ Michael Willis
	Name:	Michael Willis
	Title:	Managing Director

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-13



	GOLDMAN SACHS BANK USA
	as a Lender


	By:	/s/ Rebecca Kratz
	Name:	Rebecca Kratz
	Title:	Authorized Signatory

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-14



	MIZUHO CORPORATE BANK, LTD.
	as a Lender


	By:	/s/ Leon Mo
	Name:	Leon Mo
	Title:	Authorized Signatory

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-15



	MORGAN STANLEY BANK, N.A.
	as a Lender


	By:	/s/ Michael King
	Name:	Michael King
	Title:	Authorized Signatory

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-16



	ROYAL BANK OF CANADA
	as a Lender


	By:	/s/ Frank Lambrinos
	Name:	Frank Lambrinos
	Title:	Authorized Signatory

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-17



	SUNTRUST BANK
	as a Lender


	By:	/s/ Andrew Johnson
	Name:	Andrew Johnson
	Title:	Director

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-18



	THE BANK OF NEW YORK MELLON
	as a Lender


	By:	/s/ Hussam S. Alsahlani
	Name:	Hussam S. Alsahlani
	Title:	Vice President

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-19



	THE BANK OF NOVA SCOTIA
	as a Lender


	By:	/s/ Thane Rattew
	Name:	Thane Rattew
	Title:	Managing Director

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-20



	U.S. BANK NATIONAL ASSOCIATION
	as a Lender


	By:	/s/ Eric J. Cosgrove
	Name:	Eric J. Cosgrove
	Title:	Vice President

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-21



	UBS AG, STAMFORD BRANCH
	as a Lendor


	By:	/s/ Lana Gifas
	Name:	Lana Gifas
	Title:	Director


	By:	/s/ Jennifer Anderson
	Name:	Jennifer Anderson
	Title:	Associate Director

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-22



	COMPASS BANK
	as a Lender


	By:	/s/ Michael Dixon
	Name:	Michael Dixon
	Title:	Sr. Vice President

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-23



	FIFTH THIRD BANK
	as a Lender


	By:	/s/ Michael J. Schaltz, Jr.
	Name:	Michael J. Schaltz, Jr.
	Title:	Vice President

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-24



	PNC BANK, NATIONAL ASSOCIATION
	as a Lender


	By:	/s/ Thomas E. Redmond
	Name:	Thomas E. Redmond
	Title:	Senior Vice President

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-25



	SUMITOMO MITSUI BANKING
	CORPORATION
	as a Lender


	By:	/s/ James D. Weinstein
	Name:	James D. Weinstein
	Title:	Managing Director

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-26



	THE HUNTINGTON NATIONAL BANK
	as a Lender


	By:	/s/ Dan Swanson
	Name:	Dan Swanson
	Title:	Staff Officer

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

S-27



	THE NORTHERN TRUST COMPANY
	as a Lender


	By:	/s/ John D. Lejto
	Name:	John D. Lejto
	Title:	Vice President

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

EXHIBIT A

(to the Credit Agreement)

FORM OF NOTICE OF BORROWING

Barclays Bank PLC, as Administrative Agent

for the Lenders party

to the Credit Agreement

referred to below

Attention: Bank Loan Syndications

[Date]

Ladies and Gentlemen:

The undersigned, American Electric Power Company, Inc., refers to the Second Amended and Restated Credit Agreement, dated as of November 10, 2014 (as amended or modified from time to time, the “ Credit Agreement ,” the terms defined therein being used herein as therein defined), among the undersigned, the Lenders party thereto, the LC Issuing Banks party thereto and Barclays Bank PLC, as Administrative Agent for said Lenders and LC Issuing Banks, and hereby gives you notice, irrevocably, pursuant to Section 2.02(a) of the Credit Agreement that the undersigned hereby requests a Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Borrowing (the “ Proposed Borrowing ”) as required by Section 2.02(a) of the Credit Agreement:

(i) The Business Day of the Proposed Borrowing is __________________, 20__.

(ii) [The Type of Advances comprising the Proposed Borrowing is [Base Rate Advances][Eurodollar Rate Advances].]

(iii) The aggregate amount of the Proposed Borrowing is $___________________.

[(iv) The initial Interest Period for each Eurodollar Rate Advance made as part of the Proposed Borrowing is [[one][two][three][six] month[s]] [OTHER PERIOD OF LESS THAN ONE MONTH AGREED TO BY ALL LENDERS].]

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing:

(A) the representations and warranties contained in Section 4.01 of the Credit Agreement (other than Section 4.01(e) and the last sentence of Section 4.01(f)) are true and correct in all material respects on and as of the date hereof, before and after giving

A-2

effect to the Proposed Borrowing and to the application of the proceeds therefrom, as though made on the date hereof; and

(B) no event has occurred and is continuing, or would result from the Proposed Borrowing or from the application of the proceeds therefrom, that constitutes a Default.

Very truly yours,

AMERICAN ELECTRIC POWER COMPANY, INC.

