| Commission  |   | Registrants; States of Incorporation;                          |   | I.R.S. Employer     |
|-------------|--------|----------------------------------------------------------------|--------|---------------------|
| File Number |   | Address and Telephone Number                                   |   | Identification Nos. |
|        |   |                                                           |   |                |
| 1-3525      |   | AMERICAN ELECTRIC POWER COMPANY, INC. (A New York Corporation) |   | 13-4922640          |
| 1-3457      |   | APPALACHIAN POWER COMPANY (A Virginia Corporation)             |   | 54-0124790          |
| 1-2680      |   | 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          |
|        |   | 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 the AEP 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 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 |   |

| Columbus Southern Power Company and Indiana Michigan Power Company meet the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and are therefore filing this Form 10-Q with the reduced disclosure format specified in General Instruction H(2) to Form 10-Q. |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                  |   |   | Number of shares of common stock outstanding of the registrants atJuly 28, 2011 |
|---------------------------------------|--------|--------|---------------------------------------------------------------------------------|
|                                  |   |   |                                                                            |
| American Electric Power Company, Inc. |   |   | 482,273,829                                                                     |
|                                  |   |   | ($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)                                                                 |

----

|                                                            |                                                                                                                                                      | PageNumber |
|-----------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| Glossary of Terms                                               |                                                                                                                                                      | i          |
|                                                            |                                                                                                                                                      |       |
| Forward-Looking Information                                     |                                                                                                                                                      | iv         |
|                                                            |                                                                                                                                                      |       |
| Part I. FINANCIAL INFORMATION                                   |                                                                                                                                                      |       |
|                                                            |                                                                                                                                                      |       |   |
|                                                            | Items 1, 2 and 3 - Financial Statements, Management’s Discussion and Analysis and Quantitative and Qualitative Disclosures About Market Risk:  |       |   |
| American Electric Power Company, Inc. and Subsidiary Companies: |                                                                                                                                                      |       |
|                                                            | Management’s Discussion and Analysis                                                                                                                |       | 1 |
|                                                            | Quantitative and Qualitative Disclosures About Market Risk                                                                                                |       | 22 |
|                                                            | Condensed Consolidated Financial Statements                                                                                                               |       | 26 |
|                                                            | Index of Condensed Notes to Condensed Consolidated Financial Statements                                                                                   |       | 31 |
|                                                            |                                                                                                                                                      |       |   |
| Appalachian Power Company and Subsidiaries:                     |                                                                                                                                                      |       |
|                                                            | Management’s Discussion and Analysis                                                                                                                |       | 81 |
|                                                            | Quantitative and Qualitative Disclosures About Market Risk                                                                                                |       | 89 |
|                                                            | Condensed Consolidated Financial Statements                                                                                                               |       | 90 |
|                                                            | Index of Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries                                                                     |       | 95 |
|                                                            |                                                                                                                                                      |       |   |
| Columbus Southern Power Company and Subsidiaries:               |                                                                                                                                                      |       |
|                                                            | Management’s Narrative Discussion and Analysis                                                                                                      |       | 97 |
|                                                            | Quantitative and Qualitative Disclosures About Market Risk                                                                                                |       | 103 |
|                                                            | Condensed Consolidated Financial Statements                                                                                                               |       | 104 |
|                                                            | Index of Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries                                                                     |       | 109 |
|                                                            |                                                                                                                                                      |       |   |
| Indiana Michigan Power Company and Subsidiaries:                |                                                                                                                                                      |       |
|                                                            | Management’s Narrative Discussion and Analysis                                                                                                      |       | 111 |
|                                                            | Quantitative and Qualitative Disclosures About Market Risk                                                                                                |       | 115 |
|                                                            | Condensed Consolidated Financial Statements                                                                                                               |       | 116 |
|                                                            | Index of Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries                                                                     |       | 121 |
|                                                            |                                                                                                                                                      |       |   |
| Ohio Power Company Consolidated:                                |                                                                                                                                                      |       |
|                                                            | Management’s Discussion and Analysis                                                                                                                |       | 123 |
|                                                            | Quantitative and Qualitative Disclosures About Market Risk                                                                                                |       | 130 |
|                                                            | Condensed Consolidated Financial Statements                                                                                                               |       | 131 |
|                                                            | Index of Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries                                                                     |       | 136 |
|                                                            |                                                                                                                                                      |       |   |
| Public Service Company of Oklahoma:                             |                                                                                                                                                      |       |
|                                                            | Management’s Discussion and Analysis                                                                                                                |       | 138 |
|                                                            | Quantitative and Qualitative Disclosures About Market Risk                                                                                                |       | 142 |
|                                                            | Condensed Financial Statements                                                                                                                            |       | 143 |
|                                                            | Index of Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries                                                                     |       | 148 |
|                                                            |                                                                                                                                                      |       |   |
| Southwestern Electric Power Company Consolidated:               |                                                                                                                                                      |       |
|                                                            | Management’s Discussion and Analysis                                                                                                                |       | 150 |
|                                                            | Quantitative and Qualitative Disclosures About Market Risk                                                                                                |       | 155 |
|                                                            | Condensed Consolidated Financial Statements                                                                                                               |       | 156 |
|                                                            | Index of Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries                                                                     |       | 161 |

