| Commission      |   | Registrant, State of Incorporation,                            |   | I.R.S. Employer    |
|-----------------|--------|----------------------------------------------------------------|--------|--------------------|
| File Number     |   | Address of Principal Executive Offices, and Telephone Number   |   | Identification No. |
|            |   |                                                           |   |               |
| 1-3525          |   | AMERICAN ELECTRIC POWER COMPANY, INC. (A New York Corporation) |   | 13-4922640         |
| 1-3457          |   | APPALACHIAN POWER COMPANY (A Virginia Corporation)             |   | 54-0124790         |
| 1-2680          |   | COLUMBUS SOUTHERN POWER COMPANY (An Ohio Corporation)          |   | 31-4154203         |
| 1-3570          |   | INDIANA MICHIGAN POWER COMPANY (An Indiana Corporation)        |   | 35-0410455         |
| 1-6543          |   | OHIO POWER COMPANY (An Ohio Corporation)                       |   | 31-4271000         |
| 0-343           |   | PUBLIC SERVICE COMPANY OF OKLAHOMA (An Oklahoma Corporation)   |   | 73-0410895         |
| 1-3146          |   | SOUTHWESTERN ELECTRIC POWER COMPANY (A Delaware Corporation)   |   | 72-0323455         |
|            |   |                                                           |   |               |
| All Registrants |   | 1 Riverside Plaza, Columbus, Ohio 43215-2373                   |   |               |
|            |   | Telephone (614) 716-1000                                       |   |               |

| Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Yes                                                                                                                                                                                                                                                                                                                                                           | X |   | No |   |   |

| Indicate by check mark whether American Electric Power Company, Inc. has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Yes                                                                                                                                                                                                                                                                                                                                                                               | X |   | No |   |   |

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

| Indicate by check mark whether American Electric Power Company, Inc. is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of ‘large accelerated filer,’ ‘accelerated filer’ and ‘smaller reporting company’ in Rule 12b-2 of the Exchange Act. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                      |
| Large accelerated filer                                                                                                                                                                                                                                                                                                                                                   | X |   | Accelerated filer |   |   |
|                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |   |
| Non-accelerated filer                                                                                                                                                                                                                                                                                                                                                     |   |   | Smaller reporting company |   |   |

| Indicate by check mark whether Appalachian Power Company, Columbus Southern Power Company, Indiana Michigan Power Company, Ohio Power Company, Public Service Company of Oklahoma and Southwestern Electric Power Company are large accelerated filers, accelerated filers, non-accelerated filers or smaller reporting companies.  See the definitions of ‘large accelerated filer,’ ‘accelerated filer’ and ‘smaller reporting company’ in Rule 12b-2 of the Exchange Act. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Large accelerated filer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   | Accelerated filer |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |   |   |   |
| Non-accelerated filer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | X |   | Smaller reporting company |   |   |

| Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act). |
|--------------------------------------------------------------------------------------------------------------------|
| Yes                                                                                                                |   |   | No | X |   |

----

|                                  |   |   | Number of shares of common stock outstanding of the registrants atApril 29, 2010                                                                                                    |
|---------------------------------------|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                  |   |   |                                                                                                                                                                                |
| American Electric Power Company, Inc. |   |   |                             478,873,651 |
|                                  |   |   | ($6.50 par value)                                                                                                                                                                   |
| Appalachian Power Company             |   |   | 13,499,500                                                                                                                                                                          |
|                                  |   |   | (no par value)                                                                                                                                                                      |
| Columbus Southern Power Company       |   |   | 16,410,426                                                                                                                                                                          |
|                                  |   |   | (no par value)                                                                                                                                                                      |
| Indiana Michigan Power Company        |   |   | 1,400,000                                                                                                                                                                           |
|                                  |   |   | (no par value)                                                                                                                                                                      |
| Ohio Power Company                    |   |   | 27,952,473                                                                                                                                                                          |
|                                  |   |   | (no par value)                                                                                                                                                                      |
| Public Service Company of Oklahoma    |   |   | 9,013,000                                                                                                                                                                           |
|                                  |   |   | ($15 par value)                                                                                                                                                                     |
| Southwestern Electric Power Company   |   |   | 7,536,640                                                                                                                                                                           |
|                                  |   |   | ($18 par value)                                                                                                                                                                     |

----

| Glossary of Terms                                                              |
|--------------------------------------------------------------------------------|
|                                                                           |
| Forward-Looking Information                                                    |
|                                                                           |
| Part I. FINANCIAL INFORMATION                                                  |
|                                                                           |   |
|                                                                           | Items 1, 2 and 3 - Financial Statements, Management’s Financial Discussion and Analysis and Quantitative and Qualitative Disclosures About Risk Management Activities: |
| American Electric Power Company, Inc. and Subsidiary Companies:                |
|                                                                           | Management’s Financial Discussion and Analysis of Results of Operations |
|                                                                           | Quantitative and Qualitative Disclosures About Risk Management Activities |
|                                                                           | Condensed Consolidated Financial Statements |
|                                                                           | Index to Condensed Notes to Condensed Consolidated Financial Statements |
|                                                                           |   |
| Appalachian Power Company and Subsidiaries:                                    |
|                                                                           | Management’s Financial Discussion and Analysis |
|                                                                           | Quantitative and Qualitative Disclosures About Risk Management Activities |
|                                                                           | Condensed Consolidated Financial Statements |
|                                                                           | Index to Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries |
|                                                                           |   |
| Columbus Southern Power Company and Subsidiaries:                              |
|                                                                           | Management’s Narrative Financial Discussion and Analysis |
|                                                                           | Quantitative and Qualitative Disclosures About Risk Management Activities |
|                                                                           | Condensed Consolidated Financial Statements |
|                                                                           | Index to Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries |
|                                                                           |   |
| Indiana Michigan Power Company and Subsidiaries:                               |
|                                                                           | Management’s Narrative Financial Discussion and Analysis |
|                                                                           | Quantitative and Qualitative Disclosures About Risk Management Activities |
|                                                                           | Condensed Consolidated Financial Statements |
|                                                                           | Index to Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries |
|                                                                           |   |
| Ohio Power Company Consolidated:                                               |   |
|                                                                           | Management’s Financial Discussion and Analysis |   |
|                                                                           | Quantitative and Qualitative Disclosures About Risk Management Activities |   |
|                                                                           | Condensed Consolidated Financial Statements |   |
|                                                                           | Index to Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries |   |
|                                                                           |   |   |
| Public Service Company of Oklahoma:                                            |   |
|                                                                           | Management’s Narrative Financial Discussion and Analysis |   |
|                                                                           | Quantitative and Qualitative Disclosures About Risk Management Activities |   |
|                                                                           | Condensed Financial Statements |   |
|                                                                           | Index to Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries |   |
|                                                                           |   |   |
| Southwestern Electric Power Company Consolidated:                              |   |
|                                                                           | Management’s Financial Discussion and Analysis |   |
|                                                                           | Quantitative and Qualitative Disclosures About Risk Management Activities |   |
|                                                                           | Condensed Consolidated Financial Statements |   |
|                                                                           | Index to Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries |   |
|                                                                           |   |   |
| Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries   |   |
|                                                                           |   |   |
| Combined Management’s Discussion and Analysis of Registrant Subsidiaries |   |
|                                                                           |   |   |
| Controls and Procedures                                                        |   |
|                                                                           |   |   |   |
| Part II.  OTHER INFORMATION                                          |   |
|                                                                           |   |
|                                                                           | Item 1. | Legal Proceedings |   |
|                                                                           | Item 1A. | Risk Factors |   |
|                                                                           | Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |   |
|                                                                           | Item 5. | Other Information |   |
|                                                                           | Item 6. | Exhibits: |   |
|                                                                           |   |   |   |   | Exhibit 10 |   |
|                                                                           |   |   |   |   | Exhibit 12 |   |
|                                                                           |   |   |   |   | Exhibit 31(a) |   |
|                                                                           |   |   |   |   | Exhibit 31(b) |   |
|                                                                           |   |   |   |   | Exhibit 32(a) |   |
|                                                                           |   |   |   |   | Exhibit 32(b) |   |
|                                                                           |   |   |   |   |   |   |
| SIGNATURE                                                                      |   |   |

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

----

| Term |   | Meaning |
|------|--------|---------|

| AEGCo                    |   | AEP Generating Company, an AEP electric utility subsidiary.                                                                                                                                                                                          |
|--------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| AEP or Parent            |   | American Electric Power Company, Inc.                                                                                                                                                                                                                |
| AEP Consolidated         |   | AEP and its majority owned consolidated subsidiaries and consolidated affiliates.                                                                                                                                                                    |
| AEP Credit               |   | AEP Credit, Inc., a subsidiary of AEP which factors accounts receivable and accrued utility revenues for affiliated electric utility companies.                                                                                                      |
| AEP East companies       |   | APCo, CSPCo, I&M, KPCo and OPCo.                                                                                                                                                                                                                 |
| AEP Power Pool           |   | Members are APCo, CSPCo, I&M, KPCo and OPCo.  The Pool shares the generation, cost of generation and resultant wholesale off-system sales of the member companies.                                                                     |
| AEP System or the System |   | American Electric Power System, an integrated electric utility system, owned and operated by AEP’s electric utility subsidiaries.                                                                                                              |
| AEP West companies       |   | PSO, SWEPCo, TCC and TNC.                                                                                                                                                                                                                            |
| AEPSC                    |   | American Electric Power Service Corporation, a service subsidiary providing management and professional services to AEP and its subsidiaries.                                                                                                        |
| AFUDC                    |   | Allowance for Funds Used During Construction.                                                                                                                                                                                                        |
| AOCI                     |   | Accumulated Other Comprehensive Income.                                                                                                                                                                                                              |
| APCo                     |   | Appalachian Power Company, an AEP electric utility subsidiary.                                                                                                                                                                                       |
| APSC                     |   | Arkansas Public Service Commission.                                                                                                                                                                                                                  |
| ASU                      |   | Accounting Standard Update.                                                                                                                                                                                                                          |
| CAA                      |   | Clean Air Act.                                                                                                                                                                                                                                       |
| CLECO                    |   | Central Louisiana Electric Company, a nonaffiliated utility company.                                                                                                                                                                                 |
| CO2                      |   | 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.                                                                                                                                                                   |
| CSPCo                    |   | Columbus Southern Power Company, an AEP electric utility subsidiary.                                                                                                                                                                                 |
| CTC                      |   | Competition Transition Charge.                                                                                                                                                                                                                       |
| CWIP                     |   | Construction Work in Progress.                                                                                                                                                                                                                       |
| DETM                     |   | Duke Energy Trading and Marketing L.L.C., a risk management counterparty.                                                                                                                                                                            |
| DHLC                     |   | Dolet Hills Lignite Company, LLC, a wholly-owned lignite mining subsidiary of SWEPCo.                                                                                                                                                                |
| E&R                  |   | Environmental compliance and transmission and distribution system reliability.                                                                                                                                                                       |
| EIS                      |   | Energy Insurance Services, Inc., a nonaffiliated captive insurance company.                                                                                                                                                                          |
| ERCOT                    |   | Electric Reliability Council of Texas.                                                                                                                                                                                                               |
| ESP                      |   | Electric Security Plans, filed with the PUCO, pursuant to the Ohio Amendments.                                                                                                                                                                       |
| ETT                      |   | Electric Transmission Texas, LLC, an equity interest joint venture between AEP Utilities, Inc. and MidAmerican Energy Holdings Company Texas Transco, LLC formed to own and operate electric transmission facilities in ERCOT.                       |
| FAC                      |   | Fuel Adjustment Clause.                                                                                                                                                                                                                              |
| FASB                     |   | Financial Accounting Standards Board.                                                                                                                                                                                                                |
| Federal EPA              |   | United States Environmental Protection Agency.                                                                                                                                                                                                       |
| FERC                     |   | Federal Energy Regulatory Commission.                                                                                                                                                                                                                |
| FGD                      |   | Flue Gas Desulfurization or Scrubbers.                                                                                                                                                                                                               |
| FTR                      |   | Financial Transmission Right, a financial instrument that entitles the holder to receive compensation for certain congestion-related transmission charges that arise when the power grid is congested resulting in differences in locational prices. |
| GAAP                     |   | Accounting Principles Generally Accepted in the United States of America.                                                                                                                                                                            |

| I&M                   |   | Indiana Michigan Power Company, an AEP electric utility subsidiary.                                                                                                                         |
|---------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| IGCC                      |   | Integrated Gasification Combined Cycle, technology that turns coal into a cleaner-burning gas.                                                                                              |
| Interconnection Agreement |   | Agreement, dated July 6, 1951, as amended, by and among APCo, CSPCo, I&M, KPCo and OPCo, defining the sharing of costs and benefits associated with their respective generating plants. |
| IRS                       |   | Internal Revenue Service.                                                                                                                                                                   |
| IURC                      |   | Indiana Utility Regulatory Commission.                                                                                                                                                      |
| KGPCo                     |   | Kingsport Power Company, an AEP electric distribution subsidiary.                                                                                                                           |
| KPCo                      |   | Kentucky Power Company, an AEP electric utility subsidiary.                                                                                                                                 |
| KPSC                      |   | Kentucky Public Service Commission.                                                                                                                                                         |
| kV                        |   | Kilovolt.                                                                                                                                                                                   |
| KWH                       |   | Kilowatthour.                                                                                                                                                                               |
| LPSC                      |   | Louisiana Public Service Commission.                                                                                                                                                        |
| MISO                      |   | Midwest Independent Transmission System Operator.                                                                                                                                           |
| MLR                       |   | Member load ratio, the method used to allocate AEP Power Pool transactions to its members.                                                                                                  |
| MMBtu                     |   | Million British Thermal Units.                                                                                                                                                              |
| MPSC                      |   | Michigan Public Service Commission.                                                                                                                                                         |
| MTM                       |   | Mark-to-Market.                                                                                                                                                                             |
| MW                        |   | Megawatt.                                                                                                                                                                                   |
| MWH                       |   | Megawatthour.                                                                                                                                                                               |
| NEIL                      |   | Nuclear Electric Insurance Limited.                                                                                                                                                         |
| NOx                       |   | Nitrogen oxide.                                                                                                                                                                             |
| Nonutility Money Pool     |   | AEP’s Nonutility Money Pool.                                                                                                                                                          |
| NSR                       |   | New Source Review.                                                                                                                                                                          |
| OCC                       |   | Corporation Commission of the State of Oklahoma.                                                                                                                                            |
| OPCo                      |   | Ohio Power Company, an AEP electric utility subsidiary.                                                                                                                                     |
| OPEB                      |   | Other Postretirement Benefit Plans.                                                                                                                                                         |
| OTC                       |   | Over the counter.                                                                                                                                                                           |
| 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.                                                                                                                                                         |
| Registrant Subsidiaries   |   | AEP subsidiaries which are SEC registrants; APCo, CSPCo, I&M, OPCo, PSO and SWEPCo.                                                                                                     |
| Risk Management Contracts |   | Trading and nontrading derivatives, including those derivatives designated as cash flow and fair value hedges.                                                                              |
| Rockport Plant            |   | A generating plant, consisting of two 1,300 MW coal-fired generating units near Rockport, Indiana, owned by AEGCo and I&M.                                                              |
| RTO                       |   | Regional Transmission Organization.                                                                                                                                                         |
| S&P                   |   | Standard and Poor’s.                                                                                                                                                                  |
| Sabine                    |   | Sabine Mining Company, a lignite mining company that is a consolidated variable interest entity.                                                                                            |

| SIA                                         |   | System Integration Agreement.                                                                                                                              |
|---------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|
| SNF                                         |   | Spent Nuclear Fuel.                                                                                                                                        |
| SO2                                         |   | Sulfur Dioxide.                                                                                                                                            |
| SPP                                         |   | Southwest Power Pool.                                                                                                                                      |
| Stall Unit                                  |   | J. Lamar Stall Unit at Arsenal Hill Plant.                                                                                                                 |
| SWEPCo                                      |   | Southwestern Electric Power Company, an AEP electric utility subsidiary.                                                                                   |
| TCC                                         |   | AEP Texas Central Company, an AEP electric utility subsidiary.                                                                                             |
| Texas Restructuring   Legislation |   | Legislation enacted in 1999 to restructure the electric utility industry in Texas.                                                                         |
| TNC                                         |   | AEP Texas North Company, an AEP electric utility subsidiary.                                                                                               |
| True-up Proceeding                          |   | A filing made under the Texas Restructuring Legislation to finalize the amount of stranded costs and other true-up items and the recovery of such amounts. |
| Turk Plant                                  |   | John W. Turk, Jr. Plant.                                                                                                                                   |
| Utility Money Pool                          |   | AEP System’s Utility Money Pool.                                                                                                                     |
| VIE                                         |   | Variable Interest Entity.                                                                                                                                  |
| Virginia SCC                                |   | Virginia State Corporation Commission.                                                                                                                     |
| WPCo                                        |   | Wheeling Power Company, an AEP electric distribution subsidiary.                                                                                           |
| WVPSC                                       |   | Public Service Commission of West Virginia.                                                                                                                |

----

| · | The economic climate and growth in, or contraction within, our service territory and changes in market demand and demographic patterns.                                                                                                                                                                                                                                         |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Inflationary or deflationary interest rate trends.                                                                                                                                                                                                                                                                                                                              |
| · | 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.                                                                                                                                |
| · | 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.                                                                                                                                                                         |
| · | Electric load and customer growth.                                                                                                                                                                                                                                                                                                                                              |
| · | Weather conditions, including storms, and our ability to recover significant storm restoration costs through applicable rate mechanisms.                                                                                                                                                                                                                                        |
| · | Available sources and costs of, and transportation for, fuels and the creditworthiness and performance of fuel suppliers and transporters.                                                                                                                                                                                                                                      |
| · | Availability of necessary generating capacity and the performance of our generating plants.                                                                                                                                                                                                                                                                                     |
| · | Our ability to recover I&M’s Donald C. Cook Nuclear Plant Unit 1 restoration costs through warranty, insurance and the regulatory process.                                                                                                                                                                                                                            |
| · | Our ability to recover regulatory assets and stranded costs in connection with deregulation.                                                                                                                                                                                                                                                                                    |
| · | Our ability to recover increases in fuel and other energy costs through regulated or competitive electric rates.                                                                                                                                                                                                                                                                |
| · | Our ability to build or acquire generating capacity, including the Turk Plant, and transmission line facilities (including our ability to obtain any necessary regulatory approvals and permits) when needed at acceptable prices and terms and to recover those costs (including the costs of projects that are cancelled) through applicable rate cases or competitive rates. |
| · | New legislation, litigation and government regulation, including requirements for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances or additional regulation of fly ash and similar combustion products that could impact the continued operation and cost recovery of our plants.                                        |
| · | Timing and resolution of pending and future rate cases, negotiations and other regulatory decisions (including rate or other recovery of new investments in generation, distribution and transmission service and environmental compliance).                                                                                                                                    |
| · | Resolution of litigation (including our dispute with Bank of America).                                                                                                                                                                                                                                                                                                          |
| · | Our ability to constrain operation and maintenance costs.                                                                                                                                                                                                                                                                                                                       |
| · | Our ability to develop and execute a strategy based on a view regarding prices of electricity, natural gas and other energy-related commodities.                                                                                                                                                                                                                                |
| · | Changes in the creditworthiness of the counterparties with whom we have contractual arrangements, including participants in the energy trading market.                                                                                                                                                                                                                          |
| · | Actions of rating agencies, including changes in the ratings of debt.                                                                                                                                                                                                                                                                                                           |
| · | Volatility and changes in markets for electricity, natural gas, coal, nuclear fuel and other energy-related commodities.                                                                                                                                                                                                                                                        |
| · | Changes in utility regulation, including the implementation of ESPs and related regulation in Ohio and the allocation of costs within regional transmission organizations, including PJM and SPP.                                                                                                                                                                               |
| · | Accounting pronouncements periodically issued by accounting standard-setting bodies.                                                                                                                                                                                                                                                                                            |
| · | The impact of volatility in the capital markets on the value of the investments held by our pension, other postretirement benefit plans and nuclear decommissioning trust and the impact on future funding requirements.                                                                                                                                                        |
| · | Prices and demand for power that we generate and sell at wholesale.                                                                                                                                                                                                                                                                                                             |
| · | Changes in technology, particularly with respect to new, developing or alternative sources of generation.                                                                                                                                                                                                                                                                       |
| · | Other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.                                                                                                                                                                                                                      |
| · | Our ability to recover through rates the remaining unrecovered investment, if any, in generating units that may be retired before the end of their previously projected useful lives.                                                                                                                                                                                      |

| AEP and its Registrant Subsidiaries expressly disclaim any obligation to update any forward-looking information. |
|------------------------------------------------------------------------------------------------------------------|

----

| Kentucky – In December 2009, KPCo filed a base rate case with the KPSC to increase base revenues by $124 million annually based on an 11.75% return on common equity.  In April 2010, the Kentucky Industrial Utility Customers recommended an annual base revenue increase of no more than $41 million.  New rates are expected to become effective in July 2010.                                                                                                                                                                                                                                                                                                              |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Michigan – In January 2010, I&M filed for a $63 million increase in annual Michigan base rates based on an 11.75% return on common equity.  I&M can request interim rates, subject to refund, after six months.  The MPSC must issue a final order within one year.                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Ohio – Ohio law requires the PUCO to determine, following the end of each year of the ESP, if rate adjustments included in the ESP resulted in significantly excessive earnings.  If the rate adjustments, in the aggregate, result in significantly excessive earnings, the excess amount would be returned to customers.  The PUCO’s decision determining a methodology is not expected to be finalized until a filing is made by CSPCo and OPCo in 2010 related to 2009 earnings and the PUCO issues an order thereon.  As a result, CSPCo and OPCo are unable to determine whether they will be required to return any of their Ohio revenues to customers. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Oklahoma – In 2009, the OCC approved PSO’s Capital Reliability Rider (CRR) filing which requires PSO to file a base rate case no later than July 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Texas – In April 2010, a settlement was approved by the PUCT to increase SWEPCo’s base rates by approximately $15 million annually, effective May 2010, including a return on equity of 10.33%.  The settlement agreement also allows SWEPCo a $10 million one-year surcharge rider to recover additional vegetation management costs that SWEPCo must spend within two years.                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Virginia – In July 2009, APCo filed a generation and distribution base rate increase with the Virginia SCC of $154 million annually based on a 13.35% return on common equity.  The Virginia SCC staff and intervenors have recommended revenue increases ranging from $33 million to $94 million.  Interim rates, subject to refund, became effective in December 2009 but were discontinued in February 2010 when Virginia newly enacted legislation suspended the collection of interim rates.  The Virginia SCC is required to issue a final order no later than July 2010 with new rates effective August 2010.                                                  |

| West Virginia – APCo provided notice to the WVPSC that it intends to file a base rate case during 2010. |
|---------------------------------------------------------------------------------------------------------------|

| 2010 Health Care Legislation |
|------------------------------|

| · | Generation of electricity for sale to U.S. retail and wholesale customers. |
|--------|----------------------------------------------------------------------------|
| · | Electricity transmission and distribution in the U.S.                      |

| · | Commercial barging operations that annually transport coal and dry bulk commodities primarily on the Ohio, Illinois and lower Mississippi Rivers. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Wind farms and marketing and risk management activities primarily in ERCOT. |
|--------|-----------------------------------------------------------------------------|

|                     | Three Months Ended March 31, |   |
|--------------------------|------------------------------|--------|
|                     | 2010                         |   | 2009 |   |
|                     | (in millions)                |   |
| Utility Operations       |                         | $      | 344 |   |   | $ | 346 |   |
| AEP River Operations     |                         |   | 3 |   |   |   | 11 |   |
| Generation and Marketing |                         |   | 10 |   |   |   | 24 |   |
| All Other (a)            |                         |   | (11 | ) |   |   | (18 | ) |
| Net Income               |                         | $      | 346 |   |   | $ | 363 |   |

| (a)    | While not considered a business segment, All Other includes: |
|--------|--------------------------------------------------------------|
|   | ·                                                       | Parent’s guarantee revenue received from affiliates, investment income, interest income and interest expense and other nonallocated costs. |
|   | ·                                                       | Forward natural gas contracts that were not sold with our natural gas pipeline and storage operations in 2004 and 2005.  These contracts are financial derivatives which gradually settle and completely expire in 2011. |

|                          |   | Three Months Ended |   |
|-------------------------------|--------|--------------------|--------|
|                          |   | March 31,          |   |
|                          |   | 2010               |   |   | 2009 |   |
|                          |   | (in millions)      |   |
| Revenues                      |   | $                  | 3,426  |   |   | $ | 3,267 |   |
| Fuel and Purchased Power      |   |               | 1,247  |   |   |   | 1,196 |   |
| Gross Margin                  |   |               | 2,179  |   |   |   | 2,071 |   |
| Depreciation and Amortization |   |               | 398    |   |   |   | 373 |   |
| Other Operating Expenses      |   |               | 1,040  |   |   |   | 994 |   |
| Operating Income              |   |               | 741    |   |   |   | 704 |   |
| Other Income, Net             |   |               | 43     |   |   |   | 30 |   |
| Interest Expense              |   |               | 235    |   |   |   | 220 |   |
| Income Tax Expense            |   |               | 205    |   |   |   | 168 |   |
|                          |   |               |   |   |   |   |   |   |
| Net Income                    |   | $                  | 344    |   |   | $ | 346 |   |

| Energy/Delivery Summary |   |                 | 2010   |   |   | 2009   |   |
|-------------------------|--------|----------------------|--------|--------|--------|--------|--------|
|                    |   | (in millions of KWH) |   |
| Retail:                 |   |                 |   |   |   |   |
| Residential             |   |                 | 17,774 |   |   |   | 16,371 |   |
| Commercial              |   |                 | 11,475 |   |   |   | 11,610 |   |
| Industrial              |   |                 | 13,381 |   |   |   | 13,522 |   |
| Miscellaneous           |   |                 | 713    |   |   |   | 719    |   |
| Total Retail (a)        |   |                 | 43,343 |   |   |   | 42,222 |   |
|                    |   |                 |   |   |   |   |   |   |
| Wholesale               |   |                 | 8,137  |   |   |   | 6,774  |   |
|                    |   |                 |   |   |   |   |   |   |
| Total KWHs              |   |                 | 51,480 |   |   |   | 48,996 |   |

| (a) | Includes energy delivered to customers served by AEP’s Texas Wires Companies. |
|-----|-------------------------------------------------------------------------------------|

|                       |   | 2010             |   |   | 2009   |   |
|----------------------------|--------|------------------|--------|--------|--------|--------|
|                       |   | (in degree days) |   |
| Eastern Region             |   |             |   |   |   |   |
| Actual – Heating (a) |   |             | 1,900  |   |   |   | 1,820 |   |
| Normal – Heating (b) |   |             | 1,741  |   |   |   | 1,791 |   |
|                       |   |             |   |   |   |   |   |   |
| Actual – Cooling (c) |   |             | -      |   |   |   | 5 |   |
| Normal – Cooling (b) |   |             | 3      |   |   |   | 3 |   |
|                       |   |             |   |   |   |   |   |   |
| Western Region             |   |             |   |   |   |   |   |   |
| Actual – Heating (a) |   |             | 759    |   |   |   | 513 |   |
| Normal – Heating (b) |   |             | 574    |   |   |   | 579 |   |
|                       |   |             |   |   |   |   |   |   |
| Actual – Cooling (d) |   |             | 20     |   |   |   | 99 |   |
| Normal – Cooling (b) |   |             | 58     |   |   |   | 56 |   |

| (a) | Eastern Region and Western Region heating degree days are calculated on a 55 degree temperature base.                                          |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Normal Heating/Cooling represents the thirty-year average of degree days.                                                                      |
| (c) | Eastern Region cooling degree days are calculated on a 65 degree temperature base.                                                             |
| (d) | Western Region cooling degree days are calculated on a 65 degree temperature base for PSO/SWEPCo and a 70 degree temperature base for TCC/TNC. |

----

| First Quarter of 2009                               |   |   |   |   | $      | 346    |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                |   |   |   |   |   |   |   |
| Changes in Gross Margin:                            |   |   |   |   |   |   |   |
| Retail Margins                                      |   |   | 169    |   |   |   |   |   |
| Off-system Sales                                    |   |   | 12     |   |   |   |   |   |
| Transmission Revenues                               |   |   | 10     |   |   |   |   |   |
| Other Revenues                                      |   |   | (83    | )      |   |   |   |   |
| Total Change in Gross Margin                        |   |   |   |   |   |   | 108    |   |
|                                                |   |   |   |   |   |   |   |   |
| Total Expenses and Other:                           |   |   |   |   |   |   |   |   |
| Other Operation and Maintenance                     |   |   | (37    | )      |   |   |   |   |
| Depreciation and Amortization                       |   |   | (25    | )      |   |   |   |   |
| Taxes Other Than Income Taxes                       |   |   | (9     | )      |   |   |   |   |
| Interest and Investment Income                      |   |   | (3     | )      |   |   |   |   |
| Carrying Costs Income                               |   |   | 5      |   |   |   |   |   |
| Allowance for Equity Funds Used During Construction |   |   | 8      |   |   |   |   |   |
| Interest Expense                                    |   |   | (15    | )      |   |   |   |   |
| Equity Earnings of Unconsolidated Subsidiaries      |   |   | 3      |   |   |   |   |   |
| Total Expenses and Other                            |   |   |   |   |   |   | (73    | ) |
|                                                |   |   |   |   |   |   |   |   |
| Income Tax Expense                                  |   |   |   |   |   |   | (37    | ) |
|                                                |   |   |   |   |   |   |   |   |
| First Quarter of 2010                               |   |   |   |   |   | $      | 344    |   |

| · | Retail Margins increased $169 million primarily due to the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | A $52 million increase related to an increase in interim rates in Virginia and the recovery of E&R costs in Virginia and construction financing costs in West Virginia, a $31 million increase related to the PUCO’s approval of our Ohio ESPs, a $12 million net rate increase for I&M, an $11 million increase in base rates in Oklahoma and $22 million of rate increases in our other jurisdictions. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | A $38 million increase in weather-related usage primarily due to a 4% increase in heating degree days in our eastern region and a 48% increase in heating degree days in our western region. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | A $20 million increase in fuel margins due to higher fuel and purchased power costs recorded in 2009 related to the Cook Plant Unit 1 shutdown.  This increase in fuel margins was offset by a corresponding decrease in Other Revenues as discussed below. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | These increases were offset by a $37 million decrease in non-weather usage due to reduced operations by several significant industrial customers, reduced usage by commercial customers due to difficult economic conditions and the termination of an I&M unit power agreement. |
| · | Margins from Off-system Sales increased $12 million primarily due to higher physical sales volumes in our eastern region reflecting favorable generation availability.                                                                                                                                                                                                                                                                                                                                                                               |
| · | Transmission Revenues increased $10 million primarily due to increased revenues in the ERCOT, PJM and SPP regions.                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| · | Other Revenues decreased $83 million primarily due to the Cook Plant accidental outage insurance proceeds of $54 million in the first quarter of 2009.  I&M reduced customer bills by approximately $20 million in the first quarter of 2009 for the cost of replacement power during the outage period.  This decrease in revenues was offset by a corresponding increase in Retail Margins as discussed above.  Other Revenues also decreased due to lower gains on sales of emission allowances of $19 million. |

| · | Other Operation and Maintenance expenses increased $37 million primarily due to the following:                                                                                                                                                                                                                                                     |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                                                                                                                             | A $26 million increase in demand side management, energy efficiency and vegetation management programs. |
|   | ·                                                                                                                                                                                                                                                                                                                                             | A $23 million increase in transmission expenses, including base transmission work, RTO fees and transmission service expenses. |
|   | ·                                                                                                                                                                                                                                                                                                                                             | A $19 million increase in system improvements, reliability and other distribution expenses. |
|   | ·                                                                                                                                                                                                                                                                                                                                             | A $14 million increase in administrative and general expenses primarily for employee benefits. |
|   | ·                                                                                                                                                                                                                                                                                                                                             | A $5 million increase in plant outage and other plant operating and maintenance expenses. |
|   | These increases were partially offset by:                                                                                                                                                                                                                                                                                                          |
|   | ·                                                                                                                                                                                                                                                                                                                                             | A $35 million decrease in storm expenses. |
|   | ·                                                                                                                                                                                                                                                                                                                                             | A $15 million decrease in low income assistance programs and other customer accounts expense. |
| · | Depreciation and Amortization increased $25 million primarily due to new environmental improvements placed in service and other increases in depreciable property balances.                                                                                                                                                                        |
| · | Taxes Other Than Income Taxes increased $9 million primarily due to increases in property and other taxes.                                                                                                                                                                                                                                         |
| · | Allowance for Equity Funds Used During Construction increased $8 million related to construction projects at SWEPCo’s Turk Plant and Stall Unit and the reapplication of “Regulated Operations” accounting guidance for the generation portion of SWEPCo’s Texas retail jurisdiction effective the second quarter of 2009. |
| · | Interest Expense increased $15 million primarily due to an increase in long-term debt and a decrease in the debt component of AFUDC due to lower CWIP balances at APCo, CSPCo and OPCo.                                                                                                                                                            |
| · | Income Tax Expense increased $37 million primarily due to the increase in pretax book income, the regulatory accounting treatment of state income taxes and the tax treatment associated with the future reimbursement of Medicare Part D prescription drug benefits.                                                                              |

|                                                  |   | March 31, 2010  |         | December 31, 2009 |
|-------------------------------------------------------|--------|-----------------|--------------|-------------------|
|                                                  |   | ($ in millions) |
| Long-term Debt, including amounts due within one year |   | $               | 17,534  |              | 54.8% |   | $ | 17,498  |   | 56.8% |
| Short-term Debt                                       |   |            | 1,063   |              | 3.3    |   |   | 126  |   | 0.4    |
| Total Debt                                            |   |            | 18,597  |              | 58.1    |   |   | 17,624  |   | 57.2    |
| Preferred Stock of Subsidiaries                       |   |            | 61      |              | 0.2    |   |   | 61  |   | 0.2    |
| AEP Common Equity                                     |   |            | 13,324  |              | 41.7    |   |   | 13,140  |   | 42.6    |
|                                                  |   |            |         |              |   |   |   |   |   |   |
| Total Debt and Equity Capitalization                  |   | $               | 31,982  |              | 100.0% |   | $ | 30,825  |   | 100.0% |

|                                                                                 |   | Amount        |   | Maturity |
|--------------------------------------------------------------------------------------|--------|---------------|--------|----------|
|                                                                                 |   | (in millions) |   |     |
| Commercial Paper Backup:                                                             |   |          |   |     |
| Revolving Credit Facility                                                            |   | $             | 1,500  |     | March 2011 |
| Revolving Credit Facility                                                            |   |          | 1,454  |     | April 2012 |
| Revolving Credit Facility                                                            |   |          | 627    |     | April 2011 |
| Total                                                                                |   |          | 3,581  |     |   |
| Cash and Cash Equivalents                                                            |   |          | 818    |     |   |
| Total Liquidity Sources                                                              |   |          | 4,399  |     |   |
| Less:  AEP Commercial Paper Outstanding                                    |   |          | 399    |     |   |
|           Letters of Credit Issued |   |          | 652    |     |   |
|                                                                                 |   |          |   |     |   |
| Net Available Liquidity                                                              |   | $             | 3,348  |     |   |

|                      | Moody’s |   |   | S&P |   |   | Fitch  |
|---------------------------|---------------|--------|--------|---------|--------|--------|--------|
|                      |          |   |   |    |   |   |   |
| AEP Short Term Debt       | P-2           |   |   | A-2     |   |   | F-2    |
| AEP Senior Unsecured Debt | Baa2          |   |   | BBB     |   |   | BBB    |

| · | Changed its rating outlook for AEP to stable from negative. |
|--------|-------------------------------------------------------------|

| · | Changed its rating outlook for TCC to stable from negative. |
|--------|-------------------------------------------------------------|

|                                             | Three Months Ended |   |
|--------------------------------------------------|--------------------|--------|
|                                             | March 31,          |   |
|                                             | 2010               |   | 2009 |   |
|                                             | (in millions)      |   |
| Cash and Cash Equivalents at Beginning of Period |               | $      | 490 |   |   | $ | 411 |   |
| Net Cash Flows from Operating Activities         |               |   | 2 |   |   |   | 317 |   |
| Net Cash Flows Used for Investing Activities     |               |   | (430 | ) |   |   | (727 | ) |
| Net Cash Flows from Financing Activities         |               |   | 756 |   |   |   | 709 |   |
| Net Increase in Cash and Cash Equivalents        |               |   | 328 |   |   |   | 299 |   |
| Cash and Cash Equivalents at End of Period       |               | $      | 818 |   |   | $ | 710 |   |

|                                     | Three Months Ended |   |
|------------------------------------------|--------------------|--------|
|                                     | March 31,          |   |
|                                     | 2010               |   | 2009 |   |
|                                     | (in millions)      |   |
| Net Income                               |               | $      | 346 |   |   | $ | 363 |   |
| Depreciation and Amortization            |               |   | 408 |   |   |   | 382 |   |
| Other                                    |               |   | (752 | ) |   |   | (428 | ) |
| Net Cash Flows from Operating Activities |               | $      | 2 |   |   | $ | 317 |   |

|                                         | Three Months Ended |   |
|----------------------------------------------|--------------------|--------|
|                                         | March 31,          |   |
|                                         | 2010               |   | 2009 |   |
|                                         | (in millions)      |   |
| Construction Expenditures                    |               | $      | (609 | ) |   | $ | (897 | ) |
| Proceeds from Sales of Assets                |               |   | 139 |   |   |   | 172 |   |
| Other                                        |               |   | 40 |   |   |   | (2 | ) |
| Net Cash Flows Used for Investing Activities |               | $      | (430 | ) |   | $ | (727 | ) |

|                                     | Three Months Ended |   |
|------------------------------------------|--------------------|--------|
|                                     | March 31,          |   |
|                                     | 2010               |   | 2009 |   |
|                                     | (in millions)      |   |
| Issuance of Common Stock, Net            |               | $      | 26 |   |   | $ | 48 |   |
| Issuance/Retirement of Debt, Net         |               |   | 952 |   |   |   | 854 |   |
| Dividends Paid on Common Stock           |               |   | (197 | ) |   |   | (169 | ) |
| Other                                    |               |   | (25 | ) |   |   | (24 | ) |
| Net Cash Flows from Financing Activities |               | $      | 756 |   |   | $ | 709 |   |

| · | In April 2010, OPCo retired $400 million of its outstanding Senior Unsecured Notes.                    |
|--------|--------------------------------------------------------------------------------------------------------|
| · | We will refinance an additional $700 million of the remaining long-term debt that will mature in 2010. |

|                                                 | March 31,2010 |   | December 31,2009 |   |
|------------------------------------------------------|---------------|--------|------------------|--------|
|                                                 | (in millions) |
| AEP Credit Accounts Receivable Purchase Commitments  |          | $      | -                |   |   | $ | 631 |   |
| Rockport Plant Unit 2 Future Minimum Lease Payments  |          |   | 1,920            |   |   |   | 1,920 |   |
| Railcars Maximum Potential Loss From Lease Agreement |          |   | 25               |   |   |   | 25 |   |

----

|                                                                                        | Utility Operations |      | GenerationandMarketing |   | All Other |   | Total  |
|---------------------------------------------------------------------------------------------|--------------------|-----------|------------------------|--------|-----------|--------|--------|
| Total MTM Risk Management Contract Net Assets (Liabilities) at December 31, 2009       | $                  | 134  |                   | $      | 147  |   | $      | (3) |   | $ | 278  |
| (Gain) Loss from Contracts Realized/Settled During the Period and Entered in a Prior Period |               | (24)      |                   |   | (6)       |   |   | 2  |   |   | (28) |
| Fair Value of New Contracts at Inception When Entered During the Period (a)            |               | 6    |                   |   | 7    |   |   | -  |   |   | 13  |
| Changes in Fair Value Due to Valuation Methodology Changes on Forward Contracts (b)         |               | (2)       |                   |   | (2)       |   |   | -  |   |   | (4) |
| Changes in Fair Value Due to Market Fluctuations During the Period (c)            |               | 8    |                   |   | 6    |   |   | -  |   |   | 14  |
| Changes in Fair Value Allocated to Regulated Jurisdictions (d)                         |               | 25   |                   |   | -    |   |   | -  |   |   | 25  |
| Total MTM Risk Management Contract Net Assets (Liabilities) at March 31, 2010     | $                  | 147  |                   | $      | 152       |   | $      | (1) |   |   | 298  |
| Cash Flow Hedge Contracts                                                              |               |      |                   |   |      |   |   |   |   |   | (4) |
| Collateral Deposits                                                                         |               |      |                   |   |      |   |   |   |   |   | 134  |
| Total MTM Derivative Contract Net Assets at March 31, 2010                                  |               |      |                   |   |      |   |   |   |   | $ | 428  |

| (a) | Reflects fair value on long-term structured contracts which are typically with customers that seek fixed pricing to limit their risk against fluctuating energy prices.  The contract prices are valued against market curves associated with the delivery location and delivery term.  A significant portion of the total volumetric position has been economically hedged. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Reflects changes in methodology in calculating the credit and discounting liability fair value adjustments.                                                                                                                                                                                                                                                                                      |
| (c) | Market fluctuations are attributable to various factors such as supply/demand, weather, etc.                                                                                                                                                                                                                                                                                                     |
| (d) | Relates to the net gains (losses) of those contracts that are not reflected on the Condensed Consolidated Statements of Income.  These net gains (losses) are recorded as regulatory liabilities/assets.                                                                                                                                                                               |

| Counterparty Credit Quality   |   | Exposure Before Credit Collateral              |   |   | Credit Collateral |   |   | Net Exposure |   |   | Number of Counterparties >10% ofNet Exposure |   |   | Net Exposureof Counterparties >10% |   |
|-------------------------------|--------|------------------------------------------------|--------|--------|-------------------|--------|--------|--------------|--------|--------|-------------------------------------------------|--------|--------|---------------------------------------|--------|
|                          |   | (in millions, except number of counterparties) |   |
| Investment Grade              |   | $                                              | 858    |   |              | $      | 76     |         |   | $      | 782                                             |   |   |                                  | 2      |   |   | $ | 227 |   |
| Split Rating                  |   |                                           | 5      |   |              |   | -      |         |   |   | 5                                               |   |   |                                  | 1      |   |   |   | 5 |   |
| Noninvestment Grade           |   |                                           | 1      |   |              |   | -      |         |   |   | 1                                               |   |   |                                  | 2      |   |   |   | 1 |   |
| No External Ratings:          |   |                                           |   |   |              |   |   |         |   |   |                                            |   |   |                                  |   |   |   |   |   |   |
| Internal Investment Grade     |   |                                           | 127    |   |              |   | 1      |         |   |   | 126                                             |   |   |                                  | 3      |   |   |   | 77 |   |
| Internal Noninvestment Grade  |   |                                           | 105    |   |              |   | 12     |         |   |   | 93                                              |   |   |                                  | 3      |   |   |   | 78 |   |
| Total as of March 31, 2010    |   | $                                              | 1,096  |   |              | $      | 89     |         |   | $      | 1,007                                           |   |   |                                  | 11     |   |   | $ | 388 |   |
|                          |   |                                           |   |   |              |   |   |         |   |   |                                            |   |   |                                  |   |   |   |   |   |   |
| Total as of December 31, 2009 |   | $                                              | 846    |   |              | $      | 58     |         |   | $      | 788                                             |   |   |                                  | 12     |   |   | $ | 317 |   |

| Three Months Ended |   |   |   |    | Twelve Months Ended |
|--------------------|--------|--------|--------|---------|---------------------|
| March 31, 2010     |   |   |   |    | December 31, 2009   |
| (in millions)      |   |   |   |    | (in millions)       |
| End                |   | High   |   | Average |                | Low |   |   |   |   | End |   | High |   | Average |   | Low |
| $1                 |   | $2     |   | $1      |                | $- |   |   |   |   | $1 |   | $2 |   | $1 |   | $- |

----

| REVENUES                                                                 |   | 2010   |        |   | 2009   |   |
|--------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Utility Operations                                                       |   | $      | 3,406       |   |   | $      | 3,267 |   |
| Other Revenues                                                           |   |   | 163         |   |   |   | 191 |   |
| TOTAL REVENUES                                                           |   |   | 3,569       |   |   |   | 3,458 |   |
| EXPENSES                                                                 |   |   |        |   |   |   |   |   |
| Fuel and Other Consumables Used for Electric Generation                  |   |   | 1,014       |   |   |   | 929 |   |
| Purchased Electricity for Resale                                         |   |   | 238         |   |   |   | 295 |   |
| Other Operation                                                          |   |   | 673         |   |   |   | 610 |   |
| Maintenance                                                              |   |   | 271         |   |   |   | 295 |   |
| Depreciation and Amortization                                            |   |   | 408         |   |   |   | 382 |   |
| Taxes Other Than Income Taxes                                            |   |   | 207         |   |   |   | 197 |   |
| TOTAL EXPENSES                                                           |   |   | 2,811       |   |   |   | 2,708 |   |
|                                                                     |   |   |        |   |   |   |   |   |
| OPERATING INCOME                                                         |   |   | 758         |   |   |   | 750 |   |
|                                                                     |   |   |        |   |   |   |   |   |
| Other Income (Expense):                                                  |   |   |        |   |   |   |   |   |
| Interest and Investment Income                                           |   |   | 3           |   |   |   | 5 |   |
| Carrying Costs Income                                                    |   |   | 14          |   |   |   | 9 |   |
| Allowance for Equity Funds Used During Construction                      |   |   | 24          |   |   |   | 16 |   |
| Interest Expense                                                         |   |   | (250        | )      |   |   | (238 | ) |
|                                                                     |   |   |        |   |   |   |   |   |
| INCOME BEFORE INCOME TAX EXPENSE AND EQUITY EARNINGS                     |   |   | 549         |   |   |   | 542 |   |
|                                                                     |   |   |        |   |   |   |   |   |
| Income Tax Expense                                                       |   |   | 207         |   |   |   | 179 |   |
| Equity Earnings of Unconsolidated Subsidiaries                           |   |   | 4           |   |   |   | - |   |
|                                                                     |   |   |        |   |   |   |   |   |
| NET INCOME                                                               |   |   | 346         |   |   |   | 363 |   |
|                                                                     |   |   |        |   |   |   |   |   |
| Less:  Net Income Attributable to Noncontrolling Interests     |   |   | 1           |   |   |   | 2 |   |
|                                                                     |   |   |        |   |   |   |   |   |
| NET INCOME ATTRIBUTABLE TO AEP SHAREHOLDERS                              |   |   | 345         |   |   |   | 361 |   |
|                                                                     |   |   |        |   |   |   |   |   |
| Less: Preferred Stock Dividend Requirements of Subsidiaries              |   |   | 1           |   |   |   | 1 |   |
|                                                                     |   |   |        |   |   |   |   |   |
| EARNINGS ATTRIBUTABLE TO AEP COMMON SHAREHOLDERS                         |   | $      | 344         |   |   | $      | 360 |   |
|                                                                     |   |   |        |   |   |   |   |   |
| WEIGHTED AVERAGE NUMBER OF BASIC AEP COMMON SHARES OUTSTANDING           |   |   | 478,429,535 |   |   |   | 406,826,606 |   |
|                                                                     |   |   |        |   |   |   |   |   |
| TOTAL BASIC EARNINGS PER SHARE ATTRIBUTABLE TO AEP COMMON SHAREHOLDERS   |   | $      | 0.72        |   |   | $      | 0.89 |   |
|                                                                     |   |   |        |   |   |   |   |   |
| WEIGHTED AVERAGE NUMBER OF DILUTED AEP COMMON SHARES OUTSTANDING         |   |   | 478,844,632 |   |   |   | 407,381,954 |   |
|                                                                     |   |   |        |   |   |   |   |   |
| TOTAL DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO AEP COMMON SHAREHOLDERS |   | $      | 0.72        |   |   | $      | 0.89 |   |
|                                                                     |   |   |        |   |   |   |   |   |
| CASH DIVIDENDS PAID PER SHARE                                            |   | $      | 0.41        |   |   | $      | 0.41 |   |

| See Condensed Notes to Condensed Consolidated Financial Statements. |
|---------------------------------------------------------------------|

----

|                                                                   | AEP Common Shareholders |      |   |   |        |
|------------------------------------------------------------------------|-------------------------|-----------|--------|--------|-------------|
|                                                                   | Common Stock            |      |   |   |        |   | Accumulated |   |   |   |   |
|                                                                   |                    |      |   |   |        |   |   |   | Other |   |   |   |   |
|                                                                   |                    |      |   |   | Paid-in     |   | Retained |   | Comprehensive |   | Noncontrolling |   |   |
|                                                                   | Shares                  |      | Amount |   | Capital     |   | Earnings |   | Income (Loss) |   | Interests |   | Total |
| TOTAL EQUITY – DECEMBER 31, 2008                                 |                    | 426  |   | $      | 2,771  |   | $ | 4,527  |   | $ | 3,847  |   | $ | (452) |   | $ | 17  |   | $ | 10,710  |
|                                                                   |                    |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of Common Stock                                               |                    | 2    |   |   | 11     |   |   | 37  |   |   |   |   |   |   |   |   |   |   |   | 48  |
| Common Stock Dividends                                                 |                    |      |   |   |        |   |   |   |   |   | (167) |   |   |   |   |   | (2) |   |   | (169) |
| Preferred Stock Dividend Requirements of Subsidiaries                  |                    |      |   |   |        |   |   |   |   |   | (1) |   |   |   |   |   |   |   |   | (1) |
| Other Changes in Equity                                                |                    |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   | 1  |   |   | 1  |
| SUBTOTAL – EQUITY                                                |                    |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 10,589  |
|                                                                   |                    |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                   |                    |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income (Loss), Net of Taxes:                       |                    |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash Flow Hedges, Net of Tax of $1                                     |                    |      |   |   |        |   |   |   |   |   |   |   |   | 3  |   |   |   |   |   | 3  |
| Securities Available for Sale, Net of Tax of $1                        |                    |      |   |   |        |   |   |   |   |   |   |   |   | (2) |   |   |   |   |   | (2) |
| Amortization of Pension and OPEB Deferred Costs, Net of Tax of $3 |                    |      |   |   |        |   |   |   |   |   |   |   |   | 5  |   |   |   |   |   | 5  |
| NET INCOME                                                             |                    |      |   |   |        |   |   |   |   |   | 361  |   |   |   |   |   | 2  |   |   | 363  |
| TOTAL COMPREHENSIVE INCOME                                             |                    |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 369  |
|                                                                   |                    |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – MARCH 31, 2009                                    |                    | 428  |   | $      | 2,782  |   | $ | 4,564  |   | $ | 4,040  |   | $ | (446) |   | $ | 18  |   | $ | 10,958  |
|                                                                   |                    |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – DECEMBER 31, 2009                                 |                    | 498  |   | $      | 3,239  |   | $ | 5,824  |   | $ | 4,451  |   | $ | (374) |   | $ | -  |   | $ | 13,140  |
|                                                                   |                    |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of Common Stock                                               |                    | 1    |   |   | 5      |   |   | 21 |   |   |   |   |   |   |   |   |   |   |   | 26  |
| Common Stock Dividends                                                 |                    |      |   |   |        |   |   |   |   |   | (196) |   |   |   |   |   | (1) |   |   | (197) |
| Preferred Stock Dividend Requirements of Subsidiaries                  |                    |      |   |   |        |   |   |   |   |   | (1) |   |   |   |   |   |   |   |   | (1) |
| Other Changes in Equity                                                |                    |      |   |   |        |   |   | 2  |   |   | (2) |   |   |   |   |   |   |   |   | -  |
| SUBTOTAL – EQUITY                                                |                    |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 12,968  |
|                                                                   |                    |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                   |                    |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income, Net of Taxes:                              |                    |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash Flow Hedges, Net of Tax of $2                                     |                    |      |   |   |        |   |   |   |   |   |   |   |   | 4  |   |   |   |   |   | 4  |
| Securities Available for Sale, Net of Tax of $-                        |                    |      |   |   |        |   |   |   |   |   |   |   |   | 1  |   |   |   |   |   | 1  |
| Amortization of Pension and OPEB Deferred Costs, Net of Tax of $3 |                    |      |   |   |        |   |   |   |   |   |   |   |   | 5  |   |   |   |   |   | 5  |
| NET INCOME                                                             |                    |      |   |   |        |   |   |   |   |   | 345  |   |   |   |   |   | 1  |   |   | 346  |
| TOTAL COMPREHENSIVE INCOME                                             |                    |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 356  |
|                                                                   |                    |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – MARCH 31, 2010                                    |                    | 499  |   | $      | 3,244  |   | $ | 5,847  |   | $ | 4,597  |   | $ | (364) |   | $ | -  |   | $ | 13,324  |

| See Condensed Notes to Condensed Consolidated Financial Statements. |
|---------------------------------------------------------------------|