By:_________

Name:

Title:

Exhibit A

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

EXHIBIT B

(to the Credit Agreement)

FORM OF REQUEST FOR ISSUANCE

Barclays Bank PLC, as Administrative Agent

for the Lenders party

to the Credit Agreement

referred to below

Attention: Bank Loan Syndications

[ ], as LC Issuing Bank

[Date]

Ladies and Gentlemen:

The undersigned, American Electric Power Company, Inc., refers to the Second Amended and Restated Credit Agreement, dated as of November 10, 2014 (as amended or modified from time to time, the “ Credit Agreement ,” the terms defined therein being used herein as therein defined), among the undersigned, the Lenders party thereto, the LC Issuing Banks party thereto and Barclays Bank PLC, as Administrative Agent for said Lenders and LC Issuing Banks, and hereby gives you notice pursuant to Section 2.04(b) of the Credit Agreement that the undersigned hereby requests the issuance of a Letter of Credit (the “ Requested Letter of Credit ”) in accordance with the following terms:

(i) the LC Issuing Bank is _____________;

(ii) the requested date of [issuance] [extension] [modification] [amendment] of the Requested Letter of Credit (which is a Business Day) is _____________;

(iii) the expiration date of the Requested Letter of Credit requested hereby is ___________; ¹

(iv) the proposed stated amount of the Requested Letter of Credit is _______________; ²

(v) the beneficiary of the Requested Letter of Credit is _____________, with an address at ______________; and

(vi) the conditions under which a drawing may be made under the Requested Letter of Credit are as follows: ___________________; and




	¹ Date may not be more than one year after the date specified in clause (ii).
	² Must be minimum of $100,000.

B-2


(vi)	any other additional conditions are as follows: ___________________.

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the [issuance] [extension] [modification] [amendment] of the Requested Letter of Credit:

(A) the representations and warranties contained in Section 4.01 of the Credit (other than Section 4.01 (e) and the last sentence of Section 4.01(f)) are true and correct in all material respects on and as of the date hereof, before and after giving effect to the [issuance] [extension] [modification] [amendment] of the Requested Letter of Credit and to the application of the proceeds therefrom, as though made on and as of the date hereof; and

(B) no event has occurred and is continuing, or would result from the [issuance] [extension] [modification] [amendment] of the Requested Letter of Credit or from the application of the proceeds therefrom, that constitutes a Default.

AMERICAN ELECTRIC POWER COMPANY, INC.

By:_________

Name:

Title:

Exhibit B

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

EXHIBIT C

(to the Credit Agreement)

FORM OF ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (the “ Assignment and Assumption ”) is dated as of the Effective Date set forth below and is entered into by and between [the][each] ¹ Assignor identified in item 1 below ([the][each, an] “ Assignor ”) and [the][each] ² Assignee identified in item 2 below ([the][each, an] “ Assignee ”). [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees] ³ hereunder are several and not joint.] ⁴ Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “ Credit Agreement ”), receipt of a copy of which is hereby acknowledged by [the][each] Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the Credit Agreement, and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an] “ Assigned Interest ”). Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by [the][any] Assignor.




1	For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language. If the assignment is from multiple Assignors, choose the second bracketed language.
2	For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the second bracketed language.
3	Select as appropriate.
4	Include bracketed language if there are either multiple Assignors or multiple Assignees.

C-2



1. Assignor[s]:

2. Assignee[s]:

[Assignee is an [Affiliate][Approved Fund] of [ identify Lender ]

3. Borrower(s):		American Electric Power Company, Inc.
4. Administrative Agent:		Barclays Bank PLC, as the Administrative Agent under the Credit Agreement
5. Credit Agreement:		The $1,750,000,000 Second Amended and Restated Credit Agreement dated as of November 10, 2014 among American Electric Power Company, Inc., as the Borrower, the Lenders parties thereto, the LC Issuing Banks parties thereto and Barclays Bank PLC, as Administrative Agent


6.	Assigned Interest[s]:



Assignor[s] ⁵	Assignee[s] ⁶	Aggregate Amount of Commitment/Advances for all Lenders ⁷	Amount of Commitment/Advances Assigned ⁸	Percentage Assigned of Commitment/Advances ⁸	CUSIP Number
		$	$	%
		$	$	%
		$	$	%

[7. Trade Date: ______________] ⁹

[Page break]




5	List each Assignor, as appropriate.
6	List each Assignee, as appropriate.
7	Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.
8	Set forth, to at least 9 decimals, as a percentage of the Commitment/Advances of all Lenders thereunder.
9	To be completed if the Assignor and the Assignee(s) intend that the minimum assignment amount is to be determined as of the Trade Date.

EXHIBIT C

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

C-3

Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR[S] ¹⁰

[NAME OF ASSIGNOR]


By:	_____________

Title:

[NAME OF ASSIGNOR]


By:	_____________

Title:

ASSIGNEE[S] ¹¹

[NAME OF ASSIGNEE]


By:	_____________

Title:

[NAME OF ASSIGNEE]


By:	_____________

Title:




10	Add additional signature blocks as needed.
11	Add additional signature blocks as needed.

EXHIBIT C

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

C-4

[Consented to and] ¹² Accepted:

BARCLAYS BANK PLC, as

Administrative Agent

By: ______________________

Title:

Consented to:

BARCLAYS BANK PLC, as

an LC Issuing Bank

By: ______________________

Title:

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., as

an LC Issuing Bank

By: ______________________

Title:

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as

an LC Issuing Bank

By: ______________________

Title:

By: ______________________

Title:




12	To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

EXHIBIT C

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

C-5

WELLS FARGO BANK, NATIONAL ASSOCIATION, as

an LC Issuing Bank

By: ______________________

Title:

[Consented to:

American Electric Power Company, Inc.

By: ______________________

Title:] ¹³




13	To be added only if the consent of the Borrower is required by the terms of the Credit Agreement.

EXHIBIT C

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

ANNEX 1

$1,750,000,000 Second Amended and Restated Credit Agreement dated as of November 10, 2014 among American Electric Power Company, Inc., as the Borrower, the Lenders parties thereto, the LC Issuing Banks parties thereto and Barclays Bank PLC, as Administrative Agent

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION


1.	Representations and Warranties .

1.1.

Assignor[s] . [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and (iv) it is [not] a Defaulting Lender; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2.