----

|                                                                                  |     |                                                        |   |
|---------------------------------------------------------------------------------------|----------|-------------------------------------------------------------|--------|
| Index of Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries |     | 162                                                         |
|                                                                                  |     |                                                        |   |
| Combined Management’s Discussion and Analysis of Registrant Subsidiaries        |     | 227                                                         |
|                                                                                  |     |                                                        |   |
| Controls and Procedures                                                               |     | 238                                                         |
|                                                                                  |     |                                                        |   |   |
| Part II.  OTHER INFORMATION                                                 |     |                                                        |
|                                                                                  |     |                                                        |
|                                                                                  | Item 1.  | Legal Proceedings                                           |   | 239 |
|                                                                                  | Item 1A. | Risk Factors                                                |   | 239 |
|                                                                                  | Item 2.  | Unregistered Sales of Equity Securities and Use of Proceeds |   | 242 |
|                                                                                  | Item 5.  | Other Information                                           |   | 243 |
|                                                                                  | Item 6.  | Exhibits:                                                   |   | 243 |
|                                                                                  |     |                                                        |   |   | Exhibit 4(d) |   |   |
|                                                                                  |     |                                                        |   |   | Exhibit 4(e) |   |   |
|                                                                                  |     |                                                        |   |   | Exhibit 12 |   |   |
|                                                                                  |     |                                                        |   |   | Exhibit 31(a) |   |   |
|                                                                                  |     |                                                        |   |   | Exhibit 31(b) |   |   |
|                                                                                  |     |                                                        |   |   | Exhibit 32(a) |   |   |
|                                                                                  |     |                                                        |   |   | Exhibit 32(b) |   |   |
|                                                                                  |     |                                                        |   |   |   |   |   |
| SIGNATURE                                                                             |     |                                                        | 244    |

| 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., a holding company.                                                                                                                                                                                            |
| 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 AEP Power 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.                                                                                                              |
| AEPEP                    |   | AEP Energy Partners, Inc., a subsidiary of AEP dedicated to wholesale marketing and trading, asset management and commercial and industrial sales in the deregulated Texas market.                                                                   |
| 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.                                                                                                                                                                                                                          |
| BOA                      |   | Bank of America Corporation.                                                                                                                                                                                                                         |
| 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, a transition charge applied to TCC’s transmission and distribution rates for stranded costs and other true-up amounts as required by the Texas Restructuring Legislation.                                       |
| DCC Fuel                 |   | DCC Fuel LLC, DCC Fuel II LLC and DCC Fuel III LLC, variable interest entities formed for the purpose of acquiring, owning and leasing nuclear fuel to I&M.                                                                                      |
| 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, an intrastate RTO.                                                                                                                                                                                            |
| 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. |

----

| Term                      |   | Meaning                                                                                                                                                                                     |
|---------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |   |                                                                                                                                                                                        |
| 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 utility subsidiary.                                                                                                                                |
| KPCo                      |   | Kentucky Power Company, an AEP electric utility subsidiary.                                                                                                                                 |
| KWH                       |   | Kilowatthour.                                                                                                                                                                               |
| LPSC                      |   | Louisiana Public Service Commission.                                                                                                                                                        |
| MISO                      |   | Midwest Independent Transmission System Operator.                                                                                                                                           |
| MMBtu                     |   | Million British Thermal Units.                                                                                                                                                              |
| MPSC                      |   | Michigan Public Service Commission.                                                                                                                                                         |
| MTM                       |   | Mark-to-Market.                                                                                                                                                                             |
| MW                        |   | Megawatt.                                                                                                                                                                                   |
| NEIL                      |   | Nuclear Electric Insurance Limited insures domestic and international nuclear utilities for the costs associated with interruptions, damages, decontaminations and related nuclear risks.   |
| NOx                       |   | Nitrogen oxide.                                                                                                                                                                             |
| Nonutility Money Pool     |   | AEP’s Nonutility Money Pool is the centralized funding mechanism AEP uses to meet the short term cash requirements of pool participants.                                              |
| 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.                                                                                                                                                                           |
| PJM                       |   | Pennsylvania – New Jersey – Maryland, a RTO.                                                                                                                                    |
| 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, responsible for moving electricity over large interstate areas.                                                                                         |
| Sabine                    |   | Sabine Mining Company, a lignite mining company that is a consolidated variable interest entity.                                                                                            |
| SEET                      |   | Significantly Excessive Earnings Test.                                                                                                                                                      |
| SIA                       |   | System Integration Agreement, effective June 15, 2000, provides contractual basis for coordinated planning, operation and maintenance of the power supply sources of the combined AEP.      |
| SNF                       |   | Spent Nuclear Fuel.                                                                                                                                                                         |
| SO2                       |   | Sulfur Dioxide.                                                                                                                                                                             |
| SPP                       |   | Southwest Power Pool, a RTO.                                                                                                                                                                |

----

| Term                                        |   | Meaning                                                                                                                                                                                                                                                                           |
|---------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                        |   |                                                                                                                                                                                                                                                                              |
| 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.                                                                                                                                                                                                                      |
|                                        |   |                                                                                                                                                                                                                                                                              |
| Transition Funding                          |   | AEP Texas Central Transition Funding I LLC and AEP Texas Central Transition Funding II LLC, wholly-owned subsidiaries of TCC and consolidated variable interest entities formed for the purpose of issuing and servicing securitization bonds related to Texas restructuring law. |
| 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 is the centralized funding mechanism AEP uses to meet the short term cash requirements of pool participants.                                                                                                                                |
| VIE                                         |   | Variable Interest Entity.                                                                                                                                                                                                                                                         |
| Virginia SCC                                |   | Virginia State Corporation Commission.                                                                                                                                                                                                                                            |
| WPCo                                        |   | Wheeling Power Company, an AEP electric utility 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, customer growth and the impact of retail competition, particularly in Ohio.                                                                                                                                                                                                                                                                                                                               |
| · | 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 resolve I&M’s Donald C. Cook Nuclear Plant Unit 1 restoration and outage-related issues 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 lines and facilities (including our ability to obtain any necessary regulatory approvals and permits) when needed at acceptable prices and terms and to recover those costs (including the costs of projects that are cancelled) through applicable rate cases or competitive rates.                                     |
| · | New legislation, litigation and government regulation, including oversight of nuclear generation, energy commodity trading and new or heightened requirements for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances or additional regulation of fly ash and similar combustion products that could impact the continued operation 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.                                                                                                                                                                                                                                                                                                                                                                                                |
| · | 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, captive insurance entity 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.                                                                                                                                          |
| · | Our ability to recover through rates or prices any remaining unrecovered investment in generating units that may be retired before the end of their previously projected useful lives.                                                             |
| · | Evolving public perception of the risks associated with fuels used before, during and after the generation of electricity, including nuclear fuel.                                                                                                 |
| · | Other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes, cyber security threats and other catastrophic events.                                                                 |