----

|                                                                         |   | 2010   |   |   | 2009   |   |
|------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| CURRENT ASSETS                                                               |   |   |   |   |   |   |
| Cash and Cash Equivalents                                                    |   | $      | 818    |   |   | $      | 490 |   |
| Other Temporary Investments                                                  |   |   | 238    |   |   |   | 363 |   |
| Accounts Receivable:                                                         |   |   |   |   |   |   |   |   |
| Customers                                                                    |   |   | 613    |   |   |   | 492 |   |
| Accrued Unbilled Revenues                                                    |   |   | 116    |   |   |   | 503 |   |
| Pledged Accounts Receivable – AEP Credit                               |   |   | 867    |   |   |   | - |   |
| Miscellaneous                                                                |   |   | 98     |   |   |   | 92 |   |
| Allowance for Uncollectible Accounts                                         |   |   | (38    | )      |   |   | (37 | ) |
| Total Accounts Receivable                                                    |   |   | 1,656  |   |   |   | 1,050 |   |
| Fuel                                                                         |   |   | 984    |   |   |   | 1,075 |   |
| Materials and Supplies                                                       |   |   | 582    |   |   |   | 586 |   |
| Risk Management Assets                                                       |   |   | 323    |   |   |   | 260 |   |
| Accrued Tax Benefits                                                         |   |   | 460    |   |   |   | 547 |   |
| Regulatory Asset for Under-Recovered Fuel Costs                              |   |   | 107    |   |   |   | 85 |   |
| Margin Deposits                                                              |   |   | 109    |   |   |   | 89 |   |
| Prepayments and Other Current Assets                                         |   |   | 239    |   |   |   | 211 |   |
| TOTAL CURRENT ASSETS                                                         |   |   | 5,516  |   |   |   | 4,756 |   |
|                                                                         |   |   |   |   |   |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT                                                |   |   |   |   |   |   |   |   |
| Electric:                                                                    |   |   |   |   |   |   |   |   |
| Production                                                                   |   |   | 23,417 |   |   |   | 23,045 |   |
| Transmission                                                                 |   |   | 8,313  |   |   |   | 8,315 |   |
| Distribution                                                                 |   |   | 13,685 |   |   |   | 13,549 |   |
| Other Property, Plant and Equipment (including coal mining and nuclear fuel) |   |   | 3,833  |   |   |   | 3,744 |   |
| Construction Work in Progress                                                |   |   | 2,765  |   |   |   | 3,031 |   |
| Total Property, Plant and Equipment                                          |   |   | 52,013 |   |   |   | 51,684 |   |
| Accumulated Depreciation and Amortization                                    |   |   | 17,487 |   |   |   | 17,340 |   |
| TOTAL PROPERTY, PLANT AND EQUIPMENT – NET                              |   |   | 34,526 |   |   |   | 34,344 |   |
|                                                                         |   |   |   |   |   |   |   |   |
| OTHER NONCURRENT ASSETS                                                      |   |   |   |   |   |   |   |   |
| Regulatory Assets                                                            |   |   | 4,683  |   |   |   | 4,595 |   |
| Securitized Transition Assets                                                |   |   | 1,865  |   |   |   | 1,896 |   |
| Spent Nuclear Fuel and Decommissioning Trusts                                |   |   | 1,433  |   |   |   | 1,392 |   |
| Goodwill                                                                     |   |   | 76     |   |   |   | 76 |   |
| Long-term Risk Management Assets                                             |   |   | 449    |   |   |   | 343 |   |
| Deferred Charges and Other Noncurrent Assets                                 |   |   | 1,077  |   |   |   | 946 |   |
| TOTAL OTHER NONCURRENT ASSETS                                                |   |   | 9,583  |   |   |   | 9,248 |   |
|                                                                         |   |   |   |   |   |   |   |   |
| TOTAL ASSETS                                                                 |   | $      | 49,625 |   |   | $      | 48,348 |   |

| See Condensed Notes to Condensed Consolidated Financial Statements. |
|---------------------------------------------------------------------|

----

|                                                                              |        | 2010          |         | 2009   |
|-----------------------------------------------------------------------------------|-------------|---------------|--------------|--------|
| CURRENT LIABILITIES                                                               |        | (in millions) |
| Accounts Payable                                                                  |        | $             | 954     |   | $ | 1,158  |
| Short-term Debt:                                                                  |        |          |         |   |   |   |
| General                                                                           |        |          | 412     |   |   | 126  |
| Securitized Debt for Receivables – AEP Credit                               |        |          | 651     |   |   | -  |
| Total Short-term Debt                                                             |        |          | 1,063   |   |   | 126  |
| Long-term Debt Due Within One Year                                                |        |          | 1,253   |   |   | 1,741  |
| Risk Management Liabilities                                                       |        |          | 151     |   |   | 120  |
| Customer Deposits                                                                 |        |          | 261     |   |   | 256  |
| Accrued Taxes                                                                     |        |          | 621     |   |   | 632  |
| Accrued Interest                                                                  |        |          | 254     |   |   | 287  |
| Regulatory Liability for Over-Recovered Fuel Costs                                |        |          | 38      |   |   | 76  |
| Other Current Liabilities                                                         |        |          | 920     |   |   | 931  |
| TOTAL CURRENT LIABILITIES                                                         |        |          | 5,515   |   |   | 5,327  |
|                                                                              |        |          |         |   |   |   |
| NONCURRENT LIABILITIES                                                            |        |          |         |   |   |   |
| Long-term Debt                                                                    |        |          | 16,281  |   |   | 15,757  |
| Long-term Risk Management Liabilities                                             |        |          | 193     |   |   | 128  |
| Deferred Income Taxes                                                             |        |          | 6,587   |   |   | 6,420  |
| Regulatory Liabilities and Deferred Investment Tax Credits                        |        |          | 3,005   |   |   | 2,909  |
| Asset Retirement Obligations                                                      |        |          | 1,264   |   |   | 1,254  |
| Employee Benefits and Pension Obligations                                         |        |          | 2,153   |   |   | 2,189  |
| Deferred Credits and Other Noncurrent Liabilities                                 |        |          | 1,242   |   |   | 1,163  |
| TOTAL NONCURRENT LIABILITIES                                                      |        |          | 30,725  |   |   | 29,820  |
|                                                                              |        |          |         |   |   |   |
| TOTAL LIABILITIES                                                                 |        |          | 36,240  |   |   | 35,147  |
|                                                                              |        |          |         |   |   |   |
| Cumulative Preferred Stock Not Subject to Mandatory Redemption                    |        |          | 61      |   |   | 61  |
|                                                                              |        |          |         |   |   |   |
| Rate Matters (Note 3)                                                             |        |          |         |   |   |   |
| Commitments and Contingencies (Note 4)                                            |        |          |         |   |   |   |
|                                                                              |        |          |         |   |   |   |
| EQUITY                                                                            |        |          |         |   |   |   |
| Common Stock – Par Value – $6.50 Per Share:                           |        |          |         |   |   |   |
|                                                                              | 2010        |          | 2009         |   |   |   |   |   |   |   |
| Shares Authorized                                                                 | 600,000,000 |          | 600,000,000  |   |   |   |   |   |   |   |
| Shares Issued                                                                     | 499,133,697 |          | 498,333,265  |   |   |   |   |   |   |   |
| (20,278,858 shares were held in treasury at March 31, 2010 and December 31, 2009) |        |          | 3,244   |   |   | 3,239  |
| Paid-in Capital                                                                   |        |          | 5,847   |   |   | 5,824  |
| Retained Earnings                                                                 |        |          | 4,597   |   |   | 4,451  |
| Accumulated Other Comprehensive Income (Loss)                                     |        |          | (364)        |   |   | (374) |
| TOTAL AEP COMMON SHAREHOLDERS’ EQUITY                                       |        |          | 13,324  |   |   | 13,140  |
|                                                                              |        |          |         |   |   |   |
| Noncontrolling Interests                                                          |        |          | -       |   |   | -  |
|                                                                              |        |          |         |   |   |   |
| TOTAL EQUITY                                                                      |        |          | 13,324  |   |   | 13,140  |
|                                                                              |        |          |         |   |   |   |
| TOTAL LIABILITIES AND EQUITY                                                      |        | $             | 49,625  |   | $ | 48,348  |

| See Condensed Notes to Condensed Consolidated Financial Statements. |
|---------------------------------------------------------------------|

----

|                                                                             |   | 2010   |   |   | 2009   |   |
|----------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| OPERATING ACTIVITIES                                                             |   |   |   |   |   |   |
| Net Income                                                                       |   | $      | 346    |   |   | $      | 363 |   |
| Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities: |   |   |   |   |   |   |   |   |
| Depreciation and Amortization                                                    |   |   | 408    |   |   |   | 382 |   |
| Deferred Income Taxes                                                            |   |   | 121    |   |   |   | 217 |   |
| Carrying Costs Income                                                            |   |   | (14    | )      |   |   | (9 | ) |
| Allowance for Equity Funds Used During Construction                              |   |   | (24    | )      |   |   | (16 | ) |
| Mark-to-Market of Risk Management Contracts                                      |   |   | (69    | )      |   |   | (46 | ) |
| Amortization of Nuclear Fuel                                                     |   |   | 30     |   |   |   | 13 |   |
| Property Taxes                                                                   |   |   | (53    | )      |   |   | (64 | ) |
| Fuel Over/Under-Recovery, Net                                                    |   |   | (97    | )      |   |   | (95 | ) |
| Change in Other Noncurrent Assets                                                |   |   | (28    | )      |   |   | 23 |   |
| Change in Other Noncurrent Liabilities                                           |   |   | 37     |   |   |   | 18 |   |
| Changes in Certain Components of Working Capital:                                |   |   |   |   |   |   |   |   |
| Accounts Receivable, Net                                                         |   |   | (617   | )      |   |   | 102 |   |
| Fuel, Materials and Supplies                                                     |   |   | 83     |   |   |   | (118 | ) |
| Margin Deposits                                                                  |   |   | (20    | )      |   |   | (39 | ) |
| Accounts Payable                                                                 |   |   | (83    | )      |   |   | 3 |   |
| Customer Deposits                                                                |   |   | 5      |   |   |   | 12 |   |
| Accrued Taxes, Net                                                               |   |   | 80     |   |   |   | (57 | ) |
| Accrued Interest                                                                 |   |   | (34    | )      |   |   | (44 | ) |
| Other Current Assets                                                             |   |   | (14    | )      |   |   | (7 | ) |
| Other Current Liabilities                                                        |   |   | (55    | )      |   |   | (321 | ) |
| Net Cash Flows from Operating Activities                                         |   |   | 2      |   |   |   | 317 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| INVESTING ACTIVITIES                                                             |   |   |   |   |   |   |   |   |
| Construction Expenditures                                                        |   |   | (609   | )      |   |   | (897 | ) |
| Change in Other Temporary Investments, Net                                       |   |   | 82     |   |   |   | 111 |   |
| Purchases of Investment Securities                                               |   |   | (445   | )      |   |   | (179 | ) |
| Sales of Investment Securities                                                   |   |   | 473    |   |   |   | 158 |   |
| Acquisitions of Nuclear Fuel                                                     |   |   | (38    | )      |   |   | (76 | ) |
| Proceeds from Sales of Assets                                                    |   |   | 139    |   |   |   | 172 |   |
| Other Investing Activities                                                       |   |   | (32    | )      |   |   | (16 | ) |
| Net Cash Flows Used for Investing Activities                                     |   |   | (430   | )      |   |   | (727 | ) |
|                                                                             |   |   |   |   |   |   |   |   |
| FINANCING ACTIVITIES                                                             |   |   |   |   |   |   |   |   |
| Issuance of Common Stock                                                         |   |   | 26     |   |   |   | 48 |   |
| Issuance of Long-term Debt                                                       |   |   | 652    |   |   |   | 947 |   |
| Borrowings from Revolving Credit Facilities                                      |   |   | 24     |   |   |   | 28 |   |
| Change in Short-term Debt, Net                                                   |   |   | 931    |   |   |   | - |   |
| Retirement of Long-term Debt                                                     |   |   | (638   | )      |   |   | (93 | ) |
| Repayments to Revolving Credit Facilities                                        |   |   | (17    | )      |   |   | (28 | ) |
| Principal Payments for Capital Lease Obligations                                 |   |   | (24    | )      |   |   | (23 | ) |
| Dividends Paid on Common Stock                                                   |   |   | (197   | )      |   |   | (169 | ) |
| Dividends Paid on Cumulative Preferred Stock                                     |   |   | (1     | )      |   |   | (1 | ) |
| Net Cash Flows from Financing Activities                                         |   |   | 756    |   |   |   | 709 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| Net Increase in Cash and Cash Equivalents                                        |   |   | 328    |   |   |   | 299 |   |
| Cash and Cash Equivalents at Beginning of Period                                 |   |   | 490    |   |   |   | 411 |   |
| Cash and Cash Equivalents at End of Period                                       |   | $      | 818    |   |   | $      | 710 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| SUPPLEMENTARY INFORMATION                                                        |   |   |   |   |   |   |   |   |
| Cash Paid for Interest, Net of Capitalized Amounts                               |   | $      | 271    |   |   | $      | 314 |   |
| Net Cash Paid (Received) for Income Taxes                                        |   |   | (2     | )      |   |   | 2 |   |
| Noncash Acquisitions under Capital Leases                                        |   |   | 148    |   |   |   | 6 |   |
| Construction Expenditures Included in Accounts Payable at March 31,              |   |   | 216    |   |   |   | 294 |   |
| Acquisition of Nuclear Fuel Included in Accounts Payable at March 31,            |   |   | 3      |   |   |   | 17 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Consolidated Financial Statements.              |   |   |   |   |   |   |   |   |

----

|  1. | Significant Accounting Matters            |
|----------|-------------------------------------------|
|  2. | New Accounting Pronouncements             |
|  3. | Rate Matters                              |
|  4. | Commitments, Guarantees and Contingencies |
|  5. | Acquisitions and Dispositions             |
|  6. | Benefit Plans                             |
|  7. | Business Segments                         |
|  8. | Derivatives and Hedging                   |
|  9. | Fair Value Measurements                   |
| 10.      | Income Taxes                              |
| 11.      | Financing Activities                      |
| 12.      | Company-wide Staffing and Budget Review   |

----

| 1. | SIGNIFICANT ACCOUNTING MATTERS |
|----|--------------------------------|

|                              |   | SWEPCoSabine |   |   | I&MDCC Fuel |   |   | Protected Cellof EIS |   |   | AEP Credit |   |
|-----------------------------------|--------|--------------|--------|--------|-----------------|--------|--------|----------------------|--------|--------|------------|--------|
| ASSETS                            |   |         |   |   |            |   |   |                 |   |   |       |   |
| Current Assets                    |   | $            | 51     |   |            | $      | 56     |                 |   | $      | 145        |   |   | $ | 844 |   |
| Net Property, Plant and Equipment |   |         | 146    |   |            |   | 77     |                 |   |   | -          |   |   |   | - |   |
| Other Noncurrent Assets           |   |         | 34     |   |            |   | 49     |                 |   |   | 2          |   |   |   | 8 |   |
| Total Assets                      |   | $            | 231    |   |            | $      | 182    |                 |   | $      | 147        |   |   | $ | 852 |   |
|                              |   |         |   |   |            |   |   |                 |   |   |       |   |   |   |   |   |
| LIABILITIES AND EQUITY            |   |         |   |   |            |   |   |                 |   |   |       |   |   |   |   |   |
| Current Liabilities               |   | $            | 35     |   |            | $      | 41     |                 |   | $      | 42         |   |   | $ | 808 |   |
| Noncurrent Liabilities            |   |         | 196    |   |            |   | 141    |                 |   |   | 82         |   |   |   | - |   |
| Equity                            |   |         | -      |   |            |   | -      |                 |   |   | 23         |   |   |   | 44 |   |
| Total Liabilities and Equity      |   | $            | 231    |   |            | $      | 182    |                 |   | $      | 147        |   |   | $ | 852 |   |

|                              |   | SWEPCoSabine |   |   | SWEPCoDHLC |   |   | I&MDCC Fuel |   |   | Protected Cellof EIS |   |
|-----------------------------------|--------|--------------|--------|--------|------------|--------|--------|-----------------|--------|--------|----------------------|--------|
| ASSETS                            |   |         |   |   |       |   |   |            |   |   |                 |   |
| Current Assets                    |   | $            | 51     |   |       | $      | 8      |            |   | $      | 47                   |   |   | $ | 130 |   |
| Net Property, Plant and Equipment |   |         | 149    |   |       |   | 44     |            |   |   | 89                   |   |   |   | - |   |
| Other Noncurrent Assets           |   |         | 35     |   |       |   | 11     |            |   |   | 57                   |   |   |   | 2 |   |
| Total Assets                      |   | $            | 235    |   |       | $      | 63     |            |   | $      | 193                  |   |   | $ | 132 |   |
|                              |   |         |   |   |       |   |   |            |   |   |                 |   |   |   |   |   |
| LIABILITIES AND EQUITY            |   |         |   |   |       |   |   |            |   |   |                 |   |   |   |   |   |
| Current Liabilities               |   | $            | 36     |   |       | $      | 17     |            |   | $      | 39                   |   |   | $ | 36 |   |
| Noncurrent Liabilities            |   |         | 199    |   |       |   | 38     |            |   |   | 154                  |   |   |   | 74 |   |
| Equity                            |   |         | -      |   |       |   | 8      |            |   |   | -                    |   |   |   | 22 |   |
| Total Liabilities and Equity      |   | $            | 235    |   |       | $      | 63     |            |   | $      | 193                  |   |   | $ | 132 |   |

|                             | March 31, 2010   |   |
|----------------------------------|------------------|--------|
|                             | As Reported on   |   |   |   |
|                             | the Consolidated |   | Maximum |   |
|                             | Balance Sheet    |   | Exposure |   |
|                             | (in millions)    |   |
| Capital Contribution from Parent |             | $      | 7 |   |   | $ | 7 |   |
| Retained Earnings                |             |   | 1 |   |   |   | 1 |   |
| SWEPCo’s Guarantee of Debt |             |   | - |   |   |   | 44 |   |
|                             |             |   |   |   |   |   |   |   |
| Total Investment in DHLC         |             | $      | 8 |   |   | $ | 52 |   |

|                             | March 31, 2010   |   | December 31, 2009 |   |
|----------------------------------|------------------|--------|-------------------|--------|
|                             | As Reported on   |   |              |   | As Reported on |   |   |   |
|                             | the Consolidated |   | Maximum           |   | the Consolidated |   | Maximum |   |
|                             | Balance Sheet    |   | Exposure          |   | Balance Sheet |   | Exposure |   |
|                             | (in millions)    |   |
| Capital Contribution from Parent |             | $      | 14                |   |   | $ | 14 |   |   | $ | 13 |   |   | $ | 13 |   |
| Retained Earnings                |             |   | 3                 |   |   |   | 3 |   |   |   | 3 |   |   |   | 3 |   |
|                             |             |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Investment in PATH-WV      |             | $      | 17                |   |   | $ | 17 |   |   | $ | 16 |   |   | $ | 16 |   |

|                                                  |   | Three Months Ended March 31,         |   |
|-------------------------------------------------------|--------|--------------------------------------|--------|
|                                                  |   | 2010                                 |   |   | 2009 |   |
|                                                  |   | (in millions, except per share data) |   |
|                                                  |   |                                 |   | $/share |   |   |   |   | $/share |   |
| Earnings Attributable to AEP Common Shareholders      |   | $                                    | 344    |   |   |   |   |   | $ | 360 |   |   |   |   |
|                                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted Average Number of Basic Shares Outstanding   |   |                                 | 478.4  |   |   | $ | 0.72 |   |   |   | 406.8 |   |   | $ | 0.89 |   |
| Weighted Average Dilutive Effect of:                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Performance Share Units                               |   |                                 | 0.3    |   |   |   | - |   |   |   | 0.5 |   |   |   | - |   |
| Restricted Stock Units                                |   |                                 | 0.1    |   |   |   | - |   |   |   | 0.1 |   |   |   | - |   |
| Weighted Average Number of Diluted Shares Outstanding |   |                                 | 478.8  |   |   | $ | 0.72 |   |   |   | 407.4 |   |   | $ | 0.89 |   |

|                                                                                                   |   | Three Months Ended March 31, |   |
|--------------------------------------------------------------------------------------------------------|--------|------------------------------|--------|
|                                                                                                   |   | 2010                         |   |   | 2009 |   |
| Related Party Transactions                                                                             |   | (in millions)                |   |
| AEP Consolidated Revenues – Utility Operations:                                                  |   |                         |   |   |   |   |
| Ohio Valley Electric Corporation (43.47%) (a)                                                          |   | $                            | (9     | ) |   | $ | - |   |
| AEP Consolidated Revenues – Other Revenues:                                                      |   |                         |   |   |   |   |   |   |
| Ohio Valley Electric Corporation – Barging and Other Transportation Services (43.47% Owned) |   |                         | 8      |   |   |   | 9 |   |
| AEP Consolidated Expenses – Purchased Electricity for Resale:                                    |   |                         |   |   |   |   |   |   |
| Ohio Valley Electric Corporation (43.47% Owned) (b)                                                    |   |                         | 77     |   |   |   | 70 |   |

| (a) | In January 2010, the AEP Power Pool began purchasing power from OVEC to serve off-system sales through June 2010.                                                                                            |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | In January 2010, the AEP Power Pool began purchasing power from OVEC to serve retail sales through June 2010.  The total amount reported in 2010 includes $6 million related to the new agreement. |

| 2. | NEW ACCOUNTING PRONOUNCEMENTS |
|----|-------------------------------|

| · | The power to direct the activities of the VIE that most significantly impact the VIE’s economic performance.                                                                                    |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | The obligation to absorb the losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE. |

| 3. | RATE MATTERS |
|----|--------------|

|                                                                                                              |   | March 31,     |   |   | December 31, |   |
|-------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|--------|--------------|--------|
|                                                                                                              |   | 2010          |   |   | 2009         |   |
|                                                                                                              |   | (in millions) |   |
|                                                                                                              |   |          |   |   |         |   |
| Noncurrent Regulatory Assets (excluding fuel)                                                                     |   |          |   |   |         |   |
| Regulatory assets not yet being recovered pending future proceedings to determine the recovery method and timing: |   |          |   |   |         |   |
|                                                                                                              |   |          |   |   |         |   |
| Regulatory Assets Currently Earning a Return                                                                      |   |          |   |   |         |   |
| Customer Choice Deferrals – CSPCo, OPCo                                                                     |   | $             | 57     |   |         | $      | 57 |   |
| Storm Related Costs – CSPCo, OPCo, TCC                                                                      |   |          | 48     |   |         |   | 49 |   |
| Line Extension Carrying Costs – CSPCo, OPCo                                                                 |   |          | 46     |   |         |   | 43 |   |
| Acquisition of Monongahela Power – CSPCo                                                                    |   |          | 11     |   |         |   | 10 |   |
| Regulatory Assets Currently Not Earning a Return                                                                  |   |          |   |   |         |   |   |   |
| Mountaineer Carbon Capture and Storage Project – APCo                                                       |   |          | 111    |   |         |   | 111 |   |
| Environmental Rate Adjustment Clause – APCo                                                                 |   |          | 27     |   |         |   | 25 |   |
| Storm Related Costs – KPCo                                                                                  |   |          | 24     |   |         |   | 24 |   |
| Transmission Rate Adjustment Clause – APCo                                                                  |   |          | 21     |   |         |   | 26 |   |
| Peak Demand Reduction/Energy Efficiency – CSPCo, OPCo                                                       |   |          | 12     |   |         |   | 8 |   |
| Special Rate Mechanism for Century Aluminum – APCo                                                          |   |          | 12     |   |         |   | 12 |   |
| Storm Related Costs – PSO                                                                                   |   |          | 11     |   |         |   | - |   |
| Deferred Wind Power Costs – APCo                                                                            |   |          | 11     |   |         |   | 5 |   |
| Total Regulatory Assets Not Yet Being Recovered                                                                   |   | $             | 391    |   |         | $      | 370 |   |

| ·   | The Texas District Court judge determined that the PUCT erred by applying an invalid rule to determine the carrying cost rate for the true-up of stranded costs.  The Texas Court of Appeals reversed the District Court’s unfavorable decision. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Texas District Court judge determined that the PUCT improperly reduced TCC’s net stranded plant costs for commercial unreasonableness. This favorable decision was affirmed by the Texas Court of Appeals. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Texas Court of Appeals determined that the PUCT erred by not reducing stranded costs by the “excess earnings” that had already been refunded to affiliated REPs.  This decision could be unfavorable unless the PUCT allows TCC to recover the refunds previously made to the REPs.  See the “TCC Excess Earnings” section below. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4. | COMMITMENTS, GUARANTEES AND CONTINGENCIES |
|----|-------------------------------------------|

| The Comprehensive Environmental Response Compensation and Liability Act (Superfund) and State Remediation |
|-----------------------------------------------------------------------------------------------------------|

|                |   |                                                        |   | JBRs          |   |
|---------------------|--------|-------------------------------------------------------------|--------|---------------|--------|
|                |   |                                                        |   | Installed/    |   |
|                |   |                                                        |   | Scheduled for |   |
| Plant Name          |   | Plant Owners                                                |   | Installation  |   |
| Cardinal            |   | OPCo/ Buckeye Power, Inc.                                   |   | 3             |   |
| Conesville          |   | CSPCo/Dayton Power and Light Company/Duke Energy Ohio, Inc. |   | 1             |   |
| Clifty Creek        |   | Indiana-Kentucky Electric Corporation                       |   | 2             |   |
| Kyger Creek         |   | Ohio Valley Electric Corporation                            |   | 2             |   |
| Muskingum River (a) |   | OPCo                                                        |   | 1             |   |
| Big Sandy (a)       |   | KPCo                                                        |   | 1             |   |

| (a) | Contracts for the Muskingum River and Big Sandy projects have been temporarily suspended during the early development stages of the projects. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------|

| 5. | ACQUISITIONS AND DISPOSITIONS |
|----|-------------------------------|

|                                  |                         |   | Other                        |   |
|---------------------------------------|------------------------------|--------|------------------------------|--------|
|                                  |                         |   | Postretirement               |   |
|                                  | Pension Plans                |   | Benefit Plans                |   |
|                                  | Three Months Ended March 31, |   | Three Months Ended March 31, |   |
|                                  | 2010                         |   | 2009                         |   | 2010 |   | 2009 |   |
|                                  | (in millions)                |   |
| Service Cost                          |                         | $      | 28                           |   |   | $ | 26 |   |   | $ | 12 |   |   | $ | 10 |   |
| Interest Cost                         |                         |   | 63                           |   |   |   | 63 |   |   |   | 28 |   |   |   | 27 |   |
| Expected Return on Plan Assets        |                         |   | (78                          | )      |   |   | (80 | ) |   |   | (26 | ) |   |   | (20 | ) |
| Amortization of Transition Obligation |                         |   | -                            |   |   |   | - |   |   |   | 7 |   |   |   | 7 |   |
| Amortization of Net Actuarial Loss    |                         |   | 22                           |   |   |   | 15 |   |   |   | 7 |   |   |   | 11 |   |
| Net Periodic Benefit Cost             |                         | $      | 35                           |   |   | $ | 24 |   |   | $ | 28 |   |   | $ | 35 |   |

|  7. | BUSINESS SEGMENTS |
|----------|-------------------|

| · | Generation of electricity for sale to U.S. retail and wholesale customers. |
|--------|----------------------------------------------------------------------------|
| · | Electricity transmission and distribution in the U.S.                      |

| · | Commercial barging operations that annually transport coal and dry bulk commodities primarily on the Ohio, Illinois and lower Mississippi Rivers. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Wind farms and marketing and risk management activities primarily in ERCOT. |
|--------|-----------------------------------------------------------------------------|

| · | Parent’s guarantee revenue received from affiliates, investment income, interest income and interest expense, and other nonallocated costs.                                                                                  |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Forward natural gas contracts that were not sold with our natural gas pipeline and storage operations in 2004 and 2005.  These contracts are financial derivatives which gradually settle and completely expire in 2011. |

|                              |   |               |        | Nonutility Operations |   |                   |   |          |     |                    |
|-----------------------------------|--------|--------------------|-------------|-----------------------|--------|------------------------|--------|---------------|----------|-------------------------|
| Three Months Ended March 31, 2010 |   | Utility Operations |        | AEP RiverOperations   |   | GenerationandMarketing |   | All Other (a) |     | Reconciling Adjustments |   | Consolidated |
|                              |   | (in millions)      |
| Revenues from:                    |   |               |        |                  |   |                   |   |          |     |                    |   |   |   |   |   |   |   |   |
| External Customers                |   | $                  | 3,406  |                  | $      | 121               |   | $             | 47  |                    | $ | (5) |   | $ | -  |   | $ | 3,569  |
| Other Operating Segments          |   |               | 20     |                  |   | 5                 |   |          | -   |                    |   | 8  |   |   | (33) |   |   | -  |
| Total Revenues                    |   | $                  | 3,426  |                  | $      | 126               |   | $             | 47  |                    | $ | 3  |   | $ | (33) |   | $ | 3,569  |
|                              |   |               |        |                  |   |                   |   |          |     |                    |   |   |   |   |   |   |   |   |
| Net Income (Loss)                 |   | $                  | 344    |                  | $      | 3                 |   | $             | 10  |                    | $ | (11) |   | $ | -  |   | $ | 346  |

|                              |   |               |        | Nonutility Operations |   |                   |   |         |     |                    |
|-----------------------------------|--------|--------------------|-------------|-----------------------|--------|------------------------|--------|--------------|----------|-------------------------|
|                              |   | Utility Operations |        | AEP RiverOperations   |   | GenerationandMarketing |   | All Other(a) |     | Reconciling Adjustments |   | Consolidated |
|                              |   | (in millions)      |
| Three Months Ended March 31, 2009 |   |               |        |                  |   |                   |   |         |     |                    |   |   |   |   |   |   |   |   |
| Revenues from:                    |   |               |        |                  |   |                   |   |         |     |                    |   |   |   |   |   |   |   |   |
| External Customers                |   | $                  | 3,267  | (d)                   | $      | 123               |   | $            | 87  |                    | $ | (19) |   | $ | -  |   | $ | 3,458  |
| Other Operating Segments          |   |               | -      | (d)                   |   | 6                 |   |         | 5   |                    |   | 22  |   |   | (33) |   |   | -  |
| Total Revenues                    |   | $                  | 3,267  |                  | $      | 129               |   | $            | 92  |                    | $ | 3  |   | $ | (33) |   | $ | 3,458  |
|                              |   |               |        |                  |   |                   |   |         |     |                    |   |   |   |   |   |   |   |   |
| Net Income (Loss)                 |   | $                  | 346    |                  | $      | 11                |   | $            | 24  |                    | $ | (18) |   | $ | -  |   | $ | 363  |

|                                                 |   |               |         | Nonutility Operations |   |                   |   |          |      |                       |
|------------------------------------------------------|--------|--------------------|--------------|-----------------------|--------|------------------------|--------|---------------|-----------|----------------------------|
| March 31, 2010                                       |   | Utility Operations |         | AEP RiverOperations   |   | GenerationandMarketing |   | All Other (a) |      | Reconciling Adjustments(b) |   | Consolidated |
|                                                 |   | (in millions)      |
| Total Property, Plant and Equipment                  |   | $                  | 51,168  |                  | $      | 502               |   | $             | 584  |                       | $ | 10  |   | $ | (251) |   | $ | 52,013  |
| Accumulated Depreciation and Amortization            |   |               | 17,247  |                  |   | 92                |   |          | 176  |                       |   | 9  |   |   | (37) |   |   | 17,487  |
| Total Property, Plant and Equipment – Net |   | $                  | 33,921  |                  | $      | 410               |   | $             | 408  |                       | $ | 1  |   | $ | (214) |   | $ | 34,526  |
|                                                 |   |               |         |                  |   |                   |   |          |      |                       |   |   |   |   |   |   |   |   |
| Total Assets                                         |   | $                  | 48,066  |                  | $      | 551               |   | $             | 832  |                       | $ | 14,996  |   | $ | (14,820) | (c) | $ | 49,625  |

|                                                 |   |               |         | Nonutility Operations |   |                   |   |         |      |                       |
|------------------------------------------------------|--------|--------------------|--------------|-----------------------|--------|------------------------|--------|--------------|-----------|----------------------------|
| December 31, 2009                                    |   | Utility Operations |         | AEP RiverOperations   |   | GenerationandMarketing |   | All Other(a) |      | Reconciling Adjustments(b) |   | Consolidated |
|                                                 |   | (in millions)      |
| Total Property, Plant and Equipment                  |   | $                  | 50,905  |                  | $      | 436               |   | $            | 571  |                       | $ | 10  |   | $ | (238) |   | $ | 51,684  |
| Accumulated Depreciation and Amortization            |   |               | 17,110  |                  |   | 88                |   |         | 168  |                       |   | 8  |   |   | (34) |   |   | 17,340  |
| Total Property, Plant and Equipment – Net |   | $                  | 33,795  |                  | $      | 348               |   | $            | 403  |                       | $ | 2  |   | $ | (204) |   | $ | 34,344  |
|                                                 |   |               |         |                  |   |                   |   |         |      |                       |   |   |   |   |   |   |   |   |
| Total Assets                                         |   | $                  | 46,930  |                  | $      | 495               |   | $            | 779  |                       | $ | 15,094  |   | $ | (14,950) | (c) | $ | 48,348  |

| (a)    | All Other includes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Parent’s guarantee revenue received from affiliates, investment income, interest income and interest expense, and other nonallocated costs. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Forward natural gas contracts that were not sold with our natural gas pipeline and storage operations in 2004 and 2005.  These contracts are financial derivatives which gradually settle and completely expire in 2011. |
| (b)    | Includes eliminations due to an intercompany capital lease.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (c)    | Reconciling Adjustments for Total Assets primarily include the elimination of intercompany advances to affiliates and intercompany accounts receivable along with the elimination of AEP’s investments in subsidiary companies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (d)    | PSO and SWEPCo transferred certain existing ERCOT energy marketing contracts to AEP Energy Partners, Inc. (AEPEP) (Generation and Marketing segment) and entered into intercompany financial and physical purchase and sales agreements with AEPEP.  As a result, we reported third-party net purchases or sales activity for these energy marketing contracts as Revenues from External Customers for the Utility Operations segment.  This is offset by the Utility Operations segment’s related net sales (purchases) for these contracts with AEPEP in Revenues from Other Operating Segments of $(5) million for the three months ended March 31, 2009.  The Generation and Marketing segment also reports these purchases or sales contracts with Utility Operations as Revenues from Other Operating Segments.  These affiliated contracts between PSO and SWEPCo with AEPEP ended in December 2009. |

| 8. | DERIVATIVES AND HEDGING |
|----|-------------------------|

| Notional Volume of Derivative Instruments |
|-------------------------------------------|
|                                      |   |   |   |
|                                      | Volume |   |   |
|                                      | March 31, |   | December 31, |   | Unit of |
|                                      | 2010 |   | 2009 |   | Measure |
|                                      | (in millions) |   |   |
| Commodity:                                |   |   |   |   |   |   |   |
| Power                                     |   |   | 523 |   |   |   | 589 |   | MWHs |
| Coal                                      |   |   | 72 |   |   |   | 60 |   | Tons |
| Natural Gas                               |   |   | 137 |   |   |   | 127 |   | MMBtus |
| Heating Oil and Gasoline                  |   |   | 7 |   |   |   | 6 |   | Gallons |
| Interest Rate                             |   | $ | 194 |   |   | $ | 216 |   | USD |
|                                      |   |   |   |   |   |   |   |   |   |
| Interest Rate and Foreign Currency        |   | $ | 329 |   |   | $ | 83 |   | USD |

| ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND THE IMPACT ON OUR FINANCIAL STATEMENTS |
|----------------------------------------------------------------------------------|

| Fair Value of Derivative InstrumentsMarch 31, 2010     |   |
|--------------------------------------------------------|--------|
|                                                   |   |   |   |   |   |   |   |   |   |   |   |
|                                                   |   | Risk Management |   |   |   |   |   |   |   |   |   |
|                                                   |   | Contracts |   | Hedging Contracts |   |   |   |   |   |
|                                                   |   |   |   |   |   | Interest Rate |   |   |   |   |   |
|                                                   |   |   |   |   |   | and Foreign |   | Other |   |   |   |
| Balance Sheet Location                                 |   | Commodity (a) |   | Commodity (a) |   | Currency (a) |   | (a) (b) |   | Total |   |
|                                                   |   | (in millions) |   |
| Current Risk Management Assets                         |   |   | $ | 1,614 |   |   | $ | 25 |   |   | $ | - |   |   | $ | (1,316 | ) |   | $ | 323 |   |
| Long-term Risk Management Assets                       |   |   |   | 933 |   |   |   | 6 |   |   |   | - |   |   |   | (490 | ) |   |   | 449 |   |
| Total Assets                                           |   |   |   | 2,547 |   |   |   | 31 |   |   |   | - |   |   |   | (1,806 | ) |   |   | 772 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities                    |   |   |   | 1,522 |   |   |   | 25 |   |   |   | 4 |   |   |   | (1,400 | ) |   |   | 151 |   |
| Long-term Risk Management Liabilities                  |   |   |   | 792 |   |   |   | 4 |   |   |   | 2 |   |   |   | (605 | ) |   |   | 193 |   |
| Total Liabilities                                      |   |   |   | 2,314 |   |   |   | 29 |   |   |   | 6 |   |   |   | (2,005 | ) |   |   | 344 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net Assets (Liabilities) |   |   | $ | 233 |   |   | $ | 2 |   |   | $ | (6 | ) |   | $ | 199 |   |   | $ | 428 |   |

| Fair Value of Derivative InstrumentsDecember 31, 2009  |   |
|--------------------------------------------------------|--------|
|                                                   |   | Risk Management |   |   |   |   |   |   |   |   |   |
|                                                   |   | Contracts |   | Hedging Contracts |   |   |   |   |   |
|                                                   |   |   |   |   |   | Interest Rate |   |   |   |   |   |
|                                                   |   |   |   |   |   | and Foreign |   | Other |   |   |   |
| Balance Sheet Location                                 |   | Commodity (a) |   | Commodity (a) |   | Currency (a) |   | (a) (b) |   | Total |   |
|                                                   |   | (in millions) |   |
| Current Risk Management Assets                         |   |   | $ | 1,078 |   |   | $ | 13 |   |   | $ | - |   |   | $ | (831 | ) |   | $ | 260 |   |
| Long-term Risk Management Assets                       |   |   |   | 614 |   |   |   | - |   |   |   | - |   |   |   | (271 | ) |   |   | 343 |   |
| Total Assets                                           |   |   |   | 1,692 |   |   |   | 13 |   |   |   | - |   |   |   | (1,102 | ) |   |   | 603 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities                    |   |   |   | 997 |   |   |   | 17 |   |   |   | 3 |   |   |   | (897 | ) |   |   | 120 |   |
| Long-term Risk Management Liabilities                  |   |   |   | 442 |   |   |   | - |   |   |   | 2 |   |   |   | (316 | ) |   |   | 128 |   |
| Total Liabilities                                      |   |   |   | 1,439 |   |   |   | 17 |   |   |   | 5 |   |   |   | (1,213 | ) |   |   | 248 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net Assets (Liabilities) |   |   | $ | 253 |   |   | $ | (4 | ) |   | $ | (5 | ) |   | $ | 111 |   |   | $ | 355 |   |

| (a) | Derivative instruments within these categories are reported gross.  These instruments are subject to master netting agreements and are presented on the Condensed Consolidated Balance Sheet on a net basis in accordance with the accounting guidance for “Derivatives and Hedging.” |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Amounts represent counterparty netting of risk management and hedging contracts, associated cash collateral in accordance with the accounting guidance for “Derivatives and Hedging” and dedesignated risk management contracts.                                                                |

| Amount of Gain (Loss) Recognized onRisk Management ContractsFor the Three Months Ended March 31, 2010 and 2009 |
|----------------------------------------------------------------------------------------------------------------|

|                                    |   | 2010          |   |   | 2009   |   |
|-----------------------------------------|--------|---------------|--------|--------|--------|--------|
| Location of Gain (Loss)                 |   | (in millions) |   |
| Utility Operations Revenue              |   | $             | 38     |   |   | $      | 65 |   |
| Other Revenue                           |   |          | 1      |   |   |   | 13 |   |
| Regulatory Assets (a)                   |   |          | -      |   |   |   | (1 | ) |
| Regulatory Liabilities (a)              |   |          | 42     |   |   |   | 34 |   |
| Total Gain on Risk Management Contracts |   | $             | 81     |   |   | $      | 111 |   |

|  (a) | Represents realized and unrealized gains and losses subject to regulatory accounting treatment recorded as either current or non-current within the balance sheet. |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Total Accumulated Other Comprehensive Income (Loss) Activity for Cash Flow Hedges                    |   |
|------------------------------------------------------------------------------------------------------|--------|
| For the Three Months Ended March 31, 2010                                                            |   |
|                                                                                                 |   | Commodity |   |   | Interest Rate and Foreign Currency |   |   | Total |   |
|                                                                                                 |   | (in millions) |   |
| Balance in AOCI as of January 1, 2010                                                                |   | $ | (2 | ) |   | $ | (13 | ) |   | $ | (15 | ) |
| Changes in Fair Value Recognized in AOCI                                                             |   |   | 3 |   |   |   | (1 | ) |   |   | 2 |   |
| Amount of (Gain) or Loss Reclassified from AOCI  to Income Statement/within Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |
| Utility Operations Revenue                                                                           |   |   | - |   |   |   | - |   |   |   | - |   |
| Other Revenue                                                                                        |   |   | (1 | ) |   |   | - |   |   |   | (1 | ) |
| Purchased Electricity for Resale                                                                     |   |   | 1 |   |   |   | - |   |   |   | 1 |   |
| Interest Expense                                                                                     |   |   | - |   |   |   | 1 |   |   |   | 1 |   |
| Regulatory Assets (a)                                                                                |   |   | 1 |   |   |   | - |   |   |   | 1 |   |
| Regulatory Liabilities (a)                                                                           |   |   | - |   |   |   | - |   |   |   | - |   |
| Balance in AOCI as of March 31, 2010                                                                 |   | $ | 2 |   |   | $ | (13 | ) |   | $ | (11 | ) |

| Total Accumulated Other Comprehensive Income (Loss) Activity for Cash Flow Hedges                    |   |
|------------------------------------------------------------------------------------------------------|--------|
| For the Three Months Ended March 31, 2009                                                            |   |
|                                                                                                 |   | Commodity |   |   | Interest Rate and Foreign Currency |   |   | Total |   |
|                                                                                                 |   | (in millions) |   |
| Balance in AOCI as of January 1, 2009                                                                |   | $ | 7 |   |   | $ | (29 | ) |   | $ | (22 | ) |
| Changes in Fair Value Recognized in AOCI                                                             |   |   | (3 | ) |   |   | - |   |   |   | (3 | ) |
| Amount of (Gain) or Loss Reclassified from AOCI  to Income Statement/within Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |
| Utility Operations Revenue                                                                           |   |   | (2 | ) |   |   | - |   |   |   | (2 | ) |
| Other Revenue                                                                                        |   |   | (2 | ) |   |   | - |   |   |   | (2 | ) |
| Purchased Electricity for Resale                                                                     |   |   | 8 |   |   |   | - |   |   |   | 8 |   |
| Interest Expense                                                                                     |   |   | - |   |   |   | 1 |   |   |   | 1 |   |
| Regulatory Assets (a)                                                                                |   |   | 2 |   |   |   | - |   |   |   | 2 |   |
| Regulatory Liabilities (a)                                                                           |   |   | (1 | ) |   |   | - |   |   |   | (1 | ) |
| Balance in AOCI as of March 31, 2009                                                                 |   | $ | 9 |   |   | $ | (28 | ) |   | $ | (19 | ) |

| (a) | Represents realized and unrealized gains and losses subject to regulatory accounting treatment recorded as either current or non-current within the balance sheet. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Impact of Cash Flow HedgesCondensed Consolidated Balance SheetMarch 31, 2010    |          |
|---------------------------------------------------------------------------------|---------------|
|                                                                            | Commodity     |   | Interest Rate and Foreign Currency |   | Total |   |
|                                                                            | (in millions) |   |
| Hedging Assets (a)                                                              |          | $ | 16 |   |   | $ | - |   |   | $ | 16 |   |
| Hedging Liabilities (a)                                                         |          |   | (14 | ) |   |   | (6 | ) |   |   | (20 | ) |
| AOCI Loss Net of Tax                                                            |          |   | 2 |   |   |   | (13 | ) |   |   | (11 | ) |
| Portion Expected to be Reclassified to Net Income During the Next Twelve Months |          |   | - |   |   |   | (4 | ) |   |   | (4 | ) |

| Impact of Cash Flow HedgesCondensed Consolidated Balance SheetDecember 31, 2009 |          |
|---------------------------------------------------------------------------------|---------------|
|                                                                            | Commodity     |   | Interest Rate and Foreign Currency |   | Total |   |
|                                                                            | (in millions) |   |
| Hedging Assets (a)                                                              |          | $ | 8 |   |   | $ | - |   |   | $ | 8 |   |
| Hedging Liabilities (a)                                                         |          |   | (12 | ) |   |   | (5 | ) |   |   | (17 | ) |
| AOCI Loss Net of Tax                                                            |          |   | (2 | ) |   |   | (13 | ) |   |   | (15 | ) |
| Portion Expected to be Reclassified to Net Income During the Next Twelve Months |          |   | (2 | ) |   |   | (4 | ) |   |   | (6 | ) |

|  (a) | Hedging Assets and Hedging Liabilities are included in Risk Management Assets and Liabilities on our Condensed Consolidated Balance Sheet. |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------|

|              | Aggregate     |   | Amount of Collateral the |   | Amount          |   |
|-------------------|---------------|--------|--------------------------|--------|-----------------|--------|
|              | Fair Value of |   | Registrant Subsidiaries  |   | Attributable to |   |
|              | Derivative    |   | Would Have Been          |   | RTO and ISO     |   |
|              | Contracts     |   | Required to Post         |   | Activities      |   |
|              | (in millions) |   |
| March 31, 2010    | $             | 9      |                     | $      | 34              |   | $ | 32 |   |
| December 31, 2009 |          | 10     |                     |   | 34              |   |   | 29 |   |

|              | Liabilities of       |   |              |   | Additional           |   |
|-------------------|----------------------|--------|-------------------|--------|----------------------|--------|
|              | Contracts with Cross |   |              |   | Settlement Liability |   |
|              | Default Provisions   |   |              |   | if Cross Default     |   |
|              | Prior to Contractual |   | Amount of Cash    |   | Provision is         |   |
|              | Netting Arrangements |   | Collateral Posted |   | Triggered            |   |
|              | (in millions)        |   |
| March 31, 2010    | $                    | 794    |              | $      | 48                   |   | $ | 287 |   |
| December 31, 2009 |                 | 567    |              |   | 15                   |   |   | 199 |   |

|                            |   | Type of Fixed Income Security |   |
|---------------------------------|--------|-------------------------------|--------|
|                            |   | United States                 |   |   |   |   |   | State and Local |   |
| Type of Input                   |   | Government                    |   |   | Corporate Debt |   |   | Government |   |
|                            |   |                          |   |   |   |   |   |   |   |
| Benchmark Yields                |   |                          | X      |   |   |   | X |   |   |   | X |   |
| Broker Quotes                   |   |                          | X      |   |   |   | X |   |   |   | X |   |
| Discount Margins                |   |                          | X      |   |   |   | X |   |   |   |   |   |
| Treasury Market Update          |   |                          | X      |   |   |   |   |   |   |   |   |   |
| Base Spread                     |   |                          | X      |   |   |   | X |   |   |   | X |   |
| Corporate Actions               |   |                          |   |   |   |   | X |   |   |   |   |   |
| Ratings Agency Updates          |   |                          |   |   |   |   |   |   |   |   | X |   |
| Prepayment Schedule and History |   |                          |   |   |   |   |   |   |   |   | X |   |
| Yield Adjustments               |   |                          | X      |   |   |   |   |   |   |   |   |   |

|           |   | March 31, 2010 |         |       | December 31, 2009 |
|----------------|--------|----------------|--------------|------------|-------------------|
|           |   | Book Value     |         | Fair Value |              |   | Book Value |   | Fair Value |
|           |   | (in millions)  |
| Long-term Debt |   | $              | 17,534  |       | $                 | 18,647  |   |   | $ | 17,498  |   | $ | 18,479  |

|                                         |   | March 31, 2010 |   |
|----------------------------------------------|--------|----------------|--------|
| Other Temporary Investments                  |   | Cost           |   |   | Gross Unrealized Gains |   |   | Gross Unrealized Losses |   |   | EstimatedFair Value |   |
|                                         |   | (in millions)  |   |
| Restricted Cash (a)                          |   | $              | 141    |   |   | $ | - |   |   | $ | - |   |   | $ | 141 |   |
| Fixed Income Securities – Mutual Funds |   |           | 58     |   |   |   | - |   |   |   | - |   |   |   | 58 |   |
| Equity Securities:                           |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                                     |   |           | 1      |   |   |   | 15 |   |   |   | - |   |   |   | 16 |   |
| Mutual Funds                                 |   |           | 18     |   |   |   | 5 |   |   |   | - |   |   |   | 23 |   |
| Total Other Temporary Investments            |   | $              | 218    |   |   | $ | 20 |   |   | $ | - |   |   | $ | 238 |   |