Assignee[s] . [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 8.07 of the Credit Agreement (subject to such consents, if any, as may be required thereunder), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to clauses (i) and (ii) of Section 5.01(i) thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this

EXHIBIT C

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

C-A1-2

Assignment and Assumption and to purchase [the][such] Assigned Interest, and (vii) attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by [the][such] Assignee; (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender and (c) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement as are delegated to the Administrative Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto.

Payments . From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignee whether such amounts have accrued prior to, on or after the Effective Date. The Assignor[s] and the Assignee[s] shall make all appropriate adjustments in payments by the Administrative Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves. Notwithstanding the foregoing, the Administrative Agent shall make all payments of interest, fees or other amounts paid or payable in kind from and after the Effective Date to [the][the relevant] Assignee.

General Provisions . This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by fax shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

EXHIBIT C

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

EXHIBIT D

(to the Credit Agreement)

FORM OF OPINION OF COUNSEL FOR THE BORROWER

To each of the Lenders and LC Issuing Banks party to the

Second Amended and Restated Credit Agreement referred to below

and to Barclays Bank PLC, as Administrative Agent thereunder

November 10, 2014

Ladies and Gentlemen:

This opinion is furnished to you pursuant to Section 3.01(a)(iii) of the Second Amended and Restated Credit Agreement, dated as of November 10, 2014 (the “ Credit Agreement ”) among American Electric Power Company, Inc. (the “ Borrower ”), the Lenders party thereto, the LC Issuing Banks party thereto and Barclays Bank PLC, as Administrative Agent. Terms defined in the Credit Agreement are used herein as therein defined.

I am an Associate General Counsel for American Electric Power Service Corporation, an affiliate of the Borrower, and have acted as counsel to the Borrower in connection with the preparation, execution and delivery of the Credit Agreement. I am generally familiar with the Borrower’s corporate history, properties, operations and charter (including amendments, restatements and supplements thereto).

In connection with this opinion, I, or attorneys over whom I exercise supervision, have examined:


(1)	The Credit Agreement.


(2)	The documents furnished by the Borrower pursuant to Article III of the Credit Agreement .


(3)	The certificate of incorporation of the Borrower and all amendments thereto.


(4)	The by-laws of the Borrower and all amendments thereto.


(5)	A certificate of the Secretary of State of New York, dated November 7, 2014, attesting to the continued existence and good standing of the Borrower in that State.

In addition, I, or attorneys over whom I exercise supervision, have examined the originals, or copies certified to my satisfaction, of such other corporate records of the Borrower, certificates of public officials and of officers of the Borrower, and agreements, instruments and other documents, as I have deemed necessary as a basis for the opinions expressed below.

D-2

In my examination, I, or attorneys over whom I exercise supervision, have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals and the conformity with the originals of all documents submitted to us as copies. In making our examination of documents and instruments executed or to be executed by persons other than the Borrower, I, or attorneys over whom I exercise supervision, have assumed that each such other person had the requisite power and authority to enter into and perform fully its obligations thereunder, the due authorization by each such other person for the execution, delivery and performance thereof and the due execution and delivery thereof by or on behalf of such person of each such document and instrument. In the case of any such person that is not a natural person, I, or attorneys over whom I exercise supervision, have also assumed, insofar as it is relevant to the opinions set forth below, that each such other person is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it was created and is duly qualified and in good standing in each other jurisdiction where the failure to be so qualified could reasonably be expected to have a material effect upon its ability to execute, deliver and/or perform its obligations under any such document or instrument. I, or attorneys over whom I exercise supervision, have further assumed that each document, instrument, agreement, record and certificate reviewed by us for purposes of rendering the opinions expressed below has not been amended by any oral agreement, conduct or course of dealing between the parties thereto.

As to questions of fact material to the opinions expressed herein, I have relied upon certificates and representations of officers of the Borrower (including but not limited to those contained in the Credit Agreement and certificates delivered upon the execution and delivery of the Credit Agreement) and of appropriate public officials, without independent verification of such matters except as otherwise described herein.

Whenever my opinions herein with respect to the existence or absence of facts are stated to be to my knowledge or awareness, it is intended to signify that no information has come to my attention or the attention of other counsel working under my direction in connection with the preparation of this opinion letter that would give me or them actual knowledge of the existence or absence of such facts. However, except to the extent expressly set forth herein, neither I nor they have undertaken any independent investigation to determine the existence or absence of such facts, and no inference as to my or their knowledge of the existence or absence of such facts should be assumed.

I am a member of the Bar of the States of New York and Ohio and do not purport to be expert on the laws of any jurisdiction other than the laws of the States of New York and Ohio and the Federal laws of the United States. My opinions expressed below are limited to the law of the States of New York and Ohio and the Federal law of the United States.

Based upon the foregoing and upon such investigation as I have deemed necessary, and subject to the limitations, qualifications and assumptions set forth herein, I am of the following opinion:


1.	The Borrower (a) is a corporation duly organized, validly existing and in good standing under the laws of the State of New York; (b) has the corporate power and authority, and the legal right, to own and operate its property, to lease the property which it operates as lessee and to conduct the business in which it is

D-3

currently engaged and in which it proposes to be engaged after the date hereof; (c) is duly qualified as a foreign corporation and is in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, except any such jurisdiction where the failure to so qualify could not, in the aggregate, reasonably be expected to result in a Material Adverse Change; (d) owns or possesses all material licenses and permits necessary for the operation by it of its business as currently conducted; and (e) is in compliance with all Requirements of Law, except as disclosed in the Disclosure Documents referenced in Section 4.01(e) of the Credit Agreement or to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. The term “Requirements of Law” means the laws of the State of Ohio and the laws, rules and regulations of the United States of America (including, without limitation, ERISA and Environmental Laws) and orders of any governmental authority applicable to the Borrower.