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

----

----

----

----

----

|                             |   |     | Generating        |
|----------------------------------|--------|----------|-------------------|
| Plant Name and Unit              |   | Capacity |
|                             |   | (in MWs) |
| Big Sandy Plant                  |   |     |  1,078  |
| Clinch River Plant, Unit 3       |   |     |  235    |
| Conesville Plant, Unit 3         |   |     |  165    |
| Glen Lyn Plant                   |   |     |  335    |
| Kammer Plant                     |   |     |  630    |
| Kanawha River Plant              |   |     |  400    |
| Muskingum River Plant, Units 1-4 |   |     |  840    |
| Philip Sporn Plant               |   |     |  1,050  |
| Picway Plant                     |   |     |  100    |
| Tanners Creek Plant, Units 1-3   |   |     |  495    |
| Welsh Plant, Unit 2              |   |     |  528    |
| Total                            |   |     |  5,856  |

----

----

----

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

|   | · | Commercial barging operations that 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 and, to a lesser extent, Ohio in PJM and MISO. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------|

|                     | Three Months Ended June 30, |   | Six Months Ended June 30, |   |
|--------------------------|-----------------------------|--------|---------------------------|--------|
|                     | 2011                        |   | 2010                      |   | 2011 |   | 2010 |   |
|                     | (in millions)               |   |
| Utility Operations       |                        | $      | 356                       |   |   | $ | 132 |   |   | $ | 734 |   |   | $ | 476 |   |
| AEP River Operations     |                        |   | (1                        | )      |   |   | (1 | ) |   |   | 6 |   |   |   | 2 |   |
| Generation and Marketing |                        |   | 11                        |   |   |   | 7 |   |   |   | 12 |   |   |   | 17 |   |
| All Other (a)            |                        |   | (13                       | )      |   |   | (1 | ) |   |   | (44 | ) |   |   | (12 | ) |
| Net Income               |                        | $      | 353                       |   |   | $ | 137 |   |   | $ | 708 |   |   | $ | 483 |   |

| (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 settle and expire in the fourth quarter of 2011. |
|   | ·                                                       | Revenue sharing related to the Plaquemine Cogeneration Facility which ends in the fourth quarter of 2011. |

----

|                          |   | Three Months Ended |   |   | Six Months Ended |   |
|-------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                          |   | June 30,           |   |   | June 30,         |   |
|                          |   | 2011               |   |   | 2010             |   |   | 2011 |   |   | 2010 |   |
|                          |   | (in millions)      |   |
| Revenues                      |   | $                  | 3,389  |   |             | $      | 3,211 |   |   | $ | 6,913 |   |   | $ | 6,637 |   |
| Fuel and Purchased Power      |   |               | 1,230  |   |             |   | 1,110 |   |   |   | 2,527 |   |   |   | 2,357 |   |
| Gross Margin                  |   |               | 2,159  |   |             |   | 2,101 |   |   |   | 4,386 |   |   |   | 4,280 |   |
| Depreciation and Amortization |   |               | 398    |   |             |   | 394 |   |   |   | 791 |   |   |   | 792 |   |
| Other Operating Expenses      |   |               | 1,053  |   |             |   | 1,314 |   |   |   | 2,113 |   |   |   | 2,354 |   |
| Operating Income              |   |               | 708    |   |             |   | 393 |   |   |   | 1,482 |   |   |   | 1,134 |   |
| Other Income, Net             |   |               | 48     |   |             |   | 42 |   |   |   | 91 |   |   |   | 85 |   |
| Interest Expense              |   |               | 227    |   |             |   | 237 |   |   |   | 459 |   |   |   | 472 |   |
| Income Tax Expense            |   |               | 173    |   |             |   | 66 |   |   |   | 380 |   |   |   | 271 |   |
| Net Income                    |   | $                  | 356    |   |             | $      | 132 |   |   | $ | 734 |   |   | $ | 476 |   |

| Summary of KWH Energy Sales for Utility Operations                                     |
|----------------------------------------------------------------------------------------|
|                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                   | Three Months Ended |   | Six Months Ended |
|                                                                                   | June 30, |   | June 30, |
|                                                                                   | 2011  |   | 2010 |   | 2011  |   | 2010  |
|                                                                                   | (in millions of KWH) |
| Retail:                                                                                |   |   |   |   |   |   |   |   |
| Residential                                                                            |  13,503  |   |   |  12,659  |   |  30,452  |   |  30,433  |
| Commercial                                                                             |  12,913  |   |   |  13,002  |   |  24,559  |   |  24,476  |
| Industrial                                                                             |  15,153  |   |   |  14,662  |   |  29,482  |   |  28,044  |
| Miscellaneous                                                                          |  777  |   |   |  783  |   |  1,500  |   |  1,495  |
| Total Retail (a)                                                                       |  42,346  |   |   |  41,106  |   |  85,993  |   |  84,448  |
|                                                                                   |   |   |   |   |   |   |   |   |
| Wholesale                                                                              |  10,216  |   |   |  7,019  |   |  19,367  |   |  15,156  |
|                                                                                   |   |   |   |   |   |   |   |   |
| Total KWHs                                                                             |  52,562  |   |   |  48,125  |   |  105,360  |   |  99,604  |
|                                                                                   |   |   |   |   |   |   |   |   |
| (a) Includes energy delivered to customers served by AEP's Texas wires companies. |