|                                    |   | December 31, 2009 |   |
|-----------------------------------------|--------|------------------------|--------|
|   Other Temporary Investments |   | Cost                   |   | Gross Unrealized Gains |   | Gross Unrealized Losses |   | EstimatedFair Value |   |
|                                    |   | (in millions)          |   |
| Cash and Cash Equivalents (a)      |   |                   | $      | 223 |   |   | $ | - |   |   | $ | - |   |   | $ | 223 |   |
| Debt Securities                         |   |                   |   | 102 |   |   |   | - |   |   |   | - |   |   |   | 102 |   |
| Equity Securities                       |   |                   |   | 19 |   |   |   | 19 |   |   |   | - |   |   |   | 38 |   |
| Total Other Temporary Investments       |   |                   | $      | 344 |   |   | $ | 19 |   |   | $ | - |   |   | $ | 363 |   |

| (a) | Primarily represents amounts held for the payment of debt. |
|-----|------------------------------------------------------------|

|               |   |             |      |           |   | Gross Realized   |   | Gross Realized   |
|--------------------|--------|------------------|-----------|----------------|--------|------------------|--------|------------------|
| Three Months Ended |   | Proceeds From    |      | Purchases      |   | Gains on         |   | Losses on        |
| March 31,          |   | Investment Sales |      | of Investments |   | Investment Sales |   | Investment Sales |
|               |   | (in millions)    |
| 2010               |   | $                | 241  |           | $      | 197         |   | $                | -  |   | $ | -  |
| 2009               |   |             | -    |           |   | -           |   |             | -  |   |   | -  |

| · | Acceptable investments (rated investment grade or above when purchased).            |
|--------|-------------------------------------------------------------------------------------|
| · | Maximum percentage invested in a specific type of investment.                       |
| · | Prohibition of investment in obligations of AEP or its affiliates.                  |
| · | Withdrawals permitted only for payment of decommissioning costs and trust expenses. |
| · | Target asset allocation is 50% fixed income and 50% equity securities.              |

|                                               |   | March 31, 2010     |   |   | December 31, 2009    |   |
|----------------------------------------------------|--------|--------------------|--------|--------|----------------------|--------|
|                                               |   | EstimatedFairValue |   |   | GrossUnrealizedGains |   |   | Other-Than-TemporaryImpairments |   |   | EstimatedFairValue |   |   | GrossUnrealizedGains |   |   | Other-Than-TemporaryImpairments |   |
|                                               |   | (in millions)      |   |
| Cash and Cash Equivalents                          |   | $                  | 16     |   |                 | $      | - |   |   | $ | - |   |   | $ | 14 |   |   | $ | - |   |   | $ | - |   |
| Fixed Income Securities:                           |   |               |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| United States Government                           |   |               | 451    |   |                 |   | 15 |   |   |   | (2 | ) |   |   | 401 |   |   |   | 13 |   |   |   | (4 | ) |
| Corporate Debt                                     |   |               | 59     |   |                 |   | 5 |   |   |   | (2 | ) |   |   | 57 |   |   |   | 5 |   |   |   | (2 | ) |
| State and Local Government                         |   |               | 326    |   |                 |   | 3 |   |   |   | - |   |   |   | 369 |   |   |   | 8 |   |   |   | 1 |   |
| Subtotal Fixed Income Securities         |   |               | 836    |   |                 |   | 23 |   |   |   | (4 | ) |   |   | 827 |   |   |   | 26 |   |   |   | (5 | ) |
| Equity Securities – Domestic                 |   |               | 581    |   |                 |   | 261 |   |   |   | (118 | ) |   |   | 551 |   |   |   | 234 |   |   |   | (119 | ) |
| Spent Nuclear Fuel and Decommissioning Trusts |   | $                  | 1,433  |   |                 | $      | 284 |   |   | $ | (122 | ) |   | $ | 1,392 |   |   | $ | 260 |   |   | $ | (124 | ) |

|               |   |             |      |           |   |                 |   | Gross Realized   |
|--------------------|--------|------------------|-----------|----------------|--------|----------------------|--------|------------------|
| Three Months Ended |   | Proceeds From    |      | Purchases      |   | Gross Realized Gains |   | Losses on        |
| March 31,          |   | Investment Sales |      | of Investments |   | on Investment Sales  |   | Investment Sales |
|               |   | (in millions)    |
| 2010               |   | $                | 232  |           | $      | 248             |   | $                | 5  |   | $ | -  |
| 2009               |   |             | 158  |           |   | 178             |   |             | 3  |   |   | -  |

|                     |   | Fair Valueof DebtSecurities |   |
|--------------------------|--------|-----------------------------|--------|
|                     |   | (in millions)               |   |
| Within 1 year            |   | $                           | 15     |   |
| 1 year – 5 years   |   |                        | 309    |   |
| 5 years – 10 years |   |                        | 256    |   |
| After 10 years           |   |                        | 256    |   |
| Total                    |   | $                           | 836    |   |

| Assets and Liabilities Measured at Fair Value on a Recurring BasisMarch 31, 2010 |
|----------------------------------------------------------------------------------|
|                                                                             |   |   |   |   |   |   |   |   |   |
|                                                                             | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                                                          | (in millions) |
|                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents (a)                                                    | $ | 733  |   | $ | -   |   | $ | -  |   | $ | 85  |   | $ | 818  |
|                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Temporary Investments                                                      |   |
| Restricted Cash (a)                                                              |   | 106  |   |   | -  |   |   | -  |   |   | 35  |   |   | 141  |
| Fixed Income Securities – Mutual Funds                                     |   | 58  |   |   | -  |   |   | -  |   |   | -  |   |   | 58  |
| Equity Securities (c):                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                                                                         |   | 16  |   |   | -  |   |   | -  |   |   | -  |   |   | 16  |
| Mutual Funds                                                                     |   |  23  |   |   | -  |   |   | -  |   |   | -  |   |   | 23  |
| TotalOther Temporary Investments                                                 |   | 203  |   |   | -  |   |   | -  |   |   | 35  |   |   | 238  |
|                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (d) (g)                                      |   | 22  |   |   | 2,360  |   |   | 148  |   |   | (1,839) |   |   | 691  |
| Cash Flow Hedges:                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodity Hedges (d)                                                             |   | 11  |   |   | 20  |   |   | -  |   |   | (15) |   |   | 16  |
| Dedesignated Risk Management Contracts (e)                                       |   | -  |   |   | -  |   |   | -  |   |   | 65  |   |   | 65  |
| Total Risk Management Assets                                                     |   | 33  |   |   | 2,380  |   |   | 148  |   |   | (1,789) |   |   | 772  |
|                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Spent Nuclear Fuel and Decommissioning Trusts                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents (f)                                                    |   | -  |   |   | 6  |   |   | -  |   |   | 10  |   |   | 16  |
| Fixed Income Securities:                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| United States Government                                                         |   | -  |   |   | 451  |   |   | -  |   |   | -  |   |   | 451  |
| Corporate Debt                                                                   |   | -  |   |   | 59  |   |   | -  |   |   | -  |   |   | 59  |
| State and Local Government                                                       |   | -  |   |   | 326  |   |   | -  |   |   | -  |   |   | 326  |
| Subtotal Fixed Income Securities                                       |   | -  |   |   | 836  |   |   | -  |   |   | -  |   |   | 836  |
| Equity Securities – Domestic (c)                                           |   | 581  |   |   | -  |   |   | - |   |   | - |   |   | 581  |
| TotalSpent Nuclear Fuel and Decommissioning Trusts                               |   | 581  |   |   | 842  |   |   | -  |   |   | 10  |   |   | 1,433  |
|                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                                                                     | $ | 1,550  |   | $ | 3,222  |   | $ | 148  |   | $ | (1,659) |   | $ | 3,261  |
|                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (d) (g)                                      | $ | 27  |   | $ | 2,238  |   | $ | 32  |   | $ | (1,973) |   | $ | 324  |
| Cash Flow Hedges:                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodity Hedges (d)                                                             |   | 2  |   |   | 27  |   |   | -  |   |   | (15) |   |   | 14  |
| Interest Rate/Foreign Currency Hedges                                            |   | -  |   |   | 6  |   |   | -  |   |   | -  |   |   | 6  |
| Total Risk Management Liabilities                                                | $ | 29  |   | $ | 2,271  |   | $ | 32  |   | $ | (1,988) |   | $ | 344  |

| Assets and Liabilities Measured at Fair Value on a Recurring BasisDecember 31, 2009 |
|-------------------------------------------------------------------------------------|
|                                                                                |   |   |   |   |   |   |   |   |   |
|                                                                                | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                                                             | (in millions) |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents (a)                                                       | $ | 427  |   | $ | -  |   | $ | -  |   | $ | 63  |   | $ | 490  |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Temporary Investments                                                         |   |
| Cash and Cash Equivalents (a)                                                       |   | 198  |   |   | -  |   |   | -  |   |   | 25  |   |   | 223  |
| Debt Securities (b)                                                                 |   | 57  |   |   | 45  |   |   | -  |   |   | -  |   |   | 102  |
| Equity Securities (c)                                                               |   | 38  |   |   | -  |   |   | -  |   |   | -  |   |   | 38  |
| TotalOther Temporary Investments                                                    |   | 293  |   |   | 45  |   |   | -  |   |   | 25  |   |   | 363  |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Contracts (d) (h)                                                   |   | 8  |   |   | 1,609  |   |   | 72  |   |   | (1,119) |   |   | 570  |
| Cash Flow Hedges (d)                                                                |   | 1  |   |   | 11  |   |   | -  |   |   | (4) |   |   | 8  |
| Dedesignated Risk Management Contracts (e)                                          |   | -  |   |   | -  |   |   | -  |   |   | 25  |   |   | 25  |
| Total Risk Management Assets                                                        |   | 9  |   |   | 1,620  |   |   | 72  |   |   | (1,098) |   |   | 603  |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Spent Nuclear Fuel and Decommissioning Trusts                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents (f)                                                       |   | -  |   |   | 3  |   |   | -  |   |   | 11  |   |   | 14  |
| Fixed Income Securities:                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| United States Government                                                            |   | -  |   |   | 401  |   |   | -  |   |   | -  |   |   | 401  |
| Corporate Debt                                                                      |   | -  |   |   | 57  |   |   | -  |   |   | -  |   |   | 57  |
| State and Local Government                                                          |   | -  |   |   | 369  |   |   | -  |   |   | -  |   |   | 369  |
| Subtotal Fixed Income Securities                                          |   | -  |   |   | 827  |   |   | -  |   |   | -  |   |   | 827  |
| Equity Securities (c)                                                               |   | 551  |   |   | -  |   |   | -  |   |   | -  |   |   | 551  |
| TotalSpent Nuclear Fuel and Decommissioning Trusts                                  |   | 551  |   |   | 830  |   |   | -  |   |   | 11  |   |   | 1,392  |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                                                                        | $ | 1,280  |   | $ | 2,495  |   | $ | 72  |   | $ | (999) |   | $ | 2,848  |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Contracts (d) (h)                                                   | $ | 11  |   | $ | 1,415  |   | $ | 10  |   | $ | (1,205) |   | $ | 231  |
| Cash Flow Hedges (d)                                                                |   | -  |   |   | 21  |   |   | -  |   |   | (4) |   |   | 17  |
| Total Risk Management Liabilities                                                   | $ | 11  |   | $ | 1,436  |   | $ | 10  |   | $ | (1,209) |   | $ | 248  |

| (a) | Amounts in “Other” column primarily represent cash deposits in bank accounts with financial institutions or with third parties.  Level 1 amounts primarily represent investments in money market funds.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Amounts represent debt-based mutual funds.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| (c) | Amounts represent publicly traded equity securities and equity-based mutual funds.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (d) | Amounts in “Other” column primarily represent counterparty netting of risk management and hedging contracts and associated cash collateral under the accounting guidance for “Derivatives and Hedging.”                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (e) | Represents contracts that were originally MTM but were subsequently elected as normal under the accounting guidance for “Derivatives and Hedging.”  At the time of the normal election, the MTM value was frozen and no longer fair valued.  This MTM value will be amortized into revenues over the remaining life of the contracts.                                                                                                                                                                                                                                                                                                                             |
| (f) | Amounts in “Other” column primarily represent accrued interest receivables from financial institutions.  Level 2 amounts primarily represent investments in money market funds.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (g) | The March 31, 2010 maturity of the net fair value of risk management commodity contracts prior to cash collateral, assets/(liabilities), is as follows:  Level 1 matures ($1) million in 2010, ($2) million in periods 2011-2013 and ($2) million in periods 2014-2015;  Level 2 matures $44 million in 2010, $57 million in periods 2011-2013, $0 million in periods 2014-2015 and $21 million in periods 2016-2028;  Level 3 matures $28 million in 2010, $35 million in periods 2011-2013, $29 million in periods 2014-2015 and $24 million in periods 2016-2028.  Risk management commodity contracts are substantially comprised of power contracts. |
| (h) | The December 31, 2009 maturity of the net fair value of risk management contracts prior to cash collateral, assets/(liabilities), is as follows:  Level 1 matures ($1) million in 2010, ($1) million in periods 2011-2013 and ($1) million in periods 2014-2015;  Level 2 matures $65 million in 2010, $84 million in periods 2011-2013, $22 million in periods 2014-2015 and $23 million in periods 2016-2028;  Level 3 matures $17 million in 2010, $16 million in periods 2011-2013, $8 million in periods 2014-2015 and $21 million in periods 2016-2028.                                                                                                       |

| Three Months Ended March 31, 2010                                                                                                          |   | Net Risk Management Assets (Liabilities) |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|--------|
|                                                                                                                                       |   | (in millions)                            |   |
| Balance as of January 1, 2010                                                                                                              |   | $                                        | 62     |   |
| Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)                                                             |   |                                     | 27     |   |
| Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (a) |   |                                     | 24     |   |
| Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income                                                    |   |                                     | -      |   |
| Purchases, Issuances and Settlements (c)                                                                                                   |   |                                     | (31    | ) |
| Transfers into Level 3 (d) (h)                                                                                                             |   |                                     | 15     |   |
| Transfers out of Level 3 (e) (h)                                                                                                           |   |                                     | 1      |   |
| Changes in Fair Value Allocated to Regulated Jurisdictions (g)                                                                             |   |                                     | 18     |   |
| Balance as of March 31, 2010                                                                                                               |   | $                                        | 116    |   |

| Three Months Ended March 31, 2009                                                                                                     |   | Net Risk Management Assets (Liabilities) |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|--------|
|                                                                                                                                  |   | (in millions)                            |   |
| Balance as of January 1, 2009                                                                                                         |   | $                                        | 49     |   |
| Realized (Gain) Loss Included in Net Income (or Changes in Net Assets) (a)                                                            |   |                                     | (12    | ) |
| Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (a) |   |                                     | 59     |   |
| Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income                                                    |   |                                     | -      |   |
| Purchases, Issuances and Settlements                                                                                                  |   |                                     | -      |   |
| Transfers in and/or out of Level 3 (f)                                                                                                |   |                                     | (25    | ) |
| Changes in Fair Value Allocated to Regulated Jurisdictions (g)                                                                        |   |                                     | 15     |   |
| Balance as of March 31, 2009                                                                                                          |   | $                                        | 86     |   |

| (a) | Included in revenues on our Condensed Consolidated Statements of Income.                                                                                                                                                                                                                                   |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Represents the change in fair value between the beginning of the reporting period and the settlement of the risk management commodity contract.                                                                                                                                                            |
| (c) | Represents the settlement of risk management commodity contracts for the reporting period.                                                                                                                                                                                                                 |
| (d) | Represents existing assets or liabilities that were previously categorized as Level 2.                                                                                                                                                                                                                     |
| (e) | Represents existing assets or liabilities that were previously categorized as Level 3.                                                                                                                                                                                                                     |
| (f) | Represents existing assets or liabilities that were either previously categorized as a higher level for which the inputs to the model became unobservable or assets and liabilities that were previously classified as Level 3 for which the lowest significant input became observable during the period. |
| (g) | Relates to the net gains (losses) of those contracts that are not reflected on our Condensed Consolidated Statements of Income.  These net gains (losses) are recorded as regulatory liabilities/assets.                                                                                         |
| (h) | Transfers are recognized based on their value at the beginning of the reporting period that the transfer occurred.                                                                                                                                                                                         |

| 10.    INCOME TAXES |
|------------------------------------|

| 11. | FINANCING ACTIVITIES |
|-----|----------------------|

|                              |   | March 31,     |   |   | December 31, |   |
|-----------------------------------|--------|---------------|--------|--------|--------------|--------|
| Type of Debt                      |   | 2010          |   |   | 2009         |   |
|                              |   | (in millions) |   |
| Senior Unsecured Notes            |   | $             | 12,423 |   |         | $      | 12,416 |   |
| Pollution Control Bonds           |   |          | 2,263  |   |         |   | 2,159 |   |
| Notes Payable                     |   |          | 316    |   |         |   | 326 |   |
| Securitization Bonds              |   |          | 1,909  |   |         |   | 1,995 |   |
| Junior Subordinated Debentures    |   |          | 315    |   |         |   | 315 |   |
| Spent Nuclear Fuel Obligation (a) |   |          | 265    |   |         |   | 265 |   |
| Other Long-term Debt              |   |          | 88     |   |         |   | 88 |   |
| Unamortized Discount (net)        |   |          | (45    | )      |         |   | (66 | ) |
| Total Long-term Debt Outstanding  |   |          | 17,534 |   |         |   | 17,498 |   |
| Less Portion Due Within One Year  |   |          | 1,253  |   |         |   | 1,741 |   |
| Long-term Portion                 |   | $             | 16,281 |   |         | $      | 15,757 |   |

| (a) | Pursuant to the Nuclear Waste Policy Act of 1982, I&M (a nuclear licensee) has an obligation to the United States Department of Energy for spent nuclear fuel disposal.  The obligation includes a one-time fee for nuclear fuel consumed prior to April 7, 1983.  Trust fund assets related to this obligation of $306 million at March 31, 2010 and December 31, 2009 are included in Spent Nuclear Fuel and Decommissioning Trusts on our Condensed Consolidated Balance Sheets. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Company         |   | Type of Debt                  |   | Principal Amount |      | Interest Rate |       | Due Date |
|-----------------|--------|-------------------------------|--------|------------------|-----------|---------------|------------|----------|
|            |   |                          |   | (in millions)    |      | (%)           |       |     |
| Issuances:      |   |                          |   |             |      |          |       |     |
| APCo            |   | Pollution Control Bonds       |   | $                | 18   |          | 4.625      |     | 2021 |
| CSPCo           |   | Floating Rate Notes           |   |             | 150  |          | Variable   |     | 2012 |
| OPCo            |   | Pollution Control Bonds       |   |             | 86   |          | 3.125      |     | 2043 |
| SWEPCo          |   | Senior Unsecured Notes        |   |             | 350  |          | 6.20       |     | 2040 |
| SWEPCo     |   | Pollution Control Bonds  |   |             | 54   |          |  3.25 |     | 2015 |
| Total Issuances |   |                          |   | $                | 658  | (a)           |       |     |   |

| (a) | Amount indicated on statement of cash flows of $652 million is net of issuance costs and premium or discount. |
|-----|---------------------------------------------------------------------------------------------------------------|

|  Company                                  |   | Type of Debt                  |   | Principal Amount Paid |      | Interest Rate |           | Due Date |
|------------------------------------------------|--------|-------------------------------|--------|-----------------------|-----------|---------------|----------------|----------|
|                                           |   |                          |   | (in millions)         |      | (%)           |           |     |
| Retirements and Principal Payments:       |   |                          |   |                  |      |          |           |     |
| AEP                                            |   | Senior Unsecured Notes        |   | $                     | 490  |          | 5.375          |     | 2010 |
| SWEPCo                                    |   | Pollution Control Bonds  |   |                  | 54   |          |  Variable |     |  2019 |
|                                           |   |                          |   |                  |      |          |           |     |   |
| Non-Registrant:                                |   |                          |   |                  |      |          |           |     |   |
| AEP Subsidiaries                               |   | Notes Payable                 |   |                  | 4    |          | Variable       |     | 2017 |
| AEGCo                                          |   | Senior Unsecured Notes        |   |                  | 4    |          | 6.33           |     | 2037 |
| TCC                                            |   | Securitization Bonds          |   |                  | 32   |          | 5.56           |     | 2010 |
| TCC                                            |   | Securitization Bonds          |   |                  | 54   |          | 4.98           |     | 2010 |
| Total Retirements and  Principal Payments |   |                          |   | $                     | 638  |          |           |     |   |

|                                             |   | March 31, 2010 |        | December 31, 2009 |
|--------------------------------------------------|--------|----------------|-------------|-------------------|
|                                             |   | Outstanding    |        | Interest          |   | Outstanding |   | Interest |
| Type of Debt                                     |   | Amount         |        | Rate (a)          |   | Amount |   | Rate (a) |
|                                             |   | (in millions)  |        |              |   | (in millions) |   |   |
| Securitized Debt for Receivables (b)             |   | $              | 651    |              | 0.24% |   | $ | -  |   | -  |
| Commercial Paper                                 |   |           | 399    |              | 0.35% |   |   | 119  |   | 0.26% |
| Line of Credit – Sabine Mining Company (c) |   |           | 13     |              | 2.12% |   |   | 7  |   | 2.06% |
| Total                                            |   | $              | 1,063  |              |   |   | $ | 126  |   |   |

| (a) | Weighted average rate.                                                                                                                                                                                                              |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Amount of securitized debt for receivables as accounted for under the “Transfers and Servicing” accounting guidance.  See “ASU 2009-16 ‘Transfers and Servicing’ ” section of Note 2. |
| (c) | Sabine Mining Company is a consolidated variable interest entity.  This line of credit does not reduce available liquidity under AEP’s credit facilities.                                                           |

|                                                     |   | Three Months   |   |
|----------------------------------------------------------|--------|----------------|--------|
|                                                     |   | Ended          |   |
|                                                     |   | March 31, 2010 |   |
|                                                     |   | (in millions)  |   |
| Credit Losses Related to Securitized Accounts Receivable |   | $              | 4      |   |

|                                       | March 31,     |   | December 31, |   |
|--------------------------------------------|---------------|--------|--------------|--------|
|                                       | 2010          |   | 2009         |   |
|                                       | (in millions) |   |
| Total Principal Outstanding                |          | $      | 651          |   |   | $ | 656 |   |
| Derecognized Accounts Receivable           |          |   | -            |   |   |   | 631 |   |
| Delinquent Securitized Accounts Receivable |          |   | 37           |   |   |   | 29 |   |

| 12. | COMPANY-WIDE STAFFING AND BUDGET REVIEW |
|-----|-----------------------------------------|

----

----

| RESULTS OF OPERATIONS |
|-----------------------|

| First Quarter of 2009           |   |   |   |   |     |   | $      | 74  |
|---------------------------------|--------|--------|--------|--------|----------|--------|--------|----------|
|                            |   |   |   |   |     |   |   |     |
| Changes in Gross Margin:        |   |   |   |   |     |   |   |     |
| Retail Margins                  |   |   |   |   | 42  |   |   |     |
| Off-system Sales                |   |   |   |   | 3   |   |   |     |
| Transmission Revenues           |   |   |   |   | 1   |   |   |     |
| Other                           |   |   |   |   | (1)      |   |   |     |
| Total Change in Gross Margin    |   |   |   |   |     |   |   | 45  |
|                            |   |   |   |   |     |   |   |     |
| Total Expenses and Other:       |   |   |   |   |     |   |   |     |
| Other Operation and Maintenance |   |   |   |   | (32)     |   |   |     |
| Depreciation and Amortization   |   |   |   |   | (7)      |   |   |     |
| Taxes Other Than Income Taxes   |   |   |   |   | (2)      |   |   |     |
| Other Income                    |   |   |   |   | (2)      |   |   |     |
| Carrying Costs Income           |   |   |   |   | 2   |   |   |     |
| Interest Expense                |   |   |   |   | (2)      |   |   |     |
| Total Expenses and Other        |   |   |   |   |     |   |   | (43)     |
|                            |   |   |   |   |     |   |   |     |
| Income Tax Expense              |   |   |   |   |     |   |   | (6)      |
|                            |   |   |   |   |     |   |   |     |
| First Quarter of 2010           |   |   |   |   |     |   | $      | 70  |

| · | Retail Margins increased $42 million primarily due to the following:                                                                                                                                     |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                   | A $52 million increase in rate relief primarily due to the impact of the Virginia interim rate increase implemented in December 2009, subject to refund, an increase in the recovery of E&R costs in Virginia and an increase in the recovery of construction financing costs in West Virginia. |
|   | ·                                                                                                                                                                                                   | A $20 million increase in residential usage primarily due to a 17% increase in heating degree days. |
|   | These increases were partially offset by:                                                                                                                                                                |
|   | ·                                                                                                                                                                                                   | A $19 million decrease due to higher capacity settlement expenses under the Interconnection Agreement net of recovery in West Virginia and environmental deferrals in Virginia. |
|   | ·                                                                                                                                                                                                   | An $11 million decrease in industrial sales primarily due to suspended operations by APCo’s largest customer, Century Aluminum. |
| · | Margins from Off-system Sales increased $3 million primarily due to higher physical sales volumes reflecting favorable generation availability, partially offset by lower trading and marketing margins. |

| · | Other Operation and Maintenance expenses increased $32 million primarily due to the following:                                                                                                                                                                                                                |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                                                                                        | A $13 million increase in employee benefit expenses. |
|   | ·                                                                                                                                                                                                                                                                                                        | An $8 million increase related to the reduction of a 2009 regulatory asset for the over-recovery of  transmission costs. |
|   | ·                                                                                                                                                                                                                                                                                                        | A $7 million increase in maintenance expenses resulting primarily from a planned outage at the Amos Plant and snow storm damage restoration. |
| · | Depreciation and Amortization expenses increased $7 million primarily due to a greater depreciation base resulting from environmental upgrades at the Amos and Mountaineer Plants and the amortization of carrying charges and depreciation expenses being collected through the Virginia E&R surcharges. |
| · | Income Tax Expense increased $6 million primarily due to the regulatory accounting treatment of state income taxes and other book/tax differences which are accounted for on a flow-through basis.                                                                                                            |

|                  | Moody’s |   | S&P |   | Fitch  |
|-----------------------|---------------|--------|---------|--------|--------|
|                  |          |   |    |   |   |
| Senior Unsecured Debt | Baa2          |   | BBB     |   | BBB    |

|                                             |   |           |
|--------------------------------------------------|--------|----------------|
|                                             |   | 2010           |   | 2009 |
|                                             |   | (in thousands) |
| Cash and Cash Equivalents at Beginning of Period |   | $              | 2,006  |   | $ | 1,996  |
| Cash Flows from (Used for):                      |   |           |   |   |   |   |
| Operating Activities                             |   |           | 178,522  |   |   | (29,207) |
| Investing Activities                             |   |           | (167,978) |   |   | (220,590) |
| Financing Activities                             |   |           | (10,308) |   |   | 250,355  |
| Net Increase in Cash and Cash Equivalents        |   |           | 236  |   |   | 558  |
| Cash and Cash Equivalents at End of Period       |   | $              | 2,242  |   | $ | 2,554  |

|                    |   | PrincipalAmount |         | Interest |   | Due    |
|-------------------------|--------|-----------------|--------------|----------|--------|--------|
| Type of Debt            |   |            | Rate         |     | Date   |
|                    |   | (in thousands)  |         | (%)      |   |   |
| Pollution Control Bonds |   | $               | 17,500  |     | 4.625  |   | 2021 |

|                             |   | PrincipalAmount Paid |          | Interest     |   | Due    |
|----------------------------------|--------|----------------------|---------------|--------------|--------|--------|
| Type of Debt                     |   |                 | Rate          |         | Date   |
|                             |   | (in thousands)       |          | (%)          |   |   |
| Notes Payable – Affiliated |   | $                    | 100,000  |    | 4.708  |   | 2010 |
| Land Note                        |   |                 | 4        |         | 13.718 |   | 2026 |

----

----

|                                                                  |   | 2010   |          | 2009   |
|-----------------------------------------------------------------------|--------|--------|---------------|--------|
| REVENUES                                                              |   |   |          |   |
| Electric Generation, Transmission and Distribution                    |   | $      | 845,990  |   | $ | 727,959  |
| Sales to AEP Affiliates                                               |   |   | 78,771   |   |   | 56,231  |
| Other Revenues                                                        |   |   | 1,862    |   |   | 1,839  |
| TOTAL REVENUES                                                        |   |   | 926,623  |   |   | 786,029  |
|                                                                  |   |   |          |   |   |   |
| EXPENSES                                                              |   |   |          |   |   |   |
| Fuel and Other Consumables Used for Electric Generation               |   |   | 180,640  |   |   | 143,681  |
| Purchased Electricity for Resale                                      |   |   | 63,683   |   |   | 75,816  |
| Purchased Electricity from AEP Affiliates                             |   |   | 267,502  |   |   | 197,124  |
| Other Operation                                                       |   |   | 90,040   |   |   | 65,502  |
| Maintenance                                                           |   |   | 63,110   |   |   | 55,910  |
| Depreciation and Amortization                                         |   |   | 77,430   |   |   | 69,995  |
| Taxes Other Than Income Taxes                                         |   |   | 26,280   |   |   | 24,103  |
| TOTAL EXPENSES                                                        |   |   | 768,685  |   |   | 632,131  |
|                                                                  |   |   |          |   |   |   |
| OPERATING INCOME                                                      |   |   | 157,938  |   |   | 153,898  |
|                                                                  |   |   |          |   |   |   |
| Other Income (Expense):                                               |   |   |          |   |   |   |
| Interest Income                                                       |   |   | 291      |   |   | 382  |
| Carrying Costs Income                                                 |   |   | 5,764    |   |   | 4,083  |
| Allowance for Equity Funds Used During Construction                   |   |   | 1,163    |   |   | 2,653  |
| Interest Expense                                                      |   |   | (51,727)      |   |   | (49,705) |
|                                                                  |   |   |          |   |   |   |
| INCOME BEFORE INCOME TAX EXPENSE                                      |   |   | 113,429  |   |   | 111,311  |
|                                                                  |   |   |          |   |   |   |
| Income Tax Expense                                                    |   |   | 43,147   |   |   | 36,904  |
|                                                                  |   |   |          |   |   |   |
| NET INCOME                                                            |   |   | 70,282   |   |   | 74,407  |
|                                                                  |   |   |          |   |   |   |
| Preferred Stock Dividend Requirements Including Capital Stock Expense |   |   | 225      |   |   | 225  |
|                                                                  |   |   |          |   |   |   |
| EARNINGS ATTRIBUTABLE TO COMMON STOCK                                 |   | $      | 70,057   |   | $ | 74,182 |

| The common stock of APCo is wholly-owned by AEP. |
|--------------------------------------------------|

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                                                        |   | Common Stock |          | Paid-in Capital |   | Retained Earnings |   | AccumulatedOtherComprehensiveIncome (Loss) |            | Total  |
|-----------------------------------------------------------------------------|--------|--------------|---------------|-----------------|--------|-------------------|--------|--------------------------------------------|-----------------|--------|
|                                                                        |   |         |          |            |   |              |   |                                       |            |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER’S EQUITY – DECEMBER 31, 2008 |   | $            | 260,458  |            | $      | 1,225,292    |   | $                                          | 951,066    |   | $ | (60,225) |   | $ | 2,376,591  |
|                                                                        |   |         |          |            |   |              |   |                                       |            |   |   |   |   |   |   |
| Common Stock Dividends                                                      |   |         |          |            |   |              |   |                                       | (20,000)        |   |   |   |   |   | (20,000) |
| Preferred Stock Dividends                                                   |   |         |          |            |   |              |   |                                       | (200)           |   |   |   |   |   | (200) |
| Capital Stock Expense                                                       |   |         |          |            |   | 26           |   |                                       | (25)            |   |   |   |   |   | 1  |
| SUBTOTAL – COMMON SHAREHOLDER’S EQUITY                     |   |         |          |            |   |              |   |                                       |            |   |   |   |   |   | 2,356,392  |
|                                                                        |   |         |          |            |   |              |   |                                       |            |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                        |   |         |          |            |   |              |   |                                       |            |   |   |   |   |   |   |
| Other Comprehensive Income, Net of Taxes:                              |   |         |          |            |   |              |   |                                       |            |   |   |   |   |   |   |
| Cash Flow Hedges, Net of Tax of $945                                   |   |         |          |            |   |              |   |                                       |            |   |   | 1,756  |   |   | 1,756  |
| Amortization of Pension and OPEB Deferred Costs, Net of Tax of $661         |   |         |          |            |   |              |   |                                       |            |   |   | 1,226  |   |   | 1,226  |
| NET INCOME                                                                  |   |         |          |            |   |              |   |                                       | 74,407     |   |   |   |   |   | 74,407  |
| TOTAL COMPREHENSIVE INCOME                                                  |   |         |          |            |   |              |   |                                       |            |   |   |   |   |   | 77,389  |
|                                                                        |   |         |          |            |   |              |   |                                       |            |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER’S EQUITY – MARCH 31, 2009    |   | $            | 260,458  |            | $      | 1,225,318    |   | $                                          | 1,005,248  |   | $ | (57,243) |   | $ | 2,433,781  |
|                                                                        |   |         |          |            |   |              |   |                                       |            |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER’S EQUITY – DECEMBER 31, 2009      |   | $            | 260,458  |            | $      | 1,475,393    |   | $                                          | 1,085,980  |   | $ | (50,254) |   | $ | 2,771,577  |
|                                                                        |   |         |          |            |   |              |   |                                       |            |   |   |   |   |   |   |
| Common Stock Dividends                                                      |   |         |          |            |   |              |   |                                       | (44,000)        |   |   |   |   |   | (44,000) |
| Preferred Stock Dividends                                                   |   |         |          |            |   |              |   |                                       | (200)           |   |   |   |   |   | (200) |
| Capital Stock Expense                                                       |   |         |          |            |   | 27           |   |                                       | (25)            |   |   |   |   |   | 2  |
| SUBTOTAL – COMMON SHAREHOLDER’S EQUITY                     |   |         |          |            |   |              |   |                                       |            |   |   |   |   |   | 2,727,379  |
|                                                                        |   |         |          |            |   |              |   |                                       |            |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                        |   |         |          |            |   |              |   |                                       |            |   |   |   |   |   |   |
| Other Comprehensive Income (Loss), Net of Taxes:                       |   |         |          |            |   |              |   |                                       |            |   |   |   |   |   |   |
| Cash Flow Hedges, Net of Tax of $940                                   |   |         |          |            |   |              |   |                                       |            |   |   | (1,746) |   |   | (1,746) |
| Amortization of Pension and OPEB Deferred Costs, Net of Tax of $562         |   |         |          |            |   |              |   |                                       |            |   |   | 1,043  |   |   | 1,043  |
| NET INCOME                                                                  |   |         |          |            |   |              |   |                                       | 70,282     |   |   |   |   |   | 70,282  |
| TOTAL COMPREHENSIVE INCOME                                                  |   |         |          |            |   |              |   |                                       |            |   |   |   |   |   | 69,579  |
|                                                                        |   |         |          |            |   |              |   |                                       |            |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER’S EQUITY – MARCH 31, 2010    |   | $            | 260,458  |            | $      | 1,475,420    |   | $                                          | 1,112,037  |   | $ | (50,957) |   | $ | 2,796,958  |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                            |   | 2010   |            | 2009   |
|-------------------------------------------------|--------|--------|-----------------|--------|
| CURRENT ASSETS                                  |   |   |            |   |   |   |
| Cash and Cash Equivalents                       |   | $      | 2,242      |   | $ | 2,006  |
| Accounts Receivable:                            |   |   |            |   |   |   |
| Customers                                       |   |   | 150,827    |   |   | 150,285  |
| Affiliated Companies                            |   |   | 68,831     |   |   | 135,686  |
| Accrued Unbilled Revenues                       |   |   | 56,777     |   |   | 68,971  |
| Miscellaneous                                   |   |   | 4,447      |   |   | 6,690  |
| Allowance for Uncollectible Accounts            |   |   | (5,471)         |   |   | (5,408) |
| Total Accounts Receivable                       |   |   | 275,411    |   |   | 356,224  |
| Fuel                                            |   |   | 303,191    |   |   | 343,261  |
| Materials and Supplies                          |   |   | 87,591     |   |   | 88,575  |
| Risk Management Assets                          |   |   | 78,529     |   |   | 67,956  |
| Accrued Tax Benefits                            |   |   | 156,821    |   |   | 180,708  |
| Regulatory Asset for Under-Recovered Fuel Costs |   |   | 54,829     |   |   | 78,685  |
| Prepayments and Other Current Assets            |   |   | 42,336     |   |   | 36,293  |
| TOTAL CURRENT ASSETS                            |   |   | 1,000,950  |   |   | 1,153,708  |
|                                            |   |   |            |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT                   |   |   |            |   |   |   |
| Electric:                                       |   |   |            |   |   |   |
| Production                                      |   |   | 4,603,157  |   |   | 4,284,361  |
| Transmission                                    |   |   | 1,821,829  |   |   | 1,813,777  |
| Distribution                                    |   |   | 2,671,245  |   |   | 2,642,479  |
| Other Property, Plant and Equipment             |   |   | 353,552    |   |   | 329,497  |
| Construction Work in Progress                   |   |   | 437,070    |   |   | 730,099  |
| Total Property, Plant and Equipment             |   |   | 9,886,853  |   |   | 9,800,213  |
| Accumulated Depreciation and Amortization       |   |   | 2,777,628  |   |   | 2,751,443  |
| TOTAL PROPERTY, PLANT AND EQUIPMENT – NET |   |   | 7,109,225  |   |   | 7,048,770  |
|                                            |   |   |            |   |   |   |
| OTHER NONCURRENT ASSETS                         |   |   |            |   |   |   |
| Regulatory Assets                               |   |   | 1,457,796  |   |   | 1,433,791  |
| Long-term Risk Management Assets                |   |   | 65,847     |   |   | 47,141  |
| Deferred Charges and Other Noncurrent Assets    |   |   | 130,954    |   |   | 113,003  |
| TOTAL OTHER NONCURRENT ASSETS                   |   |   | 1,654,597  |   |   | 1,593,935  |
|                                            |   |   |            |   |   |   |
| TOTAL ASSETS                                    |   | $      | 9,764,772  |   | $ | 9,796,413  |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                                           |   |   | 2010           |            | 2009   |
|----------------------------------------------------------------|--------|--------|----------------|-----------------|--------|
| CURRENT LIABILITIES                                            |   |   | (in thousands) |
| Advances from Affiliates                                       |   |   | $              | 347,425    |   | $ | 229,546  |
| Accounts Payable:                                              |   |   |           |            |   |   |   |
| General                                                        |   |   |           | 185,339    |   |   | 291,240  |
| Affiliated Companies                                           |   |   |           | 100,994    |   |   | 157,640  |
| Long-term Debt Due Within One Year – Nonaffiliated       |   |   |           | 200,020    |   |   | 200,019  |
| Long-term Debt Due Within One Year – Affiliated          |   |   |           | -          |   |   | 100,000  |
| Risk Management Liabilities                                    |   |   |           | 35,161     |   |   | 25,792  |
| Customer Deposits                                              |   |   |           | 59,202     |   |   | 57,578  |
| Deferred Income Taxes                                          |   |   |           | 66,669     |   |   | 68,706  |
| Accrued Taxes                                                  |   |   |           | 65,810     |   |   | 65,241  |
| Accrued Interest                                               |   |   |           | 69,667     |   |   | 58,962  |
| Other Current Liabilities                                      |   |   |           | 80,507     |   |   | 95,292  |
| TOTAL CURRENT LIABILITIES                                      |   |   |           | 1,210,794  |   |   | 1,350,016  |
|                                                           |   |   |           |            |   |   |   |
| NONCURRENT LIABILITIES                                         |   |   |           |            |   |   |   |
| Long-term Debt – Nonaffiliated                           |   |   |           | 3,211,224  |   |   | 3,177,287  |
| Long-term Risk Management Liabilities                          |   |   |           | 30,388     |   |   | 20,364  |
| Deferred Income Taxes                                          |   |   |           | 1,478,387  |   |   | 1,439,884  |
| Regulatory Liabilities and Deferred Investment Tax Credits     |   |   |           | 534,661    |   |   | 526,546  |
| Employee Benefits and Pension Obligations                      |   |   |           | 310,417    |   |   | 312,873  |
| Deferred Credits and Other Noncurrent Liabilities              |   |   |           | 174,196    |   |   | 180,114  |
| TOTAL NONCURRENT LIABILITIES                                   |   |   |           | 5,739,273  |   |   | 5,657,068  |
|                                                           |   |   |           |            |   |   |   |
| TOTAL LIABILITIES                                              |   |   |           | 6,950,067  |   |   | 7,007,084  |
|                                                           |   |   |           |            |   |   |   |
| Cumulative Preferred Stock Not Subject to Mandatory Redemption |   |   |           | 17,747     |   |   | 17,752  |
|                                                           |   |   |           |            |   |   |   |
| Rate Matters (Note 3)                                          |   |   |           |            |   |   |   |
| Commitments and Contingencies (Note 4)                         |   |   |           |            |   |   |   |
|                                                           |   |   |           |            |   |   |   |
| COMMON SHAREHOLDER’S EQUITY                              |   |   |           |            |   |   |   |
| Common Stock – No Par Value:                             |   |   |           |            |   |   |   |
| Authorized – 30,000,000 Shares                           |   |   |           |            |   |   |   |
| Outstanding – 13,499,500 Shares                          |   |   |           | 260,458    |   |   | 260,458  |
| Paid-in Capital                                                |   |   |           | 1,475,420  |   |   | 1,475,393  |
| Retained Earnings                                              |   |   |           | 1,112,037  |   |   | 1,085,980  |
| Accumulated Other Comprehensive Income (Loss)                  |   |   |           | (50,957)        |   |   | (50,254) |
| TOTAL COMMON SHAREHOLDER’S EQUITY                        |   |   |           | 2,796,958  |   |   | 2,771,577  |
|                                                           |   |   |           |            |   |   |   |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY               |   |   | $              | 9,764,772  |   | $ | 9,796,413  |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                                                                        |   | 2010   |          | 2009   |
|---------------------------------------------------------------------------------------------|--------|--------|---------------|--------|
| OPERATING ACTIVITIES                                                                        |   |   |          |   |   |   |
| Net Income                                                                                  |   | $      | 70,282   |   | $ | 74,407  |
| Adjustments to Reconcile Net Income to Net Cash Flows from (Used for) Operating Activities: |   |   |          |   |   |   |
| Depreciation and Amortization                                                               |   |   | 77,430   |   |   | 69,995  |
| Deferred Income Taxes                                                                       |   |   | 19,121   |   |   | 80,375  |
| Carrying Costs Income                                                                       |   |   | (5,764)       |   |   | (4,083) |
| Allowance for Equity Funds Used During Construction                                         |   |   | (1,163)       |   |   | (2,653) |
| Mark-to-Market of Risk Management Contracts                                                 |   |   | (12,977)      |   |   | (9,433) |
| Fuel Over/Under-Recovery, Net                                                               |   |   | (11,804)      |   |   | (70,837) |
| Change in Other Noncurrent Assets                                                           |   |   | 11,082   |   |   | (7,737) |
| Change in Other Noncurrent Liabilities                                                      |   |   | (2,568)       |   |   | 3,098  |
| Changes in Certain Components of Working Capital:                                           |   |   |          |   |   |   |
| Accounts Receivable, Net                                                                    |   |   | 80,813   |   |   | 64,045  |
| Fuel, Materials and Supplies                                                                |   |   | 41,054   |   |   | (39,266) |
| Accounts Payable                                                                            |   |   | (97,732)      |   |   | (115,697) |
| Accrued Taxes, Net                                                                          |   |   | 24,150   |   |   | (41,201) |
| Other Current Assets                                                                        |   |   | (4,250)       |   |   | (16,033) |
| Other Current Liabilities                                                                   |   |   | (9,152)       |   |   | (14,187) |
| Net Cash Flows from (Used for) Operating Activities                                         |   |   | 178,522  |   |   | (29,207) |
|                                                                                        |   |   |          |   |   |   |
| INVESTING ACTIVITIES                                                                        |   |   |          |   |   |   |
| Construction Expenditures                                                                   |   |   | (167,412)     |   |   | (221,053) |
| Other Investing Activities                                                                  |   |   | (566)         |   |   | 463  |
| Net Cash Flows Used for Investing Activities                                                |   |   | (167,978)     |   |   | (220,590) |
|                                                                                        |   |   |          |   |   |   |
| FINANCING ACTIVITIES                                                                        |   |   |          |   |   |   |
| Issuance of Long-term Debt – Nonaffiliated                                            |   |   | 17,376   |   |   | 345,814  |
| Change in Advances from Affiliates, Net                                                     |   |   | 117,879  |   |   | (74,407) |
| Retirement of Long-term Debt – Nonaffiliated                                          |   |   | (5)           |   |   | (4) |
| Retirement of Long-term Debt – Affiliated                                             |   |   | (100,000)     |   |   | -  |
| Retirement of Cumulative Preferred Stock                                                    |   |   | (4)           |   |   | -  |
| Principal Payments for Capital Lease Obligations                                            |   |   | (1,790)       |   |   | (848) |
| Dividends Paid on Common Stock                                                              |   |   | (44,000)      |   |   | (20,000) |
| Dividends Paid on Cumulative Preferred Stock                                                |   |   | (200)         |   |   | (200) |
| Other Financing Activities                                                                  |   |   | 436      |   |   | -  |
| Net Cash Flows from (Used for) Financing Activities                                         |   |   | (10,308)      |   |   | 250,355  |
|                                                                                        |   |   |          |   |   |   |
| Net Increase in Cash and Cash Equivalents                                                   |   |   | 236      |   |   | 558  |
| Cash and Cash Equivalents at Beginning of Period                                            |   |   | 2,006    |   |   | 1,996  |
| Cash and Cash Equivalents at End of Period                                                  |   | $      | 2,242    |   | $ | 2,554  |
|                                                                                        |   |   |          |   |   |   |
| SUPPLEMENTARY INFORMATION                                                                   |   |   |          |   |   |   |
| Cash Paid for Interest, Net of Capitalized Amounts                                          |   | $      | 38,971   |   | $ | 49,390  |
| Net Cash Paid (Received) for Income Taxes                                                   |   |   | -        |   |   | (2,683) |
| Noncash Acquisitions Under Capital Leases                                                   |   |   | 20,369   |   |   | 151  |
| Construction Expenditures Included in Accounts Payable at March 31,                         |   |   | 43,262   |   |   | 88,405  |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                      | Footnote Reference |
|-------------------------------------------|--------------------|
|                                      |               |
| Significant Accounting Matters            | Note 1             |
|                                      |               |
| New Accounting Pronouncements             | Note 2             |
|                                      |               |
| Rate Matters                              | Note 3             |
|                                      |               |
| Commitments, Guarantees and Contingencies | Note 4             |
|                                      |               |
| Benefit Plans                             | Note 6             |
|                                      |               |
| Business Segments                         | Note 7             |
|                                      |               |
| Derivatives and Hedging                   | Note 8             |
|                                      |               |
| Fair Value Measurements                   | Note 9             |
|                                      |               |
| Income Taxes                              | Note 10            |
|                                      |               |
| Financing Activities                      | Note 11            |
|                                      |               |
| Company-wide Staffing and Budget Review   | Note 12            |
|                                      |               |

----

----

| RESULTS OF OPERATIONS |
|-----------------------|

| First Quarter of 2009           |   |   |   |   |    |   | $      | 49  |
|---------------------------------|--------|--------|--------|--------|---------|--------|--------|----------|
|                            |   |   |   |   |    |   |   |     |
| Changes in Gross Margin:        |   |   |   |   |    |   |   |     |
| Retail Margins                  |   |   |   |   | 3  |   |   |     |
| Off-system Sales                |   |   |   |   | 4  |   |   |     |
| Total Change in Gross Margin    |   |   |   |   |    |   |   | 7   |
|                            |   |   |   |   |    |   |   |     |
| Total Expenses and Other:       |   |   |   |   |    |   |   |     |
| Other Operation and Maintenance |   |   |   |   | 6  |   |   |     |
| Depreciation and Amortization   |   |   |   |   | (3)     |   |   |     |
| Taxes Other Than Income Taxes   |   |   |   |   | (2)     |   |   |     |
| Interest Expense                |   |   |   |   | (1)     |   |   |     |
| Total Expenses and Other        |   |   |   |   |    |   |   | -   |
|                            |   |   |   |   |    |   |   |     |
| Income Tax Expense              |   |   |   |   |    |   |   | (4)      |
|                            |   |   |   |   |    |   |   |     |
| First Quarter of 2010           |   |   |   |   |    |   | $      | 52  |

| · | Retail Margins increased $3 million due to:                                                                                                     |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                          | A $22 million increase related to the implementation of higher rates set by the Ohio ESP. |
|   | ·                                                                                                                                          | A $5 million increase in fuel margins. |
|   | These increases were partially offset by:                                                                                                       |
|   | ·                                                                                                                                          | A $14 million decrease as a result of the elimination of Restructuring Transition Charge (RTC) revenues with the implementation of CSPCo’s ESP. |
|   | ·                                                                                                                                          | A $4 million decrease as a result of the loss of the City of Westerville as a dedicated customer to Off-system Sales.  These sales are shared by the members of the AEP Power Pool. |
|   | ·                                                                                                                                          | A $4 million decrease in commercial and industrial sales primarily due to reduced usage. |
| · | Margins from Off-system Sales increased $4 million primarily due to higher physical sales volumes reflecting favorable generation availability. |

| · | Other Operation and Maintenance expenses decreased $6 million primarily due to:                                                                                                                                                                                                    |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                                                             | An $8 million decrease related to a 2009 obligation to contribute to the “Partnership with Ohio” fund for low income, at-risk customers ordered by the PUCO’s March 2009 approval of CSPCo’s ESP.  See “Ohio Electric Security Plan Filings” section of Note 3. |
|   | ·                                                                                                                                                                                                                                                                             | A $3 million decrease in overhead distribution line expenses primarily due to ice and wind storms in the first quarter of 2009, partially offset by increased vegetation management activities. |
|   | ·                                                                                                                                                                                                                                                                             | A $3 million decrease in removal costs primarily related to work performed at the Conesville and Darby Plants. |
|   | These decreases were partially offset by:                                                                                                                                                                                                                                          |
|   | ·                                                                                                                                                                                                                                                                             | A $4 million increase in recoverable customer account expenses due to increased Universal Service Fund surcharge rates for customers who qualify for payment assistance. |
|   | ·                                                                                                                                                                                                                                                                             | A $3 million increase in employee-related expenses. |
| · | Depreciation and Amortization increased $3 million primarily due to projects at the Conesville Plant that were completed and placed in service in November 2009.                                                                                                                   |
| · | Taxes Other Than Income Taxes increased $2 million due to increases in property taxes.                                                                                                                                                                                             |
| · | Income Tax Expense increased $4 million primarily due to an increase in pretax book income, other book/tax differences accounted for on a flow-through basis and the tax treatment associated with the future reimbursement of Medicare Part D retiree prescription drug benefits. |