The Borrower has the corporate power and authority, and the legal right, to execute and deliver the Credit Agreement and to perform under, and to borrow under, the Credit Agreement. The Borrower has taken all necessary corporate action to authorize the execution, delivery and performance of the Credit Agreement and the incurrence of Advances on the terms and conditions of the Credit Agreement, and the Credit Agreement has been duly executed and delivered by the Borrower.


3.	The execution, delivery and performance of the Credit Agreement and the Advances made thereunder will not violate any Requirements of Law, the Borrower’s certificate of incorporation or by-laws, or any material contractual restriction binding on or affecting the Borrower or any of its properties.


4.	No approval or authorization or other action by, and notice to or filing with, any governmental agency or regulatory body or other third person is required in connection with the due execution and delivery of the Credit Agreement and the performance, validity or enforceability of the Credit Agreement.


5.	Except as described in Section 4.01(e) of the Credit Agreement, no action, suit, investigation, litigation, or proceeding, including, without limitation, any Environmental Action, affecting the Borrower or any of its Significant Subsidiaries before any court, government agency or arbitrator is pending or, to my knowledge, threatened, that is reasonably likely to have a Material Adverse Effect.


6.	Neither the Borrower nor any of its Significant Subsidiaries is an “investment company”, or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company”, as such terms are defined in the Investment Company Act of 1940, as amended. Neither the making of any Advances, the application of the proceeds or repayment thereof by the Borrower nor the

D-4

consummation of the other transactions contemplated by the Credit Agreement will violate any provision of such Act or any rule, regulation or order of the Securities and Exchange Commission thereunder.

In any action or proceeding arising out of or relating to the Credit Agreement in any court of the State of Ohio or in any Federal court sitting in the State of Ohio, such court would recognize and give effect to the provisions of Section 8.09 of the Credit Agreement, wherein the parties thereto agree that the Credit Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. However, if a court of the State of Ohio or a Federal court sitting in the State of Ohio were to hold that the Credit Agreement is governed by, and to be construed in accordance with, the laws of the State of Ohio, the Credit Agreement would be, under the State of Ohio, the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms.

The opinion set forth above in the last sentence of paragraph 7 above is subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor’s rights generally and to general principles of equity, including (without limitation) concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law.)

I express no opinion as to (i) Section 8.05 of the Credit Agreement; (ii) the effect of the law of any jurisdiction (other than the State of Ohio) wherein any Lender may be located which limits the rates of interest which may be charged or collected by such Lender; and (iii) whether a Federal or state court outside of the States of New York or Ohio would give effect to the choice of New York law provided for in the Credit Agreement.

This opinion has been rendered solely for your benefit in connection with the Credit Agreement and the transactions contemplated thereby and may not be used, circulated, quoted, relied upon or otherwise referred to by any other Person (other than your respective counsel, auditors and any regulatory agency having jurisdiction over you or as otherwise required pursuant to legal process or other requirements of law) for any other purpose without my prior written consent; provided that, (i) King & Spalding LLP, special counsel for the Administrative Agent, may rely on the opinions expressed in this opinion letter in connection with the opinion to be furnished by them in connection with the transactions contemplated by the Credit Agreement and (ii) any Person that becomes a Lender or an LC Issuing Bank after the date hereof may rely on the opinions expressed in this opinion letter as though addressed to such Person. I undertake no responsibility to update or supplement this opinion in response to changes in law or future events or circumstances.

Very truly yours,

Thomas G. Berkemeyer

EXHIBIT E

(to the Credit Agreement)

FORM OF OPINION OF COUNSEL

FOR THE ADMINISTRATIVE AGENT

[DATE]

To each of the Lenders and LC Issuing Banks party to the

Credit Agreement referred to below

and to Barclays Bank PLC, as Administrative Agent

American Electric Power Company, Inc.

Ladies and Gentlemen:

We have acted as special New York counsel to Barclays Bank PLC, individually and as Administrative Agent, in connection with the preparation, execution and delivery of the Second Amended and Restated Credit Agreement, dated as of November 10, 2014 (the “ Credit Agreement ”), among American Electric Power Company, Inc. (the “ Borrower ”), the Lenders, the LC Issuing Banks named therein and Barclays Bank PLC, as Administrative Agent for the Lenders. This opinion is furnished to you pursuant to Section 3.01(a)(iv) of the Credit Agreement. Unless otherwise indicated, terms defined in the Credit Agreement are used herein as therein defined.

In that connection, we have examined the following documents:

(1) Counterparts of the Credit Agreement, executed by the Borrower, the Administrative Agent, the LC Issuing Banks, and the Lenders; and

(2) The other documents furnished by the Borrower pursuant to Section 3.01 of the Credit Agreement, including (without limitation) the opinion of Thomas G. Berkemeyer, Associate General Counsel for American Electric Power Service Corporation, an affiliate of the Borrower (the “ Opinion ”).

In our examination of the documents referred to above, we have assumed the authenticity of all such documents submitted to us as originals, the genuineness of all signatures, the due authority of the parties executing such documents and the conformity to the originals of all such documents submitted to us as copies. We have assumed that you independently evaluated, and are satisfied with, the creditworthiness of the Borrower and the business terms reflected in the Credit Agreement. We have also assumed that each of the Lenders, the LC Issuing Banks, and the Administrative Agent has duly executed and delivered, with all necessary power and authority (corporate and otherwise), the Credit Agreement.

E-2

To the extent that our opinions expressed below involve conclusions as to matters governed by law other than the law of the State of New York, we have relied upon the Opinion and have assumed without independent investigation the correctness of the matters set forth therein, our opinions expressed below being subject to the assumptions, qualifications and limitations set forth in the Opinion. We note that we do not represent the Borrower and, accordingly, are not privy to the nature or character of its businesses. Accordingly, we have also assumed that the Borrower is subject only to statutes, rules, regulations, judgments, orders, and other requirements of law of general applicability to corporations doing business in the State of New York. As to matters of fact, we have relied solely upon the documents we have examined.