----

| Summary of Heating and Cooling Degree Days for Utility Operations |
|-------------------------------------------------------------------|
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   | Three Months Ended |   | Six Months Ended |
|                                                              |   | June 30, | June 30, |
|                                                              |   | 2011  |   | 2010  |   | 2011  |   | 2010  |
|                                                              |   | (in degree days) |
| Eastern Region                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Actual - Heating (a)                                              |   |  134  |   |   |  75  |   |   |  1,989  |   |   |  1,975  |
| Normal - Heating (b)                                              |   |  168  |   |   |  170  |   |   |  1,907  |   |   |  1,911  |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual - Cooling (c)                                              |   |  368  |   |   |  434  |   |   |  371  |   |   |  434  |
| Normal - Cooling (b)                                              |   |  295  |   |   |  289  |   |   |  299  |   |   |  293  |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Western Region                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Actual - Heating (a)                                              |   |  10  |   |   |  5  |   |   |  702  |   |   |  764  |
| Normal - Heating (b)                                              |   |  21  |   |   |  21  |   |   |  600  |   |   |  595  |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual - Cooling (d)                                              |   |  1,035  |   |   |  866  |   |   |  1,144  |   |   |  886  |
| Normal - Cooling (b)                                              |   |  762  |   |   |  757  |   |   |  820  |   |   |  815  |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| (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. |

----

| Second Quarter of 2011 Compared to Second Quarter of 2010          |   |
|--------------------------------------------------------------------|--------|
|                                                               |   |   |   |
| Reconciliation of Second Quarter of 2010 to Second Quarter of 2011 |   |
| Net Income from Utility Operations                                 |   |
| (in millions)                                                      |   |
|                                                               |   |   |   |
| Second Quarter of 2010                                             |   | $ | 132 |   |
|                                                               |   |   |   |   |
| Changes in Gross Margin:                                           |   |   |   |   |
| Retail Margins                                                     |   |   | - |   |
| Off-system Sales                                                   |   |   | 37 |   |
| Transmission Revenues                                              |   |   | 13 |   |
| Other Revenues                                                     |   |   | 8 |   |
| Total Change in Gross Margin                                       |   |   | 58 |   |
|                                                               |   |   |   |   |
| Changes in Expenses and Other:                                     |   |   |   |   |
| Other Operation and Maintenance                                    |   |   | 258 |   |
| Depreciation and Amortization                                      |   |   | (4 | ) |
| Taxes Other Than Income Taxes                                      |   |   | 3 |   |
| Interest and Investment Income                                     |   |   | (1 | ) |
| Carrying Costs Income                                              |   |   | (2 | ) |
| Allowance for Equity Funds Used During Construction                |   |   | 4 |   |
| Interest Expense                                                   |   |   | 10 |   |
| Equity Earnings of Unconsolidated Subsidiaries                     |   |   | 5 |   |
| Total Change in Expenses and Other                                 |   |   | 273 |   |
|                                                               |   |   |   |   |
| Income Tax Expense                                                 |   |   | (107 | ) |
|                                                               |   |   |   |   |
| Second Quarter of 2011                                             |   | $ | 356 |   |

| · | Retail Margins were unchanged primarily due to the following:                                                                                |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                       | Successful rate proceedings in our service territories which include: |
|   |                                                                                                                                         | · | A $27 million rate increase for APCo. |
|   |                                                                                                                                         | · | An $18 million rate increase for KPCo. |
|   |                                                                                                                                         | · | A $7 million rate increase for SWEPCo. |
|   |                                                                                                                                         | · | A $6 million rate increase in Ohio. |
|   |                                                                                                                                         | · | A $6 million rate increase for I&M. |
|   | ·                                                                                                                                       | An $18 million increase in weather-related usage in our western region primarily due to a 20% increase in cooling degree days. |
|   | These increases were partially offset by:                                                                                                    |
|   | ·                                                                                                                                       | A $24 million decrease attributable to Ohio customers switching to alternative competitive retail electric service (CRES) providers. |
|   | ·                                                                                                                                       | A $21 million decrease due to the expiration of E&R cost recovery in Virginia. |
|   | ·                                                                                                                                       | A $20 million increase in other variable electric generation expenses. |
|   | ·                                                                                                                                       | A $13 million decrease in weather-related usage in our eastern region primarily due to a 15% decrease in cooling degree days. |
| · | Margins from Off-system Sales increased $37 million primarily due to an increase in PJM capacity revenues and higher physical sales volumes. |
| · | Transmission Revenues increased $13 million primarily due to net rate increases in PJM.                                                      |
| · | Other Revenues increased $8 million primarily due to higher amortization of deferred gains.                                                  |

----

| · | Other Operation and Maintenance expenses decreased $258 million primarily due to:                                                                                                                                                                   |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                              | A $278 million decrease due to expenses related to the cost reduction initiatives recorded in the second quarter of 2010. |
|   | ·                                                                                                                                                                                                                                              | A $54 million decrease due to the second quarter 2010 write-off of APCo’s Virginia share of the Mountaineer Carbon Capture and Storage Product Validation Facility as denied for recovery by the Virginia SCC. |
|   | ·                                                                                                                                                                                                                                              | A $6 million decrease in administrative and general expenses primarily due to a decrease in fringe benefit expenses. |
|   | These decreases were partially offset by:                                                                                                                                                                                                           |
|   | ·                                                                                                                                                                                                                                              | A $27 million increase in storm-related expenses. |
|   | ·                                                                                                                                                                                                                                              | A $25 million increase due to the second quarter 2010 deferral of 2009 storm costs as allowed by the Virginia SCC. |
|   | ·                                                                                                                                                                                                                                              | A $17 million increase in demand side management expenses, energy efficiency program expenses and other expenses currently recovered dollar-for-dollar in rate recovery riders/trackers within Gross Margin. |
|   | ·                                                                                                                                                                                                                                              | A $15 million increase in plant operating and maintenance expenses. |
| · | Depreciation and Amortization expenses increased $4 million primarily due to higher depreciable property balances partially offset by lower amortization due to the expiration of E&R amortization of deferred carrying costs in Virginia. |
| · | Taxes Other Than Income Taxes decreased $3 million primarily due to the employer portion of payroll taxes recorded in the second quarter of 2010 related to the cost reduction initiatives, partially offset by higher property taxes in 2011.      |
| · | Allowance for Equity Funds Used During Construction increased $4 million primarily due to construction of the Dresden Plant and various environmental upgrades.                                                                                     |
| · | Interest Expense decreased $10 million primarily due to a decrease in long-term debt.                                                                                                                                                               |
| · | Equity Earnings of Unconsolidated Subsidiaries increased $5 million primarily due to an increase in transmission investments for ETT.                                                                                                               |
| · | Income Tax Expense increased $107 million primarily due to an increase in pretax book income.                                                                                                                                                       |