----

----

|                                                    |   | 2010   |          | 2009   |
|---------------------------------------------------------|--------|--------|---------------|--------|
| REVENUES                                                |   |   |          |   |
| Electric Generation, Transmission and Distribution      |   | $      | 501,019  |   | $ | 460,922  |
| Sales to AEP Affiliates                                 |   |   | 15,832   |   |   | 10,206  |
| Other Revenues                                          |   |   | 588      |   |   | 608  |
| TOTAL REVENUES                                          |   |   | 517,439  |   |   | 471,736  |
|                                                    |   |   |          |   |   |   |
| EXPENSES                                                |   |   |          |   |   |   |
| Fuel and Other Consumables Used for Electric Generation |   |   | 114,441  |   |   | 70,944  |
| Purchased Electricity for Resale                        |   |   | 19,645   |   |   | 29,838  |
| Purchased Electricity from AEP Affiliates               |   |   | 98,799   |   |   | 93,092  |
| Other Operation                                         |   |   | 77,326   |   |   | 76,088  |
| Maintenance                                             |   |   | 24,283   |   |   | 31,014  |
| Depreciation and Amortization                           |   |   | 37,487   |   |   | 34,945  |
| Taxes Other Than Income Taxes                           |   |   | 47,057   |   |   | 45,282  |
| TOTAL EXPENSES                                          |   |   | 419,038  |   |   | 381,203  |
|                                                    |   |   |          |   |   |   |
| OPERATING INCOME                                        |   |   | 98,401   |   |   | 90,533  |
|                                                    |   |   |          |   |   |   |
| Other Income (Expense):                                 |   |   |          |   |   |   |
| Interest Income                                         |   |   | 142      |   |   | 240  |
| Carrying Costs Income                                   |   |   | 2,221    |   |   | 1,689  |
| Allowance for Equity Funds Used During Construction     |   |   | 921      |   |   | 1,300  |
| Interest Expense                                        |   |   | (21,784)      |   |   | (20,793) |
|                                                    |   |   |          |   |   |   |
| INCOME BEFORE INCOME TAX EXPENSE                        |   |   | 79,901   |   |   | 72,969  |
|                                                    |   |   |          |   |   |   |
| Income Tax Expense                                      |   |   | 28,251   |   |   | 24,111  |
|                                                    |   |   |          |   |   |   |
| NET INCOME                                              |   |   | 51,650   |   |   | 48,858  |
|                                                    |   |   |          |   |   |   |
| Capital Stock Expense                              |   |   | 39       |   |   | 39  |
|                                                    |   |   |          |   |   |   |
| EARNINGS ATTRIBUTABLE TO COMMON STOCK                   |   | $      | 51,611   |   | $ | 48,819  |

| The common stock of CSPCo is wholly-owned by AEP. |
|---------------------------------------------------|

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                                                        |   | Common Stock |         | Paid-in Capital |   | Retained Earnings |   | Accumulated Other Comprehensive Income (Loss) |          | Total  |
|-----------------------------------------------------------------------------|--------|--------------|--------------|-----------------|--------|-------------------|--------|-----------------------------------------------|---------------|--------|
| TOTAL COMMON SHAREHOLDER’S EQUITY – DECEMBER 31, 2008 |   | $            | 41,026  |            | $      | 580,506      |   | $                                             | 674,758  |   | $ | (51,025) |   | $ | 1,245,265  |
|                                                                        |   |         |         |            |   |              |   |                                          |          |   |   |   |   |   |   |
| Common Stock Dividends                                                      |   |         |         |            |   |              |   |                                          | (50,000)      |   |   |   |   |   | (50,000) |
| Capital Stock Expense                                                       |   |         |         |            |   | 39           |   |                                          | (39)          |   |   |   |   |   | -  |
| SUBTOTAL – COMMON SHAREHOLDER’S EQUITY                     |   |         |         |            |   |              |   |                                          |          |   |   |   |   |   | 1,195,265  |
|                                                                        |   |         |         |            |   |              |   |                                          |          |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                        |   |         |         |            |   |              |   |                                          |          |   |   |   |   |   |   |
| Other Comprehensive Income, Net of Taxes:                              |   |         |         |            |   |              |   |                                          |          |   |   |   |   |   |   |
| Cash Flow Hedges, Net of Tax of $340                                        |   |         |         |            |   |              |   |                                          |          |   |   | 631  |   |   | 631  |
| Amortization of Pension and OPEB Deferred Costs, Net of Tax of $298         |   |         |         |            |   |              |   |                                          |          |   |   | 554  |   |   | 554  |
| NET INCOME                                                                  |   |         |         |            |   |              |   |                                          | 48,858   |   |   |   |   |   | 48,858  |
| TOTAL COMPREHENSIVE INCOME                                                  |   |         |         |            |   |              |   |                                          |          |   |   |   |   |   | 50,043  |
|                                                                        |   |         |         |            |   |              |   |                                          |          |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER’S EQUITY – MARCH 31, 2009    |   | $            | 41,026  |            | $      | 580,545      |   | $                                             | 673,577  |   | $ | (49,840) |   | $ | 1,245,308  |
|                                                                        |   |         |         |            |   |              |   |                                          |          |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER’S EQUITY – DECEMBER 31, 2009 |   | $            | 41,026  |            | $      | 580,663      |   | $                                             | 788,139  |   | $ | (49,993) |   | $ | 1,359,835  |
|                                                                        |   |         |         |            |   |              |   |                                          |          |   |   |   |   |   |   |
| Common Stock Dividends                                                      |   |         |         |            |   |              |   |                                          | (31,250)      |   |   |   |   |   | (31,250) |
| Capital Stock Expense                                                       |   |         |         |            |   | 39           |   |                                          | (39)          |   |   |   |   |   | -  |
| SUBTOTAL – COMMON SHAREHOLDER’S EQUITY                     |   |         |         |            |   |              |   |                                          |          |   |   |   |   |   | 1,328,585  |
|                                                                        |   |         |         |            |   |              |   |                                          |          |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                        |   |         |         |            |   |              |   |                                          |          |   |   |   |   |   |   |
| Other Comprehensive Income (Loss), Net of Taxes:                  |   |         |         |            |   |              |   |                                          |          |   |   |   |   |   |   |
| Cash Flow Hedges, Net of Tax of $555                                        |   |         |         |            |   |              |   |                                          |          |   |   | (1,031) |   |   | (1,031) |
| Amortization of Pension and OPEB Deferred Costs, Net of Tax of $333         |   |         |         |            |   |              |   |                                          |          |   |   | 619  |   |   | 619  |
| NET INCOME                                                                  |   |         |         |            |   |              |   |                                          | 51,650   |   |   |   |   |   | 51,650  |
| TOTAL COMPREHENSIVE INCOME                                                  |   |         |         |            |   |              |   |                                          |          |   |   |   |   |   | 51,238  |
|                                                                        |   |         |         |            |   |              |   |                                          |          |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER’S EQUITY – MARCH 31, 2010    |   | $            | 41,026  |            | $      | 580,702      |   | $                                             | 808,500  |   | $ | (50,405) |   | $ | 1,379,823  |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                            |   |   | 2010   |            | 2009   |
|-------------------------------------------------|--------|--------|--------|-----------------|--------|
| CURRENT ASSETS                                  |   |   |   |            |   |   |   |
| Cash and Cash Equivalents                       |   |   | $      | 1,414      |   | $ | 1,096  |
| Other Cash Deposits                             |   |   |   | 5,860      |   |   | 16,150  |
| Advances to Affiliates                          |   |   |   | 37,818     |   |   | -  |
| Accounts Receivable:                            |   |   |   |            |   |   |   |
| Customers                                       |   |   |   | 43,051     |   |   | 37,158  |
| Affiliated Companies                            |   |   |   | 14,766     |   |   | 28,555  |
| Accrued Unbilled Revenues                       |   |   |   | 12,078     |   |   | 11,845  |
| Miscellaneous                                   |   |   |   | 4,812      |   |   | 4,164  |
| Allowance for Uncollectible Accounts            |   |   |   | (2,019)         |   |   | (3,481) |
| Total Accounts Receivable                       |   |   |   | 72,688     |   |   | 78,241  |
| Fuel                                            |   |   |   | 83,463     |   |   | 74,158  |
| Materials and Supplies                          |   |   |   | 40,142     |   |   | 39,652  |
| Emission Allowances                             |   |   |   | 25,177     |   |   | 26,587  |
| Risk Management Assets                          |   |   |   | 44,362     |   |   | 34,343  |
| Accrued Tax Benefits                            |   |   |   | 9,517      |   |   | 29,273  |
| Margin Deposits                                 |   |   |   | 18,971     |   |   | 14,874  |
| Prepayments and Other Current Assets            |   |   |   | 14,101     |   |   | 6,349  |
| TOTAL CURRENT ASSETS                            |   |   |   | 353,513    |   |   | 320,723  |
|                                            |   |   |   |            |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT                   |   |   |   |            |   |   |   |
| Electric:                                       |   |   |   |            |   |   |   |
| Production                                      |   |   |   | 2,648,128  |   |   | 2,641,860  |
| Transmission                                    |   |   |   | 635,148    |   |   | 623,680  |
| Distribution                                    |   |   |   | 1,748,245  |   |   | 1,745,559  |
| Other Property, Plant and Equipment             |   |   |   | 201,250    |   |   | 189,315  |
| Construction Work in Progress                   |   |   |   | 144,328    |   |   | 155,081  |
| Total Property, Plant and Equipment             |   |   |   | 5,377,099  |   |   | 5,355,495  |
| Accumulated Depreciation and Amortization       |   |   |   | 1,861,973  |   |   | 1,838,840  |
| TOTAL PROPERTY, PLANT AND EQUIPMENT – NET |   |   |   | 3,515,126  |   |   | 3,516,655  |
|                                            |   |   |   |            |   |   |   |
| OTHER NONCURRENT ASSETS                         |   |   |   |            |   |   |   |
| Regulatory Assets                               |   |   |   | 309,995    |   |   | 341,029  |
| Long-term Risk Management Assets                |   |   |   | 37,264     |   |   | 23,882  |
| Deferred Charges and Other Noncurrent Assets    |   |   |   | 128,009    |   |   | 147,217  |
| TOTAL OTHER NONCURRENT ASSETS                   |   |   |   | 475,268    |   |   | 512,128  |
|                                            |   |   |   |            |   |   |   |
| TOTAL ASSETS                                    |   |   | $      | 4,343,907  |   | $ | 4,349,506  |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                                       |   |   | 2010           |            | 2009   |
|------------------------------------------------------------|--------|--------|----------------|-----------------|--------|
| CURRENT LIABILITIES                                        |   |   | (in thousands) |
| Advances from Affiliates                                   |   |   | $              | -          |   | $ | 24,202  |
| Accounts Payable:                                          |   |   |           |            |   |   |   |
| General                                                    |   |   |           | 85,166     |   |   | 95,872  |
| Affiliated Companies                                       |   |   |           | 52,427     |   |   | 81,338  |
| Long-term Debt Due Within One Year – Nonaffiliated   |   |   |           | 150,000    |   |   | 150,000  |
| Long-term Debt Due Within One Year – Affiliated      |   |   |           | -          |   |   | 100,000  |
| Risk Management Liabilities                                |   |   |           | 19,407     |   |   | 13,052  |
| Customer Deposits                                          |   |   |           | 29,021     |   |   | 27,911  |
| Accrued Taxes                                              |   |   |           | 154,344    |   |   | 199,001  |
| Accrued Interest                                           |   |   |           | 27,203     |   |   | 24,669  |
| Other Current Liabilities                                  |   |   |           | 70,480     |   |   | 67,053  |
| TOTAL CURRENT LIABILITIES                                  |   |   |           | 588,048    |   |   | 783,098  |
|                                                       |   |   |           |            |   |   |   |
| NONCURRENT LIABILITIES                                     |   |   |           |            |   |   |   |
| Long-term Debt – Nonaffiliated                       |   |   |           | 1,438,592  |   |   | 1,286,393  |
| Long-term Risk Management Liabilities                      |   |   |           | 17,200     |   |   | 10,313  |
| Deferred Income Taxes                                      |   |   |           | 539,387    |   |   | 535,265  |
| Regulatory Liabilities and Deferred Investment Tax Credits |   |   |           | 177,639    |   |   | 174,671  |
| Employee Benefits and Pension Obligations                  |   |   |           | 132,317    |   |   | 133,968  |
| Deferred Credits and Other Noncurrent Liabilities          |   |   |           | 70,901     |   |   | 65,963  |
| TOTAL NONCURRENT LIABILITIES                               |   |   |           | 2,376,036  |   |   | 2,206,573  |
|                                                       |   |   |           |            |   |   |   |
| TOTAL LIABILITIES                                          |   |   |           | 2,964,084  |   |   | 2,989,671  |
|                                                       |   |   |           |            |   |   |   |
| Rate Matters (Note 3)                                      |   |   |           |            |   |   |   |
| Commitments and Contingencies (Note 4)                     |   |   |           |            |   |   |   |
|                                                       |   |   |           |            |   |   |   |
| COMMON SHAREHOLDER’S EQUITY                          |   |   |           |            |   |   |   |
| Common Stock – No Par Value:                         |   |   |           |            |   |   |   |
| Authorized – 24,000,000 Shares                       |   |   |           |            |   |   |   |
| Outstanding – 16,410,426 Shares                      |   |   |           | 41,026     |   |   | 41,026  |
| Paid-in Capital                                            |   |   |           | 580,702    |   |   | 580,663  |
| Retained Earnings                                          |   |   |           | 808,500    |   |   | 788,139  |
| Accumulated Other Comprehensive Income (Loss)              |   |   |           | (50,405)        |   |   | (49,993) |
| TOTAL COMMON SHAREHOLDER’S EQUITY                    |   |   |           | 1,379,823  |   |   | 1,359,835  |
|                                                       |   |   |           |            |   |   |   |
| TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY           |   |   | $              | 4,343,907  |   | $ | 4,349,506  |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                                                             |   | 2010   |          | 2009   |
|----------------------------------------------------------------------------------|--------|--------|---------------|--------|
| OPERATING ACTIVITIES                                                             |   |   |          |   |   |   |
| Net Income                                                                       |   | $      | 51,650   |   | $ | 48,858  |
| Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities: |   |   |          |   |   |   |
| Depreciation and Amortization                                                    |   |   | 37,487   |   |   | 34,945  |
| Deferred Income Taxes                                                            |   |   | 8,327    |   |   | 38,945  |
| Allowance for Equity Funds Used During Construction                              |   |   | (921)         |   |   | (1,300) |
| Mark-to-Market of Risk Management Contracts                                      |   |   | (11,609)      |   |   | (3,204) |
| Property Taxes                                                                   |   |   | 24,131   |   |   | 22,262  |
| Fuel Over/Under-Recovery, Net                                                    |   |   | 26,139   |   |   | (16,934) |
| Change in Other Noncurrent Assets                                                |   |   | (4,994)       |   |   | (8,551) |
| Change in Other Noncurrent Liabilities                                           |   |   | (46)          |   |   | 13,410  |
| Changes in Certain Components of Working Capital:                                |   |   |          |   |   |   |
| Accounts Receivable, Net                                                         |   |   | 5,553         |   |   | 43,345  |
| Fuel, Materials and Supplies                                                     |   |   | (9,795)       |   |   | (19,854) |
| Accounts Payable                                                                 |   |   | (22,402)      |   |   | (81,080) |
| Accrued Taxes, Net                                                               |   |   | (24,444)      |   |   | (57,623) |
| Other Current Assets                                                             |   |   | (428)         |   |   | 1,157  |
| Other Current Liabilities                                                        |   |   | (1,619)       |   |   | (9,817) |
| Net Cash Flows from Operating Activities                                         |   |   | 77,029   |   |   | 4,559  |
|                                                                             |   |   |          |   |   |   |
| INVESTING ACTIVITIES                                                             |   |   |          |   |   |   |
| Construction Expenditures                                                        |   |   | (42,906)      |   |   | (67,831) |
| Change in Other Cash Deposits                                                    |   |   | 10,290   |   |   | 11,093  |
| Change in Advances to Affiliates, Net                                            |   |   | (37,818)      |   |   | -  |
| Acquisitions of Assets                                                           |   |   | (190)         |   |   | -  |
| Proceeds from Sales of Assets                                                    |   |   | 789      |   |   | 206  |
| Net Cash Flows Used for Investing Activities                                     |   |   | (69,835)      |   |   | (56,532) |
|                                                                             |   |   |          |   |   |   |
| FINANCING ACTIVITIES                                                             |   |   |          |   |   |   |
| Issuance of Long-term Debt – Nonaffiliated                                 |   |   | 149,625  |   |   | -  |
| Change in Advances from Affiliates, Net                                          |   |   | (24,202)      |   |   | 102,871  |
| Retirement of Long-term Debt – Affiliated                                  |   |   | (100,000)     |   |   | -  |
| Principal Payments for Capital Lease Obligations                                 |   |   | (1,120)       |   |   | (674) |
| Dividends Paid on Common Stock                                                   |   |   | (31,250)      |   |   | (50,000) |
| Other Financing Activities                                                       |   |   | 71       |   |   | -  |
| Net Cash Flows from (Used for) Financing Activities                              |   |   | (6,876)       |   |   | 52,197  |
|                                                                             |   |   |          |   |   |   |
| Net Increase in Cash and Cash Equivalents                                        |   |   | 318      |   |   | 224  |
| Cash and Cash Equivalents at Beginning of Period                                 |   |   | 1,096    |   |   | 1,063  |
| Cash and Cash Equivalents at End of Period                                       |   | $      | 1,414    |   | $ | 1,287  |
|                                                                             |   |   |          |   |   |   |
| SUPPLEMENTARY INFORMATION                                                        |   |   |          |   |   |   |
| Cash Paid for Interest, Net of Capitalized Amounts                               |   | $      | 18,631   |   | $ | 31,229  |
| Net Cash Paid for Income Taxes                                                   |   |   | -        |   |   | 387  |
| Noncash Acquisitions Under Capital Leases                                        |   |   | 8,353    |   |   | 254  |
| Construction Expenditures Included in Accounts Payable at March 31,              |   |   | 13,891   |   |   | 51,297  |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                      | FootnoteReference |
|-------------------------------------------|-------------------|
|                                      |              |
| Significant Accounting Matters            | Note 1            |
|                                      |              |
| New Accounting Pronouncements             | Note 2            |
|                                      |              |
| Rate Matters                              | Note 3            |
|                                      |              |
| Commitments, Guarantees and Contingencies | Note 4            |
|                                      |              |
| Benefit Plans                             | Note 6            |
|                                      |              |
| Business Segments                         | Note 7            |
|                                      |              |
| Derivatives and Hedging                   | Note 8            |
|                                      |              |
| Fair Value Measurements                   | Note 9            |
|                                      |              |
| Income Taxes                              | Note 10           |
|                                      |              |
| Financing Activities                      | Note 11           |
|                                      |              |
| Company-wide Staffing and Budget Review   | Note 12           |

----

----

| First Quarter of 2009            |   |   |   |   |     |   | $      | 81  |
|----------------------------------|--------|--------|--------|--------|----------|--------|--------|----------|
|                             |   |   |   |   |     |   |   |     |
| Changes in Gross Margin:         |   |   |   |   |     |   |   |     |
| Retail Margins                   |   |   |   |   | 35  |   |   |     |
| FERC Municipals and Cooperatives |   |   |   |   | (8)      |   |   |     |
| Off-system Sales                 |   |   |   |   | 3   |   |   |     |
| Transmission Revenues            |   |   |   |   | 1   |   |   |     |
| Other                            |   |   |   |   | (55)     |   |   |     |
| Total Change in Gross Margin     |   |   |   |   |     |   |   | (24)     |
|                             |   |   |   |   |     |   |   |     |
| Total Expenses and Other:        |   |   |   |   |     |   |   |     |
| Other Operation and Maintenance  |   |   |   |   | (24)     |   |   |     |
| Depreciation and Amortization    |   |   |   |   | (1)      |   |   |     |
| Other Income                     |   |   |   |   | 1   |   |   |     |
| Interest Expense                 |   |   |   |   | (2)      |   |   |     |
| Total Expenses and Other         |   |   |   |   |     |   |   | (26)     |
|                             |   |   |   |   |     |   |   |     |
| Income Tax Expense               |   |   |   |   |     |   |   | 14  |
|                             |   |   |   |   |     |   |   |     |
| First Quarter of 2010            |   |   |   |   |     |   | $      | 45  |

| · | Retail Margins increased $35 million primarily due to the following:                                                                                                                                                                                                                                                                                                                                                                     |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                   | A $12 million base rate increase primarily due to the approval of the Indiana base rate filing, effective March 2009. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                   | A $10 million increase in capacity settlements under the Interconnection Agreement. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                   | A $20 million increase in fuel margins due to higher fuel and purchased power costs recorded in 2009 related to the Cook Plant Unit 1 shutdown.  This increase in fuel margins was offset by a corresponding decrease in Other Revenues as discussed below. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                   | An $8 million increase in margins from industrial sales due to higher industrial usage reflecting an improvement in demand. |
|   | These increases were partially offset by:                                                                                                                                                                                                                                                                                                                                                                                                |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                   | A $10 million decrease in other fuel margins.  |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                   | A $4 million increase in PJM charges. |
| · | FERC Municipals and Cooperatives margins decreased $8 million due to a unit power sales agreement ending in December 2009.                                                                                                                                                                                                                                                                                                               |
| · | Margins from Off-system Sales increased $3 million primarily due to higher physical sales volumes reflecting favorable generation availability, partially offset by lower trading and marketing margins.                                                                                                                                                                                                                                 |
| · | Other revenues decreased $55 million primarily due to the Cook Plant accidental outage insurance proceeds of $54 million in the first quarter of 2009.  I&M reduced customer bills by approximately $20 million in the first quarter of 2009 for the cost of replacement power during the outage period.  This decrease in revenues was offset by a corresponding increase in Retail Margins as discussed above. |

| · | Other Operation and Maintenance expenses increased $24 million primarily due to the following: |
|--------|------------------------------------------------------------------------------------------------|
|   | ·                                                                                         | A $13 million increase in administrative and general expenses for increased benefit and insurance costs. |
|   | ·                                                                                         | A $4 million increase in steam production expense primarily due to deferral of NSR costs in 2009 included in a rate settlement. |
|   | ·                                                                                         | A $3 million increase in transmission expense reflecting lower credits under the Transmission Agreement. |
| · | Income Tax Expense decreased $14 million primarily due to a decrease in pretax book income.    |

----

----

|                                                    |   | 2010   |          | 2009   |
|---------------------------------------------------------|--------|--------|---------------|--------|
| REVENUES                                                |   |   |          |   |
| Electric Generation, Transmission and Distribution      |   | $      | 438,024  |   | $ | 421,927  |
| Sales to AEP Affiliates                                 |   |   | 84,217   |   |   | 59,986  |
| Other Revenues – Affiliated                       |   |   | 27,966   |   |   | 30,740  |
| Other Revenues – Nonaffiliated                    |   |   | 2,849    |   |   | 54,391  |
| TOTAL REVENUES                                          |   |   | 553,056  |   |   | 567,044  |
|                                                    |   |   |          |   |   |   |
| EXPENSES                                                |   |   |          |   |   |   |
| Fuel and Other Consumables Used for Electric Generation |   |   | 119,181  |   |   | 102,960  |
| Purchased Electricity for Resale                        |   |   | 29,767   |   |   | 38,361  |
| Purchased Electricity from AEP Affiliates               |   |   | 82,250   |   |   | 79,978  |
| Other Operation                                         |   |   | 130,681  |   |   | 109,460  |
| Maintenance                                             |   |   | 48,444   |   |   | 46,274  |
| Depreciation and Amortization                           |   |   | 33,831   |   |   | 32,745  |
| Taxes Other Than Income Taxes                           |   |   | 21,032   |   |   | 20,696  |
| TOTAL EXPENSES                                          |   |   | 465,186  |   |   | 430,474  |
|                                                    |   |   |          |   |   |   |
| OPERATING INCOME                                        |   |   | 87,870   |   |   | 136,570  |
|                                                    |   |   |          |   |   |   |
| Other Income (Expense):                                 |   |   |          |   |   |   |
| Interest Income                                         |   |   | 485      |   |   | 2,543  |
| Allowance for Equity Funds Used During Construction     |   |   | 4,435    |   |   | 1,555  |
| Interest Expense                                        |   |   | (26,101)      |   |   | (23,531) |
|                                                    |   |   |          |   |   |   |
| INCOME BEFORE INCOME TAX EXPENSE                        |   |   | 66,689   |   |   | 117,137  |
|                                                    |   |   |          |   |   |   |
| Income Tax Expense                                      |   |   | 21,631   |   |   | 36,185  |
|                                                    |   |   |          |   |   |   |
| NET INCOME                                              |   |   | 45,058   |   |   | 80,952  |
|                                                    |   |   |          |   |   |   |
| Preferred Stock Dividend Requirements                   |   |   | 85       |   |   | 85  |
|                                                    |   |   |          |   |   |   |
| EARNINGS ATTRIBUTABLE TO COMMON STOCK                   |   | $      | 44,973   |   | $ | 80,867  |

| The common stock of I&M is wholly-owned by AEP. |
|-----------------------------------------------------|

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                                                           |   | Common Stock |         | Paid-in Capital |   | Retained Earnings |   | AccumulatedOtherComprehensiveIncome (Loss) |          | Total  |
|--------------------------------------------------------------------------------|--------|--------------|--------------|-----------------|--------|-------------------|--------|--------------------------------------------|---------------|--------|
|                                                                           |   |         |         |            |   |              |   |                                       |          |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER’S EQUITY – DECEMBER 31, 2008    |   | $            | 56,584  |            | $      | 861,291      |   | $                                          | 538,637  |   | $ | (21,694) |   | $ | 1,434,818  |
|                                                                           |   |         |         |            |   |              |   |                                       |          |   |   |   |   |   |   |
| Common Stock Dividends                                                         |   |         |         |            |   |              |   |                                       | (24,500)      |   |   |   |   |   | (24,500) |
| Preferred Stock Dividends                                                      |   |         |         |            |   |              |   |                                       | (85)          |   |   |   |   |   | (85) |
| Gain on Reacquired Preferred Stock                                             |   |         |         |            |   | 1            |   |                                       |          |   |   |   |   |   | 1  |
| SUBTOTAL – COMMON SHAREHOLDER’S EQUITY                        |   |         |         |            |   |              |   |                                       |          |   |   |   |   |   | 1,410,234  |
|                                                                           |   |         |         |            |   |              |   |                                       |          |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                           |   |         |         |            |   |              |   |                                       |          |   |   |   |   |   |   |
| Other Comprehensive Income, Net of Taxes:                                 |   |         |         |            |   |              |   |                                       |          |   |   |   |   |   |   |
| Cash Flow Hedges, Net of Tax of $463                                           |   |         |         |            |   |              |   |                                       |          |   |   | 859  |   |   | 859  |
| Amortization of Pension and OPEB Deferred Costs, Net of Tax of $111       |   |         |         |            |   |              |   |                                       |          |   |   | 207  |   |   | 207  |
| NET INCOME                                                                     |   |         |         |            |   |              |   |                                       | 80,952   |   |   |   |   |   | 80,952  |
| TOTAL COMPREHENSIVE INCOME                                                     |   |         |         |            |   |              |   |                                       |          |   |   |   |   |   | 82,018  |
|                                                                           |   |         |         |            |   |              |   |                                       |          |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER’S EQUITY –  MARCH 31, 2009 |   | $            | 56,584  |            | $      | 861,292      |   | $                                          | 595,004  |   | $ | (20,628) |   | $ | 1,492,252  |
|                                                                           |   |         |         |            |   |              |   |                                       |          |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER’S EQUITY – DECEMBER 31, 2009    |   | $            | 56,584  |            | $      | 981,292      |   | $                                          | 656,608  |   | $ | (21,701) |   | $ | 1,672,783  |
|                                                                           |   |         |         |            |   |              |   |                                       |          |   |   |   |   |   |   |
| Common Stock Dividends                                                         |   |         |         |            |   |              |   |                                       | (25,750)      |   |   |   |   |   | (25,750) |
| Preferred Stock Dividends                                                      |   |         |         |            |   |              |   |                                       | (85)          |   |   |   |   |   | (85) |
| SUBTOTAL – COMMON SHAREHOLDER’S EQUITY                        |   |         |         |            |   |              |   |                                       |          |   |   |   |   |   | 1,646,948  |
|                                                                           |   |         |         |            |   |              |   |                                       |          |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                           |   |         |         |            |   |              |   |                                       |          |   |   |   |   |   |   |
| Other Comprehensive Income (Loss), Net of Taxes:                          |   |         |         |            |   |              |   |                                       |          |   |   |   |   |   |   |
| Cash Flow Hedges, Net of Tax of $422                                           |   |         |         |            |   |              |   |                                       |          |   |   | (784) |   |   | (784) |
| Amortization of Pension and OPEB Deferred Costs, Net of Tax of $117       |   |         |         |            |   |              |   |                                       |          |   |   | 218  |   |   | 218  |
| NET INCOME                                                                     |   |         |         |            |   |              |   |                                       | 45,058   |   |   |   |   |   | 45,058  |
| TOTAL COMPREHENSIVE INCOME                                                     |   |         |         |            |   |              |   |                                       |          |   |   |   |   |   | 44,492  |
|                                                                           |   |         |         |            |   |              |   |                                       |          |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER’S EQUITY –  MARCH 31, 2010 |   | $            | 56,584  |            | $      | 981,292      |   | $                                          | 675,831  |   | $ | (22,267) |   | $ | 1,691,440  |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                                                         |   |   | 2010   |            | 2009   |
|------------------------------------------------------------------------------|--------|--------|--------|-----------------|--------|
| CURRENT ASSETS                                                               |   |   |   |            |   |   |   |
| Cash and Cash Equivalents                                                    |   |   | $      | 994        |   | $ | 779  |
| Advances to Affiliates                                                       |   |   |   | 85,186     |   |   | 114,012  |
| Accounts Receivable:                                                         |   |   |   |            |   |   |   |
| Customers                                                                    |   |   |   | 61,564     |   |   | 71,120  |
| Affiliated Companies                                                         |   |   |   | 58,417     |   |   | 83,248  |
| Accrued Unbilled Revenues                                                    |   |   |   | 7,395      |   |   | 8,762  |
| Miscellaneous                                                                |   |   |   | 16,160     |   |   | 8,638  |
| Allowance for Uncollectible Accounts                                         |   |   |   | (2,111)         |   |   | (2,265) |
| Total Accounts Receivable                                                    |   |   |   | 141,425    |   |   | 169,503  |
| Fuel                                                                         |   |   |   | 98,700     |   |   | 79,554  |
| Materials and Supplies                                                       |   |   |   | 164,265    |   |   | 164,439  |
| Risk Management Assets                                                       |   |   |   | 46,704     |   |   | 34,438  |
| Accrued Tax Benefits                                                         |   |   |   | 142,237    |   |   | 144,473  |
| Deferred Cook Plant Fire Costs                                               |   |   |   | 143,071    |   |   | 134,322  |
| Prepayments and Other Current Assets                                         |   |   |   | 30,810     |   |   | 29,395  |
| TOTAL CURRENT ASSETS                                                         |   |   |   | 853,392    |   |   | 870,915  |
|                                                                         |   |   |   |            |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT                                                |   |   |   |            |   |   |   |
| Electric:                                                                    |   |   |   |            |   |   |   |
| Production                                                                   |   |   |   | 3,650,607  |   |   | 3,634,215  |
| Transmission                                                                 |   |   |   | 1,160,617  |   |   | 1,154,026  |
| Distribution                                                                 |   |   |   | 1,373,381  |   |   | 1,360,553  |
| Other Property, Plant and Equipment (including nuclear fuel and coal mining) |   |   |   | 783,596    |   |   | 755,132  |
| Construction Work in Progress                                                |   |   |   | 297,681    |   |   | 278,278  |
| Total Property, Plant and Equipment                                          |   |   |   | 7,265,882  |   |   | 7,182,204  |
| Accumulated Depreciation, Depletion and Amortization                         |   |   |   | 3,094,371  |   |   | 3,073,695  |
| TOTAL PROPERTY, PLANT AND EQUIPMENT – NET                              |   |   |   | 4,171,511  |   |   | 4,108,509  |
|                                                                         |   |   |   |            |   |   |   |
| OTHER NONCURRENT ASSETS                                                      |   |   |   |            |   |   |   |
| Regulatory Assets                                                            |   |   |   | 525,685    |   |   | 496,464  |
| Spent Nuclear Fuel and Decommissioning Trusts                                |   |   |   | 1,433,012  |   |   | 1,391,919  |
| Long-term Risk Management Assets                                             |   |   |   | 48,654     |   |   | 29,134  |
| Deferred Charges and Other Noncurrent Assets                                 |   |   |   | 87,677     |   |   | 82,047  |
| TOTAL OTHER NONCURRENT ASSETS                                                |   |   |   | 2,095,028  |   |   | 1,999,564  |
|                                                                         |   |   |   |            |   |   |   |
| TOTAL ASSETS                                                                 |   |   | $      | 7,119,931  |   | $ | 6,978,988  |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                                           |   | 2010           |            | 2009   |
|----------------------------------------------------------------|--------|----------------|-----------------|--------|
| CURRENT LIABILITIES                                            |   | (in thousands) |
| Accounts Payable:                                              |   |           |            |   |   |   |
| General                                                        |   | $              | 151,467    |   | $ | 171,192  |
| Affiliated Companies                                           |   |           | 52,146     |   |   | 61,315  |
| Long-term Debt Due Within One Year – Nonaffiliated       |   |           | 37,544     |   |   | 37,544  |
| Long-term Debt Due Within One Year – Affiliated          |   |           | -          |   |   | 25,000  |
| Risk Management Liabilities                                    |   |           | 19,423     |   |   | 13,436  |
| Customer Deposits                                              |   |           | 28,927     |   |   | 27,711  |
| Accrued Taxes                                                  |   |           | 76,903     |   |   | 56,814  |
| Obligations Under Capital Leases                               |   |           | 27,327     |   |   | 25,065  |
| Other Current Liabilities                                      |   |           | 209,788    |   |   | 154,433  |
| TOTAL CURRENT LIABILITIES                                      |   |           | 603,525    |   |   | 572,510  |
|                                                           |   |           |            |   |   |   |
| NONCURRENT LIABILITIES                                         |   |           |            |   |   |   |
| Long-term Debt – Nonaffiliated                           |   |           | 2,015,546  |   |   | 2,015,362  |
| Long-term Risk Management Liabilities                          |   |           | 17,306     |   |   | 10,386  |
| Deferred Income Taxes                                          |   |           | 720,092    |   |   | 696,163  |
| Regulatory Liabilities and Deferred Investment Tax Credits     |   |           | 799,892    |   |   | 756,845  |
| Asset Retirement Obligations                                   |   |           | 911,918    |   |   | 894,746  |
| Deferred Credits and Other Noncurrent Liabilities              |   |           | 352,135    |   |   | 352,116  |
| TOTAL NONCURRENT LIABILITIES                                   |   |           | 4,816,889  |   |   | 4,725,618  |
|                                                           |   |           |            |   |   |   |
| TOTAL LIABILITIES                                              |   |           | 5,420,414  |   |   | 5,298,128  |
|                                                           |   |           |            |   |   |   |
| Cumulative Preferred Stock Not Subject to Mandatory Redemption |   |           | 8,077      |   |   | 8,077  |
|                                                           |   |           |            |   |   |   |
| Rate Matters (Note 3)                                          |   |           |            |   |   |   |
| Commitments and Contingencies (Note 4)                         |   |           |            |   |   |   |
|                                                           |   |           |            |   |   |   |
| COMMON SHAREHOLDER’S EQUITY                              |   |           |            |   |   |   |
| Common Stock – No Par Value:                             |   |           |            |   |   |   |
| Authorized – 2,500,000 Shares                            |   |           |            |   |   |   |
| Outstanding – 1,400,000 Shares                           |   |           | 56,584     |   |   | 56,584  |
| Paid-in Capital                                                |   |           | 981,292    |   |   | 981,292  |
| Retained Earnings                                              |   |           | 675,831    |   |   | 656,608  |
| Accumulated Other Comprehensive Income (Loss)                  |   |           | (22,267)        |   |   | (21,701) |
| TOTAL COMMON SHAREHOLDER’S EQUITY                        |   |           | 1,691,440  |   |   | 1,672,783  |
|                                                           |   |           |            |   |   |   |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY               |   | $              | 7,119,931  |   | $ | 6,978,988  |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                                                             |   | 2010   |          | 2009   |
|----------------------------------------------------------------------------------|--------|--------|---------------|--------|
| OPERATING ACTIVITIES                                                             |   |   |          |   |   |   |
| Net Income                                                                       |   | $      | 45,058   |   | $ | 80,952  |
| Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities: |   |   |          |   |   |   |
| Depreciation and Amortization                                                    |   |   | 33,831   |   |   | 32,745  |
| Deferred Income Taxes                                                            |   |   | 18,442   |   |   | 56,889  |
| Deferral of Incremental Nuclear Refueling Outage Expenses, Net              |   |   | (20,025)      |   |   | (7,851) |
| Allowance for Equity Funds Used During Construction                              |   |   | (4,435)       |   |   | (1,555) |
| Mark-to-Market of Risk Management Contracts                                      |   |   | (20,345)      |   |   | (3,272) |
| Amortization of Nuclear Fuel                                                     |   |   | 30,090   |   |   | 13,228  |
| Fuel Over/Under-Recovery, Net                                                    |   |   | 16,439   |   |   | (5,709) |
| Change in Other Noncurrent Assets                                                |   |   | (11,056)      |   |   | (12,585) |
| Change in Other Noncurrent Liabilities                                           |   |   | 28,926   |   |   | 9,715  |
| Changes in Certain Components of Working Capital:                                |   |   |          |   |   |   |
| Accounts Receivable, Net                                                         |   |   | 28,078   |   |   | 34,499  |
| Fuel, Materials and Supplies                                                     |   |   | (18,972)      |   |   | (2,036) |
| Accounts Payable                                                                 |   |   | 13,171   |   |   | (68,603) |
| Accrued Taxes, Net                                                               |   |   | 23,964   |   |   | (1,224) |
| Other Current Assets                                                             |   |   | (13,044)      |   |   | (18,527) |
| Other Current Liabilities                                                        |   |   | 38,068   |   |   | (26,733) |
| Net Cash Flows from Operating Activities                                         |   |   | 188,190  |   |   | 79,933  |
|                                                                             |   |   |          |   |   |   |
| INVESTING ACTIVITIES                                                             |   |   |          |   |   |   |
| Construction Expenditures                                                        |   |   | (104,796)     |   |   | (92,814) |
| Change in Advances to Affiliates, Net                                            |   |   | 28,826   |   |   | -  |
| Purchases of Investment Securities                                               |   |   | (247,632)     |   |   | (178,407) |
| Sales of Investment Securities                                                   |   |   | 232,078  |   |   | 158,086  |
| Acquisitions of Nuclear Fuel                                                     |   |   | (37,616)      |   |   | (75,670) |
| Other Investing Activities                                                       |   |   | 500      |   |   | 10,757  |
| Net Cash Flows Used for Investing Activities                                     |   |   | (128,640)     |   |   | (178,048) |
|                                                                             |   |   |          |   |   |   |
| FINANCING ACTIVITIES                                                             |   |   |          |   |   |   |
| Issuance of Long-term Debt – Nonaffiliated                                 |   |   | -        |   |   | 567,949  |
| Issuance of Long-term Debt – Affiliated                                    |   |   | -        |   |   | 25,000  |
| Change in Advances from Affiliates, Net                                          |   |   | -        |   |   | (459,615) |
| Retirement of Long-term Debt – Affiliated                                  |   |   | (25,000)      |   |   | -  |
| Retirement of Cumulative Preferred Stock                                         |   |   | -        |   |   | (2) |
| Principal Payments for Capital Lease Obligations                                 |   |   | (8,524)       |   |   | (10,377) |
| Dividends Paid on Common Stock                                                   |   |   | (25,750)      |   |   | (24,500) |
| Dividends Paid on Cumulative Preferred Stock                                     |   |   | (85)          |   |   | (85) |
| Other Financing Activities                                                       |   |   | 24       |   |   | -  |
| Net Cash Flows from (Used for) Financing Activities                              |   |   | (59,335)      |   |   | 98,370  |
|                                                                             |   |   |          |   |   |   |
| Net Increase in Cash and Cash Equivalents                                        |   |   | 215      |   |   | 255  |
| Cash and Cash Equivalents at Beginning of Period                                 |   |   | 779      |   |   | 728  |
| Cash and Cash Equivalents at End of Period                                       |   | $      | 994      |   | $ | 983  |
|                                                                             |   |   |          |   |   |   |
| SUPPLEMENTARY INFORMATION                                                        |   |   |          |   |   |   |
| Cash Paid for Interest, Net of Capitalized Amounts                               |   | $      | 30,056   |   | $ | 35,231  |
| Net Cash Paid (Received) for Income Taxes                                        |   |   | -        |   |   | (355) |
| Noncash Acquisitions Under Capital Leases                                        |   |   | 8,476    |   |   | 705  |
| Construction Expenditures Included in Accounts Payable at March 31,              |   |   | 29,496   |   |   | 29,910  |
| Acquisition of Nuclear Fuel Included in Accounts Payable at March 31,            |   |   | 2,705    |   |   | 17,016  |

----

|                                      | FootnoteReference |
|-------------------------------------------|-------------------|
|                                      |              |
| Significant Accounting Matters            | Note 1            |
|                                      |              |
| New Accounting Pronouncements             | Note 2            |
|                                      |              |
| Rate Matters                              | Note 3            |
|                                      |              |
| Commitments, Guarantees and Contingencies | Note 4            |
|                                      |              |
| Benefit Plans                             | Note 6            |
|                                      |              |
| Business Segments                         | Note 7            |
|                                      |              |
| Derivatives and Hedging                   | Note 8            |
|                                      |              |
| Fair Value Measurements                   | Note 9            |
|                                      |              |
| Income Taxes                              | Note 10           |
|                                      |              |
| Financing Activities                      | Note 11           |
|                                      |              |
| Company-wide Staffing and Budget Review   | Note 12           |

----

----

| First Quarter of 2009           |   |   |   |   |     |   | $      | 73  |
|---------------------------------|--------|--------|--------|--------|----------|--------|--------|----------|
|                            |   |   |   |   |     |   |   |     |
| Changes in Gross Margin:        |   |   |   |   |     |   |   |     |
| Retail Margins                  |   |   |   |   | 42  |   |   |     |
| Off-system Sales                |   |   |   |   | 5   |   |   |     |
| Other                           |   |   |   |   | (18)     |   |   |     |
| Total Change in Gross Margin    |   |   |   |   |     |   |   | 29  |
|                            |   |   |   |   |     |   |   |     |
| Total Expenses and Other:       |   |   |   |   |     |   |   |     |
| Other Operation and Maintenance |   |   |   |   | 14  |   |   |     |
| Depreciation and Amortization   |   |   |   |   | (5)      |   |   |     |
| Taxes Other Than Income Taxes   |   |   |   |   | (2)      |   |   |     |
| Carrying Costs Income           |   |   |   |   | 3   |   |   |     |
| Interest Expense                |   |   |   |   | (1)      |   |   |     |
| Total Expenses and Other        |   |   |   |   |     |   |   | 9   |
|                            |   |   |   |   |     |   |   |     |
| Income Tax Expense              |   |   |   |   |     |   |   | (19)     |
|                            |   |   |   |   |     |   |   |     |
| First Quarter of 2010           |   |   |   |   |     |   | $      | 92  |

| · | Retail Margins increased $42 million primarily due to the following:                                                                            |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                          | A $24 million increase in capacity settlements under the Interconnection Agreement. |
|   | ·                                                                                                                                          | A $23 million increase primarily due to a $16 million increase related to the implementation of higher rates set by the Ohio ESP and $6 million of increased demand charges from WPCo effective January 2010. |
|   | ·                                                                                                                                          | A $12 million increase in fuel margins. |
|   | These increases were partially offset by:                                                                                                       |
|   | ·                                                                                                                                          | A $15 million decrease in retail sales primarily due to a decrease in residential and commercial usage. |
| · | Margins from Off-system Sales increased $5 million primarily due to higher physical sales volumes reflecting favorable generating availability. |
| · | Other revenues decreased $18 million primarily due to reduced gains on the sale of emission allowances.                                         |

| · | Other Operation and Maintenance expenses decreased $14 million primarily due to:                                                                                                                                                                                                                                                                                                |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                                                                                                                                                          | An $8 million decrease related to a 2009 obligation to contribute to the “Partnership with Ohio” fund for low income, at-risk customers ordered by the PUCO’s March 2009 approval of OPCo’s ESP. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                          | A $7 million decrease from the reversal of an accrual for employee benefit expenses. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                          | A $4 million decrease in rent expense as a result of the purchase of JMG in December 2009. |
|   | These decreases were partially offset by:                                                                                                                                                                                                                                                                                                                                       |
|   | ·                                                                                                                                                                                                                                                                                                                                                                          | A $3 million increase in recoverable customer account expenses due to increased Universal Service Fund surcharge rates for customers who qualify for payment assistance. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                          | A $2 million increase in employee benefit expenses. |
| · | Depreciation and Amortization increased $5 million primarily due to a $6 million increase from higher depreciable property balances as a result of environmental improvements placed in service and various other property additions, partially offset by a $1 million decrease due to distribution leasehold improvements being fully amortized in the fourth quarter of 2009. |
| · | Interest expense increased $1 million primarily due to:                                                                                                                                                                                                                                                                                                                         |
|   | ·                                                                                                                                                                                                                                                                                                                                                                          | A $6 million decrease in the debt component of AFUDC primarily due to the Amos Plant FGD and precipitator upgrade going into service in March 2009. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                          | A $5 million increase primarily due to an increase in interest expense from the issuance of long-term debt in September 2009. |
|   | These increases were partially offset by:                                                                                                                                                                                                                                                                                                                                       |
|   | ·                                                                                                                                                                                                                                                                                                                                                                          | An $8 million decrease in interest expense related to the reacquisition of JMG’s bonds during the third quarter of 2009. |
| · | Income Tax Expense increased $19 million primarily due to an increase in pretax book income and the tax treatment associated with the future reimbursement of Medicare Part D prescription drug benefits.                                                                                                                                                                       |

|                  | Moody’s |   | S&P |   | Fitch  |
|-----------------------|---------------|--------|---------|--------|--------|
|                  |          |   |    |   |   |
| Senior Unsecured Debt | Baa1          |   | BBB     |   | BBB+   |

|                                                 |   | 2010           |          | 2009   |
|------------------------------------------------------|--------|----------------|---------------|--------|
|                                                 |   | (in thousands) |
| Cash and Cash Equivalents at Beginning of Period     |   | $              | 1,984    |   | $ | 12,679  |
| Cash Flows from (Used for):                          |   |           |          |   |   |   |
| Operating Activities                                 |   |           | 251,324  |   |   | (22,900) |
| Investing Activities                                 |   |           | (258,305)     |   |   | (156,584) |
| Financing Activities                                 |   |           | 6,150    |   |   | 180,174  |
| Net Increase (Decrease) in Cash and Cash Equivalents |   |           | (831)         |   |   | 690  |
| Cash and Cash Equivalents at End of Period           |   | $              | 1,153    |   | $ | 13,369  |

|                    |   | PrincipalAmount |           | Interest |   | Due    |
|-------------------------|--------|-----------------|----------------|----------|--------|--------|
| Type of Debt            |   |            | Rate           |     | Date   |
|                    |   |            | (in thousands) |     | (%)    |   |   |
| Pollution Control Bonds |   | $               | 86,000    |     | 3.125  |   | 2043 |

----

----

|                                                     |   | 2010   |          | 2009   |
|----------------------------------------------------------|--------|--------|---------------|--------|
| REVENUES                                                 |   |   |          |   |
| Electric Generation, Transmission and Distribution       |   | $      | 543,700  |   | $ | 524,686  |
| Sales to AEP Affiliates                                  |   |   | 306,768  |   |   | 226,694  |
| Other Revenues – Affiliated                        |   |   | 6,574    |   |   | 7,488  |
| Other Revenues – Nonaffiliated                     |   |   | 4,231    |   |   | 3,847  |
| TOTAL REVENUES                                           |   |   | 861,273  |   |   | 762,715  |
|                                                     |   |   |          |   |   |   |
| EXPENSES                                                 |   |   |          |   |   |   |
| Fuel and Other Consumables Used for Electric Generation  |   |   | 331,017  |   |   | 253,474  |
| Purchased Electricity for Resale                         |   |   | 38,890   |   |   | 52,269  |
| Purchased Electricity from AEP Affiliates                |   |   | 22,191   |   |   | 16,742  |
| Other Operation                                          |   |   | 89,156   |   |   | 99,598  |
| Maintenance                                              |   |   | 56,231   |   |   | 60,040  |
| Depreciation and Amortization                            |   |   | 89,361   |   |   | 84,023  |
| Taxes Other Than Income Taxes                            |   |   | 53,084   |   |   | 51,492  |
| TOTAL EXPENSES                                           |   |   | 679,930  |   |   | 617,638  |
|                                                     |   |   |          |   |   |   |
| OPERATING INCOME                                         |   |   | 181,343  |   |   | 145,077  |
|                                                     |   |   |          |   |   |   |
| Other Income (Expense):                                  |   |   |          |   |   |   |
| Interest Income                                          |   |   | 405      |   |   | 244  |
| Carrying Costs Income                                    |   |   | 4,874    |   |   | 1,584  |
| Allowance for Equity Funds Used During Construction      |   |   | 1,031    |   |   | 867  |
| Interest Expense                                         |   |   | (39,975)      |   |   | (38,681) |
|                                                     |   |   |          |   |   |   |
| INCOME BEFORE INCOME TAX EXPENSE                         |   |   | 147,678  |   |   | 109,091  |
|                                                     |   |   |          |   |   |   |
| Income Tax Expense                                       |   |   | 55,775   |   |   | 36,482  |
|                                                     |   |   |          |   |   |   |
| NET INCOME                                               |   |   | 91,903   |   |   | 72,609  |
|                                                     |   |   |          |   |   |   |
| Less: Net Income Attributable to Noncontrolling Interest |   |   | -        |   |   | 463  |
|                                                     |   |   |          |   |   |   |
| NET INCOME ATTRIBUTABLE TO OPCo SHAREHOLDERS             |   |   | 91,903   |   |   | 72,146  |
|                                                     |   |   |          |   |   |   |
| Less: Preferred Stock Dividend Requirements              |   |   | 183      |   |   | 183  |
|                                                     |   |   |          |   |   |   |
| EARNINGS ATTRIBUTABLE TO OPCo COMMON SHAREHOLDER         |   | $      | 91,720   |   | $ | 71,963  |

| The common stock of OPCo is wholly-owned by AEP. |
|--------------------------------------------------|