Based upon the foregoing, and subject to the qualifications set forth below, we are of the opinion that:

(i) The Credit Agreement is the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms.

(ii) While we have not independently considered the matters covered by the Opinion to the extent necessary to enable us to express the conclusions stated therein, the Opinion and the other documents referred to in item (2) above are substantially responsive to the corresponding requirements set forth in Section 3.01 of the Credit Agreement pursuant to which the same have been delivered.

Our opinions are subject to the following qualifications:

(a) Our opinion in paragraph (i) above is subject to the effect of any applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar law affecting creditors’ rights generally.

(b) Our opinion in paragraph (i) above is subject to the effect of general principles of equity, including (without limitation) concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law). Such principles of equity are of general obligation, and, in applying such principles, a court, among other things, might not allow a contracting party to exercise remedies in respect of a default deemed immaterial, or might decline to order an obligor to perform covenants.

(c) We note further that, in addition to the application of equitable principles described above, courts have imposed an obligation on contracting parties to act reasonably and in good faith in the exercise of their contractual rights and remedies, and may also apply public policy considerations in limiting the right of parties seeking to obtain indemnification under circumstances where the conduct of such parties in the circumstances in question is determined to have constituted negligence.

(d) We express no opinion herein as to (i) Section 8.05 of the Credit Agreement, (ii) the enforceability of provisions purporting to grant to a party conclusive rights of determination, (iii) the availability of specific performance or other equitable remedies, (iv) the enforceability of rights to indemnity under Federal or state securities laws and (v) the enforceability of waivers by parties of their respective rights and remedies under law.

E-3

(e) In connection with any provision of the Credit Agreement whereby the Borrower submits to the jurisdiction of any court of competent jurisdiction, we note the limitations of 28 U.S.C. §§ 1331 and 1332 on Federal court jurisdiction.

(f) Our opinions expressed above are limited to the law of the State of New York, and we do not express any opinion herein concerning any other law. Without limiting the generality of the foregoing, we express no opinion as to the effect of the law of any jurisdiction other than the State of New York wherein any Lender may be located or wherein enforcement of the Credit Agreement may be sought that limits the rates of interest legally chargeable or collectible.

This opinion letter speaks only as of the date hereof, and we expressly disclaim any responsibility to advise you of any development or circumstance, including changes of law of fact, that may occur after the date of this opinion letter that might affect the opinions expressed herein. This opinion letter is furnished to the addressees hereof solely in connection with the transactions contemplated by the Credit Agreement, is solely for the benefit of the addressees hereof and may not be relied upon by any other Person or for any other purpose without our prior written consent. Notwithstanding the foregoing, this opinion letter may be relied upon by any Person that becomes a Lender after the date hereof in accordance with the provisions of the Credit Agreement as if this opinion letter were addressed and delivered to such Person on the date hereof. Any such reliance must be actual and reasonable under the circumstances existing at the time such Person becomes a Lender, taking into account any changes in law or facts and any other developments known to or reasonably knowable by such Person at such time.

Very truly yours,

AHC:kty:mgj

EXHIBIT F-1

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Not Partnerships

For U.S. Federal Income Tax Purposes)

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Second Amended and Restated Credit Agreement, dated as of November 10, 2014 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among American Electric Power Company, Inc. (the “ Borrower ”), the Lenders and LC Issuing Banks named therein and Barclays Bank PLC, as the administrative agent (the “ Administrative Agent ”) for the Lenders.

Pursuant to the provisions of Section 2.18 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Advance(s) and Commitment (as well as any promissory note(s) evidencing such Advance(s) and Commitment) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Internal Revenue Code.

The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN or W‑8BEN‑E. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Administrative Agent and the Borrower, and (2) the undersigned shall have at all times furnished the Administrative Agent and the Borrower with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF LENDER]

By:____________________

Name:

Title:

Date: ________ __, 20[ ]

EXHIBIT F-2

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Not Partnerships

For U.S. Federal Income Tax Purposes)

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Pursuant to the provisions of Section 2.18 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code, and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Internal Revenue Code.

The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN or W‑8BEN‑E. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF PARTICIPANT]

By:____________________

Name:

Title:

Date: ________ __, 20[ ]

EXHIBIT F-3

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Partnerships

For U.S. Federal Income Tax Purposes)

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

Pursuant to the provisions of Section 2.18 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Internal Revenue Code.

The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or W‑8BEN‑E, or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or W‑8BEN‑E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF PARTICIPANT]

By:____________________

Name:

Title:

Date: ________ __, 20[ ]

EXHIBIT F-4

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Partnerships

For U.S. Federal Income Tax Purposes)

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

Pursuant to the provisions of Section 2.18 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Advance(s) and Commitment (as well as any promissory note(s) evidencing such Advance(s) and Commitment) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Advance(s) and Commitment (as well as any promissory note(s) evidencing such Advance(s) and Commitment), (iii) with respect to the extension of credit pursuant to the Credit Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Internal Revenue Code.