----

| Six Months Ended June 30, 2011 Compared to Six Months Ended June 30, 2010          |
|------------------------------------------------------------------------------------|
|                                                                               |   |   |   |   |
| Reconciliation of Six Months Ended June 30, 2010 to Six Months Ended June 30, 2011 |
| Net Income from Utility Operations                                                 |
| (in millions)                                                                      |
|                                                                               |   |   |   |   |
| Six Months Ended June 30, 2010                                                     |   | $ |  476  |   |
|                                                                               |   |   |   |   |
| Changes in Gross Margin:                                                           |   |   |   |   |
| Retail Margins                                                                     |   |   |  26  |   |
| Off-system Sales                                                                   |   |   |  49  |   |
| Transmission Revenues                                                              |   |   |  21  |   |
| Other Revenues                                                                     |   |   |  10  |   |
| Total Change in Gross Margin                                                       |   |   |  106  |   |
|                                                                               |   |   |   |   |
| Changes in Expenses and Other:                                                     |   |   |   |   |
| Other Operation and Maintenance                                                    |   |   |  244  |   |
| Depreciation and Amortization                                                      |   |   |  1  |   |
| Taxes Other Than Income Taxes                                                      |   |   |  (3) |   |
| Interest and Investment Income                                                     |   |   |  (1) |   |
| Carrying Costs Income                                                              |   |   |  (1) |   |
| Interest Expense                                                                   |   |   |  13  |   |
| Equity Earnings of Unconsolidated Subsidiaries                                     |   |   |  8  |   |
| Total Change in Expenses and Other                                                 |   |   |  261  |   |
|                                                                               |   |   |   |   |
| Income Tax Expense                                                                 |   |   |  (109) |   |
|                                                                               |   |   |   |   |
| Six Months Ended June 30, 2011                                                     |   | $ |  734  |   |

| · | Retail Margins increased $26 million primarily due to the following:                                                                         |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                       | Successful rate proceedings in our service territories which include: |
|   |                                                                                                                                         | · | A $41 million rate increase in Ohio. |
|   |                                                                                                                                         | · | A $36 million rate increase for KPCo. |
|   |                                                                                                                                         | · | A $27 million rate increase for APCo. |
|   |                                                                                                                                         | · | A $20 million rate increase for SWEPCo. |
|   |                                                                                                                                         | · | A $15 million rate increase for I&M. |
|   |                                                                                                                                         | · | A $9 million net rate increase in our other jurisdictions. |
|   | ·                                                                                                                                       | A $12 million increase in weather-related usage in our western region primarily due to a 29% increase in cooling degree days. |
|   | These increases were partially offset by:                                                                                                    |
|   | ·                                                                                                                                       | A $43 million decrease attributable to Ohio customers switching to alternative CRES providers. |
|   | ·                                                                                                                                       | A $37 million decrease in rate related margins for APCo due to the expiration of E&R cost recovery in Virginia. |
|   | ·                                                                                                                                       | A $27 million decrease in weather-related usage in our eastern region primarily due to a 15% decrease in cooling degree days. |
|   | ·                                                                                                                                       | An $8 million increase in other variable electric generation expenses. |
| · | Margins from Off-system Sales increased $49 million primarily due to an increase in PJM capacity revenues and higher physical sales volumes. |
| · | Transmission Revenues increased $21 million primarily due to net rate increases in PJM.                                                      |
| · | Other Revenues increased $10 million primarily due to higher amortization of deferred gains.                                                 |

----

| · | Other Operation and Maintenance expenses decreased $244 million primarily due to the following:                                                                                                                                               |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                        | A $278 million decrease due to expenses related to the cost reduction initiatives recorded in the second quarter of 2010. |
|   | ·                                                                                                                                                                                                                                        | A $54 million decrease due to the second quarter 2010 write-off of APCo’s Virginia share of the Mountaineer Carbon Capture and Storage Product Validation Facility as denied for recovery by the Virginia SCC. |
|   | ·                                                                                                                                                                                                                                        | A $33 million decrease due to the first quarter 2011 deferral of 2010 costs related to storms and our cost reduction initiatives as allowed by the WVPSC. |
|   | ·                                                                                                                                                                                                                                        | A $24 million decrease in administrative and general expenses primarily due to a decrease in fringe benefit expenses. |
|   | ·                                                                                                                                                                                                                                        | An $11 million gain on the sale of land. |
|   | These decreases were partially offset by:                                                                                                                                                                                                     |
|   | ·                                                                                                                                                                                                                                        | A $44 million increase in demand side management, energy efficiency programs and other expenses currently recovered dollar-for-dollar in rate recovery riders/trackers within Gross Margin. |
|   | ·                                                                                                                                                                                                                                        | A $41 million increase due to the first quarter 2011 write-off of a portion of the Mountaineer Carbon Capture and Storage Product Validation Facility as denied for recovery by the WVPSC. |
|   | ·                                                                                                                                                                                                                                        | A $29 million increase in storm-related expenses. |
|   | ·                                                                                                                                                                                                                                        | A $26 million increase in plant outage and other plant operating and maintenance expenses. |
|   | ·                                                                                                                                                                                                                                        | A $25 million increase due to the second quarter 2010 deferral of 2009 storm costs as allowed by the Virginia SCC. |
| · | Depreciation and Amortization expenses decreased $1 million due to the expiration of E&R amortization of deferred carrying costs in Virginia partially offset by higher depreciable property balances.                                    |
| · | Taxes Other Than Income Taxes increased $3 million primarily due to higher property taxes in 2011 partially offset by the employer portion of payroll taxes recorded in the second quarter of 2010 related to the cost reduction initiatives. |
| · | Interest Expense decreased $13 million primarily due to a decrease in long-term debt.                                                                                                                                                         |
| · | Equity Earnings of Unconsolidated Subsidiaries increased $8 million primarily due to an increase in transmission investments for ETT.                                                                                                         |
| · | Income Tax Expense increased $109 million primarily due to an increase in pretax book income, partially offset by the 2010 tax treatment associated with the future reimbursement of Medicare Part D retiree prescription drug benefits.      |