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                                                                | OPCo Common Shareholder |          |            |   |              |   |                                       |
|-------------------------------------------------------------------------------------|-------------------------|---------------|-----------------|--------|-------------------|--------|--------------------------------------------|
|                                                                                | Common Stock            |          | Paid-in Capital |   | Retained Earnings |   | AccumulatedOtherComprehensiveIncome (Loss) |   | NoncontrollingInterest |   | Total |
|                                                                                |                    |          |            |   |              |   |                                       |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – DECEMBER 31, 2008                                    | $                       | 321,201  |            | $      | 536,640      |   | $                                          | 1,697,962  |   | $ | (133,858) |   | $ | 16,799  |   | $ | 2,438,744  |
|                                                                                |                    |          |            |   |              |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Common Stock Dividends – Nonaffiliated                                        |                    |          |            |   |              |   |                                       |   |   |   |   |   |   | (463) |   |   | (463) |
| Preferred Stock Dividends                                                           |                    |          |            |   |              |   |                                       | (183) |   |   |   |   |   |   |   |   | (183) |
| Other Changes in Equity                                                             |                    |          |            |   |              |   |                                       |   |   |   |   |   |   | 1,111  |   |   | 1,111  |
| SUBTOTAL – EQUITY                                                             |                    |          |            |   |              |   |                                       |   |   |   |   |   |   |   |   |   | 2,439,209  |
|                                                                                |                    |          |            |   |              |   |                                       |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                |                    |          |            |   |              |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income, Net of Taxes:                                      |                    |          |            |   |              |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Cash Flow Hedges, Net of Tax of $570                                                |                    |          |            |   |              |   |                                       |   |   |   | 1,058  |   |   |   |   |   | 1,058  |
| Amortization of Pension and OPEB Deferred Costs, Net of  Tax of $855 |                    |          |            |   |              |   |                                       |   |   |   | 1,588  |   |   |   |   |   | 1,588  |
| NET INCOME                                                                          |                    |          |            |   |              |   |                                       | 72,146  |   |   |   |   |   | 463  |   |   | 72,609  |
| TOTAL COMPREHENSIVE INCOME                                                          |                    |          |            |   |              |   |                                       |   |   |   |   |   |   |   |   |   | 75,255  |
|                                                                                |                    |          |            |   |              |   |                                       |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – MARCH 31, 2009                                       | $                       | 321,201  |            | $      | 536,640      |   | $                                          | 1,769,925  |   | $ | (131,212) |   | $ | 17,910  |   | $ | 2,514,464  |
|                                                                                |                    |          |            |   |              |   |                                       |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER’S EQUITY –DECEMBER 31, 2009               | $                       | 321,201  |            | $      | 1,123,149    |   | $                                          | 1,908,803 |   | $ | (118,458) |   | $ | -  |   | $ | 3,234,695  |
|                                                                                |                    |          |            |   |              |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Common Stock Dividends                                                              |                    |          |            |   |              |   |                                       | (75,287) |   |   |   |   |   |   |   |   | (75,287) |
| Preferred Stock Dividends                                                           |                    |          |            |   |              |   |                                       | (183) |   |   |   |   |   |   |   |   | (183) |
| SUBTOTAL – COMMON SHAREHOLDER’S EQUITY                                  |                    |          |            |   |              |   |                                       |   |   |   |   |   |   |   |   |   | 3,159,225  |
|                                                                                |                    |          |            |   |              |   |                                       |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                |                    |          |            |   |              |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income (Loss), Net of Taxes:                               |                    |          |            |   |              |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Cash Flow Hedges, Net of Tax of $817                                                |                    |          |            |   |              |   |                                       |   |   |   | (1,517) |   |   |   |   |   | (1,517) |
| Amortization of Pension and OPEB Deferred Costs, Net of  Tax of $949 |                    |          |            |   |              |   |                                       |   |   |   | 1,762  |   |   |   |   |   | 1,762  |
| NET INCOME                                                                          |                    |          |            |   |              |   |                                       | 91,903  |   |   |   |   |   |   |   |   | 91,903  |
| TOTAL COMPREHENSIVE INCOME                                                          |                    |          |            |   |              |   |                                       |   |   |   |   |   |   |   |   |   | 92,148  |
|                                                                                |                    |          |            |   |              |   |                                       |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER’S EQUITY –MARCH 31, 2010                  | $                       | 321,201  |            | $      | 1,123,149    |   | $                                          | 1,925,236  |   | $ | (118,213) |   | $ | -  |   | $ | 3,251,373  |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                            |   |   | 2010   |             | 2009   |
|-------------------------------------------------|--------|--------|--------|------------------|--------|
| CURRENT ASSETS                                  |   |   |   |             |   |   |   |
| Cash and Cash Equivalents                       |   |   | $      | 1,153       |   | $ | 1,984  |
| Advances to Affiliates                          |   |   |   | 617,299     |   |   | 438,352  |
| Accounts Receivable:                            |   |   |   |             |   |   |   |
| Customers                                       |   |   |   | 64,895      |   |   | 60,711  |
| Affiliated Companies                            |   |   |   | 129,823     |   |   | 200,579  |
| Accrued Unbilled Revenues                       |   |   |   | 19,146      |   |   | 15,021  |
| Miscellaneous                                   |   |   |   | 3,076       |   |   | 2,701  |
| Allowance for Uncollectible Accounts            |   |   |   | (2,668)          |   |   | (2,665) |
| Total Accounts Receivable                       |   |   |   | 214,272     |   |   | 276,347  |
| Fuel                                            |   |   |   | 280,344     |   |   | 336,866  |
| Materials and Supplies                          |   |   |   | 114,976     |   |   | 115,486  |
| Risk Management Assets                          |   |   |   | 59,227      |   |   | 50,048  |
| Accrued Tax Benefits                            |   |   |   | 128,944     |   |   | 143,473  |
| Prepayments and Other Current Assets            |   |   |   | 37,415      |   |   | 26,301  |
| TOTAL CURRENT ASSETS                            |   |   |   | 1,453,630   |   |   | 1,388,857  |
|                                            |   |   |   |             |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT                   |   |   |   |             |   |   |   |
| Electric:                                       |   |   |   |             |   |   |   |
| Production                                      |   |   |   | 6,755,219   |   |   | 6,731,469  |
| Transmission                                    |   |   |   | 1,184,514   |   |   | 1,166,557  |
| Distribution                                    |   |   |   | 1,579,150   |   |   | 1,567,871  |
| Other Property, Plant and Equipment             |   |   |   | 374,890     |   |   | 348,718  |
| Construction Work in Progress                   |   |   |   | 204,870     |   |   | 198,843  |
| Total Property, Plant and Equipment             |   |   |   | 10,098,643  |   |   | 10,013,458  |
| Accumulated Depreciation and Amortization       |   |   |   | 3,395,099   |   |   | 3,318,896  |
| TOTAL PROPERTY, PLANT AND EQUIPMENT – NET |   |   |   | 6,703,544   |   |   | 6,694,562  |
|                                            |   |   |   |             |   |   |   |
| OTHER NONCURRENT ASSETS                         |   |   |   |             |   |   |   |
| Regulatory Assets                               |   |   |   | 795,135     |   |   | 742,905  |
| Long-term Risk Management Assets                |   |   |   | 43,746      |   |   | 28,003  |
| Deferred Charges and Other Noncurrent Assets    |   |   |   | 162,378     |   |   | 184,812  |
| TOTAL OTHER NONCURRENT ASSETS                   |   |   |   | 1,001,259   |   |   | 955,720  |
|                                            |   |   |   |             |   |   |   |
| TOTAL ASSETS                                    |   |   | $      | 9,158,433   |   | $ | 9,039,139  |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                                           |   |   |   |   | 2010           |            | 2009   |
|----------------------------------------------------------------|--------|--------|--------|--------|----------------|-----------------|--------|
| CURRENT LIABILITIES                                            |   |   |   |   | (in thousands) |
| Accounts Payable:                                              |   |   |   |   |           |            |   |   |   |
| General                                                        |   |   |   |   | $              | 166,683    |   | $ | 182,848  |
| Affiliated Companies                                           |   |   |   |   |           | 81,706     |   |   | 92,766  |
| Long-term Debt Due Within One Year – Nonaffiliated       |   |   |   |   |           | 679,450    |   |   | 679,450  |
| Risk Management Liabilities                                    |   |   |   |   |           | 29,456     |   |   | 24,391  |
| Customer Deposits                                              |   |   |   |   |           | 23,238     |   |   | 22,409  |
| Accrued Taxes                                                  |   |   |   |   |           | 159,132    |   |   | 203,335  |
| Accrued Interest                                               |   |   |   |   |           | 48,674     |   |   | 46,431  |
| Other Current Liabilities                                      |   |   |   |   |           | 109,626    |   |   | 104,889  |
| TOTAL CURRENT LIABILITIES                                      |   |   |   |   |           | 1,297,965  |   |   | 1,356,519  |
|                                                           |   |   |   |   |           |            |   |   |   |
| NONCURRENT LIABILITIES                                         |   |   |   |   |           |            |   |   |   |
| Long-term Debt – Nonaffiliated                           |   |   |   |   |           | 2,449,659  |   |   | 2,363,055  |
| Long-term Debt – Affiliated                              |   |   |   |   |           | 200,000    |   |   | 200,000  |
| Long-term Risk Management Liabilities                          |   |   |   |   |           | 20,353     |   |   | 12,510  |
| Deferred Income Taxes                                          |   |   |   |   |           | 1,345,173  |   |   | 1,302,939  |
| Regulatory Liabilities and Deferred Investment Tax Credits     |   |   |   |   |           | 137,116    |   |   | 128,187  |
| Employee Benefits and Pension Obligations                      |   |   |   |   |           | 259,072    |   |   | 269,485  |
| Deferred Credits and Other Noncurrent Liabilities              |   |   |   |   |           | 181,095    |   |   | 155,122  |
| TOTAL NONCURRENT LIABILITIES                                   |   |   |   |   |           | 4,592,468  |   |   | 4,431,298  |
|                                                           |   |   |   |   |           |            |   |   |   |
| TOTAL LIABILITIES                                              |   |   |   |   |           | 5,890,433  |   |   | 5,787,817  |
|                                                           |   |   |   |   |           |            |   |   |   |
| Cumulative Preferred Stock Not Subject to Mandatory Redemption |   |   |   |   |           | 16,627     |   |   | 16,627  |
|                                                           |   |   |   |   |           |            |   |   |   |
| Rate Matters (Note 3)                                          |   |   |   |   |           |            |   |   |   |
| Commitments and Contingencies (Note 4)                         |   |   |   |   |           |            |   |   |   |
|                                                           |   |   |   |   |           |            |   |   |   |
| COMMON SHAREHOLDER’S EQUITY                              |   |   |   |   |           |            |   |   |   |
| Common Stock – No Par Value:                             |   |   |   |   |           |            |   |   |   |
| Authorized – 40,000,000 Shares                           |   |   |   |   |           |            |   |   |   |
| Outstanding – 27,952,473 Shares                          |   |   |   |   |           | 321,201    |   |   | 321,201  |
| Paid-in Capital                                                |   |   |   |   |           | 1,123,149  |   |   | 1,123,149  |
| Retained Earnings                                              |   |   |   |   |           | 1,925,236  |   |   | 1,908,803  |
| Accumulated Other Comprehensive Income (Loss)                  |   |   |   |   |           | (118,213)       |   |   | (118,458) |
| TOTAL COMMON SHAREHOLDER’S EQUITY                        |   |   |   |   |           | 3,251,373  |   |   | 3,234,695  |
|                                                           |   |   |   |   |           |            |   |   |   |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY               |   |   |   |   | $              | 9,158,433  |   | $ | 9,039,139  |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                                                                             |   | 2010   |          | 2009   |
|--------------------------------------------------------------------------------------------------|--------|--------|---------------|--------|
| OPERATING ACTIVITIES                                                                             |   |   |          |   |   |   |
| Net Income                                                                                       |   | $      | 91,903   |   | $ | 72,609  |
| Adjustments to Reconcile Net Income to Net Cash Flows from (Used for) Operating Activities: |   |   |          |   |   |   |
| Depreciation and Amortization                                                                    |   |   | 89,361   |   |   | 84,023  |
| Deferred Income Taxes                                                                            |   |   | 41,462   |   |   | 71,740  |
| Carrying Costs Income                                                                            |   |   | (4,874)       |   |   | (1,584) |
| Allowance for Equity Funds Used During Construction                                              |   |   | (1,031)       |   |   | (867) |
| Mark-to-Market of Risk Management Contracts                                                      |   |   | (13,704)      |   |   | (7,117) |
| Property Taxes                                                                                   |   |   | 24,242   |   |   | 21,527  |
| Fuel Over/Under-Recovery, Net                                                                    |   |   | (38,025)      |   |   | (65,192) |
| Change in Other Noncurrent Assets                                                                |   |   | (5,008)       |   |   | 1,669  |
| Change in Other Noncurrent Liabilities                                                           |   |   | (1,741)       |   |   | 19,318  |
| Changes in Certain Components of Working Capital:                                                |   |   |          |   |   |   |
| Accounts Receivable, Net                                                                         |   |   | 62,075   |   |   | 39,518  |
| Fuel, Materials and Supplies                                                                     |   |   | 57,032   |   |   | (52,588) |
| Accounts Payable                                                                                 |   |   | (10,190)      |   |   | (95,306) |
| Customer Deposits                                                                                |   |   | 829      |   |   | 2,073  |
| Accrued Taxes, Net                                                                               |   |   | (30,082)      |   |   | (78,533) |
| Accrued Interest                                                                                 |   |   | 2,243    |   |   | (8,311) |
| Other Current Assets                                                                             |   |   | (8,331)       |   |   | (15,394) |
| Other Current Liabilities                                                                        |   |   | (4,837)       |   |   | (10,485) |
| Net Cash Flows from (Used for) Operating Activities                                              |   |   | 251,324  |   |   | (22,900) |
|                                                                                             |   |   |          |   |   |   |
| INVESTING ACTIVITIES                                                                             |   |   |          |   |   |   |
| Construction Expenditures                                                                        |   |   | (78,398)      |   |   | (163,263) |
| Change in Advances to Affiliates, Net                                                            |   |   | (178,947)     |   |   | -  |
| Acquisitions of Assets                                                                           |   |   | (823)         |   |   | -  |
| Proceeds from Sales of Assets                                                                    |   |   | 2,047    |   |   | 2,796  |
| Other Investing Activities                                                                       |   |   | (2,184)       |   |   | 3,883  |
| Net Cash Flows Used for Investing Activities                                                     |   |   | (258,305)     |   |   | (156,584) |
|                                                                                             |   |   |          |   |   |   |
| FINANCING ACTIVITIES                                                                             |   |   |          |   |   |   |
| Issuance of Long-term Debt – Nonaffiliated                                                 |   |   | 85,487   |   |   | -  |
| Change in Advances from Affiliates, Net                                                          |   |   | -        |   |   | 186,279  |
| Retirement of Long-term Debt – Nonaffiliated                                               |   |   | -        |   |   | (4,500) |
| Principal Payments for Capital Lease Obligations                                                 |   |   | (2,101)       |   |   | (1,316) |
| Dividends Paid on Common Stock – Nonaffiliated                                             |   |   | -        |   |   | (463) |
| Dividends Paid on Common Stock – Affiliated                                                |   |   | (75,287)      |   |   | -  |
| Dividends Paid on Cumulative Preferred Stock                                                     |   |   | (183)         |   |   | (183) |
| Other Financing Activities                                                                       |   |   | (1,766)       |   |   | 357  |
| Net Cash Flows from Financing Activities                                                         |   |   | 6,150    |   |   | 180,174  |
|                                                                                             |   |   |          |   |   |   |
| Net Increase (Decrease) in Cash and Cash Equivalents                                             |   |   | (831)         |   |   | 690  |
| Cash and Cash Equivalents at Beginning of Period                                                 |   |   | 1,984    |   |   | 12,679  |
| Cash and Cash Equivalents at End of Period                                                       |   | $      | 1,153    |   | $ | 13,369  |
|                                                                                             |   |   |          |   |   |   |
| SUPPLEMENTARY INFORMATION                                                                        |   |   |          |   |   |   |
| Cash Paid for Interest, Net of Capitalized Amounts                                               |   | $      | 36,243   |   | $ | 64,554  |
| Net Cash Paid for Income Taxes                                                                   |   |   | -        |   |   | 2,337  |
| Noncash Acquisitions Under Capital Leases                                                        |   |   | 22,559   |   |   | 157  |
| Construction Expenditures Included in Accounts Payable at March 31,                              |   |   | 12,894   |   |   | 15,767  |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                      | FootnoteReference |
|-------------------------------------------|-------------------|
|                                      |              |
| Significant Accounting Matters            | Note 1            |
|                                      |              |
| New Accounting Pronouncements             | Note 2            |
|                                      |              |
| Rate Matters                              | Note 3            |
|                                      |              |
| Commitments, Guarantees and Contingencies | Note 4            |
|                                      |              |
| Benefit Plans                             | Note 6            |
|                                      |              |
| Business Segments                         | Note 7            |
|                                      |              |
| Derivatives and Hedging                   | Note 8            |
|                                      |              |
| Fair Value Measurements                   | Note 9            |
|                                      |              |
| Income Taxes                              | Note 10           |
|                                      |              |
| Financing Activities                      | Note 11           |
|                                      |              |
| Company-wide Staffing and Budget Review   | Note 12           |

----

----

| First Quarter of 2009           |   |   |   |   |     |   | $      | 6   |
|---------------------------------|--------|--------|--------|--------|----------|--------|--------|----------|
|                            |   |   |   |   |     |   |   |     |
| Changes in Gross Margin:        |   |   |   |   |     |   |   |     |
| Retail Margins (a)              |   |   |   |   | 11  |   |   |     |
| Off-system Sales                |   |   |   |   | 1   |   |   |     |
| Transmission Revenues           |   |   |   |   | 2   |   |   |     |
| Other                           |   |   |   |   | 1   |   |   |     |
| Total Change in Gross Margin    |   |   |   |   |     |   |   | 15  |
|                            |   |   |   |   |     |   |   |     |
| Total Expenses and Other:       |   |   |   |   |     |   |   |     |
| Other Operation and Maintenance |   |   |   |   | (16)     |   |   |     |
| Depreciation and Amortization   |   |   |   |   | 1   |   |   |     |
| Other Income                    |   |   |   |   | (1)      |   |   |     |
| Interest Expense                |   |   |   |   | (2)      |   |   |     |
| Total Expenses and Other        |   |   |   |   |     |   |   | (18)     |
|                            |   |   |   |   |     |   |   |     |
| Income Tax Expense              |   |   |   |   |     |   |   | 1   |
|                            |   |   |   |   |     |   |   |     |
| First Quarter of 2010           |   |   |   |   |     |   | $      | 4   |

| (a) | Includes firm wholesale sales to municipals and cooperatives. |
|-----|---------------------------------------------------------------|

| · | Retail Margins increased $11 million primarily due to base rate increases.                  |
|--------|---------------------------------------------------------------------------------------------|
| · | Transmission Revenues increased $2 million primarily due to higher rates in the SPP region. |

| · | Other Operation and Maintenance expenses increased $16 million primarily due to the following:                       |
|--------|----------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                               | A $7 million increase in employee-related expenses. |
|   | ·                                                                                                               | A $6 million increase in plant maintenance expense primarily resulting from the 2009 deferral of generation maintenance expenses as a result of PSO’s base rate case. |
| · | Interest Expense increased $2 million primarily due to an increase in long-term borrowings in the last half of 2009. |

|                  | Moody’s |   | S&P |   | Fitch      |
|-----------------------|---------------|--------|---------|--------|------------|
|                  |          |   |    |   |       |
| Senior Unsecured Debt | Baa1          |   | BBB     |   |  BBB+ |

|                                                 |   | 2010           |         | 2009   |
|------------------------------------------------------|--------|----------------|--------------|--------|
|                                                 |   | (in thousands) |
| Cash and Cash Equivalents at Beginning of Period     |   | $              | 796     |   | $ | 1,345  |
| Cash Flows from (Used for):                          |   |           |         |   |   |   |
| Operating Activities                                 |   |           | (60,332)     |   |   | 103,803  |
| Investing Activities                                 |   |           | 5,380   |   |   | (59,145) |
| Financing Activities                                 |   |           | 55,082  |   |   | (44,726) |
| Net Increase (Decrease) in Cash and Cash Equivalents |   |           | 130     |   |   | (68) |
| Cash and Cash Equivalents at End of Period           |   | $              | 926     |   | $ | 1,277  |

----

----

|                                                    |   | 2010   |          | 2009   |
|---------------------------------------------------------|--------|--------|---------------|--------|
| REVENUES                                                |   |   |          |   |
| Electric Generation, Transmission and Distribution      |   | $      | 228,551  |   | $ | 278,771  |
| Sales to AEP Affiliates                                 |   |   | 8,670    |   |   | 15,823  |
| Other Revenues                                          |   |   | 534      |   |   | 693  |
| TOTAL REVENUES                                          |   |   | 237,755  |   |   | 295,287  |
|                                                    |   |   |          |   |   |   |
| EXPENSES                                                |   |   |          |   |   |   |
| Fuel and Other Consumables Used for Electric Generation |   |   | 40,972   |   |   | 119,399  |
| Purchased Electricity for Resale                        |   |   | 44,980   |   |   | 44,425  |
| Purchased Electricity from AEP Affiliates               |   |   | 10,992   |   |   | 5,915  |
| Other Operation                                         |   |   | 49,662   |   |   | 39,545  |
| Maintenance                                             |   |   | 30,939   |   |   | 25,430  |
| Depreciation and Amortization                           |   |   | 27,288   |   |   | 27,950  |
| Taxes Other Than Income Taxes                           |   |   | 10,300   |   |   | 10,751  |
| TOTAL EXPENSES                                          |   |   | 215,133  |   |   | 273,415  |
|                                                    |   |   |          |   |   |   |
| OPERATING INCOME                                        |   |   | 22,622   |   |   | 21,872  |
|                                                    |   |   |          |   |   |   |
| Other Income (Expense):                                 |   |   |          |   |   |   |
| Interest Income                                         |   |   | 182      |   |   | 648  |
| Carrying Costs Income                                   |   |   | 867      |   |   | 1,711  |
| Allowance for Equity Funds Used During Construction     |   |   | 247      |   |   | 170  |
| Interest Expense                                        |   |   | (17,363)      |   |   | (14,805) |
|                                                    |   |   |          |   |   |   |
| INCOME BEFORE INCOME TAX EXPENSE                        |   |   | 6,555    |   |   | 9,596  |
|                                                    |   |   |          |   |   |   |
| Income Tax Expense                                      |   |   | 2,416    |   |   | 3,558  |
|                                                    |   |   |          |   |   |   |
| NET INCOME                                              |   |   | 4,139    |   |   | 6,038  |
|                                                    |   |   |          |   |   |   |
| Preferred Stock Dividend Requirements                   |   |   | 53       |   |   | 53  |
|                                                    |   |   |          |   |   |   |
| EARNINGS ATTRIBUTABLE TO COMMON STOCK                   |   | $      | 4,086    |   | $ | 5,985  |

| The common stock of PSO is wholly-owned by AEP. |
|-------------------------------------------------|

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                                              |   | Common Stock |          | Paid-in Capital |   | Retained Earnings |   | AccumulatedOtherComprehensiveIncome (Loss) |          | Total  |
|-------------------------------------------------------------------|--------|--------------|---------------|-----------------|--------|-------------------|--------|--------------------------------------------|---------------|--------|
|                                                              |   |         |          |            |   |              |   |                                       |          |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER’S EQUITY – DECEMBER 31, 2008 |   | $            | 157,230  |            | $      | 340,016      |   | $                                          | 251,704  |   | $ | (704) |   | $ | 748,246  |
|                                                              |   |         |          |            |   |              |   |                                       |          |   |   |   |   |   |   |
| Common Stock Dividends                                            |   |         |          |            |   |              |   |                                       | (7,250)       |   |   |   |   |   | (7,250) |
| Preferred Stock Dividends                                         |   |         |          |            |   |              |   |                                       | (53)          |   |   |   |   |   | (53) |
| Other Changes in Common Shareholder’s Equity                |   |         |          |            |   | 4,214        |   |                                       | (4,214)       |   |   |   |   |   | -  |
| SUBTOTAL – COMMON SHAREHOLDER’S EQUITY           |   |         |          |            |   |              |   |                                       |          |   |   |   |   |   | 740,943  |
|                                                              |   |         |          |            |   |              |   |                                       |          |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                              |   |         |          |            |   |              |   |                                       |          |   |   |   |   |   |   |
| Other Comprehensive Income, Net of Taxes:                         |   |         |          |            |   |              |   |                                       |          |   |   |   |   |   |   |
| Cash Flow Hedges, Net of Tax of $12                               |   |         |          |            |   |              |   |                                       |          |   |   | 22  |   |   | 22  |
| NET INCOME                                                        |   |         |          |            |   |              |   |                                       | 6,038    |   |   |   |   |   | 6,038  |
| TOTAL COMPREHENSIVE INCOME                                        |   |         |          |            |   |              |   |                                       |          |   |   |   |   |   | 6,060  |
|                                                              |   |         |          |            |   |              |   |                                       |          |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER’S EQUITY – MARCH 31, 2009    |   | $            | 157,230  |            | $      | 344,230      |   | $                                          | 246,225  |   | $ | (682) |   | $ | 747,003  |
|                                                              |   |         |          |            |   |              |   |                                       |          |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER’S EQUITY – DECEMBER 31, 2009 |   | $            | 157,230  |            | $      | 364,231      |   | $                                          | 290,880  |   | $ | (599) |   | $ | 811,742  |
|                                                              |   |         |          |            |   |              |   |                                       |          |   |   |   |   |   |   |
| Common Stock Dividends                                            |   |         |          |            |   |              |   |                                       | (12,687)      |   |   |   |   |   | (12,687) |
| Preferred Stock Dividends                                         |   |         |          |            |   |              |   |                                       | (53)          |   |   |   |   |   | (53) |
| SUBTOTAL – COMMON SHAREHOLDER’S EQUITY           |   |         |          |            |   |              |   |                                       |          |   |   |   |   |   | 799,002  |
|                                                              |   |         |          |            |   |              |   |                                       |          |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                              |   |         |          |            |   |              |   |                                       |          |   |   |   |   |   |   |
| Other Comprehensive Income, Net of Taxes:                         |   |         |          |            |   |              |   |                                       |          |   |   |   |   |   |   |
| Cash Flow Hedges, Net of Tax of $62                               |   |         |          |            |   |              |   |                                       |          |   |   | 116  |   |   | 116  |
| NET INCOME                                                        |   |         |          |            |   |              |   |                                       | 4,139    |   |   |   |   |   | 4,139  |
| TOTAL COMPREHENSIVE INCOME                                        |   |         |          |            |   |              |   |                                       |          |   |   |   |   |   | 4,255  |
|                                                              |   |         |          |            |   |              |   |                                       |          |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER’S EQUITY – MARCH 31, 2010    |   | $            | 157,230  |            | $      | 364,231      |   | $                                          | 282,279  |   | $ | (483) |   | $ | 803,257  |
|                                                              |   |         |          |            |   |              |   |                                       |          |   |   |   |   |   |   |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                            |   |   | 2010   |            | 2009   |
|-------------------------------------------------|--------|--------|--------|-----------------|--------|
| CURRENT ASSETS                                  |   |   |   |            |
| Cash and Cash Equivalents                       |   |   | $      | 926        |   | $ | 796  |
| Advances to Affiliates                          |   |   |   | -          |   |   | 62,695  |
| Accounts Receivable:                            |   |   |   |            |   |   |   |
| Customers                                       |   |   |   | 32,961     |   |   | 38,239  |
| Affiliated Companies                            |   |   |   | 58,353     |   |   | 59,096  |
| Miscellaneous                                   |   |   |   | 7,461      |   |   | 7,242  |
| Allowance for Uncollectible Accounts            |   |   |   | (128)           |   |   | (304) |
| Total Accounts Receivable                       |   |   |   | 98,647     |   |   | 104,273  |
| Fuel                                            |   |   |   | 21,608     |   |   | 20,892  |
| Materials and Supplies                          |   |   |   | 46,560     |   |   | 44,914  |
| Risk Management Assets                          |   |   |   | 3,263      |   |   | 2,376  |
| Deferred Income Tax Benefits                    |   |   |   | 14,312     |   |   | 26,335  |
| Accrued Tax Benefits                            |   |   |   | 32,860     |   |   | 15,291  |
| Regulatory Asset for Under-Recovered Fuel Costs |   |   |   | 31,025     |   |   | -  |
| Prepayments and Other Current Assets            |   |   |   | 11,311     |   |   | 9,139  |
| TOTAL CURRENT ASSETS                            |   |   |   | 260,512    |   |   | 286,711  |
|                                            |   |   |   |            |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT                   |   |   |   |            |   |   |   |
| Electric:                                       |   |   |   |            |   |   |   |
| Production                                      |   |   |   | 1,304,060  |   |   | 1,300,069  |
| Transmission                                    |   |   |   | 633,864    |   |   | 617,291  |
| Distribution                                    |   |   |   | 1,627,977  |   |   | 1,596,355  |
| Other Property, Plant and Equipment             |   |   |   | 244,558    |   |   | 228,705  |
| Construction Work in Progress                   |   |   |   | 81,462     |   |   | 67,138  |
| Total Property, Plant and Equipment             |   |   |   | 3,891,921  |   |   | 3,809,558  |
| Accumulated Depreciation and Amortization       |   |   |   | 1,234,393  |   |   | 1,220,177  |
| TOTAL PROPERTY, PLANT AND EQUIPMENT – NET |   |   |   | 2,657,528  |   |   | 2,589,381  |
|                                            |   |   |   |            |   |   |   |
| OTHER NONCURRENT ASSETS                         |   |   |   |            |   |   |   |
| Regulatory Assets                               |   |   |   | 276,679    |   |   | 279,185  |
| Long-term Risk Management Assets                |   |   |   | 157        |   |   | 50  |
| Deferred Charges and Other Noncurrent Assets    |   |   |   | 40,328     |   |   | 13,880  |
| TOTAL OTHER NONCURRENT ASSETS                   |   |   |   | 317,164    |   |   | 293,115  |
|                                            |   |   |   |            |   |   |   |
| TOTAL ASSETS                                    |   |   | $      | 3,235,204  |   | $ | 3,169,207  |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                                           |   |   | 2010           |            | 2009   |
|----------------------------------------------------------------|--------|--------|----------------|-----------------|--------|
| CURRENT LIABILITIES                                            |   |   | (in thousands) |
| Advances from Affiliates                                       |   |   | $              | 68,743     |   | $ | -  |
| Accounts Payable:                                              |   |   |           |            |   |   |   |
| General                                                        |   |   |           | 101,867    |   |   | 76,895  |
| Affiliated Companies                                           |   |   |           | 78,260     |   |   | 71,099  |
| Risk Management Liabilities                                    |   |   |           | 536        |   |   | 2,579  |
| Customer Deposits                                              |   |   |           | 41,603     |   |   | 42,002  |
| Accrued Taxes                                                  |   |   |           | 37,591     |   |   | 19,471  |
| Regulatory Liability for Over-Recovered Fuel Costs             |   |   |           | -          |   |   | 51,087  |
| Other Current Liabilities                                      |   |   |           | 56,929     |   |   | 60,905  |
| TOTAL CURRENT LIABILITIES                                      |   |   |           | 385,529    |   |   | 324,038  |
|                                                           |   |   |           |            |   |   |   |
| NONCURRENT LIABILITIES                                         |   |   |           |            |   |   |   |
| Long-term Debt – Nonaffiliated                           |   |   |           | 968,808    |   |   | 968,121  |
| Long-term Risk Management Liabilities                          |   |   |           | 117        |   |   | 144  |
| Deferred Income Taxes                                          |   |   |           | 602,506    |   |   | 588,768  |
| Regulatory Liabilities and Deferred Investment Tax Credits     |   |   |           | 317,573    |   |   | 326,931  |
| Employee Benefits and Pension Obligations                      |   |   |           | 108,101    |   |   | 107,748  |
| Deferred Credits and Other Noncurrent Liabilities              |   |   |           | 44,055     |   |   | 36,457  |
| TOTAL NONCURRENT LIABILITIES                                   |   |   |           | 2,041,160  |   |   | 2,028,169  |
|                                                           |   |   |           |            |   |   |   |
| TOTAL LIABILITIES                                              |   |   |           | 2,426,689  |   |   | 2,352,207  |
|                                                           |   |   |           |            |   |   |   |
| Cumulative Preferred Stock Not Subject to Mandatory Redemption |   |   |           | 5,258      |   |   | 5,258  |
|                                                           |   |   |           |            |   |   |   |
| Rate Matters (Note 3)                                          |   |   |           |            |   |   |   |
| Commitments and Contingencies (Note 4)                         |   |   |           |            |   |   |   |
|                                                           |   |   |           |            |   |   |   |
| COMMON SHAREHOLDER’S EQUITY                              |   |   |           |            |   |   |   |
| Common Stock – Par Value – $15 Per Share:          |   |   |           |            |   |   |   |
| Authorized – 11,000,000 Shares                           |   |   |           |            |   |   |   |
| Issued – 10,482,000 Shares                               |   |   |           |            |   |   |   |
| Outstanding – 9,013,000 Shares                           |   |   |           | 157,230    |   |   | 157,230  |
| Paid-in Capital                                                |   |   |           | 364,231    |   |   | 364,231  |
| Retained Earnings                                              |   |   |           | 282,279    |   |   | 290,880  |
| Accumulated Other Comprehensive Income (Loss)                  |   |   |           | (483)           |   |   | (599) |
| TOTAL COMMON SHAREHOLDER’S EQUITY                        |   |   |           | 803,257    |   |   | 811,742  |
|                                                           |   |   |           |            |   |   |   |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY               |   |   | $              | 3,235,204  |   | $ | 3,169,207  |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                                                                        |   | 2010   |         | 2009   |
|---------------------------------------------------------------------------------------------|--------|--------|--------------|--------|
| OPERATING ACTIVITIES                                                                        |   |   |         |   |   |   |
| Net Income                                                                                  |   | $      | 4,139   |   | $ | 6,038  |
| Adjustments to Reconcile Net Income to Net Cash Flows from (Used for) Operating Activities: |   |   |         |   |   |   |
| Depreciation and Amortization                                                               |   |   | 27,288  |   |   | 27,950  |
| Deferred Income Taxes                                                                       |   |   | 20,526  |   |   | (13,835) |
| Carrying Costs Income                                                                       |   |   | (867)        |   |   | (1,711) |
| Allowance for Equity Funds Used During Construction                                         |   |   | (247)        |   |   | (170) |
| Mark-to-Market of Risk Management Contracts                                                 |   |   | (2,959)      |   |   | (562) |
| Property Taxes                                                                              |   |   | (27,797)     |   |   | (28,050) |
| Fuel Over/Under-Recovery, Net                                                               |   |   | (82,112)     |   |   | 36,650  |
| Change in Other Noncurrent Assets                                                           |   |   | (10,473)     |   |   | 429  |
| Change in Other Noncurrent Liabilities                                                      |   |   | 1,764   |   |   | (1,879) |
| Changes in Certain Components of Working Capital:                                           |   |   |         |   |   |   |
| Accounts Receivable, Net                                                                    |   |   | 5,626   |   |   | 92,561  |
| Fuel, Materials and Supplies                                                                |   |   | (2,362)      |   |   | 1,386  |
| Accounts Payable                                                                            |   |   | 15,235  |   |   | (28,623) |
| Accrued Taxes, Net                                                                          |   |   | 1,152   |   |   | 36,694  |
| Other Current Assets                                                                        |   |   | (2,108)      |   |   | (3,511) |
| Other Current Liabilities                                                                   |   |   | (7,137)      |   |   | (19,564) |
| Net Cash Flows from (Used for) Operating Activities                                         |   |   | (60,332)     |   |   | 103,803  |
|                                                                                        |   |   |         |   |   |   |
| INVESTING ACTIVITIES                                                                        |   |   |         |   |   |   |
| Construction Expenditures                                                                   |   |   | (54,837)     |   |   | (52,368) |
| Change in Advances to Affiliates, Net                                                       |   |   | 62,695  |   |   | (7,009) |
| Other Investing Activities                                                                  |   |   | (2,478)      |   |   | 232  |
| Net Cash Flows from (Used for) Investing Activities                                         |   |   | 5,380   |   |   | (59,145) |
|                                                                                        |   |   |         |   |   |   |
| FINANCING ACTIVITIES                                                                        |   |   |         |   |   |   |
| Issuance of Long-term Debt – Nonaffiliated                                            |   |   | -       |   |   | 33,283  |
| Change in Advances from Affiliates, Net                                                     |   |   | 68,743  |   |   | (70,308) |
| Principal Payments for Capital Lease Obligations                                            |   |   | (1,026)      |   |   | (398) |
| Dividends Paid on Common Stock                                                              |   |   | (12,687)     |   |   | (7,250) |
| Dividends Paid on Cumulative Preferred Stock                                                |   |   | (53)         |   |   | (53) |
| Other Financing Activities                                                                  |   |   | 105     |   |   | -  |
| Net Cash Flows from (Used for) Financing Activities                                         |   |   | 55,082  |   |   | (44,726) |
|                                                                                        |   |   |         |   |   |   |
| Net Increase (Decrease) in Cash and Cash Equivalents                                        |   |   | 130     |   |   | (68) |
| Cash and Cash Equivalents at Beginning of Period                                            |   |   | 796     |   |   | 1,345  |
| Cash and Cash Equivalents at End of Period                                                  |   | $      | 926     |   | $ | 1,277  |
|                                                                                        |   |   |         |   |   |   |
| SUPPLEMENTARY INFORMATION                                                                   |   |   |         |   |   |   |
| Cash Paid for Interest, Net of Capitalized Amounts                                          |   | $      | 8,267   |   | $ | 29,174  |
| Net Cash Paid (Received) for Income Taxes                                                   |   |   | (1,331)      |   |   | 391  |
| Noncash Acquisitions Under Capital Leases                                                   |   |   | 13,274  |   |   | 391  |
| Construction Expenditures Included in Accounts Payable at March 31,                         |   |   | 28,799  |   |   | 11,776  |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                      | Footnote Reference |
|-------------------------------------------|-------------------------|
|                                      |                    |
| Significant Accounting Matters            | Note 1                  |
|                                      |                    |
| New Accounting Pronouncements             | Note 2                  |
|                                      |                    |
| Rate Matters                              | Note 3                  |
|                                      |                    |
| Commitments, Guarantees and Contingencies | Note 4                  |
|                                      |                    |
| Benefit Plans                             | Note 6                  |
|                                      |                    |
| Business Segments                         | Note 7                  |
|                                      |                    |
| Derivatives and Hedging                   | Note 8                  |
|                                      |                    |
| Fair Value Measurements                   | Note 9                  |
|                                      |                    |
| Income Taxes                              | Note 10                 |
|                                      |                    |
| Financing Activities                      | Note 11                 |
|                                      |                    |
| Company-wide Staffing and Budget Review   | Note 12                 |

----

----

| First Quarter of 2009                          |   |   |   |   |     |   | $      | 12  |
|------------------------------------------------|--------|--------|--------|--------|----------|--------|--------|----------|
|                                           |   |   |   |   |     |   |   |     |
| Changes in Gross Margin:                       |   |   |   |   |     |   |   |     |
| Retail Margins (a)                             |   |   |   |   | 18  |   |   |     |
| Off-system Sales                               |   |   |   |   | 1   |   |   |     |
| Transmission Revenues                          |   |   |   |   | 2   |   |   |     |
| Other                                          |   |   |   |   | (11)     |   |   |     |
| Total Change in Gross Margin                   |   |   |   |   |     |   |   | 10  |
|                                           |   |   |   |   |     |   |   |     |
| Total Expenses and Other:                      |   |   |   |   |     |   |   |     |
| Other Operation and Maintenance                |   |   |   |   | 5   |   |   |     |
| Depreciation and Amortization                  |   |   |   |   | 3   |   |   |     |
| Taxes Other Than Income Taxes                  |   |   |   |   | (1)      |   |   |     |
| Other Income                                   |   |   |   |   | 9   |   |   |     |
| Interest Expense                               |   |   |   |   | (2)      |   |   |     |
| Equity Earnings of Unconsolidated Subsidiaries |   |   |   |   | 1   |   |   |     |
| Total Expenses and Other                       |   |   |   |   |     |   |   | 15  |
|                                           |   |   |   |   |     |   |   |     |
| Income Tax Expense                             |   |   |   |   |     |   |   | (6)      |
|                                           |   |   |   |   |     |   |   |     |
| First Quarter of 2010                          |   |   |   |   |     |   | $      | 31  |

| (a) | Includes firm wholesale sales to municipals and cooperatives. |
|-----|---------------------------------------------------------------|

| · | Retail Margins increased $18 million primarily due to the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | A $13 million increase in retail sales primarily due to favorable weather and slight increases in usage in the commercial and industrial classes. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | A $3 million increase in base rates in Arkansas. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | A $2 million increase in FERC wholesale and municipal revenue. |
| · | Transmission Revenues increased $2 million primarily due to higher rates in the SPP region.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| · | Other revenues decreased $11 million resulting from the deconsolidation of SWEPCo’s mining subsidiary, Dolet Hills Lignite Company, LLC (DHLC).  Prior to the deconsolidation, SWEPCo recorded revenues from coal deliveries from DHLC to CLECO.  SWEPCo prospectively adopted the “Consolidation” accounting guidance effective January 1, 2010 and began accounting for DHLC under the equity method of accounting.  The decreased revenue from coal deliveries was offset by a corresponding decrease in Other Operation and Maintenance expenses from mining operations as discussed below. |

| · | Other Operation and Maintenance expenses decreased $5 million primarily due to the following:                                                                                                                                                                                                                                    |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                                                                                                           | An $8 million decrease in expenses for mining operations from DHLC.  The decreased expenses for mining operations were partially offset by a corresponding decrease in revenues as discussed above. |
|   | This decrease was partially offset by:                                                                                                                                                                                                                                                                                           |
|   | ·                                                                                                                                                                                                                                                                                                                           | A $2 million gain on sale of property during the first quarter of 2009 related to the sale of percentage ownership of the Turk Plant to nonaffiliated companies who exercised their participation options. |
| · | Depreciation and Amortization expenses decreased $3 million primarily due to lower Arkansas depreciation resulting from the Arkansas Base Rate Filing and the deconsolidation of DHLC.                                                                                                                                           |
| · | Other Income increased $9 million primarily due to an increase in AFUDC equity as a result of construction at the Turk Plant and Stall Unit and the reapplication of “Regulated Operations” accounting guidance for the generation portion of Texas’ retail jurisdiction effective the second quarter of 2009. |
| · | Interest Expense increased $2 million primarily due to increased long-term debt outstanding and capital leases, partially offset by an increase in the debt component of AFUDC due to generation projects at the Turk Plant and Stall Unit.                                                                                      |
| · | Income Tax Expense increased $6 million primarily due to an increase in pretax book income, partially offset by changes in certain book/tax differences accounted for on a flow-through basis.                                                                                                                                   |

|                  | Moody’s |   | S&P |   | Fitch      |
|-----------------------|---------------|--------|---------|--------|------------|
|                  |          |   |    |   |       |
| Senior Unsecured Debt | Baa3          |   | BBB     |   |  BBB+ |

|                                                 |                 | 2010           |        | 2009          |
|------------------------------------------------------|----------------------|----------------|-------------|---------------|
|                                                 |                 | (in thousands) |
| Cash and Cash Equivalents at Beginning of Period     |                 | $              | 1,661  |          | $ | 1,910  |
| Cash Flows from (Used for):                          |                 |           |        |          |   |   |
|                                                 | Operating Activities |           |        | (21,572)      |   |   | 93,470  |
|                                                 | Investing Activities |           |        | (277,945)     |   |   | (103,382) |
|                                                 | Financing Activities |           |        | 299,536  |   |   | 9,739  |
| Net Increase (Decrease) in Cash and Cash Equivalents |                 |           | 19     |          |   | (173) |
| Cash and Cash Equivalents at End of Period           |                 | $              | 1,680  |          | $ | 1,737  |

|                                                              |   | PrincipalAmount |          | Interest |       | Due    |
|-------------------------------------------------------------------|--------|-----------------|---------------|----------|------------|--------|
| Type of Debt                                                      |   |            | Rate          |     | Date       |
|                                                              |   | (in thousands)  |          | (%)      |       |   |
| Senior Unsecured Notes                                            |   | $               | 350,000  |     | 6.20       |   | 2040 |
| Pollution Control Bonds        |   |            | 53,500   |     |  3.25 |   |  2015 |

|                                      |   | PrincipalAmount Paid |         | Interest |           | Due    |
|-------------------------------------------|--------|----------------------|--------------|----------|----------------|--------|
| Type of Debt                              |   |                 | Rate         |     | Date           |
|                                      |   | (in thousands)       |         | (%)      |           |   |
| Notes Payable – Affiliated          |   | $                    | 50,000  |     | 4.45           |   | 2010 |
| Pollution Control Bonds    |   |                 | 53,500  |     |  Variable |   |  2019 |

----

----

|                                                     |   | 2010   |          | 2009   |
|----------------------------------------------------------|--------|--------|---------------|--------|
| REVENUES                                                 |   |   |          |   |
| Electric Generation, Transmission and Distribution       |   | $      | 333,078  |   | $ | 302,383  |
| Sales to AEP Affiliates                                  |   |   | 9,333    |   |   | 8,344  |
| Lignite Revenues – Nonaffiliated                   |   |   | -        |   |   | 10,720  |
| Other Revenues                                           |   |   | 393      |   |   | 355  |
| TOTAL REVENUES                                           |   |   | 342,804  |   |   | 321,802  |
|                                                     |   |   |          |   |   |   |
| EXPENSES                                                 |   |   |          |   |   |   |
| Fuel and Other Consumables Used for Electric Generation  |   |   | 122,888  |   |   | 126,315  |
| Purchased Electricity for Resale                         |   |   | 41,886   |   |   | 24,397  |
| Purchased Electricity from AEP Affiliates                |   |   | 9,752    |   |   | 13,010  |
| Other Operation                                          |   |   | 58,253   |   |   | 54,204  |
| Maintenance                                              |   |   | 17,419   |   |   | 26,702  |
| Depreciation and Amortization                            |   |   | 33,243   |   |   | 36,792  |
| Taxes Other Than Income Taxes                            |   |   | 15,895   |   |   | 15,389  |
| TOTAL EXPENSES                                           |   |   | 299,336  |   |   | 296,809  |
|                                                     |   |   |          |   |   |   |
| OPERATING INCOME                                         |   |   | 43,468   |   |   | 24,993  |
|                                                     |   |   |          |   |   |   |
| Other Income (Expense):                                  |   |   |          |   |   |   |
| Interest Income                                          |   |   | 79       |   |   | 454  |
| Allowance for Equity Funds Used During Construction      |   |   | 15,517   |   |   | 6,405  |
| Interest Expense                                         |   |   | (18,544)      |   |   | (16,299) |
|                                                     |   |   |          |   |   |   |
| INCOME BEFORE INCOME TAX EXPENSE AND EQUITY EARNINGS     |   |   | 40,520   |   |   | 15,553  |
|                                                     |   |   |          |   |   |   |
| Income Tax Expense                                       |   |   | 10,156   |   |   | 3,853  |
| Equity Earnings of Unconsolidated Subsidiaries           |   |   | 719      |   |   | -  |
|                                                     |   |   |          |   |   |   |
| NET INCOME                                               |   |   | 31,083   |   |   | 11,700  |
|                                                     |   |   |          |   |   |   |
| Less: Net Income Attributable to Noncontrolling Interest |   |   | 1,151    |   |   | 1,137  |
|                                                     |   |   |          |   |   |   |
| NET INCOME ATTRIBUTABLE TO SWEPCo SHAREHOLDERS           |   |   | 29,932   |   |   | 10,563  |
|                                                     |   |   |          |   |   |   |
| Less: Preferred Stock Dividend Requirements              |   |   | 57       |   |   | 57  |
|                                                     |   |   |          |   |   |   |
| EARNINGS ATTRIBUTABLE TO SWEPCo COMMON SHAREHOLDER       |   | $      | 29,875   |   | $ | 10,506  |

| The common stock of SWEPCo is wholly-owned by AEP. |
|----------------------------------------------------|