The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or W‑8BEN‑E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or W‑8BEN‑E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Administrative Agent and the Borrower, and (2) the undersigned shall have at all times furnished the Administrative Agent and the Borrower with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

F-4-2

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF LENDER]

By:____________________

Name:

Title:

Date: ________ __, 20[ ]

Schedule I

Schedule of Initial Lenders



Lender Name	Commitment
Barclays Bank PLC	$86,875,000
JPMorgan Chase Bank, N.A.	$86,875,000
Citibank, N.A.	$86,875,000
Credit Suisse AG, Cayman Islands Branch	$86,875,000
KeyBank National Association	$86,875,000
The Bank of Tokyo-Mitsubishi UFJ, Ltd.	$86,875,000
The Royal Bank of Scotland plc	$86,875,000
Wells Fargo Bank, National Association	$86,875,000
Bank of America, N.A.	$68,750,000
BNP Paribas	$68,750,000
Credit Agricole Corporate and Investment Bank	$68,750,000
Goldman Sachs Bank USA	$68,750,000
Mizuho Corporate Bank, Ltd.	$68,750,000
Morgan Stanley Bank, N.A.	$68,750,000
Royal Bank of Canada	$68,750,000
SunTrust Bank	$68,750,000
The Bank of New York Mellon	$68,750,000
The Bank of Nova Scotia	$68,750,000
U.S. Bank National Association	$68,750,000
UBS AG, Stamford Branch	$68,750,000
Compass Bank	$45,000,000
Fifth Third Bank	$45,000,000
PNC Bank, National Association	$45,000,000
Sumitomo Mitsui Banking Corporation	$45,000,000
The Huntington National Bank	$25,000,000
The Northern Trust Company	$25,000,000

Total	$1,750,000,000

Schedule I

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

Schedule 4.01(m)

Significant Subsidiaries

Appalachian Power Company

Ohio Power Company

Indiana Michigan Power Company

AEP Utilities, Inc.

Southwestern Electric Power Company

Schedule 4.01(M)

AEP - SECOND AMENDED AND RESTATED CREDIT AGREEMENT

Exhibit 4(c)

CONFORMED COPY

U.S. $1,750,000,000

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of November 10, 2014

among

AMERICAN ELECTRIC POWER COMPANY, INC.

as the Borrower

THE LENDERS NAMED HEREIN

as Initial Lenders

THE LC ISSUING BANKS NAMED HEREIN

and

JPMORGAN CHASE BANK, N.A.

as Administrative Agent

J.P. MORGAN SECURITIES LLC

CITIGROUP GLOBAL MARKETS INC.

KEYBANK NATIONAL ASSOCIATION

RBS SECURITIES INC.

Joint Lead Arrangers



THE ROYAL BANK OF SCOTLAND PLC Syndication Agent	CITIBANK, N.A. KEYBANK NATIONAL ASSOCIATION Documentation Agents

TABLE OF CONTENTS



	Page

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS	1

SECTION 1.01. Certain Defined Terms	1
SECTION 1.02. Computation of Time Periods	21
SECTION 1.03. Accounting Terms	21
SECTION 1.04. Other Interpretive Provisions	21

ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES	21

SECTION 2.01. The Advances	21
SECTION 2.02. Making the Advances	21
SECTION 2.03. [Reserved]	23
SECTION 2.04. Letters of Credit	23
SECTION 2.05. Fees	27
SECTION 2.06. Extension of the Termination Date	27
SECTION 2.07. Increase of the Commitments	28
SECTION 2.08. Termination or Reduction of the Commitments	29
SECTION 2.09. Repayment of Advances	30
SECTION 2.10. Evidence of Indebtedness	30
SECTION 2.11. Interest on Advances	31
SECTION 2.12. Interest Rate Determination	32
SECTION 2.13. Optional Conversion of Advances	32
SECTION 2.14. Optional Prepayments of Advances	33
SECTION 2.15. Increased Costs	33
SECTION 2.16. Illegality	34
SECTION 2.17. Payments and Computations	35
SECTION 2.18. Taxes	36
SECTION 2.19. Sharing of Payments, Etc	40
SECTION 2.20. Mitigation Obligations; Replacement of Lenders	40

ARTICLE III CONDITIONS PRECEDENT	42

SECTION 3.01. Conditions Precedent to Effectiveness of this Agreement and
Initial Extensions of Credit	42
SECTION 3.02. Conditions Precedent to each Extension of Credit	44

ARTICLE IV REPRESENTATIONS AND WARRANTIES	44

SECTION 4.01. Representations and Warranties of the Borrower	44

ARTICLE V COVENANTS OF THE BORROWER	47

SECTION 5.01. Affirmative Covenants	47



SECTION 5.02. Negative Covenants	50
SECTION 5.03. Financial Covenant	52

ARTICLE VI EVENTS OF DEFAULT	52

SECTION 6.01. Events of Default	52
SECTION 6.02. Actions in Respect of the Letters of Credit upon Default	54

ARTICLE VII THE ADMINISTRATIVE AGENT	55

SECTION 7.01. Authorization and Action	55
SECTION 7.02. Agent's Reliance, Etc	55
SECTION 7.03. JPMorgan Chase and its Affiliates	56
SECTION 7.04. Lender Credit Decision	56
SECTION 7.05. Indemnification	56
SECTION 7.06. Successor Agent	57

ARTICLE VIII MISCELLANEOUS	57

SECTION 8.01. Amendments, Etc	57
SECTION 8.02. Notices, Etc	58
SECTION 8.03. No Waiver; Remedies	60
SECTION 8.04. Costs and Expenses	60
SECTION 8.05. Right of Set-off	62
SECTION 8.06. Binding Effect	62
SECTION 8.07. Assignments and Participations	62
SECTION 8.08. Confidentiality	66
SECTION 8.09. Governing Law	67
SECTION 8.10. Severability; Survival	67
SECTION 8.11. Execution in Counterparts	68
SECTION 8.12. Jurisdiction, Etc	68
SECTION 8.13. Waiver of Jury Trial	68
SECTION 8.14. USA Patriot Act	69
SECTION 8.15. No Fiduciary Duty	69
SECTION 8.16. Defaulting Lenders	69
SECTION 8.17. Cash Collateral	72
SECTION 8.18. Reallocations	73
SECTION 8.19. Amendment and Restatement of Existing Credit Agreement	74