----

|                                                  |   | June 30, 2011         |   |   | December 31, 2010 |
|-------------------------------------------------------|--------|-----------------------|--------|--------|-------------------|
|                                                  |   | (dollars in millions) |
| Long-term Debt, including amounts due within one year |   | $                     | 16,635 |   |              |   | 51.5 | % |   | $ | 16,811 |   |   |   | 52.8 | % |
| Short-term Debt                                       |   |                  | 1,639  |   |              |   | 5.1 |   |   |   | 1,346 |   |   |   | 4.2 |   |
| Total Debt                                            |   |                  | 18,274 |   |              |   | 56.6 |   |   |   | 18,157 |   |   |   | 57.0 |   |
| Preferred Stock of Subsidiaries                       |   |                  | 60     |   |              |   | 0.2 |   |   |   | 60 |   |   |   | 0.2 |   |
| AEP Common Equity                                     |   |                  | 13,939 |   |              |   | 43.2 |   |   |   | 13,622 |   |   |   | 42.8 |   |
|                                                  |   |                  |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Total Debt and Equity Capitalization                  |   | $                     | 32,273 |   |              |   | 100.0 | % |   | $ | 31,839 |   |   |   | 100.0 | %  |

----

|                      |                             |   | Amount            |              | Maturity |
|---------------------------|----------------------------------|--------|-------------------|-------------------|----------|
|                      |                             |   | (in millions)     |              |     |
| Commercial Paper Backup:  |                             |   |              |              |     |
|                      | Revolving Credit Facility        |   | $                 |  1,454  |     | April 2012 |
|                      | Revolving Credit Facility        |   |              |  1,500  |     | June 2013 |
| Total                     |                             |   |  2,954  |              |     |
| Cash and Cash Equivalents |                             |   |  417    |              |     |
| Total Liquidity Sources   |                             |   |  3,371  |              |     |
| Less:                     | AEP Commercial Paper Outstanding |   |              |  944    |     |   |
|                      | Letters of Credit Issued         |   |              |  132    |     |   |
|                      |                             |   |              |              |     |   |
| Net Available Liquidity   |                             | $      |  2,295  |              |     |

----

----

|                                                | Six Months Ended |   |
|-----------------------------------------------------|------------------|--------|
|                                                | June 30,         |   |
|                                                | 2011             |   | 2010 |   |
|                                                | (in millions)    |   |
| Cash and Cash Equivalents at Beginning of Period    |             | $      | 294 |   |   | $ | 490 |   |
| Net Cash Flows from Operating Activities            |             |   | 1,732 |   |   |   | 582 |   |
| Net Cash Flows Used for Investing Activities        |             |   | (1,280 | ) |   |   | (992 | ) |
| Net Cash Flows from (Used for) Financing Activities |             |   | (329 | ) |   |   | 758 |   |
| Net Increase in Cash and Cash Equivalents           |             |   | 123 |   |   |   | 348 |   |
| Cash and Cash Equivalents at End of Period          |             | $      | 417 |   |   | $ | 838 |   |

| Operating Activities                     |             |   |   |   |   |   |
|------------------------------------------|------------------|--------|--------|--------|--------|--------|
|                                     |             |   |   |   |   |   |
|                                     | Six Months Ended |   |
|                                     | June 30,         |   |
|                                     | 2011             |   | 2010   |   |
|                                     | (in millions)    |   |
| Net Income                               |             | $      | 708    |   |   | $      | 483 |   |
| Depreciation and Amortization            |             |   | 813    |   |   |   | 813 |   |
| Other                                    |             |   | 211    |   |   |   | (714 | ) |
| Net Cash Flows from Operating Activities |             | $      | 1,732  |   |   | $      | 582 |   |

----

| Investing Activities                         |             |   |   |   |   |   |
|----------------------------------------------|------------------|--------|--------|--------|--------|--------|
|                                         |             |   |   |   |   |   |
|                                         | Six Months Ended |   |
|                                         | June 30,         |   |
|                                         | 2011             |   | 2010   |   |
|                                         | (in millions)    |   |
| Construction Expenditures                    |             | $      | (1,113 | )      |   | $      | (1,104 | ) |
| Acquisitions of Nuclear Fuel                 |             |   | (93    | )      |   |   | (41 | ) |
| Acquisition of Cushion Gas from BOA          |             |   | (214   | )      |   |   | - |   |
| Proceeds from Sales of Assets                |             |   | 94     |   |   |   | 147 |   |
| Other                                        |             |   | 46     |   |   |   | 6 |   |
| Net Cash Flows Used for Investing Activities |             | $      | (1,280 | )      |   | $      | (992 | ) |

| Financing Activities                                |             |   |   |   |   |   |
|-----------------------------------------------------|------------------|--------|--------|--------|--------|--------|
|                                                |             |   |   |   |   |   |
|                                                | Six Months Ended |   |
|                                                | June 30,         |   |
|                                                | 2011             |   | 2010   |   |
|                                                | (in millions)    |   |
| Issuance of Common Stock, Net                       |             | $      | 49     |   |   | $      | 42 |   |
| Issuance/Retirement of Debt, Net                    |             |   | 104    |   |   |   | 1,166 |   |
| Dividends Paid on Common Stock                      |             |   | (446   | )      |   |   | (399 | ) |
| Other                                               |             |   | (36    | )      |   |   | (51 | ) |
| Net Cash Flows from (Used for) Financing Activities |             | $      | (329   | )      |   | $      | 758 |   |

----

|   |                                                 |   |   | June 30,          |   | December 31, |
|--------|------------------------------------------------------|--------|--------|-------------------|--------|--------------|
|   |                                                 |   |   | 2011         |   | 2010    |
|   |                                                 |   |   | (in millions)     |
|   | Rockport Plant Unit 2 Future Minimum Lease Payments  |   | $      |  1,700  |   | $            |  1,774  |
|   | Railcars Maximum Potential Loss From Lease Agreement |   |   |  25     |   |         |  25  |