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                                                |   | SWEPCo Common Shareholder |          |            |   |             |
|---------------------------------------------------------------------|--------|---------------------------|---------------|-----------------|--------|------------------|
|                                                                |   | Common Stock              |          | Paid-in Capital |   | RetainedEarnings |   | AccumulatedOtherComprehensiveIncome (Loss) |   | NoncontrollingInterest |   | Total |
|                                                                |   |                      |          |            |   |             |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – DECEMBER 31, 2008                              |   | $                         | 135,660  |            | $      | 530,003     |   | $ | 615,110  |   | $ | (32,120) |   | $ | 276  |   | $ | 1,248,929  |
|                                                                |   |                      |          |            |   |             |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital Contribution from Parent                                    |   |                      |          |            |   | 17,500      |   |   |   |   |   |   |   |   |   |   |   | 17,500  |
| Common Stock Dividends – Nonaffiliated                        |   |                      |          |            |   |             |   |   |   |   |   |   |   |   | (1,115) |   |   | (1,115) |
| Preferred Stock Dividends                                           |   |                      |          |            |   |             |   |   | (57) |   |   |   |   |   |   |   |   | (57) |
| Other Changes in Equity                                             |   |                      |          |            |   | 2,476       |   |   | (2,476) |   |   |   |   |   |   |   |   | -  |
| SUBTOTAL – EQUITY                                             |   |                      |          |            |   |             |   |   |   |   |   |   |   |   |   |   |   | 1,265,257  |
|                                                                |   |                      |          |            |   |             |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                |   |                      |          |            |   |             |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income, Net of Taxes:                           |   |                      |          |            |   |             |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash Flow Hedges, Net of Tax of $51                                 |   |                      |          |            |   |             |   |   |   |   |   | 95  |   |   |   |   |   | 95  |
| Amortization of Pension and OPEB Deferred Costs, Net of Tax of $243 |   |                      |          |            |   |             |   |   |   |   |   | 451  |   |   |   |   |   | 451  |
| NET INCOME                                                          |   |                      |          |            |   |             |   |   | 10,563  |   |   |   |   |   | 1,137  |   |   | 11,700  |
| TOTAL COMPREHENSIVE INCOME                                          |   |                      |          |            |   |             |   |   |   |   |   |   |   |   |   |   |   | 12,246  |
|                                                                |   |                      |          |            |   |             |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – MARCH 31, 2009                                 |   | $                         | 135,660  |            | $      | 549,979     |   | $ | 623,140  |   | $ | (31,574) |   | $ | 298  |   | $ | 1,277,503  |
|                                                                |   |                      |          |            |   |             |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – DECEMBER 31, 2009                              |   | $                         | 135,660  |            | $      | 674,979     |   | $ | 726,478  |   | $ | (12,991) |   | $ | 31  |   | $ | 1,524,157  |
|                                                                |   |                      |          |            |   |             |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock Dividends – Nonaffiliated                        |   |                      |          |            |   |             |   |   |   |   |   |   |   |   | (809) |   |   | (809) |
| Preferred Stock Dividends                                           |   |                      |          |            |   |             |   |   | (57) |   |   |   |   |   |   |   |   | (57) |
| SUBTOTAL – EQUITY                                             |   |                      |          |            |   |             |   |   |   |   |   |   |   |   |   |   |   | 1,523,291  |
|                                                                |   |                      |          |            |   |             |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                |   |                      |          |            |   |             |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income, Net of Taxes:                           |   |                      |          |            |   |             |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash Flow Hedges, Net of Tax of $42                                 |   |                      |          |            |   |             |   |   |   |   |   | 88  |   |   |   |   |   | 88  |
| Amortization of Pension and OPEB Deferred Costs, Net of Tax of $127 |   |                      |          |            |   |             |   |   |   |   |   |  235  |   |   |   |   |   | 235  |
| NET INCOME                                                          |   |                      |          |            |   |             |   |   | 29,932  |   |   |   |   |   | 1,151  |   |   | 31,083  |
| TOTAL COMPREHENSIVE INCOME                                          |   |                      |          |            |   |             |   |   |   |   |   |   |   |   |   |   |   | 31,406  |
|                                                                |   |                      |          |            |   |             |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – MARCH 31, 2010                                 |   | $                         | 135,660  |            | $      | 674,979     |   | $ | 756,353  |   | $ | (12,668) |   | $ | 373  |   | $ | 1,554,697  |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                                                                                                                         |   | 2010   |            | 2009   |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------|--------|
| CURRENT ASSETS                                                                                                                               |   |   |            |   |   |   |
| Cash and Cash Equivalents                                                                                                                    |   | $      | 1,680      |   | $ | 1,661  |
| Advances to Affiliates                                                                                                                       |   |   | 238,817    |   |   | 34,883  |
| Accounts Receivable:                                                                                                                         |   |   |            |   |   |   |
| Customers                                                                                                                                    |   |   | 31,172     |   |   | 46,657  |
| Affiliated Companies                                                                                                                         |   |   | 25,390     |   |   | 19,542  |
| Miscellaneous                                                                                                                                |   |   | 15,376     |   |   | 9,952  |
| Allowance for Uncollectible Accounts                                                                                                         |   |   | (1)             |   |   | (64) |
| Total Accounts Receivable                                                                                                                    |   |   | 71,937     |   |   | 76,087  |
| Fuel   (March 31, 2010 amount includes $31,636 related to Sabine)                          |   |   | 99,740     |   |   | 121,453  |
| Materials and Supplies                                                                                                                       |   |   | 45,987     |   |   | 54,484  |
| Risk Management Assets                                                                                                                       |   |   | 2,055      |   |   | 3,049  |
| Deferred Income Tax Benefits                                                                                                                 |   |   | 12,731     |   |   | 13,820  |
| Accrued Tax Benefits                                                                                                                         |   |   | 10,203     |   |   | 16,164  |
| Regulatory Asset for Under-Recovered Fuel Costs                                                                                              |   |   | 10,291     |   |   | 1,639  |
| Prepayments and Other Current Assets                                                                                                         |   |   | 25,251     |   |   | 20,503  |
| TOTAL CURRENT ASSETS                                                                                                                         |   |   | 518,692    |   |   | 343,743  |
|                                                                                                                                         |   |   |            |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT                                                                                                                |   |   |            |   |   |   |
| Electric:                                                                                                                                    |   |   |            |   |   |   |
| Production                                                                                                                                   |   |   | 1,837,260  |   |   | 1,837,318  |
| Transmission                                                                                                                                 |   |   | 875,469    |   |   | 870,069  |
| Distribution                                                                                                                                 |   |   | 1,457,777  |   |   | 1,447,559  |
| Other Property, Plant and Equipment (March 31, 2010 amount includes $229,220 related to Sabine)      |   |   | 638,983    |   |   | 733,310  |
| Construction Work in Progress                                                                                                                |   |   | 1,253,122  |   |   | 1,176,639  |
| Total Property, Plant and Equipment                                                                                                          |   |   | 6,062,611  |   |   | 6,064,895  |
| Accumulated Depreciation and Amortization (March 31, 2010 amount includes $88,067 related to Sabine) |   |   | 2,049,962  |   |   | 2,086,333  |
| TOTAL PROPERTY, PLANT AND EQUIPMENT – NET                                                                                              |   |   | 4,012,649  |   |   | 3,978,562  |
|                                                                                                                                         |   |   |            |   |   |   |
| OTHER NONCURRENT ASSETS                                                                                                                      |   |   |            |   |   |   |
| Regulatory Assets                                                                                                                            |   |   | 283,964    |   |   | 268,165  |
| Long-term Risk Management Assets                                                                                                             |   |   | 244        |   |   | 84  |
| Deferred Charges and Other Noncurrent Assets                                                                                                 |   |   | 91,196     |   |   | 49,479  |
| TOTAL OTHER NONCURRENT ASSETS                                                                                                                |   |   | 375,404    |   |   | 317,728  |
|                                                                                                                                         |   |   |            |   |   |   |
| TOTAL ASSETS                                                                                                                                 |   | $      | 4,906,745  |   | $ | 4,640,033  |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                                           |   | 2010           |            | 2009   |
|----------------------------------------------------------------|--------|----------------|-----------------|--------|
| CURRENT LIABILITIES                                            |   | (in thousands) |
| Accounts Payable:                                              |   |           |            |   |   |   |
| General                                                        |   | $              | 115,639    |   | $ | 160,870  |
| Affiliated Companies                                           |   |           | 58,288     |   |   | 59,818  |
| Short-term Debt – Nonaffiliated                          |   |           | 13,218     |   |   | 6,890  |
| Long-term Debt Due Within One Year – Nonaffiliated       |   |           | -          |   |   | 4,406  |
| Long-term Debt Due Within One Year – Affiliated          |   |           | -          |   |   | 50,000  |
| Risk Management Liabilities                                    |   |           | 989        |   |   | 844  |
| Customer Deposits                                              |   |           | 41,815     |   |   | 41,269  |
| Accrued Taxes                                                  |   |           | 54,966     |   |   | 24,720  |
| Accrued Interest                                               |   |           | 17,661     |   |   | 33,179  |
| Obligations Under Capital Leases                               |   |           | 12,670     |   |   | 14,617  |
| Regulatory Liability for Over-Recovered Fuel Costs             |   |           | 12,852     |   |   | 13,762  |
| Provision for SIA Refund                                       |   |           | 21,003     |   |   | 19,307  |
| Other Current Liabilities                                      |   |           | 40,891     |   |   | 71,781  |
| TOTAL CURRENT LIABILITIES                                      |   |           | 389,992    |   |   | 501,463  |
|                                                           |   |           |            |   |   |   |
| NONCURRENT LIABILITIES                                         |   |           |            |   |   |   |
| Long-term Debt – Nonaffiliated                           |   |           | 1,769,331  |   |   | 1,419,747  |
| Long-term Risk Management Liabilities                          |   |           | 632        |   |   | 221  |
| Deferred Income Taxes                                          |   |           | 498,283    |   |   | 485,936  |
| Regulatory Liabilities and Deferred Investment Tax Credits     |   |           | 346,091    |   |   | 333,935  |
| Asset Retirement Obligations                                   |   |           | 48,732     |   |   | 60,562  |
| Employee Benefits and Pension Obligations                      |   |           | 123,616    |   |   | 125,956  |
| Obligations Under Capital Leases                               |   |           | 119,562    |   |   | 134,044  |
| Deferred Credits and Other Noncurrent Liabilities              |   |           | 51,112     |   |   | 49,315  |
| TOTAL NONCURRENT LIABILITIES                                   |   |           | 2,957,359  |   |   | 2,609,716  |
|                                                           |   |           |            |   |   |   |
| TOTAL LIABILITIES                                              |   |           | 3,347,351  |   |   | 3,111,179  |
|                                                           |   |           |            |   |   |   |
| Cumulative Preferred Stock Not Subject to Mandatory Redemption |   |           | 4,697      |   |   | 4,697  |
|                                                           |   |           |            |   |   |   |
| Rate Matters (Note 3)                                          |   |           |            |   |   |   |
| Commitments and Contingencies (Note 4)                         |   |           |            |   |   |   |
|                                                           |   |           |            |   |   |   |
| EQUITY                                                         |   |           |            |   |   |   |
| Common Stock – Par Value – $18 Per Share:          |   |           |            |   |   |   |
| Authorized – 7,600,000 Shares                            |   |           |            |   |   |   |
| Outstanding – 7,536,640 Shares                           |   |           | 135,660    |   |   | 135,660  |
| Paid-in Capital                                                |   |           | 674,979    |   |   | 674,979  |
| Retained Earnings                                              |   |           | 756,353    |   |   | 726,478  |
| Accumulated Other Comprehensive Income (Loss)                  |   |           | (12,668)        |   |   | (12,991) |
| TOTAL COMMON SHAREHOLDER’S EQUITY                        |   |           | 1,554,324  |   |   | 1,524,126  |
|                                                           |   |           |            |   |   |   |
| Noncontrolling Interest                                        |   |           | 373        |   |   | 31  |
|                                                           |   |           |            |   |   |   |
| TOTAL EQUITY                                                   |   |           | 1,554,697  |   |   | 1,524,157  |
|                                                           |   |           |            |   |   |   |
| TOTAL LIABILITIES AND EQUITY                                   |   | $              | 4,906,745  |   | $ | 4,640,033  |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                                                                             |   | 2010   |          | 2009   |
|--------------------------------------------------------------------------------------------------|--------|--------|---------------|--------|
| OPERATING ACTIVITIES                                                                             |   |   |          |   |   |   |
| Net Income                                                                                       |   | $      | 31,083   |   | $ | 11,700  |
| Adjustments to Reconcile Net Income to Net Cash Flows from (Used for) Operating Activities: |   |   |          |   |   |   |
| Depreciation and Amortization                                                                    |   |   | 33,243   |   |   | 36,792  |
| Deferred Income Taxes                                                                            |   |   | 477      |   |   | (27,042) |
| Allowance for Equity Funds Used During Construction                                              |   |   | (15,517)      |   |   | (6,405) |
| Mark-to-Market of Risk Management Contracts                                                      |   |   | 1,324    |   |   | (752) |
| Property Taxes                                                                                   |   |   | (28,569)      |   |   | (29,792) |
| Fuel Over/Under-Recovery, Net                                                                    |   |   | (9,565)       |   |   | 26,786  |
| Change in Other Noncurrent Assets                                                                |   |   | 409      |   |   | 6,230  |
| Change in Other Noncurrent Liabilities                                                           |   |   | 3,779    |   |   | 331  |
| Changes in Certain Components of Working Capital:                                                |   |   |          |   |   |   |
| Accounts Receivable, Net                                                                         |   |   | (5,975)       |   |   | 94,646  |
| Fuel, Materials and Supplies                                                                     |   |   | 17,008   |   |   | (4,775) |
| Accounts Payable                                                                                 |   |   | (46,408)      |   |   | (2,717) |
| Accrued Taxes, Net                                                                               |   |   | 38,552   |   |   | 58,794  |
| Accrued Interest                                                                                 |   |   | (15,512)      |   |   | (20,160) |
| Other Current Assets                                                                             |   |   | (4,310)       |   |   | 326  |
| Other Current Liabilities                                                                        |   |   | (21,591)      |   |   | (50,492) |
| Net Cash Flows from (Used for) Operating Activities                                              |   |   | (21,572)      |   |   | 93,470  |
|                                                                                             |   |   |          |   |   |   |
| INVESTING ACTIVITIES                                                                             |   |   |          |   |   |   |
| Construction Expenditures                                                                        |   |   | (88,731)      |   |   | (169,603) |
| Change in Advances to Affiliates, Net                                                            |   |   | (187,000)     |   |   | (37,649) |
| Proceeds from Sales of Assets                                                                    |   |   | 174      |   |   | 104,824  |
| Other Investing Activities                                                                       |   |   | (2,388)       |   |   | (954) |
| Net Cash Flows Used for Investing Activities                                                     |   |   | (277,945)     |   |   | (103,382) |
|                                                                                             |   |   |          |   |   |   |
| FINANCING ACTIVITIES                                                                             |   |   |          |   |   |   |
| Capital Contribution from Parent                                                                 |   |   | -        |   |   | 17,500  |
| Issuance of Long-term Debt – Nonaffiliated                                                 |   |   | 399,650  |   |   | (15) |
| Borrowings from Revolving Credit Facilities                                                      |   |   | 23,743   |   |   | 27,435  |
| Change in Advances from Affiliates, Net                                                          |   |   | -        |   |   | (2,526) |
| Retirement of Long-term Debt – Nonaffiliated                                               |   |   | (53,500)      |   |   | (1,101) |
| Retirement of Long-term Debt – Affiliated                                                  |   |   | (50,000)      |   |   | -  |
| Repayments to Revolving Credit Facilities                                                        |   |   | (17,415)      |   |   | (28,048) |
| Principal Payments for Capital Lease Obligations                                                 |   |   | (2,858)       |   |   | (2,334) |
| Dividends Paid on Common Stock – Nonaffiliated                                             |   |   | (809)         |   |   | (1,115) |
| Dividends Paid on Cumulative Preferred Stock                                                     |   |   | (57)          |   |   | (57) |
| Other Financing Activities                                                                       |   |   | 782      |   |   | -  |
| Net Cash Flows from Financing Activities                                                         |   |   | 299,536  |   |   | 9,739  |
|                                                                                             |   |   |          |   |   |   |
| Net Increase (Decrease) in Cash and Cash Equivalents                                             |   |   | 19       |   |   | (173) |
| Cash and Cash Equivalents at Beginning of Period                                                 |   |   | 1,661    |   |   | 1,910  |
| Cash and Cash Equivalents at End of Period                                                       |   | $      | 1,680    |   | $ | 1,737  |
|                                                                                             |   |   |          |   |   |   |
| SUPPLEMENTARY INFORMATION                                                                        |   |   |          |   |   |   |
| Cash Paid for Interest, Net of Capitalized Amounts                                               |   | $      | 31,789   |   | $ | 51,573  |
| Net Cash Received for Income Taxes                                                               |   |   | (1,062)       |   |   | (1,117) |
| Noncash Acquisitions Under Capital Leases                                                        |   |   | 169      |   |   | 1,568  |
| Construction Expenditures Included in Accounts Payable at March 31,                              |   |   | 71,395   |   |   | 72,331  |

| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries. |
|-----------------------------------------------------------------------------------|

----

|                                      | Footnote Reference |
|-------------------------------------------|--------------------|
|                                      |               |
| Significant Accounting Matters            | Note 1             |
|                                      |               |
| New Accounting Pronouncements             | Note 2             |
|                                      |               |
| Rate Matters                              | Note 3             |
|                                      |               |
| Commitments, Guarantees and Contingencies | Note 4             |
|                                      |               |
| Acquisitions                              | Note 5             |
|                                      |               |
| Benefit Plans                             | Note 6             |
|                                      |               |
| Business Segments                         | Note 7             |
|                                      |               |
| Derivatives and Hedging                   | Note 8             |
|                                      |               |
| Fair Value Measurements                   | Note 9             |
|                                      |               |
| Income Taxes                              | Note 10            |
|                                      |               |
| Financing Activities                      | Note 11            |
|                                      |               |
| Company-wide Staffing and Budget Review   | Note 12            |

----

| The condensed notes to condensed financial statements that follow are a combined presentation for the Registrant Subsidiaries.  The following list indicates the registrants to which the footnotes apply: |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                 |   |   |
| 1.                                                                                                                                                                                                                   | Significant Accounting Matters | APCo, CSPCo, I&M, OPCo, PSO, SWEPCo |
| 2.                                                                                                                                                                                                                   | New Accounting Pronouncements | APCo, CSPCo, I&M, OPCo, PSO, SWEPCo |
| 3.                                                                                                                                                                                                                   | Rate Matters | APCo, CSPCo, I&M, OPCo, PSO, SWEPCo |
| 4.                                                                                                                                                                                                                   | Commitments, Guarantees and Contingencies | APCo, CSPCo, I&M, OPCo, PSO, SWEPCo |
| 5.                                                                                                                                                                                                                   | Acquisitions | SWEPCo |
| 6.                                                                                                                                                                                                                   | Benefit Plans | APCo, CSPCo, I&M, OPCo, PSO, SWEPCo |
| 7.                                                                                                                                                                                                                   | Business Segments | APCo, CSPCo, I&M, OPCo, PSO, SWEPCo |
| 8.                                                                                                                                                                                                                   | Derivatives and Hedging | APCo, CSPCo, I&M, OPCo, PSO, SWEPCo |
| 9.                                                                                                                                                                                                                   | Fair Value Measurements | APCo, CSPCo, I&M, OPCo, PSO, SWEPCo |
| 10.                                                                                                                                                                                                                  | Income Taxes | APCo, CSPCo, I&M, OPCo, PSO, SWEPCo |
| 11.                                                                                                                                                                                                                  | Financing Activities | APCo, CSPCo, I&M, OPCo, PSO, SWEPCo |
| 12.                                                                                                                                                                                                                  | Company-wide Staffing and Budget Review | APCo, CSPCo, I&M, OPCo, PSO, SWEPCo |

----

| 1. | SIGNIFICANT ACCOUNTING MATTERS |
|----|--------------------------------|

| ASSETS                            |   | Sabine |   |
|-----------------------------------|--------|--------|--------|
| Current Assets                    |   | $      | 51     |   |
| Net Property, Plant and Equipment |   |   | 146    |   |
| Other Noncurrent Assets           |   |   | 34     |   |
| Total Assets                      |   | $      | 231    |   |
|                              |   |   |   |   |
| LIABILITIES AND EQUITY            |   |   |   |   |
| Current Liabilities               |   | $      | 35     |   |
| Noncurrent Liabilities            |   |   | 196    |   |
| Equity                            |   |   | -      |   |
| Total Liabilities and Equity      |   | $      | 231    |   |

| ASSETS                            |   | Sabine |   |   | DHLC   |   |
|-----------------------------------|--------|--------|--------|--------|--------|--------|
| Current Assets                    |   | $      | 51     |   |   | $      | 8 |   |
| Net Property, Plant and Equipment |   |   | 149    |   |   |   | 44 |   |
| Other Noncurrent Assets           |   |   | 35     |   |   |   | 11 |   |
| Total Assets                      |   | $      | 235    |   |   | $      | 63 |   |
|                              |   |   |   |   |   |   |   |   |
| LIABILITIES AND EQUITY            |   |   |   |   |   |   |   |   |
| Current Liabilities               |   | $      | 36     |   |   | $      | 17 |   |
| Noncurrent Liabilities            |   |   | 199    |   |   |   | 38 |   |
| Equity                            |   |   | -      |   |   |   | 8 |   |
| Total Liabilities and Equity      |   | $      | 235    |   |   | $      | 63 |   |

|                             | March 31, 2010   |   |
|----------------------------------|------------------|--------|
|                             | As Reported on   |   |   |   |
|                             | the Consolidated |   | Maximum |   |
|                             | Balance Sheet    |   | Exposure |   |
|                             | (in millions)    |   |
| Capital Contribution from Parent |             | $      | 7 |   |   | $ | 7 |   |
| Retained Earnings                |             |   | 1 |   |   |   | 1 |   |
| SWEPCo’s Guarantee of Debt |             |   | - |   |   |   | 44 |   |
|                             |             |   |   |   |   |   |   |   |
| Total Investment in DHLC         |             | $      | 8 |   |   | $ | 52 |   |

|                              |   | DCC Fuel |   |
|-----------------------------------|--------|----------|--------|
| ASSETS                            |   | 2010     |   |   | 2009 |   |
| Current Assets                    |   | $        | 56     |   |   | $ | 47 |   |
| Net Property, Plant and Equipment |   |     | 77     |   |   |   | 89 |   |
| Other Noncurrent Assets           |   |     | 49     |   |   |   | 57 |   |
| Total Assets                      |   | $        | 182    |   |   | $ | 193 |   |
|                              |   |     |   |   |   |   |   |   |
| LIABILITIES AND EQUITY            |   |     |   |   |   |   |   |   |
| Current Liabilities               |   | $        | 41     |   |   | $ | 39 |   |
| Noncurrent Liabilities            |   |     | 141    |   |   |   | 154 |   |
| Equity                            |   |     | -      |   |   |   | - |   |
| Total Liabilities and Equity      |   | $        | 182    |   |   | $ | 193 |   |

|    |   | Three Months Ended March 31, |   |
|---------|--------|------------------------------|--------|
| Company |   | 2010                         |   |   | 2009 |   |
|    |   | (in millions)                |   |
| APCo    |   | $                            | 59     |   |   | $ | 50 |   |
| CSPCo   |   |                         | 35     |   |   |   | 29 |   |
| I&M |   |                         | 34     |   |   |   | 29 |   |
| OPCo    |   |                         | 49     |   |   |   | 41 |   |
| PSO     |   |                         | 24     |   |   |   | 21 |   |
| SWEPCo  |   |                         | 35     |   |   |   | 29 |   |

|    | 2010               |   | 2009     |   |
|---------|--------------------|--------|----------|--------|
|    | As Reported in the |   | Maximum  |   | As Reported in the |   | Maximum |   |
|    | Balance Sheet      |   | Exposure |   | Balance Sheet |   | Exposure |   |
|    | (in millions)      |   |
| APCo    |               | $      | 23       |   |   | $ | 23 |   |   | $ | 23 |   |   | $ | 23 |   |
| CSPCo   |               |   | 15       |   |   |   | 15 |   |   |   | 13 |   |   |   | 13 |   |
| I&M |               |   | 14       |   |   |   | 14 |   |   |   | 13 |   |   |   | 13 |   |
| OPCo    |               |   | 20       |   |   |   | 20 |   |   |   | 18 |   |   |   | 18 |   |
| PSO     |               |   | 9        |   |   |   | 9 |   |   |   | 9 |   |   |   | 9 |   |
| SWEPCo  |               |   | 14       |   |   |   | 14 |   |   |   | 14 |   |   |   | 14 |   |

|    | Three Months Ended March 31, |   |
|---------|------------------------------|--------|
|    | 2010                         |   | 2009 |   |
|    | (in millions)                |   |
| CSPCo   |                         | $      | 15 |   |   | $ | 17 |   |
| I&M |                         |   | 56 |   |   |   | 63 |   |

|    | March 31, 2010     |   | December 31, 2009 |   |
|---------|--------------------|--------|-------------------|--------|
|    | As Reported in the |   |              |   | As Reported in the |   |   |   |
|    | Consolidated       |   | Maximum           |   | Consolidated |   | Maximum |   |
|    | Balance Sheet      |   | Exposure          |   | Balance Sheet |   | Exposure |   |
|    | (in millions)      |   |
| CSPCo   |               | $      | 6                 |   |   | $ | 6 |   |   | $ | 6 |   |   | $ | 6 |   |
| I&M |               |   | 18                |   |   |   | 18 |   |   |   | 23 |   |   |   | 23 |   |

|    |   | Three Months Ended March 31, 2010 |   |
|---------|--------|-----------------------------------|--------|
|    |   | Reported in                       |   |   | Reported in |   |
| Company |   | Revenues                          |   |   | Expenses |   |
|    |   | (in thousands)                    |   |
| APCo    |   | $                                 | (2,895 | ) |   | $ | 2,194 |   |
| CSPCo   |   |                              | (1,576 | ) |   |   | 1,148 |   |
| I&M |   |                              | (1,589 | ) |   |   | 1,158 |   |
| OPCo    |   |                              | (1,816 | ) |   |   | 1,330 |   |

| 2. | NEW ACCOUNTING PRONOUNCEMENTS |
|----|-------------------------------|

| · | The power to direct the activities of the VIE that most significantly impact the VIE’s economic performance.                                                                                    |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | The obligation to absorb the losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE. |

|  3. | RATE MATTERS |
|----------|--------------|

|                                                                                                              |   | APCo           |    |   | I&M        |   |
|-------------------------------------------------------------------------------------------------------------------|--------|----------------|---------|--------|----------------|--------|
|                                                                                                              |   | March 31,      |    |   | December 31,   |   |   | March 31, |   |   | December 31, |   |
|                                                                                                              |   | 2010           |    |   | 2009           |   |   | 2010 |   |   | 2009 |   |
| Noncurrent Regulatory Assets (excluding fuel)                                                                     |   | (in thousands) |    |   | (in thousands) |   |
| Regulatory assets not yet being recovered pending future proceedings to determine the recovery method and timing: |   |           |    |   |           |   |   |   |   |   |   |   |
|                                                                                                              |   |           |    |   |           |   |   |   |   |   |   |   |
| Regulatory Assets Currently Not Earning a Return                                                                  |   |           |    |   |           |   |   |   |   |   |   |   |
| Mountaineer Carbon Capture and Storage Project                                                                    |   | $              | 111,461 |   |           | $      | 110,665 |   |   | $ | - |   |   | $ | - |   |
| Virginia Environmental Rate Adjustment Clause                                                                     |   |           | 27,232  |   |           |   | 25,311 |   |   |   | - |   |   |   | - |   |
| Virginia Transmission Rate Adjustment Clause                                                                      |   |           | 21,088  |   |           |   | 26,184 |   |   |   | - |   |   |   | - |   |
| Special Rate Mechanism for Century Aluminum                                                                       |   |           | 12,474  |   |           |   | 12,422 |   |   |   | - |   |   |   | - |   |
| Deferred Wind Power Costs                                                                                         |   |           | 10,581  |   |           |   | 5,372 |   |   |   | - |   |   |   | - |   |
| Deferred PJM Fees                                                                                                 |   |           | -       |   |           |   | - |   |   |   | 6,597 |   |   |   | 6,254 |   |
| Total Regulatory Assets Not Yet Being Recovered                                                                   |   | $              | 182,836 |   |           | $      | 179,954 |   |   | $ | 6,597 |   |   | $ | 6,254 |   |

|                                                                                                              |   | CSPCo          |   |   | OPCo           |   |
|-------------------------------------------------------------------------------------------------------------------|--------|----------------|--------|--------|----------------|--------|
|                                                                                                              |   | March 31,      |   |   | December 31,   |   |   | March 31, |   |   | December 31, |   |
|                                                                                                              |   | 2010           |   |   | 2009           |   |   | 2010 |   |   | 2009 |   |
| Noncurrent Regulatory Assets (excluding fuel)                                                                     |   | (in thousands) |   |   | (in thousands) |   |
| Regulatory assets not yet being recovered pending future proceedings to determine the recovery method and timing: |   |           |   |   |           |   |   |   |   |   |   |   |
|                                                                                                              |   |           |   |   |           |   |   |   |   |   |   |   |
| Regulatory Assets Currently Earning a Return                                                                      |   |           |   |   |           |   |   |   |   |   |   |   |
| Customer Choice Deferrals                                                                                         |   | $              | 28,994 |   |           | $      | 28,781 |   |   | $ | 28,494 |   |   | $ | 28,330 |   |
| Line Extension Carrying Costs                                                                                     |   |           | 28,379 |   |           |   | 26,590 |   |   |   | 17,530 |   |   |   | 16,278 |   |
| Storm Related Costs                                                                                               |   |           | 17,014 |   |           |   | 17,014 |   |   |   | 9,794 |   |   |   | 9,794 |   |
| Acquisition of Monongahela Power                                                                                  |   |           | 10,706 |   |           |   | 10,282 |   |   |   | - |   |   |   | - |   |
| Regulatory Assets Currently Not Earning a Return                                                                  |   |           |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Peak Demand Reduction/Energy Efficiency                                                                           |   |           | 5,796  |   |           |   | 4,071 |   |   |   | 5,713 |   |   |   | 4,007 |   |
| Total Regulatory Assets Not Yet Being Recovered                                                                   |   | $              | 90,889 |   |           | $      | 86,738 |   |   | $ | 61,531 |   |   | $ | 58,409 |   |

|                                                                                                              | PSO            |   | SWEPCo         |   |
|-------------------------------------------------------------------------------------------------------------------|----------------|--------|----------------|--------|
|                                                                                                              | March 31,      |   | December 31,   |   | March 31, |   | December 31, |   |
|                                                                                                              | 2010           |   | 2009           |   | 2010 |   | 2009 |   |
| Noncurrent Regulatory Assets (excluding fuel)                                                                     | (in thousands) |   | (in thousands) |   |
| Regulatory assets not yet being recovered pending future proceedings to determine the recovery method and timing: |           |   |           |   |   |   |   |   |   |   |   |   |
|                                                                                                              |           |   |           |   |   |   |   |   |   |   |   |   |
| Regulatory Assets Currently Not Earning a Return                                                                  |           |   |           |   |   |   |   |   |   |   |   |   |
| Storm Related Costs                                                                                               |           | $      | 11,329         |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Asset Retirement Obligation                                                                                       |           |   | -              |   |   |   | - |   |   |   | 521 |   |   |   | 471 |   |
| Total Regulatory Assets Not Yet Being Recovered                                                                   |           | $      | 11,329         |   |   | $ | - |   |   | $ | 521 |   |   | $ | 471 |   |

| Company |   | (in millions) |   |
|---------|--------|---------------|--------|
| APCo    |   | $             | 70.2   |   |
| CSPCo   |   |          | 38.8   |   |
| I&M |   |          | 41.3   |   |
| OPCo    |   |          | 53.3   |   |

| Company |   | (in millions) |   |
|---------|--------|---------------|--------|
| APCo    |   | $             | 14.1   |   |
| CSPCo   |   |          | 7.8    |   |
| I&M |   |          | 8.3    |   |
| OPCo    |   |          | 10.7   |   |

| Company |   | March 31, 2010 |   |
|---------|--------|----------------|--------|
|    |   | (in millions)  |   |
| APCo    |   | $              | 10.7   |   |
| CSPCo   |   |           | 5.9    |   |
| I&M |   |           | 6.3    |   |
| OPCo    |   |           | 8.2    |   |

| 4. | COMMITMENTS, GUARANTEES AND CONTINGENCIES |
|----|-------------------------------------------|

|               |   |           |          |     |                       | Borrower |
|--------------------|--------|----------------|---------------|----------|----------------------------|----------|
| Company            |   | Amount         |          | Maturity |                       | Sublimit |
|               |   | (in thousands) |          |     |                       |     |   |
| $1.5 billion LOCs: |   |           |          |     |                       |     |   |   |
| I&M            |   | $              | 300      |     | March 2011                 |     |   |              N/A  |
| SWEPCo             |   |           | 4,448    |     | December 2010              |     |   |              N/A  |
|               |   |           |          |     |                       |     |   |   |
| $627 million LOC:  |   |           |          |     |                       |     |   |   |
| APCo               |   | $              | 232,292  |     | June 2010 to November 2010 |     | $ |        300,000  |
| I&M            |   |           | 77,886   |     | May 2010                   |     |   |        230,000  |
| OPCo               |   |           | 166,899  |     | June 2010                  |     |   |        400,000  |

|    |   | Maximum        |   |
|---------|--------|----------------|--------|
|    |   | Potential      |   |
| Company |   | Loss           |   |
|    |   | (in thousands) |   |
| APCo    |   |           | $      | 236 |   |
| CSPCo   |   |           |   | 57 |   |
| I&M |   |           |   | 405 |   |
| OPCo    |   |           |   | 187 |   |
| PSO     |   |           |   | 351 |   |
| SWEPCo  |   |           |   | 322 |   |

|                |   |                                                        |   | JBRs          |
|---------------------|--------|-------------------------------------------------------------|--------|---------------|
|                |   |                                                        |   | Scheduled for |
| Plant Name          |   | Plant Owners                                                |   | Installation  |
| Cardinal            |   | OPCo/ Buckeye Power, Inc.                                   |   | 3             |
| Conesville          |   | CSPCo/Dayton Power and Light Company/Duke Energy Ohio, Inc. |   | 1             |
| Muskingum River (a) |   | OPCo                                                        |   | 1             |

| (a) | Contracts for the Muskingum River project have been temporarily suspended during the early development stage of the project. |
|-----|------------------------------------------------------------------------------------------------------------------------------|

| 5. | ACQUISITIONS |
|----|--------------|

|  6. | BENEFIT PLANS |
|----------|---------------|

|                                  |                         |   | Other Postretirement         |   |
|---------------------------------------|------------------------------|--------|------------------------------|--------|
|                                  | Pension Plans                |   | Benefit Plans                |   |
|                                  | Three Months Ended March 31, |   | Three Months Ended March 31, |   |
|                                  | 2010                         |   | 2009                         |   | 2010 |   | 2009 |   |
|                                  | (in millions)                |   |
| Service Cost                          |                         | $      | 28                           |   |   | $ | 26 |   |   | $ | 12 |   |   | $ | 10 |   |
| Interest Cost                         |                         |   | 63                           |   |   |   | 63 |   |   |   | 28 |   |   |   | 27 |   |
| Expected Return on Plan Assets        |                         |   | (78                          | )      |   |   | (80 | ) |   |   | (26 | ) |   |   | (20 | ) |
| Amortization of Transition Obligation |                         |   | -                            |   |   |   | - |   |   |   | 7 |   |   |   | 7 |   |
| Amortization of Net Actuarial Loss    |                         |   | 22                           |   |   |   | 15 |   |   |   | 7 |   |   |   | 11 |   |
| Net Periodic Benefit Cost             |                         | $      | 35                           |   |   | $ | 24 |   |   | $ | 28 |   |   | $ | 35 |   |

|    |                         |   | Other Postretirement         |   |
|---------|------------------------------|--------|------------------------------|--------|
|    | Pension Plans                |   | Benefit Plans                |   |
|    | Three Months Ended March 31, |   | Three Months Ended March 31, |   |
|    | 2010                         |   | 2009                         |   | 2010 |   | 2009 |   |
| Company | (in thousands)               |   |
| APCo    |                         | $      | 3,954                        |   |   | $ | 2,615 |   |   | $ | 4,762 |   |   | $ | 6,058 |   |
| CSPCo   |                         |   | 1,486                        |   |   |   | 688 |   |   |   | 2,062 |   |   |   | 2,638 |   |
| I&M |                         |   | 5,035                        |   |   |   | 3,485 |   |   |   | 3,464 |   |   |   | 4,358 |   |
| OPCo    |                         |   | 3,439                        |   |   |   | 2,067 |   |   |   | 3,965 |   |   |   | 5,139 |   |
| PSO     |                         |   | 1,360                        |   |   |   | 770 |   |   |   | 1,861 |   |   |   | 2,283 |   |
| SWEPCo  |                         |   | 1,774                        |   |   |   | 1,208 |   |   |   | 1,893 |   |   |   | 2,363 |   |

| 7. | BUSINESS SEGMENTS |
|----|-------------------|

| 8. | DERIVATIVES AND HEDGING |
|----|-------------------------|

| Notional Volume of Derivative Instruments |   |
|-------------------------------------------|--------|
| March 31, 2010                            |   |
| (in thousands)                            |   |
|                                      |   |
| Primary Risk                              |   | Unit of |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exposure                                  |   | Measure |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |   |
| Commodity:                                |   |   |   |   |   |
| Power                                     |   | MWHs |   |   | 156,031 |   |   | 88,273 |   |   | 90,380 |   |   | 101,589 |   |   | 15 |   |   | 18 |   |
| Coal                                      |   | Tons |   |   | 11,112 |   |   | 6,616 |   |   | 4,928 |   |   | 31,865 |   |   | 5,597 |   |   | 8,075 |   |
| Natural Gas                               |   | MMBtus |   |   | 12,027 |   |   | 6,804 |   |   | 6,862 |   |   | 7,831 |   |   | - |   |   | - |   |
| Heating Oil and Gasoline                  |   | Gallons |   |   | 1,218 |   |   | 529 |   |   | 597 |   |   | 898 |   |   | 717 |   |   | 659 |   |
| Interest Rate                             |   | USD |   | $ | 12,703 |   | $ | 7,198 |   | $ | 7,198 |   | $ | 9,124 |   | $ | 705 |   | $ | 908 |   |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Rate and Foreign Currency   |   | USD |   | $ | 150,000 |   | $ | - |   | $ | - |   | $ | - |   | $ | - |   | $ | 3,547 |   |
|                                      |   |
| Notional Volume of Derivative Instruments |   |
| December 31, 2009                         |   |
| (in thousands)                            |   |
|                                      |   |
| Primary Risk Exposure                     |   | Unit of Measure |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |   |
| Commodity:                                |   |   |   |   |   |
| Power                                     |   | MWHs |   |   | 191,121 |   |   | 96,828 |   |   | 99,265 |   |   | 112,745 |   |   | 10 |   |   | 12 |   |
| Coal                                      |   | Tons |   |   | 11,347 |   |   | 5,615 |   |   | 5,150 |   |   | 23,631 |   |   | 5,936 |   |   | 6,790 |   |
| Natural Gas                               |   | MMBtus |   |   | 17,867 |   |   | 9,051 |   |   | 9,129 |   |   | 10,539 |   |   | - |   |   | - |   |
| Heating Oil and Gasoline                  |   | Gallons |   |   | 1,164 |   |   | 474 |   |   | 552 |   |   | 838 |   |   | 668 |   |   | 628 |   |
| Interest Rate                             |   | USD |   | $ | 21,054 |   | $ | 10,658 |   | $ | 10,716 |   | $ | 13,487 |   | $ | 1,137 |   | $ | 1,457 |   |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Rate and Foreign Currency   |   | USD |   | $ | - |   | $ | - |   | $ | - |   | $ | - |   | $ | - |   | $ | 3,798 |   |

|    |   | March 31, 2010  |   | December 31, 2009 |   |
|---------|--------|-----------------|--------|-------------------|--------|
|    |   | Cash Collateral |   | Cash Collateral   |   | Cash Collateral |   | Cash Collateral |   |
|    |   | Received        |   | Paid              |   | Received |   | Paid |   |
|    |   | Netted Against  |   | Netted Against    |   | Netted Against |   | Netted Against |   |
|    |   | Risk Management |   | Risk Management   |   | Risk Management |   | Risk Management |   |
| Company |   | Assets          |   | Liabilities       |   | Assets |   | Liabilities |   |
|    |   | (in thousands)  |   |
| APCo    |   |            | $      | 10,391            |   |   | $ | 51,936 |   |   | $ | 3,789 |   |   | $ | 31,806 |   |
| CSPCo   |   |            |   | 5,879             |   |   |   | 29,408 |   |   |   | 1,920 |   |   |   | 16,108 |   |
| I&M |   |            |   | 5,929             |   |   |   | 29,520 |   |   |   | 1,936 |   |   |   | 16,222 |   |
| OPCo    |   |            |   | 6,766             |   |   |   | 35,771 |   |   |   | 2,235 |   |   |   | 19,512 |   |
| PSO     |   |            |   | -                 |   |   |   | 349 |   |   |   | - |   |   |   | 194 |   |
| SWEPCo  |   |            |   | -                 |   |   |   | 572 |   |   |   | - |   |   |   | 305 |   |

| Fair Value of Derivative InstrumentsMarch 31, 2010     |   |
|--------------------------------------------------------|--------|
|                                                   |   |
| APCo                                                   |   |
|                                                   |   | Risk |   |   |   |   |   |   |   |
|                                                   |   | Management |   |   |   |   |   |   |   |
|                                                   |   | Contracts |   | Hedging Contracts |   |   |   |   |   |
|                                                   |   |   |   |   |   | Interest Rate |   |   |   |   |   |
|                                                   |   | Commodity |   | Commodity |   | and Foreign |   |   |   |   |   |
| Balance Sheet Location                                 |   | (a) |   | (a) |   | Currency (a) |   | Other (a) (b) |   | Total |   |
|                                                   |   | (in thousands) |   |
| Current Risk Management Assets                         |   |   | $ | 482,823 |   |   | $ | 4,882 |   |   | $ | 207 |   |   | $ | (409,383 | ) |   | $ | 78,529 |   |
| Long-term Risk Management Assets                       |   |   |   | 226,173 |   |   |   | 274 |   |   |   | - |   |   |   | (160,600 | ) |   |   | 65,847 |   |
| Total Assets                                           |   |   |   | 708,996 |   |   |   | 5,156 |   |   |   | 207 |   |   |   | (569,983 | ) |   |   | 144,376 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities                    |   |   |   | 458,322 |   |   |   | 8,189 |   |   |   | 908 |   |   |   | (432,258 | ) |   |   | 35,161 |   |
| Long-term Risk Management Liabilities                  |   |   |   | 214,123 |   |   |   | 899 |   |   |   | - |   |   |   | (184,634 | ) |   |   | 30,388 |   |
| Total Liabilities                                      |   |   |   | 672,445 |   |   |   | 9,088 |   |   |   | 908 |   |   |   | (616,892 | ) |   |   | 65,549 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net Assets (Liabilities) |   |   | $ | 36,551 |   |   | $ | (3,932 | ) |   | $ | (701 | ) |   | $ | 46,909 |   |   | $ | 78,827 |   |

| Fair Value of Derivative InstrumentsDecember 31, 2009  |   |
|--------------------------------------------------------|--------|
|                                                   |   |
| APCo                                                   |   |
|                                                   |   | Risk |   |   |   |   |   |   |   |
|                                                   |   | Management |   |   |   |   |   |   |   |
|                                                   |   | Contracts |   | Hedging Contracts |   |   |   |   |   |
|                                                   |   |   |   |   |   | Interest Rate |   |   |   |   |   |
|                                                   |   | Commodity |   | Commodity |   | and Foreign |   |   |   |   |   |
| Balance Sheet Location                                 |   | (a) |   | (a) |   | Currency (a) |   | Other (a) (b) |   | Total |   |
|                                                   |   | (in thousands) |   |
| Current Risk Management Assets                         |   |   | $ | 332,764 |   |   | $ | 3,621 |   |   | $ | - |   |   | $ | (268,429 | ) |   | $ | 67,956 |   |
| Long-term Risk Management Assets                       |   |   |   | 132,044 |   |   |   | - |   |   |   | - |   |   |   | (84,903 | ) |   |   | 47,141 |   |
| Total Assets                                           |   |   |   | 464,808 |   |   |   | 3,621 |   |   |   | - |   |   |   | (353,332 | ) |   |   | 115,097 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities                    |   |   |   | 309,639 |   |   |   | 5,084 |   |   |   | - |   |   |   | (288,931 | ) |   |   | 25,792 |   |
| Long-term Risk Management Liabilities                  |   |   |   | 118,702 |   |   |   | 80 |   |   |   | - |   |   |   | (98,418 | ) |   |   | 20,364 |   |
| Total Liabilities                                      |   |   |   | 428,341 |   |   |   | 5,164 |   |   |   | - |   |   |   | (387,349 | ) |   |   | 46,156 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net Assets (Liabilities) |   |   | $ | 36,467 |   |   | $ | (1,543 | ) |   | $ | - |   |   | $ | 34,017 |   |   | $ | 68,941 |   |

| Fair Value of Derivative InstrumentsMarch 31, 2010 |
|----------------------------------------------------|

| CSPCo                                                  |   |           |   |              |   |          |   |          |   |   |   |
|--------------------------------------------------------|--------|----------------|--------|-------------------|--------|---------------|--------|---------------|--------|--------|--------|
|                                                   |   | Risk           |   |              |   |          |   |          |   |
|                                                   |   | Management     |   |              |   |          |   |          |   |
|                                                   |   | Contracts      |   | Hedging Contracts |   |          |   |          |   |
|                                                   |   |           |   |              |   | Interest Rate |   |          |   |   |   |
|                                                   |   | Commodity      |   | Commodity         |   | and Foreign   |   |          |   |   |   |
| Balance Sheet Location                                 |   | (a)            |   | (a)               |   | Currency (a)  |   | Other (a) (b) |   | Total  |   |
|                                                   |   | (in thousands) |   |
| Current Risk Management Assets                         |   |           | $      | 273,981           |   |          | $      | 2,726         |   |   | $      | - |   |   | $ | (232,345 | ) |   | $ | 44,362 |   |
| Long-term Risk Management Assets                       |   |           |   | 128,131           |   |          |   | 155           |   |   |   | - |   |   |   | (91,022 | ) |   |   | 37,264 |   |
| Total Assets                                           |   |           |   | 402,112           |   |          |   | 2,881         |   |   |   | - |   |   |   | (323,367 | ) |   |   | 81,626 |   |
|                                                   |   |           |   |              |   |          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities                    |   |           |   | 260,063           |   |          |   | 4,632         |   |   |   | - |   |   |   | (245,288 | ) |   |   | 19,407 |   |
| Long-term Risk Management Liabilities                  |   |           |   | 121,335           |   |          |   | 508           |   |   |   | - |   |   |   | (104,643 | ) |   |   | 17,200 |   |
| Total Liabilities                                      |   |           |   | 381,398           |   |          |   | 5,140         |   |   |   | - |   |   |   | (349,931 | ) |   |   | 36,607 |   |
|                                                   |   |           |   |              |   |          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net Assets (Liabilities) |   |           | $      | 20,714            |   |          | $      | (2,259        | )      |   | $      | - |   |   | $ | 26,564 |   |   | $ | 45,019 |   |

| Fair Value of Derivative InstrumentsDecember 31, 2009 |
|-------------------------------------------------------|

| CSPCo                                                  |   |           |   |              |   |          |   |          |   |   |   |
|--------------------------------------------------------|--------|----------------|--------|-------------------|--------|---------------|--------|---------------|--------|--------|--------|
|                                                   |   | Risk           |   |              |   |          |   |          |   |
|                                                   |   | Management     |   |              |   |          |   |          |   |
|                                                   |   | Contracts      |   | Hedging Contracts |   |          |   |          |   |
|                                                   |   |           |   |              |   | Interest Rate |   |          |   |   |   |
|                                                   |   | Commodity      |   | Commodity         |   | and Foreign   |   |          |   |   |   |
| Balance Sheet Location                                 |   | (a)            |   | (a)               |   | Currency (a)  |   | Other (a) (b) |   | Total  |   |
|                                                   |   | (in thousands) |   |
| Current Risk Management Assets                         |   |           | $      | 168,137           |   |          | $      | 1,805         |   |   | $      | - |   |   | $ | (135,599 | ) |   | $ | 34,343 |   |
| Long-term Risk Management Assets                       |   |           |   | 66,816            |   |          |   | -             |   |   |   | - |   |   |   | (42,934 | ) |   |   | 23,882 |   |
| Total Assets                                           |   |           |   | 234,953           |   |          |   | 1,805         |   |   |   | - |   |   |   | (178,533 | ) |   |   | 58,225 |   |
|                                                   |   |           |   |              |   |          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities                    |   |           |   | 156,463           |   |          |   | 2,574         |   |   |   | - |   |   |   | (145,985 | ) |   |   | 13,052 |   |
| Long-term Risk Management Liabilities                  |   |           |   | 60,048            |   |          |   | 41            |   |   |   | - |   |   |   | (49,776 | ) |   |   | 10,313 |   |
| Total Liabilities                                      |   |           |   | 216,511           |   |          |   | 2,615         |   |   |   | - |   |   |   | (195,761 | ) |   |   | 23,365 |   |
|                                                   |   |           |   |              |   |          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net Assets (Liabilities) |   |           | $      | 18,442            |   |          | $      | (810          | )      |   | $      | - |   |   | $ | 17,228 |   |   | $ | 34,860 |   |
|                                                   |   |           |   |              |   |          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Fair Value of Derivative InstrumentsMarch 31, 2010     |   |
|--------------------------------------------------------|--------|
|                                                   |   |   |   |   |   |   |   |   |   |   |   |
| I&M                                                |   |   |   |   |   |   |   |   |   |   |   |
|                                                   |   | Risk |   |   |   |   |   |   |   |
|                                                   |   | Management |   |   |   |   |   |   |   |
|                                                   |   | Contracts |   | Hedging Contracts |   |   |   |   |   |
|                                                   |   |   |   |   |   | Interest Rate |   |   |   |   |   |
|                                                   |   | Commodity |   | Commodity |   | and Foreign |   |   |   |   |   |
| Balance Sheet Location                                 |   | (a) |   | (a) |   | Currency (a) |   | Other (a) (b) |   | Total |   |
|                                                   |   | (in thousands) |   |
| Current Risk Management Assets                         |   |   | $ | 274,350 |   |   | $ | 2,763 |   |   | $ | - |   |   | $ | (230,409 | ) |   | $ | 46,704 |   |
| Long-term Risk Management Assets                       |   |   |   | 139,429 |   |   |   | 156 |   |   |   | - |   |   |   | (90,931 | ) |   |   | 48,654 |   |
| Total Assets                                           |   |   |   | 413,779 |   |   |   | 2,919 |   |   |   | - |   |   |   | (321,340 | ) |   |   | 95,358 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities                    |   |   |   | 258,206 |   |   |   | 4,672 |   |   |   | - |   |   |   | (243,455 | ) |   |   | 19,423 |   |
| Long-term Risk Management Liabilities                  |   |   |   | 121,330 |   |   |   | 512 |   |   |   | - |   |   |   | (104,536 | ) |   |   | 17,306 |   |
| Total Liabilities                                      |   |   |   | 379,536 |   |   |   | 5,184 |   |   |   | - |   |   |   | (347,991 | ) |   |   | 36,729 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net Assets (Liabilities) |   |   | $ | 34,243 |   |   | $ | (2,265 | ) |   | $ | - |   |   | $ | 26,651 |   |   | $ | 58,629 |   |

| Fair Value of Derivative InstrumentsDecember 31, 2009 |
|-------------------------------------------------------|

| I&M                                                |   |
|--------------------------------------------------------|--------|
|                                                   |   | Risk |   |   |   |   |   |   |   |
|                                                   |   | Management |   |   |   |   |   |   |   |
|                                                   |   | Contracts |   | Hedging Contracts |   |   |   |   |   |
|                                                   |   |   |   |   |   | Interest Rate |   |   |   |   |   |
|                                                   |   | Commodity |   | Commodity |   | and Foreign |   |   |   |   |   |
| Balance Sheet Location                                 |   | (a) |   | (a) |   | Currency (a) |   | Other (a) (b) |   | Total |   |
|                                                   |   | (in thousands) |   |
| Current Risk Management Assets                         |   |   | $ | 167,847 |   |   | $ | 1,839 |   |   | $ | - |   |   | $ | (135,248 | ) |   | $ | 34,438 |   |
| Long-term Risk Management Assets                       |   |   |   | 72,127 |   |   |   | - |   |   |   | - |   |   |   | (42,993 | ) |   |   | 29,134 |   |
| Total Assets                                           |   |   |   | 239,974 |   |   |   | 1,839 |   |   |   | - |   |   |   | (178,241 | ) |   |   | 63,572 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities                    |   |   |   | 156,561 |   |   |   | 2,596 |   |   |   | - |   |   |   | (145,721 | ) |   |   | 13,436 |   |
| Long-term Risk Management Liabilities                  |   |   |   | 60,217 |   |   |   | 41 |   |   |   | - |   |   |   | (49,872 | ) |   |   | 10,386 |   |
| Total Liabilities                                      |   |   |   | 216,778 |   |   |   | 2,637 |   |   |   | - |   |   |   | (195,593 | ) |   |   | 23,822 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net Assets (Liabilities) |   |   | $ | 23,196 |   |   | $ | (798 | ) |   | $ | - |   |   | $ | 17,352 |   |   | $ | 39,750 |   |

| Fair Value of Derivative InstrumentsMarch 31, 2010     |   |
|--------------------------------------------------------|--------|
|  OPCo                                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                   |   | Risk |   |   |   |   |   |   |   |
|                                                   |   | Management |   |   |   |   |   |   |   |
|                                                   |   | Contracts |   | Hedging Contracts |   |   |   |   |   |
|                                                   |   |   |   |   |   | Interest Rate |   |   |   |   |   |
|                                                   |   | Commodity |   | Commodity |   | and Foreign |   |   |   |   |   |
| Balance Sheet Location                                 |   | (a) |   | (a) |   | Currency (a) |   | Other (a) (b) |   | Total |   |
|                                                   |   | (in thousands) |   |
| Current Risk Management Assets                         |   |   | $ | 377,428 |   |   | $ | 3,204 |   |   | $ | - |   |   | $ | (321,405 | ) |   | $ | 59,227 |   |
| Long-term Risk Management Assets                       |   |   |   | 160,257 |   |   |   | 178 |   |   |   | - |   |   |   | (116,689 | ) |   |   | 43,746 |   |
| Total Assets                                           |   |   |   | 537,685 |   |   |   | 3,382 |   |   |   | - |   |   |   | (438,094 | ) |   |   | 102,973 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities                    |   |   |   | 360,508 |   |   |   | 5,332 |   |   |   | - |   |   |   | (336,384 | ) |   |   | 29,456 |   |
| Long-term Risk Management Liabilities                  |   |   |   | 153,975 |   |   |   | 586 |   |   |   | - |   |   |   | (134,208 | ) |   |   | 20,353 |   |
| Total Liabilities                                      |   |   |   | 514,483 |   |   |   | 5,918 |   |   |   | - |   |   |   | (470,592 | ) |   |   | 49,809 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net Assets (Liabilities) |   |   | $ | 23,202 |   |   | $ | (2,536 | ) |   | $ | - |   |   | $ | 32,498 |   |   | $ | 53,164 |   |