EXHIBITS AND SCHEDULES

EXHIBIT A --------------- Form of Notice of Borrowing

EXHIBIT B --------------- Form of Request for Issuance

EXHIBIT C --------------- Form of Assignment and Assumption

EXHIBIT D --------------- Form of Opinion of Counsel for the Borrower

EXHIBIT E --------------- Form of Opinion of Counsel for the Administrative Agent

EXHIBIT F-1 --------------- Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

EXHIBIT F-2 --------------- Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

EXHIBIT F-3 --------------- Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

EXHIBIT F-4 --------------- Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

SCHEDULE I --------------- Schedule of Initial Lenders

SCHEDULE 2.04(j) -------- Letters of Credit

SCHEDULE 4.01(m) -------- Schedule of Significant Subsidiaries

iii

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

THIRD AMENDED AND RESTATED CREDIT AGREEMENT, dated as of November 10, 2014 (this “ Agreement ”), among AMERICAN ELECTRIC POWER COMPANY, INC., a New York corporation (the “ Borrower ”), the banks, financial institutions and other institutional lenders listed on the signatures pages hereof (the “ Initial Lenders ”), JPMORGAN CHASE BANK, N.A. (“ JPMorgan Chase ”), as administrative agent (in such capacity, the “ Administrative Agent ”) for the Lenders (as hereinafter defined), and the LC Issuing Banks (as hereinafter defined).

PRELIMINARY STATEMENT:

The Borrower has requested that the Lenders and the LC Issuing Banks agree, on the terms and conditions set forth herein, to amend and restate in its entirety the Second Amended and Restated Credit Agreement, dated as of February 13, 2013 (the “ Existing Credit Agreement ”), among the Borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the banks, financial institutions and other institutional lenders party thereto. The Lenders and the LC Issuing Banks have indicated their willingness to amend and restate the Existing Credit Agreement on the terms and conditions of this Agreement.

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

Section 1.01. Certain Defined Terms.

As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“ Administrative Agent ” has the meaning specified in the recital of parties to this Agreement.

“ Administrative Questionnaire ” means an administrative questionnaire in a form supplied by the Administrative Agent.

“ Advance ” means an advance by a Lender to a Borrower as part of a Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance.

the management and policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise.

“ Agent Parties ” has the meaning specified in Section 8.02(c).

“ Agent’s Account ” means the account of the Administrative Agent maintained by the Administrative Agent with JPMorgan Chase at its office located at 1111 Fannin Street, Houston, Texas, Account No. 9008113381H0618, Reference: American Electric Power, or such other account of the Administrative Agent as the Administrative Agent may from time to time designate in a written notice to the Lenders and the Borrower.



Applicable Rating Level	Applicable Margin for Eurodollar Rate Advances	Applicable Margin for Base Rate Advances
1	1.000%	0.000%
2	1.125%	0.125%
3	1.250%	0.250%
4	1.500%	0.500%
5	1.750%	0.750%
6	2.000%	1.000%

provided , that the Applicable Margins set forth above shall be increased, for each Applicable Rating Level, upon the occurrence and during the continuance of any Event of Default by 2.00% per annum.

“ Applicable Rating Level ” at any time shall be determined in accordance with the then-applicable S&P Rating and the then-applicable Moody’s Rating as follows:



S&P Rating/Moody’s Rating	Applicable Rating Level
S&P Rating A or higher or Moody’s Rating A2 or higher	1
S&P Rating A- or Moody’s Rating A3	2
S&P Rating BBB+ or Moody’s Rating Baa1	3
S&P Rating BBB or Moody’s Rating Baa2	4
S&P Rating BBB- or Moody’s Rating Baa3	5
S&P Rating BB+ or below or Moody’s Rating Ba1 or below, or no S&P Rating or Moody’s Rating	6

“ Assignee Lender ” has the meaning specified in Section 8.18.

“ Assignor Lender ” has the meaning specified in Section 8.18.

“ Available Commitments ” means the aggregate of the Lenders’ Available Commitments hereunder.

“ Base Rate ” means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the highest of the following rates then in effect:


(i)	the rate of interest announced publicly by JPMorgan Chase in New York City, from time to time, as JPMorgan Chase’s prime commercial lending rate or corporate base rate;


(ii)	1/2 of 1% per annum above the Federal Funds Rate; and


(iii)	the rate of interest per annum equal to the Eurodollar Rate as determined on such day (or if such day is not a Business Day, on the next preceding Business Day) that would be applicable to a Eurodollar Rate Advance having an Interest Period of one month, plus 1%.

“ Base Rate Advance ” means an Advance that bears interest as provided in Section 2.11(a).

“ Borrower ” has the meaning specified in the recital of parties to this Agreement.

“ Borrowing Date ” means the date of any Borrowing.

“ Business Day ” means a day of the year on which banks are not required or authorized by law to close in New York City and, if the applicable Business Day relates

to any Eurodollar Rate Advances, Business Day also includes a day on which dealings are carried out in the London interbank market.

“ CGMI ” means Citigroup Global Markets Inc.

“ Citibank ” means Citibank, N.A.

“ Commitment Fee Rate ” means, at any time, the rate per annum set forth below next to the Applicable Rating Level in effect at such time:



Applicable Rating Level	Commitment Fee Rate
1	0.100%
2	0.125%
3	0.175%
4	0.225%
5	0.275%
6	0.350%

“ Commitments ” means the aggregate of the Lenders’ Commitments hereunder.

“ Communications ” has the meaning specified in Section 8.02(b).