----

|                                                      |                                                               |   | DHLC              |          | CCPC   |            | Conner Run    |
|-----------------------------------------------------------|--------------------------------------------------------------------|--------|-------------------|---------------|--------|-----------------|---------------|
| Number of Citations for Violations of Mandatory Health or |                                                               |   |              |          |   |            |          |   |   |
|                                                      | Safety Standards under 104 *                                       |   |              |  -  |   |            |  -  |   |   |  -  |
| Number of Orders Issued under 104(b) *                    |                                                               |   |  -      |          |   |  -    |          |   |  -  |
| Number of Citations and Orders for Unwarrantable Failure  |                                                               |   |              |          |   |            |          |   |   |
|                                                      | to Comply with Mandatory Health or Safety Standards under 104(d) * |   |              |  -  |   |            |  -  |   |   |  -  |
| Number of Flagrant Violations under 110(b)(2) *           |                                                               |   |  -      |          |   |  -    |          |   |  -  |
| Number of Imminent Danger Orders Issued under 107(a) *    |                                                               |   |  -      |          |   |  -    |          |   |  -  |
| Total Dollar Value of Proposed Assessments                |                                                               | $      |  1,123  |          | $      |  400  |          | $ |  -  |
| Number of Mining-related Fatalities                       |                                                               |   |  -      |          |   |  -    |          |   |  -  |
|                                                      |                                                               |   |              |          |   |            |          |   |   |
| * References to sections under the Mine Act               |                                                               |   |              |          |   |            |          |   |   |

----

----

| MTM Risk Management Contract Net Assets (Liabilities)                 |   |
|-----------------------------------------------------------------------|--------|
| Six Months Ended June 30, 2011                                        |   |
|                                                                  |   |
|                                                                  |   |   |   |   | Generation |   |   |   |   |   |   |   |
|                                                                  |   | Utility |   |   | and |   |   |   |   |   |   |   |
|                                                                  |   | Operations |   |   | Marketing |   |   | All Other |   |   | Total |   |
|                                                                  |   | (in millions) |   |
| Total MTM Risk Management Contract Net Assets                         |   |   |   |   |   |   |   |   |   |   |   |   |
| at December 31, 2010                                             |   | $ | 91 |   |   | $ | 140 |   |   | $ | 2 |   |   | $ | 233 |   |
| (Gain) Loss from Contracts Realized/Settled During the Period and     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Entered in a Prior Period                                             |   |   | (11 | ) |   |   | (14 | ) |   |   | (1 | ) |   |   | (26 | ) |
| Fair Value of New Contracts at Inception When Entered During the |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Period (a)                                                            |   |   | 3 |   |   |   | 7 |   |   |   | - |   |   |   | 10 |   |
| Net Option Premiums Received for Unexercised or Unexpired             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Option Contracts Entered During the Period                            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Changes in Fair Value Due to Market Fluctuations During the      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Period (b)                                                       |   |   | 4 |   |   |   | 10 |   |   |   | - |   |   |   | 14 |   |
| Changes in Fair Value Allocated to Regulated Jurisdictions (c)   |   |   | 3 |   |   |   | - |   |   |   | - |   |   |   | 3 |   |
| Total MTM Risk Management Contract Net Assets                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| at June 30, 2011                                                      |   | $ | 90 |   |   | $ | 143 |   |   | $ | 1 |   |   |   | 234 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodity Cash Flow Hedge Contracts                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 19 |   |
| Interest Rate and Foreign Currency Cash Flow Hedge Contracts     |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (2 | ) |
| Fair Value Hedge Contracts                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 8 |   |
| Collateral Deposits                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 39 |   |
| Total MTM Derivative Contract Net Assets at June 30, 2011             |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 298 |   |

| (a) | Reflects fair value on primarily 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) | Market fluctuations are attributable to various factors such as supply/demand, weather, etc.                                                                                                                                                                                                                                                                                                               |
| (c) | 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.                                                                                                                                                                                         |

----

|                          |                         |       | Exposure                                       |            |           |           |           |   | Number of       |            | Net Exposure |
|-------------------------------|------------------------------|------------|------------------------------------------------|-----------------|----------------|----------------|----------------|--------|-----------------|-----------------|--------------|
|                          |                         | Before     |                                           |            | Counterparties | of             |
|                          |                         | Credit     | Credit                                         | Net             | >10% of     | Counterparties |
| Counterparty Credit Quality   | Collateral                   | Collateral | Exposure                                       | Net Exposure    | >10%        |
|                          |                         |       |                                           |            |           |           |           |   |            |            |         |   |   |   |   |   |
|                          |                         |       | (in millions, except number of counterparties) |
| Investment Grade              |                         | $          |  591                                 |            | $              |  5   |           | $      |  586  |            |         |  1  |   | $ |  173  |
| Split Rating                  |                         |       |  1                                   |            |           |  -   |           |   |  1    |            |         |  1  |   |   |  1  |
| Noninvestment Grade           |                         |       |  7                                   |            |           |  4   |           |   |  3    |            |         |  2  |   |   |  3  |
| No External Ratings:          |                         |       |                                           |            |           |           |           |   |            |            |         |   |   |   |   |
|                          | Internal Investment Grade    |       |                                           |  207  |           |           |  1   |   |            |  206  |         |   |  2  |   |   |  90  |
|                          | Internal Noninvestment Grade |       |                                           |  72   |           |           |  12  |   |            |  60   |         |   |  1  |   |   |  31  |
| Total as of June 30, 2011     |                         | $          |  878                                 |            | $              |  22  |           | $      |  856  |            |         |  7  |   | $ |  298  |
|                          |                         |       |                                           |            |           |           |           |   |            |            |         |   |   |   |   |   |
| Total as of December 31, 2010 |                         | $          |  946                                 |            | $              |  33  |           | $      |  913  |            |         |  7  |   | $ |  347  |