| Fair Value of Derivative InstrumentsDecember 31, 2009 |
|-------------------------------------------------------|

| OPCo                                                   |   |           |   |
|--------------------------------------------------------|--------|----------------|--------|
|                                                   |   | Risk           |   |   |   |   |   |   |   |
|                                                   |   | Management     |   |   |   |   |   |   |   |
|                                                   |   | Contracts      |   | Hedging Contracts |   |   |   |   |   |
|                                                   |   |           |   |   |   | Interest Rate |   |   |   |   |   |
|                                                   |   | Commodity      |   | Commodity |   | and Foreign |   |   |   |   |   |
| Balance Sheet Location                                 |   | (a)            |   | (a) |   | Currency (a) |   | Other (a) (b) |   | Total |   |
|                                                   |   | (in thousands) |   |
| Current Risk Management Assets                         |   |           | $      | 255,179 |   |   | $ | 2,199 |   |   | $ | - |   |   | $ | (207,330 | ) |   | $ | 50,048 |   |
| Long-term Risk Management Assets                       |   |           |   | 88,064 |   |   |   | - |   |   |   | - |   |   |   | (60,061 | ) |   |   | 28,003 |   |
| Total Assets                                           |   |           |   | 343,243 |   |   |   | 2,199 |   |   |   | - |   |   |   | (267,391 | ) |   |   | 78,051 |   |
|                                                   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities                    |   |           |   | 240,877 |   |   |   | 2,998 |   |   |   | - |   |   |   | (219,484 | ) |   |   | 24,391 |   |
| Long-term Risk Management Liabilities                  |   |           |   | 81,186 |   |   |   | 47 |   |   |   | - |   |   |   | (68,723 | ) |   |   | 12,510 |   |
| Total Liabilities                                      |   |           |   | 322,063 |   |   |   | 3,045 |   |   |   | - |   |   |   | (288,207 | ) |   |   | 36,901 |   |
|                                                   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net Assets (Liabilities) |   |           | $      | 21,180 |   |   | $ | (846 | ) |   | $ | - |   |   | $ | 20,816 |   |   | $ | 41,150 |   |
|                                                   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Fair Value of Derivative InstrumentsMarch 31, 2010     |   |
|--------------------------------------------------------|--------|
|  PSO                                              |   |   |   |   |   |   |   |   |   |   |   |
|                                                   |   | Risk |   |   |   |   |   |   |   |
|                                                   |   | Management |   |   |   |   |   |   |   |
|                                                   |   | Contracts |   | Hedging Contracts |   |   |   |   |   |
|                                                   |   |   |   |   |   | Interest Rate |   |   |   |   |   |
|                                                   |   | Commodity |   | Commodity |   | and Foreign |   |   |   |   |   |
| Balance Sheet Location                                 |   | (a) |   | (a) |   | Currency (a) |   | Other (a) (b) |   | Total |   |
|                                                   |   | (in thousands) |   |
| Current Risk Management Assets                         |   |   | $ | 12,892 |   |   | $ | 170 |   |   | $ | - |   |   | $ | (9,799 | ) |   | $ | 3,263 |   |
| Long-term Risk Management Assets                       |   |   |   | 2,279 |   |   |   | 1 |   |   |   | - |   |   |   | (2,123 | ) |   |   | 157 |   |
| Total Assets                                           |   |   |   | 15,171 |   |   |   | 171 |   |   |   | - |   |   |   | (11,922 | ) |   |   | 3,420 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities                    |   |   |   | 10,169 |   |   |   | 181 |   |   |   | - |   |   |   | (9,814 | ) |   |   | 536 |   |
| Long-term Risk Management Liabilities                  |   |   |   | 2,567 |   |   |   | 7 |   |   |   | - |   |   |   | (2,457 | ) |   |   | 117 |   |
| Total Liabilities                                      |   |   |   | 12,736 |   |   |   | 188 |   |   |   | - |   |   |   | (12,271 | ) |   |   | 653 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net Assets (Liabilities) |   |   | $ | 2,435 |   |   | $ | (17 | ) |   | $ | - |   |   | $ | 349 |   |   | $ | 2,767 |   |

| Fair Value of Derivative InstrumentsDecember 31, 2009 |
|-------------------------------------------------------|

| PSO                                                    |   |           |   |              |   |          |   |          |   |   |   |
|--------------------------------------------------------|--------|----------------|--------|-------------------|--------|---------------|--------|---------------|--------|--------|--------|
|                                                   |   | Risk           |   |              |   |          |   |          |   |
|                                                   |   | Management     |   |              |   |          |   |          |   |
|                                                   |   | Contracts      |   | Hedging Contracts |   |          |   |          |   |
|                                                   |   |           |   |              |   | Interest Rate |   |          |   |   |   |
|                                                   |   | Commodity      |   | Commodity         |   | and Foreign   |   |          |   |   |   |
| Balance Sheet Location                                 |   | (a)            |   | (a)               |   | Currency (a)  |   | Other (a) (b) |   | Total  |   |
|                                                   |   | (in thousands) |   |
| Current Risk Management Assets                         |   |           | $      | 14,885            |   |          | $      | 179           |   |   | $      | - |   |   | $ | (12,688 | ) |   | $ | 2,376 |   |
| Long-term Risk Management Assets                       |   |           |   | 2,640             |   |          |   | -             |   |   |   | - |   |   |   | (2,590 | ) |   |   | 50 |   |
| Total Assets                                           |   |           |   | 17,525            |   |          |   | 179           |   |   |   | - |   |   |   | (15,278 | ) |   |   | 2,426 |   |
|                                                   |   |           |   |              |   |          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities                    |   |           |   | 14,981            |   |          |   | 301           |   |   |   | - |   |   |   | (12,703 | ) |   |   | 2,579 |   |
| Long-term Risk Management Liabilities                  |   |           |   | 2,913             |   |          |   | -             |   |   |   | - |   |   |   | (2,769 | ) |   |   | 144 |   |
| Total Liabilities                                      |   |           |   | 17,894            |   |          |   | 301           |   |   |   | - |   |   |   | (15,472 | ) |   |   | 2,723 |   |
|                                                   |   |           |   |              |   |          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net Assets (Liabilities) |   |           | $      | (369              | )      |          | $      | (122          | )      |   | $      | - |   |   | $ | 194 |   |   | $ | (297 | ) |

| Fair Value of Derivative InstrumentsMarch 31, 2010     |   |
|--------------------------------------------------------|--------|
|  SWEPCo                                           |   |   |   |   |   |   |   |   |   |   |   |
|                                                   |   | Risk |   |   |   |   |   |   |   |
|                                                   |   | Management |   |   |   |   |   |   |   |
|                                                   |   | Contracts |   | Hedging Contracts |   |   |   |   |   |
|                                                   |   |   |   |   |   | Interest Rate |   |   |   |   |   |
|                                                   |   | Commodity |   | Commodity |   | and Foreign |   |   |   |   |   |
| Balance Sheet Location                                 |   | (a) |   | (a) |   | Currency (a) |   | Other (a) (b) |   | Total |   |
|                                                   |   | (in thousands) |   |
| Current Risk Management Assets                         |   |   | $ | 17,797 |   |   | $ | 157 |   |   | $ | 17 |   |   | $ | (15,916 | ) |   | $ | 2,055 |   |
| Long-term Risk Management Assets                       |   |   |   | 3,747 |   |   |   | 1 |   |   |   | 3 |   |   |   | (3,507 | ) |   |   | 244 |   |
| Total Assets                                           |   |   |   | 21,544 |   |   |   | 158 |   |   |   | 20 |   |   |   | (19,423 | ) |   |   | 2,299 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities                    |   |   |   | 16,818 |   |   |   | 5 |   |   |   | 107 |   |   |   | (15,941 | ) |   |   | 989 |   |
| Long-term Risk Management Liabilities                  |   |   |   | 4,680 |   |   |   | 6 |   |   |   | - |   |   |   | (4,054 | ) |   |   | 632 |   |
| Total Liabilities                                      |   |   |   | 21,498 |   |   |   | 11 |   |   |   | 107 |   |   |   | (19,995 | ) |   |   | 1,621 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net Assets (Liabilities) |   |   | $ | 46 |   |   | $ | 147 |   |   | $ | (87 | ) |   | $ | 572 |   |   | $ | 678 |   |

| Fair Value of Derivative InstrumentsDecember 31, 2009 |
|-------------------------------------------------------|

| SWEPCo                                                 |   |           |   |              |   |          |   |          |   |   |   |
|--------------------------------------------------------|--------|----------------|--------|-------------------|--------|---------------|--------|---------------|--------|--------|--------|
|                                                   |   | Risk           |   |              |   |          |   |          |   |
|                                                   |   | Management     |   |              |   |          |   |          |   |
|                                                   |   | Contracts      |   | Hedging Contracts |   |          |   |          |   |
|                                                   |   |           |   |              |   | Interest Rate |   |          |   |   |   |
|                                                   |   | Commodity      |   | Commodity         |   | and Foreign   |   |          |   |   |   |
| Balance Sheet Location                                 |   | (a)            |   | (a)               |   | Currency (a)  |   | Other (a) (b) |   | Total  |   |
|                                                   |   | (in thousands) |   |
| Current Risk Management Assets                         |   |           | $      | 22,847            |   |          | $      | 169           |   |   | $      | 42 |   |   | $ | (20,009 | ) |   | $ | 3,049 |   |
| Long-term Risk Management Assets                       |   |           |   | 4,145             |   |          |   | -             |   |   |   | 5 |   |   |   | (4,066 | ) |   |   | 84 |   |
| Total Assets                                           |   |           |   | 26,992            |   |          |   | 169           |   |   |   | 47 |   |   |   | (24,075 | ) |   |   | 3,133 |   |
|                                                   |   |           |   |              |   |          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities                    |   |           |   | 20,788            |   |          |   | -             |   |   |   | 89 |   |   |   | (20,033 | ) |   |   | 844 |   |
| Long-term Risk Management Liabilities                  |   |           |   | 4,568             |   |          |   | -             |   |   |   | - |   |   |   | (4,347 | ) |   |   | 221 |   |
| Total Liabilities                                      |   |           |   | 25,356            |   |          |   | -             |   |   |   | 89 |   |   |   | (24,380 | ) |   |   | 1,065 |   |
|                                                   |   |           |   |              |   |          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net Assets (Liabilities) |   |           | $      | 1,636             |   |          | $      | 169           |   |   | $      | (42 | ) |   | $ | 305 |   |   | $ | 2,068 |   |

| (a) | Derivative instruments within these categories are reported gross.  These instruments are subject to master netting agreements and are presented on the Condensed Balance Sheets on a net basis in accordance with the accounting guidance for “Derivatives and Hedging.” |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Amounts represent counterparty netting of risk management and hedging contracts, associated cash collateral in accordance with the accounting guidance for “Derivatives and Hedging” and dedesignated risk management contracts.                                                    |

| Amount of Gain (Loss) Recognized                            |   |
|-------------------------------------------------------------|--------|
| on Risk Management Contracts                                |   |
| For the Three Months Ended March 31, 2010                   |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Location of Gain (Loss)                                     |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |   |
|                                                        |   | (in thousands) |   |
| Electric Generation, Transmission and Distribution Revenues |   |   | $ | 4,173 |   |   | $ | 9,607 |   |   | $ | 6,885 |   |   | $ | 10,221 |   |   | $ | 683 |   |   | $ | 788 |   |
| Sales to AEP Affiliates                                     |   |   |   | (2,361 | ) |   |   | (1,562 | ) |   |   | (1,443 | ) |   |   | 253 |   |   |   | (176 | ) |   |   | (308 | ) |
| Regulatory Assets (a)                                       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 331 |   |   |   | (47 | ) |
| Regulatory Liabilities (a)                                  |   |   |   | 17,027 |   |   |   | 3,681 |   |   |   | 15,092 |   |   |   | 4,093 |   |   |   | 2,638 |   |   |   | (1,011 | ) |
| Total Gain (Loss) on Risk Management Contracts              |   |   | $ | 18,839 |   |   | $ | 11,726 |   |   | $ | 20,534 |   |   | $ | 14,567 |   |   | $ | 3,476 |   |   | $ | (578 | ) |

| Amount of Gain (Loss) Recognizedon Risk Management Contracts |   |
|--------------------------------------------------------------|--------|
| For the Three Months Ended March 31, 2009                    |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Location of Gain (Loss)                                      |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |   |
|                                                         |   | (in thousands) |   |
| Electric Generation, Transmission and Distribution Revenues  |   |   | $ | 9,817 |   |   | $ | 10,745 |   |   | $ | 18,178 |   |   | $ | 12,711 |   |   | $ | 1,255 |   |   | $ | 1,523 |   |
| Sales to AEP Affiliates                                      |   |   |   | (7,020 | ) |   |   | (4,076 | ) |   |   | (3,971 | ) |   |   | (3,214 | ) |   |   | (1,462 | ) |   |   | (1,781 | ) |
| Regulatory Assets (a)                                        |   |   |   | (755 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (41 | ) |
| Regulatory Liabilities (a)                                   |   |   |   | 20,622 |   |   |   | 2,237 |   |   |   | 5,562 |   |   |   | 2,697 |   |   |   | 334 |   |   |   | 386 |   |
| Total Gain (Loss) on Risk Management Contracts               |   |   | $ | 22,664 |   |   | $ | 8,906 |   |   | $ | 19,769 |   |   | $ | 12,194 |   |   | $ | 127 |   |   | $ | 87 |   |

| (a) | Represents realized and unrealized gains and losses subject to regulatory accounting treatment recorded as either current or non-current within the balance sheet. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Total Accumulated Other Comprehensive Income (Loss) Activity for Cash Flow Hedges         |   |
|-------------------------------------------------------------------------------------------|--------|
| For the Three Months Ended March 31, 2010                                                 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodity Contracts                                                                       |   | APCo |   |   | CSPCo |   |   | I&M |   |   | OPCo |   |   | PSO |   |   | SWEPCo |   |
|                                                                                      |   | (in thousands) |   |
| Balance in AOCI as of January 1, 2010                                                     |   | $ | (743 | ) |   | $ | (376 | ) |   | $ | (382 | ) |   | $ | (366 | ) |   | $ | (78 | ) |   | $ | 112 |   |
| Changes in Fair Value Recognized in AOCI                                                  |   |   | (2,499 | ) |   |   | (1,457 | ) |   |   | (1,471 | ) |   |   | (1,670 | ) |   |   | 86 |   |   |   | 3 |   |
| Amount of (Gain) or Loss Reclassified from AOCI to Income Statement/within Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Electric Generation, Transmission and Distribution Revenues                               |   |   | 26 |   |   |   | 65 |   |   |   | 54 |   |   |   | 76 |   |   |   | - |   |   |   | - |   |
| Other Operation Expense                                                                   |   |   | (6 | ) |   |   | (8 | ) |   |   | (6 | ) |   |   | (5 | ) |   |   | (6 | ) |   |   | (7 | ) |
| Maintenance Expense                                                                       |   |   | (14 | ) |   |   | (6 | ) |   |   | (5 | ) |   |   | (4 | ) |   |   | (4 | ) |   |   | (4 | ) |
| Fuel and Other Consumables Used for Electric Generation                                   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (9 | ) |   |   | - |   |   |   | - |   |
| Purchased Electricity for Resale                                                          |   |   | 146 |   |   |   | 382 |   |   |   | 316 |   |   |   | 440 |   |   |   | - |   |   |   | - |   |
| Property, Plant and Equipment                                                             |   |   | (9 | ) |   |   | (7 | ) |   |   | (5 | ) |   |   | (5 | ) |   |   | (6 | ) |   |   | (4 | ) |
| Regulatory Assets (a)                                                                     |   |   | 648 |   |   |   | - |   |   |   | 81 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Regulatory Liabilities (a)                                                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Balance in AOCI as of March 31, 2010                                            |   | $ | (2,451 | ) |   | $ | (1,407 | ) |   | $ | (1,418 | ) |   | $ | (1,543 | ) |   | $ | (8 | ) |   | $ | 100 |   |

| Interest Rate and Foreign Currency                                                        |   |           |   |   |   |    |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------|--------|----------------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|
| Contracts                                                                                 |   | APCo           |   | CSPCo  |   | I&M |   | OPCo   |   | PSO    |   | SWEPCo |   |
|                                                                                      |   | (in thousands) |   |
| Balance in AOCI as of January 1, 2010                                                     |   |           | $      | (6,450 | )      |    | $      | -      |   |   | $      | (9,514 | )      |   | $ | 12,172 |   |   | $ | (521 | ) |   | $ | (5,047 | ) |
| Changes in Fair Value Recognized in AOCI                                                  |   |           |   | (456   | )      |    |   | -      |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | (107 | ) |
| Amount of (Gain) or Loss Reclassified from AOCI to Income Statement/within Balance Sheet: |   |           |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and Amortization Expense                                                     |   |           |   | -      |   |    |   | -      |   |   |   | -      |   |   |   | 1 |   |   |   | - |   |   |   | - |   |
| Interest Expense                                                                          |   |           |   | 418    |   |    |   | -      |   |   |   | 252    |   |   |   | (341 | ) |   |   | 46 |   |   |   | 207 |   |
| Balance in AOCI as of March 31, 2010                                            |   |           | $      | (6,488 | )      |    | $      | -      |   |   | $      | (9,262 | )      |   | $ | 11,832 |   |   | $ | (475 | ) |   | $ | (4,947 | ) |

| Total Contracts                                                                           |   | APCo           |   |   | CSPCo  |   |   | I&M |   |   | OPCo    |   |   | PSO    |   |   | SWEPCo |   |
|-------------------------------------------------------------------------------------------|--------|----------------|--------|--------|--------|--------|--------|---------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                      |   | (in thousands) |   |
| Balance in AOCI as of January 1, 2010                                                     |   | $              | (7,193 | )      |   | $      | (376   | )       |   | $      | (9,896  | )      |   | $      | 11,806 |   |   | $      | (599 | ) |   | $ | (4,935 | ) |
| Changes in Fair Value Recognized in AOCI                                                  |   |           | (2,955 | )      |   |   | (1,457 | )       |   |   | (1,471  | )      |   |   | (1,670 | )      |   |   | 86 |   |   |   | (104 | ) |
| Amount of (Gain) or Loss Reclassified from AOCI to Income Statement/within Balance Sheet: |   |           |   |   |   |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Electric Generation, Transmission and Distribution Revenues                               |   |           | 26     |   |   |   | 65     |    |   |   | 54      |   |   |   | 76     |   |   |   | - |   |   |   | - |   |
| Other Operation Expense                                                                   |   |           | (6     | )      |   |   | (8     | )       |   |   | (6      | )      |   |   | (5     | )      |   |   | (6 | ) |   |   | (7 | ) |
| Maintenance Expense                                                                       |   |           | (14    | )      |   |   | (6     | )       |   |   | (5      | )      |   |   | (4     | )      |   |   | (4 | ) |   |   | (4 | ) |
| Fuel and Other Consumables Used for Electric Generation                                   |   |           | -      |   |   |   | -      |    |   |   | -       |   |   |   | (9     | )      |   |   | - |   |   |   | - |   |
| Purchased Electricity for Resale                                                          |   |           | 146    |   |   |   | 382    |    |   |   | 316     |   |   |   | 440    |   |   |   | - |   |   |   | - |   |
| Depreciation and Amortization Expense                                                     |   |           | -      |   |   |   | -      |    |   |   | -       |   |   |   | 1      |   |   |   | - |   |   |   | - |   |
| Interest Expense                                                                          |   |           | 418    |   |   |   | -      |    |   |   | 252     |   |   |   | (341   | )      |   |   | 46 |   |   |   | 207 |   |
| Property, Plant and Equipment                                                             |   |           | (9     | )      |   |   | (7     | )       |   |   | (5      | )      |   |   | (5     | )      |   |   | (6 | ) |   |   | (4 | ) |
| Regulatory Assets (a)                                                                     |   |           | 648    |   |   |   | -      |    |   |   | 81      |   |   |   | -      |   |   |   | - |   |   |   | - |   |
| Regulatory Liabilities (a)                                                                |   |           | -      |   |   |   | -      |    |   |   | -       |   |   |   | -      |   |   |   | - |   |   |   | - |   |
| Balance in AOCI as of March 31, 2010                                            |   | $              | (8,939 | )      |   | $      | (1,407 | )       |   | $      | (10,680 | )      |   | $      | 10,289 |   |   | $      | (483 | ) |   | $ | (4,847 | ) |

|                        |                                                                                                                                                                           |
|-----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     (a) | Represents realized and unrealized gains and losses subject to regulatory accounting treatment recorded as either current or non-current within the balance sheet.   |

| Total Accumulated Other Comprehensive Income (Loss) Activity for Cash Flow Hedges         |           |
|-------------------------------------------------------------------------------------------|----------------|
| For the Three Months Ended March 31, 2009                                                 |           |
|                                                                                      |           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                      | APCo           |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |   |
|                                                                                      | (in thousands) |   |
| Commodity Contracts                                                                       |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance in AOCI as of January 1, 2009                                                     |           | $ | 2,726 |   |   | $ | 1,531 |   |   | $ | 1,482 |   |   | $ | 1,898 |   |   | $ | - |   |   | $ | - |   |
| Changes in Fair Value Recognized in AOCI                                                  |           |   | 380 |   |   |   | 118 |   |   |   | 113 |   |   |   | 136 |   |   |   | (24 | ) |   |   | (21 | ) |
| Amount of (Gain) or Loss Reclassified from AOCI to Income Statement/within Balance Sheet: |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Electric Generation, Transmission and Distribution Revenues                               |           |   | (251 | ) |   |   | (613 | ) |   |   | (504 | ) |   |   | (759 | ) |   |   | - |   |   |   | - |   |
| Purchased Electricity for Resale                                                          |           |   | 462 |   |   |   | 1,126 |   |   |   | 926 |   |   |   | 1,394 |   |   |   | - |   |   |   | - |   |
| Regulatory Assets                                                                         |           |   | 1,639 |   |   |   | - |   |   |   | 163 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Regulatory Liabilities                                                                    |           |   | (890 | ) |   |   | - |   |   |   | (89 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Balance in AOCI as of March 31, 2009                                                      |           | $ | 4,066 |   |   | $ | 2,162 |   |   | $ | 2,091 |   |   | $ | 2,669 |   |   | $ | (24 | ) |   | $ | (21 | ) |

|                                                                                      |   | APCo           |   |   | CSPCo  |   |   | I&M |   |   | OPCo    |   |   | PSO    |   |   | SWEPCo |   |
|-------------------------------------------------------------------------------------------|--------|----------------|--------|--------|--------|--------|--------|---------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                      |   | (in thousands) |   |
| Interest Rate and Foreign Currency Contracts                                              |   |           |   |   |   |   |   |    |   |   |    |   |   |   |   |   |   |   |
| Balance in AOCI as of January 1, 2009                                                     |   | $              | (8,118 | )      |   | $      | -      |    |   | $      | (10,521 | )      |   | $      | 1,752  |   |   | $      | (704 | ) |   | $ | (5,924 | ) |
| Changes in Fair Value Recognized in AOCI                                                  |   |           | -      |   |   |   | -      |    |   |   | -       |   |   |   | 263    |   |   |   | - |   |   |   | (91 | ) |
| Amount of (Gain) or Loss Reclassified from AOCI to Income Statement/within Balance Sheet: |   |           |   |   |   |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and Amortization Expense                                                     |   |           | -      |   |   |   | -      |    |   |   | (2      | )      |   |   | 1      |   |   |   | - |   |   |   | - |   |
| Interest Expense                                                                          |   |           | 416    |   |   |   | -      |    |   |   | 252     |   |   |   | 23     |   |   |   | 46 |   |   |   | 207 |   |
| Balance in AOCI as of March 31, 2009                                                      |   | $              | (7,702 | )      |   | $      | -      |    |   | $      | (10,271 | )      |   | $      | 2,039  |   |   | $      | (658 | ) |   | $ | (5,808 | ) |

|                                                                                      |   | APCo           |   |   | CSPCo  |   |   | I&M |   |   | OPCo   |   |   | PSO    |   |   | SWEPCo |   |
|-------------------------------------------------------------------------------------------|--------|----------------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                      |   | (in thousands) |   |
| TOTAL Contracts                                                                           |   |           |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |
| Balance in AOCI as of January 1, 2009                                                     |   | $              | (5,392 | )      |   | $      | 1,531  |    |   | $      | (9,039 | )      |   | $      | 3,650  |   |   | $      | (704 | ) |   | $ | (5,924 | ) |
| Changes in Fair Value Recognized in AOCI                                                  |   |           | 380    |   |   |   | 118    |    |   |   | 113    |   |   |   | 399    |   |   |   | (24 | ) |   |   | (112 | ) |
| Amount of (Gain) or Loss Reclassified from AOCI to Income Statement/within Balance Sheet: |   |           |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Electric Generation, Transmission and Distribution Revenues                               |   |           | (251   | )      |   |   | (613   | )       |   |   | (504   | )      |   |   | (759   | )      |   |   | - |   |   |   | - |   |
| Purchased Electricity for Resale                                                          |   |           | 462    |   |   |   | 1,126  |    |   |   | 926    |   |   |   | 1,394  |   |   |   | - |   |   |   | - |   |
| Depreciation and Amortization Expense                                                     |   |           | -      |   |   |   | -      |    |   |   | (2     | )      |   |   | 1      |   |   |   | - |   |   |   | - |   |
| Interest Expense                                                                          |   |           | 416    |   |   |   | -      |    |   |   | 252    |   |   |   | 23     |   |   |   | 46 |   |   |   | 207 |   |
| Regulatory Assets                                                                         |   |           | 1,639  |   |   |   | -      |    |   |   | 163    |   |   |   | -      |   |   |   | - |   |   |   | - |   |
| Regulatory Liabilities                                                                    |   |           | (890   | )      |   |   | -      |    |   |   | (89    | )      |   |   | -      |   |   |   | - |   |   |   | - |   |
| Balance in AOCI as of March 31, 2009                                                      |   | $              | (3,636 | )      |   | $      | 2,162  |    |   | $      | (8,180 | )      |   | $      | 4,708  |   |   | $      | (682 | ) |   | $ | (5,829 | ) |

|    |   | Hedging Assets (a) |   | Hedging Liabilities (a) |   | AOCI Gain (Loss) Net of Tax |   |
|---------|--------|--------------------|--------|-------------------------|--------|-----------------------------|--------|
|    |   |               |   | Interest Rate           |   |                        |   | Interest Rate |   |   |   | Interest Rate |   |
|    |   |               |   | and Foreign             |   |                        |   | and Foreign |   |   |   | and Foreign |   |
| Company |   | Commodity          |   | Currency                |   | Commodity                   |   | Currency |   | Commodity |   | Currency |   |
|    |   | (in thousands)     |   |
| APCo    |   |               | $      | 672                     |   |                        | $      | 207 |   |   | $ | (4,604 | ) |   | $ | (908 | ) |   | $ | (2,451 | ) |   | $ | (6,488 | ) |
| CSPCo   |   |               |   | 345                     |   |                        |   | - |   |   |   | (2,604 | ) |   |   | - |   |   |   | (1,407 | ) |   |   | - |   |
| I&M |   |               |   | 362                     |   |                        |   | - |   |   |   | (2,627 | ) |   |   | - |   |   |   | (1,418 | ) |   |   | (9,262 | ) |
| OPCo    |   |               |   | 463                     |   |                        |   | - |   |   |   | (2,999 | ) |   |   | - |   |   |   | (1,543 | ) |   |   | 11,832 |   |
| PSO     |   |               |   | 165                     |   |                        |   | - |   |   |   | (182 | ) |   |   | - |   |   |   | (8 | ) |   |   | (475 | ) |
| SWEPCo  |   |               |   | 151                     |   |                        |   | 3 |   |   |   | (4 | ) |   |   | (90 | ) |   |   | 100 |   |   |   | (4,947 | ) |

|    |   | Expected to be Reclassified to |   |          |   |
|---------|--------|--------------------------------|--------|---------------|--------|
|    |   | Net Income During the Next     |   |          |   |
|    |   | Twelve Months                  |   |          |   |
|    |   |                           |   |          |   | Maximum Term for |   |
|    |   |                           |   | Interest Rate |   | Exposure to |   |
|    |   |                           |   | and Foreign   |   | Variability of Future |   |
| Company |   | Commodity                      |   | Currency      |   | Cash Flows |   |
|    |   | (in thousands)                 |   | (in months)   |   |
| APCo    |   |                           | $      | (2,045        | )      |   | $ | (1,223 | ) |   |   | 21 |   |
| CSPCo   |   |                           |   | (1,177        | )      |   |   | - |   |   |   | 21 |   |
| I&M |   |                           |   | (1,190        | )      |   |   | (1,007 | ) |   |   | 21 |   |
| OPCo    |   |                           |   | (1,278        | )      |   |   | 1,359 |   |   |   | 21 |   |
| PSO     |   |                           |   | (5            | )      |   |   | (87 | ) |   |   | 21 |   |
| SWEPCo  |   |                           |   | 102           |   |   |   | (829 | ) |   |   | 32 |   |

|    |   | Hedging Assets (a) |   | Hedging Liabilities (a) |   | AOCI Gain (Loss) Net of Tax |   |
|---------|--------|--------------------|--------|-------------------------|--------|-----------------------------|--------|
|    |   |               |   | Interest Rate           |   |                        |   | Interest Rate |   |   |   | Interest Rate |   |
|    |   |               |   | and Foreign             |   |                        |   | and Foreign |   |   |   | and Foreign |   |
| Company |   | Commodity          |   | Currency                |   | Commodity                   |   | Currency |   | Commodity |   | Currency |   |
|    |   | (in thousands)     |   |
| APCo    |   |               | $      | 1,999                   |   |                        | $      | - |   |   | $ | (3,542 | ) |   | $ | - |   |   | $ | (743 | ) |   | $ | (6,450 | ) |
| CSPCo   |   |               |   | 984                     |   |                        |   | - |   |   |   | (1,794 | ) |   |   | - |   |   |   | (376 | ) |   |   | - |   |
| I&M |   |               |   | 1,011                   |   |                        |   | - |   |   |   | (1,809 | ) |   |   | - |   |   |   | (382 | ) |   |   | (9,514 | ) |
| OPCo    |   |               |   | 1,242                   |   |                        |   | - |   |   |   | (2,088 | ) |   |   | - |   |   |   | (366 | ) |   |   | 12,172 |   |
| PSO     |   |               |   | 178                     |   |                        |   | - |   |   |   | (300 | ) |   |   | - |   |   |   | (78 | ) |   |   | (521 | ) |
| SWEPCo  |   |               |   | 168                     |   |                        |   | 5 |   |   |   | - |   |   |   | (46 | ) |   |   | 112 |   |   |   | (5,047 | ) |

| Expected to be Reclassified to |
|--------------------------------|
| Net Income During the Next     |
| Twelve Months                  |
|                           |
|                           |   |   |   |   |
|                           |   |   |   | Interest Rate |
|                           |   |   |   | and Foreign |
| Company                        |   | Commodity |   | Currency |
|                           |   | (in thousands) |
| APCo                           |   |   | $ | (691 | ) |   | $ | (1,301 | ) |
| CSPCo                          |   |   |   | (349 | ) |   |   | - |   |
| I&M                        |   |   |   | (358 | ) |   |   | (1,007 | ) |
| OPCo                           |   |   |   | (335 | ) |   |   | 1,359 |   |
| PSO                            |   |   |   | (79 | ) |   |   | (114 | ) |
| SWEPCo                         |   |   |   | 111 |   |   |   | (829 | ) |

| (a) | Hedging Assets and Hedging Liabilities are included in Risk Management Assets and Liabilities on the Condensed Balance Sheets. |
|-----|--------------------------------------------------------------------------------------------------------------------------------|

|    |   | March 31, 2010 |
|---------|--------|----------------|
|    |   |           |   |   |   |   |
|    |   | Aggregate      |   | Amount of Collateral the |   | Amount |
|    |   | Fair Value of  |   | Registrant Subsidiaries |   | Attributable to |
|    |   | Derivative     |   | Would Have Been |   | RTO and ISO |
| Company |   | Contracts      |   | Required to Post |   | Activities |
|    |   |           | (in thousands) |
| APCo    |   | $              |                   2,487 |   | $ |                                      7,362 |   | $ |                    7,362 |
| CSPCo   |   |           |                   1,407 |   |   |                                      4,165 |   |   |                    4,165 |
| I&M |   |           |                   1,419 |   |   |                                      4,201 |   |   |                    4,201 |
| OPCo    |   |           |                   1,619 |   |   |                                      4,793 |   |   |                    4,793 |
| PSO     |   |           |                      652 |   |   |                                      3,072 |   |   |                    2,420 |
| SWEPCo  |   |           |                      775 |   |   |                                      3,653 |   |   |                    2,878 |

|    |   | December 31, 2009 |
|---------|--------|-------------------|
|    |   |              |   |   |   |   |
|    |   | Aggregate         |   | Amount of Collateral the |   | Amount |
|    |   | Fair Value of     |   | Registrant Subsidiaries |   | Attributable to |
|    |   | Derivative        |   | Would Have Been |   | RTO and ISO |
| Company |   | Contracts         |   | Required to Post |   | Activities |
|    |   |              | (in thousands) |
| APCo    |   | $                 | 2,229  |   | $ | 8,433  |   | $ | 7,947  |
| CSPCo   |   |              | 1,129  |   |   | 4,272  |   |   | 4,026  |
| I&M |   |              | 1,139  |   |   | 4,309  |   |   | 4,060  |
| OPCo    |   |              | 1,315  |   |   | 4,975  |   |   | 4,688  |
| PSO     |   |              | 689  |   |   | 2,772  |   |   | 2,083  |
| SWEPCo  |   |              | 819  |   |   | 3,297  |   |   | 2,477  |

|    |   | March 31, 2010       |           |
|---------|--------|----------------------|----------------|
|    |   |                 |           |   |   |   |   |
|    |   | Liabilities of       |           |   |   | Additional |   |
|    |   | Contracts with Cross |           |   |   | Settlement Liability |   |
|    |   | Default Provisions   |           |   |   | if Cross Default |   |
|    |   | Prior to Contractual |           | Amount of Cash |   | Provision is |   |
| Company |   | Netting Arrangements |           | Collateral Posted |   | Triggered |   |
|    |   |                 | (in thousands) |   |
| APCo    |   |                 | $              | 210,308 |   |   | $ | 12,031 |   |   | $ | 51,454 |   |
| CSPCo   |   |                 |           | 118,468 |   |   |   | 6,806 |   |   |   | 28,714 |   |
| I&M |   |                 |           | 119,474 |   |   |   | 6,864 |   |   |   | 28,959 |   |
| OPCo    |   |                 |           | 136,386 |   |   |   | 7,833 |   |   |   | 33,045 |   |
| PSO     |   |                 |           | 40 |   |   |   | - |   |   |   | - |   |
| SWEPCo  |   |                 |           | 158 |   |   |   | - |   |   |   | 86 |   |

|    |   | December 31, 2009    |
|---------|--------|----------------------|
|    |   |                 |   |   |   |   |   |
|    |   | Liabilities of       |   |   |   | Additional |   |
|    |   | Contracts with Cross |   |   |   | Settlement Liability |   |
|    |   | Default Provisions   |   |   |   | if Cross Default |   |
|    |   | Prior to Contractual |   | Amount of Cash |   | Provision is |   |
| Company |   | Netting Arrangements |   | Collateral Posted |   | Triggered |   |
|    |   |                 | (in thousands) |   |
| APCo    |   |                 | $ | 154,924 |   |   | $ | 3,115 |   |   | $ | 33,186 |   |
| CSPCo   |   |                 |   | 78,489 |   |   |   | 1,578 |   |   |   | 16,813 |   |
| I&M |   |                 |   | 79,158 |   |   |   | 1,592 |   |   |   | 16,955 |   |
| OPCo    |   |                 |   | 91,430 |   |   |   | 1,838 |   |   |   | 19,615 |   |
| PSO     |   |                 |   | 40 |   |   |   | - |   |   |   | 40 |   |
| SWEPCo  |   |                 |   | 139 |   |   |   | - |   |   |   | 93 |   |

| 9. | FAIR VALUE MEASUREMENTS |
|----|-------------------------|

|                            |   | Type of Fixed Income Security |
|---------------------------------|--------|-------------------------------|
|                            |   | United States                 |   |   |   | State and Local |
| Type of Input                   |   | Government                    |   | Corporate Debt |   | Government |
|                            |   |                          |   |   |   |   |
| Benchmark Yields                |   | X                             |   | X |   | X |
| Broker Quotes                   |   | X                             |   | X |   | X |
| Discount Margins                |   | X                             |   | X |   |   |
| Treasury Market Update          |   | X                             |   |   |   |   |
| Base Spread                     |   | X                             |   | X |   | X |
| Corporate Actions               |   |                          |   | X |   |   |
| Ratings Agency Updates          |   |                          |   | X |   | X |
| Prepayment Schedule and History |   |                          |   |   |   | X |
| Yield Adjustments               |   | X                             |   |   |   |   |

|    |   | March 31, 2010 |      |   | December 31, 2009 |   |
|---------|--------|----------------|-----------|--------|-------------------|--------|
| Company |   | Book Value     |      |   | Fair Value        |   |   | Book Value |   |   | Fair Value |   |
|    |   | (in thousands) |      |
| APCo    |   | $              | 3,411,244 |   |              | $      | 3,651,615 |   |   | $ | 3,477,306 |   |   | $ | 3,699,373 |   |
| CSPCo   |   |           | 1,588,592 |   |              |   | 1,680,540 |   |   |   | 1,536,393 |   |   |   | 1,616,857 |   |
| I&M |   |           | 2,053,090 |   |              |   | 2,185,441 |   |   |   | 2,077,906 |   |   |   | 2,192,854 |   |
| OPCo    |   |           | 3,329,109 |   |              |   | 3,495,805 |   |   |   | 3,242,505 |   |   |   | 3,380,084 |   |
| PSO     |   |           | 968,808   |   |              |   | 1,020,923 |   |   |   | 968,121 |   |   |   | 1,007,183 |   |
| SWEPCo  |   |           | 1,769,331 |   |              |   | 1,850,116 |   |   |   | 1,474,153 |   |   |   | 1,554,165 |   |

| · | Acceptable investments (rated investment grade or above when purchased).            |
|--------|-------------------------------------------------------------------------------------|
| · | Maximum percentage invested in a specific type of investment.                       |
| · | Prohibition of investment in obligations of AEP or its affiliates.                  |
| · | Withdrawals permitted only for payment of decommissioning costs and trust expenses. |
| · | Target asset allocation is 50% fixed income and 50% equity securities.              |

|                                               | March 31, 2010 |   | December 31, 2009 |   |
|----------------------------------------------------|----------------|--------|-------------------|--------|
|                                               | Estimated      |   | Gross             |   | Other-Than- |   | Estimated |   | Gross |   | Other-Than- |   |
|                                               | Fair           |   | Unrealized        |   | Temporary |   | Fair |   | Unrealized |   | Temporary |   |
|                                               | Value          |   | Gains             |   | Impairments |   | Value |   | Gains |   | Impairments |   |
|                                               | (in thousands) |   |
| Cash and Cash Equivalents                          |           | $      | 15,683            |   |   | $ | - |   |   | $ | - |   |   | $ | 14,412 |   |   | $ | - |   |   | $ | - |   |
| Fixed Income Securities:                           |           |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| United States Government                           |           |   | 450,711           |   |   |   | 14,166 |   |   |   | (1,890 | ) |   |   | 400,565 |   |   |   | 12,708 |   |   |   | (3,472 | ) |
| Corporate Debt                                     |           |   | 58,688            |   |   |   | 4,913 |   |   |   | (2,115 | ) |   |   | 57,291 |   |   |   | 4,636 |   |   |   | (2,177 | ) |
| State and Local Government                         |           |   | 326,354           |   |   |   | 3,402 |   |   |   | 509 |   |   |   | 368,930 |   |   |   | 7,924 |   |   |   | 991 |   |
| Subtotal Fixed Income Securities         |           |   | 835,753           |   |   |   | 22,481 |   |   |   | (3,496 | ) |   |   | 826,786 |   |   |   | 25,268 |   |   |   | (4,658 | ) |
| Equity Securities – Domestic                 |           |   | 581,576           |   |   |   | 261,157 |   |   |   | (118,469 | ) |   |   | 550,721 |   |   |   | 234,437 |   |   |   | (119,379 | ) |
| Spent Nuclear Fuel and Decommissioning Trusts |           | $      | 1,433,012         |   |   | $ | 283,638 |   |   | $ | (121,965 | ) |   | $ | 1,391,919 |   |   | $ | 259,705 |   |   | $ | (124,037 | ) |

|               |   |             |   |           |   |                 |   | Gross Realized   |   |
|--------------------|--------|------------------|--------|----------------|--------|----------------------|--------|------------------|--------|
| Three Months Ended |   | Proceeds From    |   | Purchases      |   | Gross Realized Gains |   | Losses on        |   |
| March 31,          |   | Investment Sales |   | of Investments |   | on Investment Sales  |   | Investment Sales |   |
|               |   | (in thousands)   |   |
| 2010               |   |             | $      | 232,078        |   |                 | $      | 247,632          |   |   | $ | 5,328 |   |   | $ | 181 |   |
| 2009               |   |             |   | 158,086        |   |                 |   | 178,407          |   |   |   | 2,882 |   |   |   | 348 |   |

|                     | Fair Value     |   |
|--------------------------|----------------|--------|
|                     | of Debt        |   |
|                     | Securities     |   |
|                     | (in thousands) |   |
| Within 1 year            |           | $      | 15,542 |   |
| 1 year – 5 years   |           |   | 308,892 |   |
| 5 years – 10 years |           |   | 255,731 |   |
| After 10 years           |           |   | 255,588 |   |
| Total                    |           | $      | 835,753 |   |

| APCo                                        |           |        |    |   |          |   |   |         |   |
|---------------------------------------------|----------------|-------------|---------|--------|---------------|--------|--------|--------------|--------|
|                                        | Level 1        |        | Level 2 |   | Level 3       |   | Other  |         | Total  |
| Assets:                                     | (in thousands) |
|                                        |           |        |    |   |          |   |   |         |   |   |   |   |   |   |
| Risk Management Assets                      |           |        |    |   |          |   |   |         |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g) | $              | 3,734  |    | $      | 673,530  |   | $      | 28,138  |   | $ | (569,091) |   | $ | 136,311  |
| Cash Flow Hedges:                           |           |        |    |   |          |   |   |         |   |   |   |   |   |   |
| Commodity Hedges (a)                        |           | -      |    |   | 5,137    |   |   | -       |   |   | (4,465) |   |   | 672  |
| Interest Rate/Foreign Currency Hedges (a)   |           | -      |    |   | 207      |   |   | -       |   |   | -  |   |   | 207  |
| Dedesignated Risk Management Contracts (b)  |           | -      |    |   | -        |   |   | -       |   |   | 7,186  |   |   | 7,186  |
| Total Risk Management Assets                | $              | 3,734  |    | $      | 678,874  |   | $      | 28,138  |   | $ | (566,370) |   | $ | 144,376  |
|                                        |           |        |    |   |          |   |   |         |   |   |   |   |   |   |
| Liabilities:                                |           |        |    |   |          |   |   |         |   |   |   |   |   |   |
|                                        |           |        |    |   |          |   |   |         |   |   |   |   |   |   |
| Risk Management Liabilities                 |           |        |    |   |          |   |   |         |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g) | $              | 3,832  |    | $      | 655,568  |   | $      | 9,451   |   | $ | (610,636) |   | $ | 58,215  |
| Cash Flow Hedges:                           |           |        |    |   |          |   |   |         |   |   |   |   |   |   |
| Commodity Hedges (a)                        |           | -      |    |   | 9,069    |   |   | -       |   |   | (4,465) |   |   | 4,604  |
| Interest Rate/Foreign Currency Hedges (a)   |           | -      |    |   | 908      |   |   | -       |   |   | -  |   |   | 908  |
| DETM Assignment (c)                         |           | -      |    |   | -        |   |   | -       |   |   | 1,822  |   |   | 1,822  |
| Total Risk Management Liabilities           | $              | 3,832  |    | $      | 665,545  |   | $      | 9,451   |   | $ | (613,279) |   | $ | 65,549  |

| APCo                                       |           |        |    |   |          |   |   |         |   |
|--------------------------------------------|----------------|-------------|---------|--------|---------------|--------|--------|--------------|--------|
|                                       | Level 1        |        | Level 2 |   | Level 3       |   | Other  |         | Total  |
| Assets:                                    | (in thousands) |
|                                       |           |        |    |   |          |   |   |         |   |   |   |   |   |   |
| Other Cash Deposits (d)                    | $              | 421    |    | $      | -        |   | $      | -       |   | $ | 51  |   | $ | 472  |
|                                       |           |        |    |   |          |   |   |         |   |   |   |   |   |   |
| Risk Management Assets                     |           |        |    |   |          |   |   |         |   |   |   |   |   |   |   |
| Risk Management Contracts (a)              |           | 2,344  |    |   | 449,406  |   |   | 12,866  |   |   | (360,248) |   |   | 104,368  |
| Cash Flow and Fair Value Hedges (a)        |           | -      |    |   | 3,620    |   |   | -       |   |   | (1,621) |   |   | 1,999  |
| Dedesignated Risk Management Contracts (b) |           | -      |    |   | -        |   |   | -       |   |   | 8,730  |   |   | 8,730  |
| Total Risk Management Assets               |           | 2,344  |    |   | 453,026  |   |   | 12,866  |   |   | (353,139) |   |   | 115,097  |
|                                       |           |        |    |   |          |   |   |         |   |   |   |   |   |   |
| Total Assets                               | $              | 2,765  |    | $      | 453,026  |   | $      | 12,866  |   | $ | (353,088) |   | $ | 115,569  |
|                                       |           |        |    |   |          |   |   |         |   |   |   |   |   |   |
| Liabilities:                               |           |        |    |   |          |   |   |         |   |   |   |   |   |   |
|                                       |           |        |    |   |          |   |   |         |   |   |   |   |   |   |
| Risk Management Liabilities                |           |        |    |   |          |   |   |         |   |   |   |   |   |   |   |
| Risk Management Contracts (a)              | $              | 2,648  |    | $      | 422,063  |   | $      | 3,438   |   | $ | (388,265) |   | $ | 39,884  |
| Cash Flow and Fair Value Hedges (a)        |           | -      |    |   | 5,163    |   |   | -       |   |   | (1,621) |   |   | 3,542  |
| DETM Assignment (c)                        |           | -      |    |   | -        |   |   | -       |   |   | 2,730  |   |   | 2,730  |
| Total Risk Management Liabilities          | $              | 2,648  |    | $      | 427,226  |   | $      | 3,438   |   | $ | (387,156) |   | $ | 46,156  |

| CSPCo                                       |           |        |    |   |          |   |   |         |   |
|---------------------------------------------|----------------|-------------|---------|--------|---------------|--------|--------|--------------|--------|
|                                        | Level 1        |        | Level 2 |   | Level 3       |   | Other  |         | Total  |
| Assets:                                     | (in thousands) |
|                                        |           |        |    |   |          |   |   |         |   |   |   |   |   |   |
| Risk Management Assets                      |           |        |    |   |          |   |   |         |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g) | $              | 2,113  |    | $      | 382,034  |   | $      | 15,918  |   | $ | (322,850) |   | $ | 77,215  |
| Cash Flow Hedges:                           |           |        |    |   |          |   |   |         |   |   |   |   |   |   |
| Commodity Hedges (a)                        |           | -      |    |   | 2,870    |   |   | -       |   |   | (2,525) |   |   | 345  |
| Dedesignated Risk Management Contracts (b)  |           | -      |    |   | -        |   |   | -       |   |   | 4,066  |   |   | 4,066  |
| Total Risk Management Assets                | $              | 2,113  |    | $      | 384,904  |   | $      | 15,918  |   | $ | (321,309) |   | $ | 81,626  |
|                                        |           |        |    |   |          |   |   |         |   |   |   |   |   |   |
| Liabilities:                                |           |        |    |   |          |   |   |         |   |   |   |   |   |   |
|                                        |           |        |    |   |          |   |   |         |   |   |   |   |   |   |
| Risk Management Liabilities                 |           |        |    |   |          |   |   |         |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g) | $              | 2,168  |    | $      | 371,835  |   | $      | 5,348   |   | $ | (346,379) |   | $ | 32,972  |
| Cash Flow Hedges:                           |           |        |    |   |          |   |   |         |   |   |   |   |   |   |
| Commodity Hedges (a)                        |           | -      |    |   | 5,129    |   |   | -       |   |   | (2,525) |   |   | 2,604  |
| DETM Assignment (c)                         |           | -      |    |   | -        |   |   | -       |   |   | 1,031  |   |   | 1,031  |
| Total Risk Management Liabilities           | $              | 2,168  |    | $      | 376,964  |   | $      | 5,348   |   | $ | (347,873) |   | $ | 36,607  |

| CSPCo                                      |           |         |    |   |          |   |   |        |   |
|--------------------------------------------|----------------|--------------|---------|--------|---------------|--------|--------|-------------|--------|
|                                       | Level 1        |         | Level 2 |   | Level 3       |   | Other  |        | Total  |
| Assets:                                    | (in thousands) |
|                                       |           |         |    |   |          |   |   |        |   |   |   |   |   |   |
| Other Cash Deposits (d)                    | $              | 16,129  |    | $      | -        |   | $      | -      |   | $ | 21  |   | $ | 16,150  |
|                                       |           |         |    |   |          |   |   |        |   |   |   |   |   |   |
| Risk Management Assets                     |           |         |    |   |          |   |   |        |   |   |   |   |   |   |   |
| Risk Management Contracts (a)              |           | 1,188   |    |   | 227,150  |   |   | 6,518  |   |   | (182,038) |   |   | 52,818  |
| Cash Flow and Fair Value Hedges (a)        |           | -       |    |   | 1,805    |   |   | -      |   |   | (821) |   |   | 984  |
| Dedesignated Risk Management Contracts (b) |           | -       |    |   | -        |   |   | -      |   |   | 4,423  |   |   | 4,423  |
| Total Risk Management Assets               |           | 1,188   |    |   | 228,955  |   |   | 6,518  |   |   | (178,436) |   |   | 58,225  |
|                                       |           |         |    |   |          |   |   |        |   |   |   |   |   |   |
| Total Assets                               | $              | 17,317  |    | $      | 228,955  |   | $      | 6,518  |   | $ | (178,415) |   | $ | 74,375  |
|                                       |           |         |    |   |          |   |   |        |   |   |   |   |   |   |
| Liabilities:                               |           |         |    |   |          |   |   |        |   |   |   |   |   |   |
|                                       |           |         |    |   |          |   |   |        |   |   |   |   |   |   |
| Risk Management Liabilities                |           |         |    |   |          |   |   |        |   |   |   |   |   |   |   |
| Risk Management Contracts (a)              | $              | 1,342   |    | $      | 213,330  |   | $      | 1,742  |   | $ | (196,226) |   | $ | 20,188  |
| Cash Flow and Fair Value Hedges (a)        |           | -       |    |   | 2,615    |   |   | -      |   |   | (821) |   |   | 1,794  |
| DETM Assignment (c)                        |           | -       |    |   | -        |   |   | -      |   |   | 1,383  |   |   | 1,383  |
| Total Risk Management Liabilities          | $              | 1,342   |    | $      | 215,945  |   | $      | 1,742  |   | $ | (195,664) |   | $ | 23,365  |