“ Credit Party ” means the Administrative Agent, any LC Issuing Bank or any Lender.

guaranteed directly or indirectly by such Person through an agreement (A) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (B) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (C) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (D) otherwise to assure a creditor against loss.

“ Declining Lender ” has the meaning specified in Section 2.06(b).

“ Default ” means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

“ Designated Lender ” has the meaning specified in Section 2.07(a).

“ Dollars ” and the symbol “$” mean lawful currency of the United States of America.

“ Environmental Permit ” means any permit, approval, identification number, license or other authorization required under any Environmental Law.

“ Equity-Preferred Securities ” means (i) debt or preferred securities that are mandatorily convertible or mandatorily exchangeable into common shares of the

Borrower and (ii) any other securities, however denominated, including but not limited to hybrid capital and trust originated preferred securities, (A) issued by the Borrower or any Consolidated Subsidiary of the Borrower, (B) that are not subject to mandatory redemption or the underlying securities, if any, of which are not subject to mandatory redemption, (C) that are perpetual or mature no less than 30 years from the date of issuance, (D) the indebtedness issued in connection with which, including any guaranty, is subordinate in right of payment to the unsecured and unsubordinated indebtedness of the issuer of such indebtedness or guaranty, and (E) the terms of which permit the deferral of the payment of interest or distributions thereon to a date occurring after the Termination Date.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ Eurocurrency Liabilities ” has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

“ Eurodollar Rate ” means, for any Interest Period for each Eurodollar Rate Advance comprising part of the same Borrowing, the London interbank offered rate (rounded upward to the nearest 1/16 ^th of 1%) as administered by ICE Benchmark Administration Limited (or any other Person that takes over the administration of such rate) for deposits in immediately available funds in Dollars for a period equal in length to such Interest Period as displayed on page LIBOR01 of the Reuters screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute Reuters page or screen that displays such rate, or on the appropriate page or screen of such other comparable information service that publishes such rate from time to time as selected by the Administrative Agent in its discretion) (in each case, the “ Screen Rate ”) at approximately 11:00 A.M. (London time) two Business Days before the first day of such Interest Period, provided , that if the Screen Rate shall be

less than zero, such rate shall be deemed to be zero for the purposes of this Agreement, and provided, further , if the Screen Rate shall not be available at such time for such Interest Period (an “ Impacted Interest Period ”), the Eurodollar Rate for such Borrowing shall be the Interpolated Rate, provided , that if any Interpolated Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

“ Eurodollar Rate Advance ” means an Advance that bears interest as provided in Section 2.11(b).

“ Events of Default ” has the meaning specified in Section 6.01.

“ Exchange Act ” has the meaning specified in Section 6.01(f).

“ Existing Credit Agreement ” has the meaning specified in the Preliminary Statement in this Agreement.

“ Extension Effective Date ” has the meaning specified in Section 2.06(c).

“ Foreign Lender ” means a Lender that is not a U.S. Person.

“ Foreign Plan ” has the meaning specified in Section 4.01(i).

“ GAAP ” has the meaning specified in Section 1.03.

“ GenCo ” means AEP Generation Resources Inc.

“ Governmental Approval ” means any authorization, consent, approval, license or exemption of, registration or filing with, or report or notice to, any Governmental Authority.

“Impacted Interest Period” has the meaning specified for such term in the definition herein of “Eurodollar Rate.”

“ Indemnified Party ” has the meaning specified in Section 8.04(b).

“ Initial Lenders ” has the meaning specified in the recital of parties to this Agreement.


(i)	the Borrower may not select any Interest Period that ends after the Termination Date of any Lender;


(ii)	Interest Periods commencing on the same date for Eurodollar Rate Advances comprising part of the same Borrowing shall be of the same duration;

(iii)


(iv)	whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month.

“ Internal Revenue Code ” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ IRS ” means the United States Internal Revenue Service.

“ Joint Lead Arrangers ” means JPMS, CGMI, KeyBank and RBSSI.

“ JPMorgan Chase ” has the meaning specified in the recital of parties to this Agreement.

“ JPMS ” means J.P. Morgan Securities LLC.

“ KeyBank ” means KeyBank National Association.

“ LC Collateral Account ” has the meaning specified in Section 2.04(b).

“ LC Fee ” has the meaning specified in Section 2.05(c).

“ LC Issuing Bank ” means, as to any Letter of Credit, JPMorgan Chase, Citibank, KeyBank, RBS, and any Lender or Affiliate of a Lender that shall agree to issue a Letter of Credit pursuant to Section 2.04.

“ LC Payment Notice ” has the meaning specified in Section 2.04(e).

“ Letter of Credit ” means any standby letters of credit issued by an LC Issuing Bank pursuant to Section 2.04.

“ Loan Documents ” means, collectively, (i) the Commitment Letter, dated as of October 20, 2014, among the Borrower, JPMS, JPMorgan Chase, CGMI, KeyBank, RBSSI, and RBS, (ii) the Fee Letter, dated as of October 20, 2014, among the Borrower, JPMS, JPMorgan Chase and Barclays Bank PLC, (iii) the Fee Letter, dated as of October 20, 2014, among the Borrower, CGMI, Credit Suisse Securities (USA) LLC Credit Suisse AG, Cayman Islands Branch, KeyBank, RBSSI, RBS, The Bank of Tokyo-Mitsubishi UFJ, Ltd., Wells Fargo Securities, LLC and Wells Fargo Bank, National Association, (iv) the Fee Letter, dated as of June 30, 2011, among the Borrower, JPMS and the Administrative Agent, (v) this Agreement and (vi) each promissory note issued pursuant to Section 2.10(d), in each case, as any of the foregoing may be amended, supplemented or modified from time to time.