| I&M                                            |           |          |    |   |            |   |   |         |   |
|----------------------------------------------------|----------------|---------------|---------|--------|-----------------|--------|--------|--------------|--------|
|                                               | Level 1        |          | Level 2 |   | Level 3         |   | Other  |         | Total  |
| Assets:                                            | (in thousands) |
|                                               |           |          |    |   |            |   |   |         |   |   |   |   |   |   |
| Risk Management Assets                             |           |          |    |   |            |   |   |         |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g)        | $              | 2,131    |    | $      | 393,603    |   | $      | 16,054  |   | $ | (320,892) |   | $ | 90,896  |
| Cash Flow Hedges:                                  |           |          |    |   |            |   |   |         |   |   |   |   |   |   |
| Commodity Hedges (a)                               |           | -        |    |   | 2,908      |   |   | -       |   |   | (2,546) |   |   | 362  |
| Dedesignated Risk Management Contracts (b)         |           | -        |    |   | -          |   |   | -       |   |   | 4,100  |   |   | 4,100  |
| Total Risk Management Assets                       |           | 2,131    |    |   | 396,511    |   |   | 16,054  |   |   | (319,338) |   |   | 95,358  |
|                                               |           |          |    |   |            |   |   |         |   |   |   |   |   |   |
| Spent Nuclear Fuel and Decommissioning Trusts      |           |          |    |   |            |   |   |         |   |   |   |   |   |   |   |
| Cash and Cash Equivalents (e)                      |           | -        |    |   | 6,057      |   |   | -       |   |   | 9,626  |   |   | 15,683  |
| Fixed Income Securities:                           |           |          |    |   |            |   |   |         |   |   |   |   |   |   |
| United States Government                           |           | -        |    |   | 450,711    |   |   | -       |   |   | -  |   |   | 450,711  |
| Corporate Debt                                     |           | -        |    |   | 58,688     |   |   | -       |   |   | -  |   |   | 58,688  |
| State and Local Government                         |           | -        |    |   | 326,354    |   |   | -       |   |   | -  |   |   | 326,354  |
| Subtotal Fixed Income Securities         |           | -        |    |   | 835,753    |   |   | -       |   |   | -  |   |   | 835,753  |
| Equity Securities – Domestic (f)             |           | 581,576  |    |   | -          |   |   | -       |   |   | -  |   |   | 581,576  |
| TotalSpent Nuclear Fuel and Decommissioning Trusts |           | 581,576  |    |   | 841,810    |   |   | -       |   |   | 9,626  |   |   | 1,433,012  |
|                                               |           |          |    |   |            |   |   |         |   |   |   |   |   |   |
| Total Assets                                       | $              | 583,707  |    | $      | 1,238,321  |   | $      | 16,054  |   | $ | (309,712) |   | $ | 1,528,370  |
|                                               |           |          |    |   |            |   |   |         |   |   |   |   |   |   |
| Liabilities:                                       |           |          |    |   |            |   |   |         |   |   |   |   |   |   |
|                                               |           |          |    |   |            |   |   |         |   |   |   |   |   |   |
| Risk Management Liabilities                        |           |          |    |   |            |   |   |         |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g)        | $              | 2,186    |    | $      | 369,967    |   | $      | 5,392   |   | $ | (344,483) |   | $ | 33,062  |
| Cash Flow Hedges:                                  |           |          |    |   |            |   |   |         |   |   |   |   |   |   |
| Commodity Hedges (a)                               |           | -        |    |   | 5,173      |   |   | -       |   |   | (2,546) |   |   | 2,627  |
| DETM Assignment (c)                                |           | -        |    |   | -          |   |   | -       |   |   | 1,040  |   |   | 1,040  |
| Total Risk Management Liabilities                  | $              | 2,186    |    | $      | 375,140    |   | $      | 5,392   |   | $ | (345,989) |   | $ | 36,729  |

| I&M                                            |           |          |          |   |            |          |   |        |    |
|----------------------------------------------------|----------------|---------------|---------------|--------|-----------------|---------------|--------|-------------|---------|
|                                               | Level 1        |          | Level 2       |   | Level 3         |          | Other  |        | Total   |
| Assets:                                            | (in thousands) |
|                                               |           |          |          |   |            |          |   |        |    |   |   |   |   |   |
| Risk Management Assets                             |           |          |          |   |            |          |   |        |    |   |   |   |   |   |   |
| Risk Management Contracts (a)                      | $              | 1,198    |          | $      | 231,777    |          | $      | 6,571  |    | $ | (181,446) |   | $ | 58,100  |
| Cash Flow and Fair Value Hedges (a)                |           | -        |          |   | 1,839      |          |   | -      |    |   | (828) |   |   | 1,011  |
| Dedesignated Risk Management Contracts (b)         |           | -        |          |   | -          |          |   | -      |    |   | 4,461  |   |   | 4,461  |
| Total Risk Management Assets                       |           | 1,198    |          |   | 233,616    |          |   | 6,571  |    |   | (177,813) |   |   | 63,572  |
|                                               |           |          |          |   |            |          |   |        |    |   |   |   |   |   |
| Spent Nuclear Fuel and Decommissioning Trusts      |           |          |          |   |            |          |   |        |    |   |   |   |   |   |   |
| Cash and Cash Equivalents (e)                      |           | -        |          |   | 3,562      |          |   | -      |    |   | 10,850  |   |   | 14,412  |
| Fixed Income Securities:                      |           |          |          |   |            |          |   |        |    |   |   |   |   |   |
| United States Government                           |           | -        |          |   | 400,565    |          |   | -      |    |   | -  |   |   | 400,565  |
| Corporate Debt                                     |           | -        |          |   | 57,291     |          |   | -      |    |   | -  |   |   | 57,291  |
| State and Local Government                         |           | -        |          |   | 368,930    |          |   | -      |    |   | -  |   |   | 368,930  |
| Subtotal Fixed Income Securities         |           | -        |          |   | 826,786    |          |   | -      |    |   | -  |   |   | 826,786  |
| Equity Securities (f)                              |           | 550,721  |          |   | -          |          |   | -      |    |   | -  |   |   | 550,721  |
| TotalSpent Nuclear Fuel and Decommissioning Trusts |           |          | 550,721  |   |            | 830,348  |   |        | -  |   |   | 10,850  |   |   | 1,391,919  |
|                                               |           |          |          |   |            |          |   |        |    |   |   |   |   |   |
| Total Assets                                       | $              | 551,919  |          | $      | 1,063,964  |          | $      | 6,571  |    | $ | (166,963) |   | $ | 1,455,491  |
|                                               |           |          |          |   |            |          |   |        |    |   |   |   |   |   |
| Liabilities:                                       |           |          |          |   |            |          |   |        |    |   |   |   |   |   |
|                                               |           |          |          |   |            |          |   |        |    |   |   |   |   |   |
| Risk Management Liabilities                        |           |          |          |   |            |          |   |        |    |   |   |   |   |   |   |
| Risk Management Contracts (a)                      | $              | 1,353    |          | $      | 213,242    |          | $      | 1,755  |    | $ | (195,732) |   | $ | 20,618  |
| Cash Flow and Fair Value Hedges (a)                |           | -        |          |   | 2,637      |          |   | -      |    |   | (828) |   |   | 1,809  |
| DETM Assignment (c)                                |           | -        |          |   | -          |          |   | -      |    |   | 1,395  |   |   | 1,395  |
| Total Risk Management Liabilities                  | $              | 1,353    |          | $      | 215,879    |          | $      | 1,755  |    | $ | (195,165) |   | $ | 23,822  |

| OPCo                                        |                        |        |    |   |          |   |   |         |   |   |
|---------------------------------------------|-----------------------------|-------------|---------|--------|---------------|--------|--------|--------------|--------|--------|
|                                        | Level 1                     |        | Level 2 |   | Level 3       |   | Other  |         | Total  |   |
| Assets:                                     | (in thousands)              |        |
|                                        |                        |        |    |   |          |   |   |         |   |   |   |   |   |   |   |
| Other Cash Deposits (d)                     | $                           | 2,054  |    | $      | -        |   | $      | -       |   | $      | 1,229 |   | $ | 3,283 |   |
|                                        |                        |        |    |   |          |   |   |         |   |   |   |   |   |   |   |
| Risk Management Assets                      |                        |        |    |   |          |   |   |         |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g) |                        | 2,432  |    |   | 512,728  |   |   | 18,344  |   |   | (435,673) |   |   | 97,831  |   |
| Cash Flow Hedges:                           |                        |        |    |   |          |   |   |         |   |   |   |   |   |   |   |
| Commodity Hedges (a)                        |                        | -      |    |   | 3,370    |   |   | -       |   |   | (2,907) |   |   | 463  |   |
| Dedesignated Risk Management Contracts (b)  |                        | -      |    |   | -        |   |   | -       |   |   | 4,679  |   |   | 4,679  |   |
| Total Risk Management Assets                |                        | 2,432  |    |   | 516,098  |   |   | 18,344  |   |   | (433,901) |   |   | 102,973  |   |
|                                        |                        |        |    |   |          |   |   |         |   |   |   |   |   |   |   |
| Total Assets                                | $                           | 4,486  |    | $      | 516,098  |   | $      | 18,344  |   | $      | (432,672) |   | $ | 106,256  |   |
|                                        |                        |        |    |   |          |   |   |         |   |   |   |   |   |   |   |
| Liabilities:                                |                        |        |    |   |          |   |   |         |   |   |   |   |   |   |   |
|                                        |                        |        |    |   |          |   |   |         |   |   |   |   |   |   |   |
|                                        | Risk Management Liabilities |        |    |   |          |   |   |         |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g) | $                           | 2,495  |    | $      | 501,643  |   | $      | 6,164   |   | $      | (464,678) |   | $ | 45,624  |   |
| Cash Flow Hedges:                           |                        |        |    |   |          |   |   |         |   |   |   |   |   |   |   |
| Commodity Hedges (a)                        |                        | -      |    |   | 5,906    |   |   | -       |   |   | (2,907) |   |   | 2,999  |   |
| DETM Assignment (c)                         |                        | -      |    |   | -        |   |   | -       |   |   | 1,186  |   |   | 1,186  |   |
| Total Risk Management Liabilities           | $                           | 2,495  |    | $      | 507,549  |   | $      | 6,164   |   | $      | (466,399) |   | $ | 49,809  |   |

| OPCo                                       |           |        |    |   |          |   |   |        |   |
|--------------------------------------------|----------------|-------------|---------|--------|---------------|--------|--------|-------------|--------|
|                                       | Level 1        |        | Level 2 |   | Level 3       |   | Other  |        | Total  |
| Assets:                                    | (in thousands) |
|                                       |           |        |    |   |          |   |   |        |   |   |   |   |   |   |
| Other Cash Deposits (d)                    | $              | 1,075  |    | $      | -        |   | $      | -      |   | $ | 24  |   | $ | 1,099  |
|                                       |           |        |    |   |          |   |   |        |   |   |   |   |   |   |
| Risk Management Assets                     |           |        |    |   |          |   |   |        |   |   |   |   |   |   |   |
| Risk Management Contracts (a)              |           | 1,383  |    |   | 332,904  |   |   | 7,644  |   |   | (270,272) |   |   | 71,659  |
| Cash Flow and Fair Value Hedges (a)        |           | -      |    |   | 2,199    |   |   | -      |   |   | (957) |   |   | 1,242  |
| Dedesignated Risk Management Contracts (b) |           | -      |    |   | -        |   |   | -      |   |   | 5,150  |   |   | 5,150  |
| Total Risk Management Assets               |           | 1,383  |    |   | 335,103  |   |   | 7,644  |   |   | (266,079) |   |   | 78,051  |
|                                       |           |        |    |   |          |   |   |        |   |   |   |   |   |   |
| Total Assets                               | $              | 2,458  |    | $      | 335,103  |   | $      | 7,644  |   | $ | (266,055) |   | $ | 79,150  |
|                                       |           |        |    |   |          |   |   |        |   |   |   |   |   |   |
| Liabilities:                               |           |        |    |   |          |   |   |        |   |   |   |   |   |   |
|                                       |           |        |    |   |          |   |   |        |   |   |   |   |   |   |
| Risk Management Liabilities                |           |        |    |   |          |   |   |        |   |   |   |   |   |   |   |
| Risk Management Contracts (a)              | $              | 1,562  |    | $      | 317,114  |   | $      | 2,075  |   | $ | (287,549) |   | $ | 33,202  |
| Cash Flow and Fair Value Hedges (a)        |           | -      |    |   | 3,045    |   |   | -      |   |   | (957) |   |   | 2,088  |
| DETM Assignment (c)                        |           | -      |    |   | -        |   |   | -      |   |   | 1,611  |   |   | 1,611  |
| Total Risk Management Liabilities          | $              | 1,562  |    | $      | 320,159  |   | $      | 2,075  |   | $ | (286,895) |   | $ | 36,901  |

| PSO                                         |           |    |    |   |         |   |   |    |   |
|---------------------------------------------|----------------|---------|---------|--------|--------------|--------|--------|---------|--------|
|                                        | Level 1        |    | Level 2 |   | Level 3      |   | Other  |    | Total  |
| Assets:                                     | (in thousands) |
|                                        |           |    |    |   |         |   |   |    |   |   |   |   |   |   |
| Risk Management Assets                      |           |    |    |   |         |   |   |    |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g) | $              | -  |    | $      | 14,983  |   | $      | 4  |   | $ | (11,732) |   | $ | 3,255  |
| Cash Flow Hedges:                           |           |    |    |   |         |   |   |    |   |   |   |   |   |   |
| Commodity Hedges (a)                        |           | -  |    |   | 170     |   |   | -  |   |   | (5) |   |   | 165  |
| Total Risk Management Assets                | $              | -  |    | $      | 15,153  |   | $      | 4  |   | $ | (11,737) |   | $ | 3,420  |
|                                        |           |    |    |   |         |   |   |    |   |   |   |   |   |   |
| Liabilities:                                |           |    |    |   |         |   |   |    |   |   |   |   |   |   |
|                                        |           |    |    |   |         |   |   |    |   |   |   |   |   |   |
| Risk Management Liabilities                 |           |    |    |   |         |   |   |    |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g) | $              | -  |    | $      | 12,550  |   | $      | 2  |   | $ | (12,081) |   | $ | 471  |
| Cash Flow Hedges:                           |           |    |    |   |         |   |   |    |   |   |   |   |   |   |
| Commodity Hedges (a)                        |           | -  |    |   | 187     |   |   | -  |   |   | (5) |   |   | 182  |
| Total Risk Management Liabilities           | $              | -  |    | $      | 12,737  |   | $      | 2  |   | $ | (12,086) |   | $ | 653  |

| PSO                                 |           |    |    |   |         |   |   |     |   |
|-------------------------------------|----------------|---------|---------|--------|--------------|--------|--------|----------|--------|
|                                | Level 1        |    | Level 2 |   | Level 3      |   | Other  |     | Total  |
| Assets:                             | (in thousands) |
|                                |           |    |    |   |         |   |   |     |   |   |   |   |   |   |
| Risk Management Assets              |           |    |    |   |         |   |   |     |   |   |   |   |   |   |   |
| Risk Management Contracts (a)       | $              | -  |    | $      | 17,494  |   | $      | 14  |   | $ | (15,260) |   | $ | 2,248  |
| Cash Flow and Fair Value Hedges (a) |           | -  |    |   | 179     |   |   | -   |   |   | (1) |   |   | 178  |
| Total Risk Management Assets        | $              | -  |    | $      | 17,673  |   | $      | 14  |   | $ | (15,261) |   | $ | 2,426  |
|                                |           |    |    |   |         |   |   |     |   |   |   |   |   |   |
| Liabilities:                        |           |    |    |   |         |   |   |     |   |   |   |   |   |   |
|                                |           |    |    |   |         |   |   |     |   |   |   |   |   |   |
| Risk Management Liabilities         |           |    |    |   |         |   |   |     |   |   |   |   |   |   |   |
| Risk Management Contracts (a)       | $              | -  |    | $      | 17,865  |   | $      | 12  |   | $ | (15,454) |   | $ | 2,423  |
| Cash Flow and Fair Value Hedges (a) |           | -  |    |   | 301     |   |   | -   |   |   | (1) |   |   | 300  |
| Total Risk Management Liabilities   | $              | -  |    | $      | 18,166  |   | $      | 12  |   | $ | (15,455) |   | $ | 2,723  |

| SWEPCo                                      |           |    |    |   |         |   |   |    |   |
|---------------------------------------------|----------------|---------|---------|--------|--------------|--------|--------|---------|--------|
|                                        | Level 1        |    | Level 2 |   | Level 3      |   | Other  |    | Total  |
| Assets:                                     | (in thousands) |
|                                        |           |    |    |   |         |   |   |    |   |   |   |   |   |   |
| Risk Management Assets                      |           |    |    |   |         |   |   |    |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g) | $              | -  |    | $      | 21,234  |   | $      | 7  |   | $ | (19,096) |   | $ | 2,145  |
| Cash Flow Hedges:                           |           |    |    |   |         |   |   |    |   |   |   |   |   |   |
| Commodity Hedges (a)                        |           | -  |    |   | 157     |   |   | -  |   |   | (6) |   |   | 151  |
| Interest Rate/Foreign Currency Hedges (a)   |           | -  |    |   | 19      |   |   | -  |   |   | (16) |   |   | 3  |
| Total Risk Management Assets                | $              | -  |    | $      | 21,410  |   | $      | 7  |   | $ | (19,118) |   | $ | 2,299  |
|                                        |           |    |    |   |         |   |   |    |   |   |   |   |   |   |
| Liabilities:                                |           |    |    |   |         |   |   |    |   |   |   |   |   |   |
|                                        |           |    |    |   |         |   |   |    |   |   |   |   |   |   |
| Risk Management Liabilities                 |           |    |    |   |         |   |   |    |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g) | $              | -  |    | $      | 21,192  |   | $      | 3  |   | $ | (19,668) |   | $ | 1,527  |
| Cash Flow Hedges:                           |           |    |    |   |         |   |   |    |   |   |   |   |   |   |
| Commodity Hedges (a)                        |           | -  |    |   | 10      |   |   | -  |   |   | (6) |   |   | 4  |
| Interest Rate/Foreign Currency Hedges (a)   |           | -  |    |   | 106     |   |   | -  |   |   | (16) |   |   | 90  |
| Total Risk Management Liabilities           | $              | -  |    | $      | 21,308  |   | $      | 3  |   | $ | (19,690) |   | $ | 1,621  |

| SWEPCo                              |           |    |    |   |         |   |   |     |   |
|-------------------------------------|----------------|---------|---------|--------|--------------|--------|--------|----------|--------|
|                                | Level 1        |    | Level 2 |   | Level 3      |   | Other  |     | Total  |
| Assets:                             | (in thousands) |
|                                |           |    |    |   |         |   |   |     |   |   |   |   |   |   |
| Risk Management Assets              |           |    |    |   |         |   |   |     |   |   |   |   |   |   |   |
| Risk Management Contracts (a)       | $              | -  |    | $      | 26,945  |   | $      | 22  |   | $ | (24,007) |   | $ | 2,960  |
| Cash Flow and Fair Value Hedges (a) |           | -  |    |   | 216     |   |   | -   |   |   | (43) |   |   | 173  |
| Total Risk Management Assets        | $              | -  |    | $      | 27,161  |   | $      | 22  |   | $ | (24,050) |   | $ | 3,133  |
|                                |           |    |    |   |         |   |   |     |   |   |   |   |   |   |
| Liabilities:                        |           |    |    |   |         |   |   |     |   |   |   |   |   |   |
|                                |           |    |    |   |         |   |   |     |   |   |   |   |   |   |
| Risk Management Liabilities         |           |    |    |   |         |   |   |     |   |   |   |   |   |   |   |
| Risk Management Contracts (a)       | $              | -  |    | $      | 25,312  |   | $      | 19  |   | $ | (24,312) |   | $ | 1,019  |
| Cash Flow and Fair Value Hedges (a) |           | -  |    |   | 89      |   |   | -   |   |   | (43) |   |   | 46  |
| Total Risk Management Liabilities   | $              | -  |    | $      | 25,401  |   | $      | 19  |   | $ | (24,355) |   | $ | 1,065  |

| (a) | Amounts in “Other” column primarily represent counterparty netting of risk management and hedging contracts and associated cash collateral under the accounting guidance for “Derivatives and Hedging.”                                                                                                                                       |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Represents contracts that were originally MTM but were subsequently elected as normal under the accounting guidance for “Derivatives and Hedging.”  At the time of the normal election, the MTM value was frozen and no longer fair valued.  This MTM value will be amortized into revenues over the remaining life of the contracts. |
| (c) | See “Natural Gas Contracts with DETM” section of Note 15 in the 2009 Annual Report.                                                                                                                                                                                                                                                                       |
| (d) | Amounts in “Other” column primarily represent cash deposits with third parties.  Level 1 amounts primarily represent investments in money market funds.                                                                                                                                                                                         |
| (e) | Amounts in “Other” column primarily represent accrued interest receivables from financial institutions.  Level 2 amounts primarily represent investments in money market funds.                                                                                                                                                                 |
| (f) | Amounts represent publicly traded equity securities and equity-based mutual funds.                                                                                                                                                                                                                                                                                    |
| (g) | Substantially comprised of power contracts for APCo, CSPCo, I&M and OPCo and coal contracts for PSO and SWEPCo.                                                                                                                                                                                                                                                   |

| Three Months Ended March 31, 2010                                                                                                |   | APCo           |         | CSPCo  |   | I&M      |   | OPCo   |         | PSO    |   | SWEPCo       |
|----------------------------------------------------------------------------------------------------------------------------------|--------|----------------|--------------|--------|--------|--------------|--------|--------|--------------|--------|--------|--------------|
|                                                                                                                             |   | (in thousands) |
| Balance as of January 1, 2010                                                                                                    |   | $              | 9,428   |   | $      | 4,776   |   | $      | 4,816   |   | $      | 5,569   |   | $ | 2  |   | $ | 3  |
| Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)                                                   |   |           | 8,947   |   |   | 5,056   |   |   | 5,099   |   |   | 5,818   |   |   | -  |   |   | -  |
| Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (a) |   |           | -       |   |   | 6,122   |   |   | -       |   |   | 6,987   |   |   | -  |   |   | -  |
| Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income                                                    |   |           | -       |   |   | -       |   |   | -       |   |   | -       |   |   | -  |   |   | -  |
| Purchases, Issuances and Settlements (c)                                                                                         |   |           | (10,221)     |   |   | (5,743)      |   |   | (5,792)      |   |   | (6,612)      |   |   | -  |   |   | -  |
| Transfers into Level 3 (d) (h)                                                                                                   |   |           | 439     |   |   | 222     |   |   | 224     |   |   | 259     |   |   | -  |   |   | -  |
| Transfers out of Level 3 (e) (h)                                                                                                 |   |           | 269     |   |   | 137     |   |   | 138     |   |   | 159     |   |   | -  |   |   | -  |
| Changes in Fair Value Allocated to Regulated Jurisdictions (g)                                                                   |   |           | 9,825   |   |   | -       |   |   | 6,177   |   |   | -       |   |   | -  |   |   | 1  |
| Balance as of March 31, 2010                                                                                                     |   | $              | 18,687  |   | $      | 10,570  |   | $      | 10,662  |   | $      | 12,180  |   | $ | 2  |   | $ | 4  |

|                                                                                                                             |   | APCo           |         | CSPCo  |   | I&M     |   | OPCo   |        | PSO    |   | SWEPCo      |
|----------------------------------------------------------------------------------------------------------------------------------|--------|----------------|--------------|--------|--------|-------------|--------|--------|-------------|--------|--------|-------------|
| Three Months Ended March 31, 2009                                                                                                |   | (in thousands) |
| Balance as of January 1, 2009                                                                                                    |   | $              | 8,009   |   | $      | 4,497  |   | $      | 4,352  |   | $      | 5,563  |   | $ | (2) |   | $ | (3) |
| Realized (Gain) Loss Included in Net Income   (or Changes in Net Assets) (a)                                      |   |           | (3,898)      |   |   | (2,189)     |   |   | (2,118)     |   |   | (2,700)     |   |   | 3  |   |   | 5  |
| Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets) Relating to Assets Still Held at the Reporting Date (a) |   |           | -       |   |   | 3,264  |   |   | -      |   |   | 4,045  |   |   | -  |   |   | -  |
| Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income                                                    |   |           | -       |   |   | -      |   |   | -      |   |   | -      |   |   | -  |   |   | -  |
| Purchases, Issuances and Settlements                                                                                             |   |           | -       |   |   | -      |   |   | -      |   |   | -      |   |   | -  |   |   | -  |
| Transfers in and/or out of Level 3 (f)                                                                                           |   |           | (74)         |   |   | (42)        |   |   | (40)        |   |   | (52)        |   |   | -  |   |   | -  |
| Changes in Fair Value Allocated to Regulated Jurisdictions (g)                                                                   |   |           | 7,810   |   |   | 764    |   |   | 3,898  |   |   | 946    |   |   | -  |   |   | -  |
| Balance as of March 31, 2009                                                                                                     |   | $              | 11,847  |   | $      | 6,294  |   | $      | 6,092  |   | $      | 7,802  |   | $ | 1  |   | $ | 2  |

| (a) | Included in revenues on the Condensed Statements of Income.                                                                                                                                                                                                                                                |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Represents the change in fair value between the beginning of the reporting period and the settlement of the risk management commodity contract.                                                                                                                                                            |
| (c) | Represents the settlement of risk management commodity contracts for the reporting period.                                                                                                                                                                                                                 |
| (d) | Represents existing assets or liabilities that were previously categorized as Level 2.                                                                                                                                                                                                                     |
| (e) | Represents existing assets or liabilities that were previously categorized as Level 3.                                                                                                                                                                                                                     |
| (f) | Represents existing assets or liabilities that were either previously categorized as a higher level for which the inputs to the model became unobservable or assets and liabilities that were previously classified as level 3 for which the lowest significant input became observable during the period. |
| (g) | Relates to the net gains (losses) of those contracts that are not reflected on the Condensed Statements of Income.  These net gains (losses) are recorded as regulatory assets/liabilities.                                                                                                      |
| (h) | Transfers are recognized based on their value at the beginning of the reporting period that the transfer occurred.                                                                                                                                                                                         |

| 10. | INCOME TAXES |
|-----|--------------|

|    | Net Reduction  |        | Tax        |        |        |
|---------|----------------|-------------|------------|-------------|-------------|
|    | to Deferred    |        | Regulatory |        | Decrease in |
| Company |           | Tax Assets  |       | Assets, Net |        | Net Income |
|    | (in thousands) |
| APCo    | $              | 9,397  |       | $           | 8,831  |   | $ | 566  |
| CSPCo   |           | 4,386  |       |        | 2,970  |   |   | 1,416  |
| I&M |           | 7,212  |       |        | 6,528  |   |   | 684  |
| OPCo    |           | 8,385  |       |        | 4,020  |   |   | 4,365  |
| PSO     |           | 3,172  |       |        | 3,172  |   |   | -  |
| SWEPCo  |           | 3,412  |       |        | 3,412  |   |   | -  |

|                |   |                    |   | Principal      |          | Interest |       | Due    |
|---------------------|--------|-------------------------|--------|----------------|---------------|----------|------------|--------|
| Company             |   | Type of Debt            |   | Amount         |          | Rate     |       | Date   |
|                |   |                    |   | (in thousands) |          | (%)      |       |   |
| Issuances:          |   |                    |   |           |          |     |       |   |   |
| APCo                |   | Pollution Control Bonds |   | $              | 17,500   |     | 4.625      |   | 2021 |
| CSPCo               |   | Floating Rate Notes     |   |           | 150,000  |     | Variable   |   | 2012 |
| OPCo                |   | Pollution Control Bonds |   |           | 86,000   |     | 3.125      |   | 2043 |
| SWEPCo              |   | Senior Unsecured Notes  |   |           | 350,000  |     | 6.20       |   | 2040 |
|    SWEPCo |   | Pollution Control Bonds |   |           | 53,500   |     |  3.25 |   |  2015 |

|                                |   |                             |   | Principal      |          | Interest |           | Due    |
|-------------------------------------|--------|----------------------------------|--------|----------------|---------------|----------|----------------|--------|
| Company                             |   | Type of Debt                     |   | Amount Paid    |          | Rate     |           | Date   |
|                                |   |                             |   | (in thousands) |          | (%)      |           |   |
| Retirements and Principal Payments: |   |                             |   |           |          |     |           |   |   |
| APCo                                |   | Land Note                        |   | $              | 4        |     | 13.718         |   | 2026 |
| APCo                                |   | Notes Payable – Affiliated |   |           | 100,000  |     | 4.708          |   | 2010 |
| CSPCo                               |   | Notes Payable – Affiliated |   |           | 100,000  |     | 4.64           |   | 2010 |
| I&M                             |   | Notes Payable – Affiliated |   |           | 25,000   |     | 5.375          |   | 2010 |
| SWEPCo                              |   | Notes Payable – Affiliated |   |           | 50,000   |     | 4.45           |   | 2010 |
|    SWEPCo                 |   | Pollution Control Bonds          |   |           | 53,500   |     |  Variable |   |  2019 |

|    |   |           |          |       |   |          |   |       |          | Loans            |   |          |
|---------|--------|----------------|---------------|------------|--------|---------------|--------|------------|---------------|------------------|--------|---------------|
|    |   | Maximum        |          | Maximum    |   | Average       |   | Average    |          | (Borrowings)     |   | Authorized    |
|    |   | Borrowings     |          | Loans      |   | Borrowings    |   | Loans      |          | to/from Utility  |   | Short-Term    |
|    |   | from Utility   |          | to Utility |   | from Utility  |   | to Utility |          | Money Pool as of |   | Borrowing     |
| Company |   | Money Pool     |          | Money Pool |   | Money Pool    |   | Money Pool |          | March 31, 2010   |   | Limit         |
|    |   | (in thousands) |
| APCo    |   | $              | 379,016  |       | $      | -        |   | $          | 246,229  |             | $      | -        |   | $ | (347,425) |   | $ | 600,000  |
| CSPCo   |   |           | 134,592  |       |   | 37,818   |   |       | 32,368   |             |   | 14,303   |   |   | 37,818  |   |   | 350,000  |
| I&M |   |           | -        |       |   | 151,044  |   |       | -        |             |   | 101,121  |   |   | 85,186  |   |   | 500,000  |
| OPCo    |   |           | -        |       |   | 618,559  |   |       | -        |             |   | 470,254  |   |   | 617,299  |   |   | 600,000  |
| PSO     |   |           | 72,418   |       |   | 74,751   |   |       | 26,958   |             |   | 51,041   |   |   | (68,743) |   |   | 300,000  |
| SWEPCo  |   |           | 78,616   |       |   | 274,958  |   |       | 39,458   |             |   | 168,501  |   |   | 238,817  |   |   | 350,000  |

|                  |   | Three Months Ended March 31, |
|-----------------------|--------|------------------------------|
|                  |   | 2010                         |   | 2009 |
| Maximum Interest Rate |   | 0.34%                        |   | 2.28% |
| Minimum Interest Rate |   | 0.09%                        |   | 1.22% |

|    |   | Average Interest Rate for Funds |   |   | Average Interest Rate for Funds |
|---------|--------|---------------------------------|--------|--------|---------------------------------|
|    |   | Borrowed from                   |   |   | Loaned to                       |
|    |   | the Utility Money Pool for the  |   |   | the Utility Money Pool for the  |
|    |   | Three Months Ended March 31,    |   |   | Three Months Ended March 31,    |
|    |   | 2010                            |   | 2009   |                            |   | 2010 |   | 2009 |
| Company |   |                            |
| APCo    |   | 0.16%                           |   | 1.76%  |                            |   | -% |   | -% |
| CSPCo   |   | 0.18%                           |   | 1.62%  |                            |   | 0.14% |   | -% |
| I&M |   | -%                              |   | 1.86%  |                            |   | 0.16% |   | 1.76% |
| OPCo    |   | -%                              |   | 1.65%  |                            |   | 0.16% |   | -% |
| PSO     |   | 0.16%                           |   | 2.01%  |                            |   | 0.16% |   | 1.63% |
| SWEPCo  |   | 0.19%                           |   | 1.86%  |                            |   | 0.13% |   | 1.68% |

| Maximum        |         | Maximum    |   | Average      |   | Average    |         | Borrowings       |
|----------------|--------------|------------|--------|--------------|--------|------------|--------------|------------------|
| Borrowings     |         | Loans      |   | Borrowings   |   | Loans      |         | from Utility     |
| from Utility   |         | to Utility |   | from Utility |   | to Utility |         | Money Pool as of |
| Money Pool     |         | Money Pool |   | Money Pool   |   | Money Pool |         | March 31, 2010   |
| (in thousands) |
| $              | 17,886  |       | $      | -       |   | $          | 13,195  |             | $ | -  |   | $ | 13,060  |

|         |   | Maximum        |   | Minimum        |   | Maximum        |   | Minimum        |   | Average       |   | Average       |
|--------------|--------|----------------|--------|----------------|--------|----------------|--------|----------------|--------|---------------|--------|---------------|
|         |   | Interest Rates |   | Interest Rates |   | Interest Rates |   | Interest Rates |   | Interest Rate |   | Interest Rate |
|         |   | for Funds      |   | for Funds      |   | for Funds      |   | for Funds      |   | for Funds     |   | for Funds     |
| Three Months |   | Borrowed from  |   | Borrowed from  |   | Loaned to the  |   | Loaned to the  |   | Borrowed from |   | Loaned to the |
| Ended        |   | the Utility    |   | the Utility    |   | Utility Money  |   | Utility Money  |   | the Utility   |   | Utility Money |
| March 31,    |   | Money Pool     |   | Money Pool     |   | Pool           |   | Pool           |   | Money Pool    |   | Pool          |
| 2010         |   | 0.34%          |   | 0.09%          |   | -%             |   | -%             |   | 0.16%         |   | -%            |

|    |   |                              |   | March 31, 2010 |         | December 31,  2009 |
|---------|--------|-----------------------------------|--------|----------------|--------------|------------------------------|
|    |   |                              |   | Outstanding    |         | Interest                     |   | Outstanding |   | Interest |
| Company |   | Type of Debt                      |   | Amount         |         | Rate (b)                     |   | Amount |   | Rate (b) |
|    |   |                              |   | (in thousands) |         |                         |   |   | (in thousands) |   |   |   |
| SWEPCo  |   | Line of Credit – Sabine (a) |   | $              | 13,218  |                         |   | 2.12% |   | $ | 6,890  |   |   | 2.06% |

| (a) | Sabine Mining Company is a consolidated variable interest entity. |
|-----|-------------------------------------------------------------------|
| (b) | Weighted average rate.                                            |

| Company |   | Amount         |
|---------|--------|----------------|
|    |   | (in thousands) |
| APCo    |   | $              | 232,292  |
| I&M |   |           | 77,886  |
| OPCo    |   |           | 166,899  |

| Company |   | March 31, 2010 |    |   | December 31, 2009 |   |
|---------|--------|----------------|---------|--------|-------------------|--------|
|    |   | (in thousands) |    |
| APCo    |   | $              | 184,319 |   |              | $      | 143,938 |   |
| CSPCo   |   |           | 172,014 |   |              |   | 169,095 |   |
| I&M |   |           | 131,480 |   |              |   | 130,193 |   |
| OPCo    |   |           | 168,388 |   |              |   | 160,977 |   |
| PSO     |   |           | 71,675  |   |              |   | 73,518 |   |
| SWEPCo  |   |           | 107,259 |   |              |   | 117,297 |   |

|    |   | Three Months   |   |
|---------|--------|----------------|--------|
|    |   | Ended          |   |
| Company |   | March 31, 2010 |   |
|    |   | (in thousands) |   |
| APCo    |   |           | $      | 1,881 |   |
| CSPCo   |   |           |   | 2,908 |   |
| I&M |   |           |   | 1,787 |   |
| OPCo    |   |           |   | 2,700 |   |
| PSO     |   |           |   | 1,384 |   |
| SWEPCo  |   |           |   | 1,671 |   |

|    |   | Three Months   |   |
|---------|--------|----------------|--------|
|    |   | Ended          |   |
| Company |   | March 31, 2010 |   |
|    |   | (in thousands) |   |
| APCo    |   |           | $      | 441,711 |   |
| CSPCo   |   |           |   | 424,685 |   |
| I&M |   |           |   | 339,208 |   |
| OPCo    |   |           |   | 441,510 |   |
| PSO     |   |           |   | 214,647 |   |
| SWEPCo  |   |           |   | 318,959 |   |

----

|    | Net Reduction  |        | Tax        |        |        |
|---------|----------------|-------------|------------|-------------|-------------|
|    | to Deferred    |        | Regulatory |        | Decrease in |
| Company |           | Tax Assets  |       | Assets, Net |        | Net Income |
|    | (in thousands) |
| APCo    | $              | 9,397  |       | $           | 8,831  |   | $ | 566  |
| CSPCo   |           | 4,386  |       |        | 2,970  |   |   | 1,416  |
| I&M |           | 7,212  |       |        | 6,528  |   |   | 684  |
| OPCo    |           | 8,385  |       |        | 4,020  |   |   | 4,365  |
| PSO     |           | 3,172  |       |        | 3,172  |   |   | -  |
| SWEPCo  |           | 3,412  |       |        | 3,412  |   |   | -  |

|    |            |      | LOC Amount   |
|---------|-----------------|-----------|--------------|
|    |            |      | Outstanding  |
|    |            |      | Against      |
|    | Credit Facility |      | $627 million |
|    | Borrowing/LOC   |      | Agreement at |
| Company |            | Limit     |         | March 31, 2010 |
|    | (in millions)   |
| APCo    | $               | 300  |         | $ | 232  |
| CSPCo   |            | 230  |         |   | -  |
| I&M |            | 230  |         |   | 78  |
| OPCo    |            | 400  |         |   | 167  |
| PSO     |            | 65   |         |   | -  |
| SWEPCo  |            | 230  |         |   | -  |

| APCo                                                                                                        |   |   |   |
|-------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| Total MTM Risk Management Contract Net Assets at December 31, 2009                                          |   | $      | 45,197 |   |
| (Gain) Loss from Contracts Realized/Settled During the Period and Entered in a Prior Period                 |   |   | (7,755 | ) |
| Fair Value of New Contracts at Inception When Entered During the Period (a)                                 |   |   | -      |   |
| Net Option Premiums Paid/(Received) for Unexercised or Unexpired Option Contracts Entered During the Period |   |   | (35    | ) |
| Changes in Fair Value Due to Market Fluctuations During the Period (c)                                      |   |   | (61    | ) |
| Changes in Fair Value Allocated to Regulated Jurisdictions (d)                                              |   |   | 6,391  |   |
| Total MTM Risk Management Contract Net Assets                                                               |   |   | 43,737 |   |
| Cash Flow Hedge Contracts                                                                                   |   |   | (4,633 | ) |
| DETM Assignment (e)                                                                                         |   |   | (1,822 | ) |
| Collateral Deposits                                                                                         |   |   | 41,545 |   |
| Total MTM Derivative Contract Net Assets at March 31, 2010                                                  |   | $      | 78,827 |   |

| OPCo                                                                                                        |   |   |   |
|-------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| Total MTM Risk Management Contract Net Assets at December 31, 2009                                          |   | $      | 26,330 |   |
| (Gain) Loss from Contracts Realized/Settled During the Period and Entered in a Prior Period                 |   |   | (5,753 | ) |
| Fair Value of New Contracts at Inception When Entered During the Period (a)                                 |   |   | 3,028  |   |
| Changes in Fair Value Due to Valuation Methodology Changes on Forward Contracts (b)                         |   |   | (715   | ) |
| Net Option Premiums Paid/(Received) for Unexercised or Unexpired Option Contracts Entered During the Period |   |   | (100   | ) |
| Changes in Fair Value Due to Market Fluctuations During the Period (c)                                      |   |   | 5,063  |   |
| Changes in Fair Value Allocated to Regulated Jurisdictions (d)                                              |   |   | 28     |   |
| Total MTM Risk Management Contract Net Assets                                                               |   |   | 27,881 |   |
| Cash Flow Hedge Contracts                                                                                   |   |   | (2,536 | ) |
| DETM Assignment (e)                                                                                         |   |   | (1,186 | ) |
| Collateral Deposits                                                                                         |   |   | 29,005 |   |
| Total MTM Derivative Contract Net Assets at March 31, 2010                                                  |   | $      | 53,164 |   |

| PSO                                                                                                         |   |   |   |
|-------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| Total MTM Risk Management Contract Net Assets (Liabilities) at December 31, 2009                            |   | $      | (369   | ) |
| (Gain) Loss from Contracts Realized/Settled During the Period and Entered in a Prior Period                 |   |   | (185   | ) |
| Fair Value of New Contracts at Inception When Entered During the Period (a)                                 |   |   | -      |   |
| Net Option Premiums Paid/(Received) for Unexercised or Unexpired Option Contracts Entered During the Period |   |   | (10    | ) |
| Changes in Fair Value Due to Market Fluctuations During the Period (c)                                      |   |   | 2      |   |
| Changes in Fair Value Allocated to Regulated Jurisdictions (d)                                              |   |   | 2,997  |   |
| Total MTM Risk Management Contract Net Assets                                                               |   |   | 2,435  |   |
| Cash Flow Hedge Contracts                                                                                   |   |   | (17    | ) |
| Collateral Deposits                                                                                         |   |   | 349    |   |
| Total MTM Derivative Contract Net Assets at March 31, 2010                                                  |   | $      | 2,767  |   |

| SWEPCo                                                                                                      |   |   |   |
|-------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| Total MTM Risk Management Contract Net Assets at December 31, 2009                                          |   | $      | 1,636  |   |
| (Gain) Loss from Contracts Realized/Settled During the Period and Entered in a Prior Period                 |   |   | (926   | ) |
| Fair Value of New Contracts at Inception When Entered During the Period (a)                                 |   |   | -      |   |
| Net Option Premiums Paid/(Received) for Unexercised or Unexpired Option Contracts Entered During the Period |   |   | (16    | ) |
| Changes in Fair Value Due to Market Fluctuations During the Period (c)                                      |   |   | 2      |   |
| Changes in Fair Value Allocated to Regulated Jurisdictions (d)                                              |   |   | (650   | ) |
| Total MTM Risk Management Contract Net Assets                                                               |   |   | 46     |   |
| Cash Flow Hedge Contracts                                                                                   |   |   | 60     |   |
| Collateral Deposits                                                                                         |   |   | 572    |   |
| Total MTM Derivative Contract Net Assets at March 31, 2010                                                  |   | $      | 678    |   |

| (a) | Reflects fair value on long-term contracts which are typically with customers that seek fixed pricing to limit their risk against fluctuating energy prices.  The contract prices are valued against market curves associated with the delivery location and delivery term.  A significant portion of the total volumetric position has been economically hedged. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Reflects changes in methodology in calculating the credit and discounting liability fair value adjustments.                                                                                                                                                                                                                                                                           |
| (c) | Market fluctuations are attributable to various factors such as supply/demand, weather, etc.                                                                                                                                                                                                                                                                                          |
| (d) | Relates to the net gains (losses) of those contracts that are not reflected on the Condensed Statements of Income.  These net gains (losses) are recorded as regulatory liabilities/assets.                                                                                                                                                                                 |
| (e) | See “Natural Gas Contracts with DETM” section of Note 15 of the 2009 Annual Report.                                                                                                                                                                                                                                                                                       |

|                                               |   | Remainder |   |   |   |      |   |   |   |   |   |   |
|----------------------------------------------------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|
| APCo                                               |   | 2010      |   |   |   | 2011-2013 |   |   |   | 2014   |   |   | Total |   |
| Level 1 (a)                                        |   | $         | (99    | )      |   | $         | 1      |   |   | $      | -      |   |   | $ | (98 | ) |
| Level 2 (b)                                        |   |      | 10,109 |   |   |      | 7,553  |   |   |   | 300    |   |   |   | 17,962 |   |
| Level 3 (c)                                        |   |      | 8,887  |   |   |      | 7,793  |   |   |   | 2,007  |   |   |   | 18,687 |   |
| Total                                              |   |      | 18,897 |   |   |      | 15,347 |   |   |   | 2,307  |   |   |   | 36,551 |   |
| Dedesignated Risk Management Contracts (d)         |   |      | 3,711  |   |   |      | 3,475  |   |   |   | -      |   |   |   | 7,186 |   |
| Total MTM Risk Management Contract Net Assets |   | $         | 22,608 |   |   | $         | 18,822 |   |   | $      | 2,307  |   |   | $ | 43,737 |   |

|                                               |   | Remainder |   |   |   |      |   |   |   |   |   |   |
|----------------------------------------------------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|
| OPCo                                               |   | 2010      |   |   |   | 2011-2013 |   |   |   | 2014   |   |   | Total |   |
| Level 1 (a)                                        |   | $         | (64    | )      |   | $         | 1      |   |   | $      | -      |   |   | $ | (63 | ) |
| Level 2 (b)                                        |   |      | 7,412  |   |   |      | 3,478  |   |   |   | 195    |   |   |   | 11,085 |   |
| Level 3 (c)                                        |   |      | 5,799  |   |   |      | 5,074  |   |   |   | 1,307  |   |   |   | 12,180 |   |
| Total                                              |   |      | 13,147 |   |   |      | 8,553  |   |   |   | 1,502  |   |   |   | 23,202 |   |
| Dedesignated Risk Management Contracts (d)         |   |      | 2,416  |   |   |      | 2,263  |   |   |   | -      |   |   |   | 4,679 |   |
| Total MTM Risk Management Contract Net Assets |   | $         | 15,563 |   |   | $         | 10,816 |   |   | $      | 1,502  |   |   | $ | 27,881 |   |

|                                                             |   | Remainder |   |   |   |        |   |   |   |
|------------------------------------------------------------------|--------|-----------|--------|--------|--------|-------------|--------|--------|--------|
| PSO                                                              |   | 2010      |   |   |   | 2011 - 2013 |   |   | Total  |   |
| Level 1 (a)                                                      |   | $         | -      |   |   | $           | -      |   |   | $ | - |   |
| Level 2 (b)                                                      |   |      | 2,708  |   |   |        | (275   | )      |   |   | 2,433 |   |
| Level 3 (c)                                                      |   |      | 2      |   |   |        | -      |   |   |   | 2 |   |
| Total MTM Risk Management Contract Net Assets (Liabilities) |   | $         | 2,710  |   |   | $           | (275   | )      |   | $ | 2,435 |   |

|                                                             |   | Remainder |   |   |   |      |   |   |   |
|------------------------------------------------------------------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|
| SWEPCo                                                           |   | 2010      |   |   |   | 2011-2013 |   |   | Total  |   |
| Level 1 (a)                                                      |   | $         | -      |   |   | $         | -      |   |   | $ | - |   |
| Level 2 (b)                                                      |   |      | 1,235  |   |   |      | (1,193 | )      |   |   | 42 |   |
| Level 3 (c)                                                      |   |      | 4      |   |   |      | -      |   |   |   | 4 |   |
| Total MTM Risk Management Contract Net Assets (Liabilities) |   | $         | 1,239  |   |   | $         | (1,193 | )      |   | $ | 46 |   |

| (a) | Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.  Level 1 inputs primarily consist of exchange traded contracts that exhibit sufficient frequency and volume to provide pricing information on an ongoing basis.                                                                                                                                                                                                                                                                                                                |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.  If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability.  Level 2 inputs primarily consist of OTC broker quotes in moderately active or less active markets, exchange traded contracts where there was not sufficient market activity to warrant inclusion in Level 1 and OTC broker quotes that are corroborated by the same or similar transactions that have occurred in the market. |
| (c) | Level 3 inputs are unobservable inputs for the asset or liability.  Unobservable inputs shall be used to measure fair value to the extent that the observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.  Level 3 inputs primarily consist of unobservable market data or are valued based on models and/or assumptions.                                                                                                                                                                                                         |
| (d) | Dedesignated Risk Management Contracts are contracts that were originally MTM but were subsequently elected as normal under the accounting guidance for “Derivatives and Hedging.”  At the time of the normal election, the MTM value was frozen and no longer fair valued.  This will be amortized into Revenues over the remaining life of the contracts.                                                                                                                                                                                                                                                                               |

|    | March 31, 2010 |   | December 31, 2009 |
|---------|----------------|--------|-------------------|
|    | (in thousands) |   | (in thousands)    |
| Company |           | End    |              | High |   | Average |   | Low |   | End |   | High |   | Average |   | Low |
| APCo    |           | $      | 209          |   | $ | 659  |   | $ | 306  |   | $ | 141  |   | $ | 275 |   | $ | 699 |   | $ | 333 |   | $ | 151 |
| OPCo    |           |   | 162          |   |   | 545  |   |   | 256  |   |   | 117  |   |   | 201 |   |   | 530 |   |   | 244 |   |   | 113 |
| PSO     |           |   | 9            |   |   | 70  |   |   | 19  |   |   | 5  |   |   | 10 |   |   | 34 |   |   | 12 |   |   | 4 |
| SWEPCo  |           |   | 13           |   |   | 93  |   |   | 27  |   |   | 8  |   |   | 16 |   |   | 49 |   |   | 18 |   |   | 6 |

|    |   | March 31,      |        | December 31, |
|---------|--------|----------------|-------------|--------------|
| Company |   | 2010           |        | 2009         |
|    |   | (in thousands) |
| APCo    |   | $              | 1,295  |         | $ | 1,837  |
| CSPCo   |   |           | 337    |         |   | 216  |
| I&M |   |           | 267    |         |   | 227  |
| OPCo    |   |           | 1,297  |         |   | 1,373  |
| PSO     |   |           | 85     |         |   | 119  |
| SWEPCo  |   |           | 80     |         |   | 305  |

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| Period                    |   | Total Numberof SharesPurchased |   | Average PricePaid per Share |   |   | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |   | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs |   |
|---------------------------|--------|--------------------------------|--------|-----------------------------|--------|--------|----------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------|--------|
| 01/01/10 – 01/31/10 |   |                           | -      |                        | $      | -      |                                                                             |   |                                                                                                         | -      |   | $ | - |   |
| 02/01/10 – 02/28/10 |   |                           | -      |                        |   | -      |                                                                             |   |                                                                                                         | -      |   |   | - |   |
| 03/01/10 – 03/31/10 |   |                           | 55     | (a)                         |   | 69.86  |                                                                             |   |                                                                                                         | -      |   |   | - |   |

| (a) | APCo purchased 50 shares of its 4.50% cumulative preferred stock and OPCo purchased 5 shares of its 4.50% cumulative preferred stock in privately-negotiated transactions outside of an announced program. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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