----

| Six Months Ended |    | Twelve Months Ended |
|------------------|---------|---------------------|
| June 30, 2011    |    | December 31, 2010   |
| End              |    | High                |   | Average |   | Low |   | End |   | High |   | Average |   | Low |
| (in millions)    |    | (in millions)       |
| $                | -  |                | $ | 2  |   | $ | -  |   | $ | -  |   | $ | -  |   | $ | 2  |   | $ | 1  |   | $ | -  |

----

| AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES       |   |
|----------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME                          |   |
| For the Three and Six Months Ended June 30, 2011 and 2010            |   |
| (in millions, except per-share and share amounts)                    |   |
| (Unaudited)                                                          |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                 |   | Three Months Ended |   |   | Six Months Ended |   |
|                                                                 |   | 2011 |   |   | 2010 |   |   | 2011 |   |   | 2010 |   |
| REVENUES                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Utility Operations                                                   |   | $ | 3,360 |   |   | $ | 3,186 |   |   | $ | 6,857 |   |   | $ | 6,592 |   |
| Other Revenues                                                       |   |   | 249 |   |   |   | 174 |   |   |   | 482 |   |   |   | 337 |   |
| TOTAL REVENUES                                                       |   |   | 3,609 |   |   |   | 3,360 |   |   |   | 7,339 |   |   |   | 6,929 |   |
| EXPENSES                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel and Other Consumables Used for Electric Generation              |   |   | 980 |   |   |   | 895 |   |   |   | 2,036 |   |   |   | 1,909 |   |
| Purchased Electricity for Resale                                     |   |   | 287 |   |   |   | 227 |   |   |   | 562 |   |   |   | 465 |   |
| Other Operation                                                      |   |   | 697 |   |   |   | 994 |   |   |   | 1,383 |   |   |   | 1,667 |   |
| Maintenance                                                          |   |   | 316 |   |   |   | 243 |   |   |   | 581 |   |   |   | 514 |   |
| Depreciation and Amortization                                        |   |   | 410 |   |   |   | 405 |   |   |   | 813 |   |   |   | 813 |   |
| Taxes Other Than Income Taxes                                        |   |   | 202 |   |   |   | 202 |   |   |   | 415 |   |   |   | 409 |   |
| TOTAL EXPENSES                                                       |   |   | 2,892 |   |   |   | 2,966 |   |   |   | 5,790 |   |   |   | 5,777 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING INCOME                                                     |   |   | 717 |   |   |   | 394 |   |   |   | 1,549 |   |   |   | 1,152 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income (Expense):                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest and Investment Income                                       |   |   | 3 |   |   |   | 18 |   |   |   | 5 |   |   |   | 21 |   |
| Carrying Costs Income                                                |   |   | 17 |   |   |   | 19 |   |   |   | 32 |   |   |   | 33 |   |
| Allowance for Equity Funds Used During Construction                  |   |   | 23 |   |   |   | 19 |   |   |   | 43 |   |   |   | 43 |   |
| Interest Expense                                                     |   |   | (239 | ) |   |   | (249 | ) |   |   | (481 | ) |   |   | (499 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME BEFORE INCOME TAX EXPENSE AND EQUITY EARNINGS                 |   |   | 521 |   |   |   | 201 |   |   |   | 1,148 |   |   |   | 750 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income Tax Expense                                                   |   |   | 174 |   |   |   | 65 |   |   |   | 452 |   |   |   | 272 |   |
| Equity Earnings of Unconsolidated Subsidiaries                       |   |   | 6 |   |   |   | 1 |   |   |   | 12 |   |   |   | 5 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME                                                           |   |   | 353 |   |   |   | 137 |   |   |   | 708 |   |   |   | 483 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less:  Net Income Attributable to Noncontrolling Interests |   |   | 1 |   |   |   | 1 |   |   |   | 2 |   |   |   | 2 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME ATTRIBUTABLE TO AEP SHAREHOLDERS                          |   |   | 352 |   |   |   | 136 |   |   |   | 706 |   |   |   | 481 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less: Preferred Stock Dividend Requirements of Subsidiaries          |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 1 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS ATTRIBUTABLE TO AEP COMMON SHAREHOLDERS                     |   | $ | 352 |   |   | $ | 136 |   |   | $ | 705 |   |   | $ | 480 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| WEIGHTED AVERAGE NUMBER OF BASIC AEP COMMON SHARES OUTSTANDING       |   |   | 481,928,494 |   |   |   | 479,050,774 |   |   |   | 481,538,549 |   |   |   | 478,741,871 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BASIC EARNINGS PER SHARE ATTRIBUTABLE TO AEP COMMON SHAREHOLDERS     |   | $ | 0.73 |   |   | $ | 0.28 |   |   | $ | 1.46 |   |   | $ | 1.00 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| WEIGHTED AVERAGE NUMBER OF DILUTED AEP COMMON SHARES OUTSTANDING     |   |   | 482,203,255 |   |   |   | 479,176,543 |   |   |   | 481,786,698 |   |   |   | 479,012,304 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO AEP COMMON SHAREHOLDERS   |   | $ | 0.73 |   |   | $ | 0.28 |   |   | $ | 1.46 |   |   | $ | 1.00 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH DIVIDENDS DECLARED PER SHARE                                    |   | $ | 0.46 |   |   | $ | 0.42 |   |   | $ | 0.92 |   |   | $ | 0.83 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Consolidated Financial Statements.  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES      |
|---------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND          |
| COMPREHENSIVE INCOME (LOSS)                                         |
| For the Six Months Ended June 30, 2011 and 2010                     |
| (in millions)                                                       |
| (Unaudited)                                                         |
|                                                                |
|                                                                | AEP Common Shareholders |   |   |   |   |
|                                                                | Common Stock |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                                |   |   |   |   |   |   |   |   | Other |   |   |   |   |
|                                                                |   |   |   |   | Paid-in |   | Retained |   | Comprehensive |   | Noncontrolling |   |   |
|                                                                | Shares |   | Amount |   | Capital |   | Earnings |   | Income (Loss) |   | Interests |   | Total |
| TOTAL EQUITY – DECEMBER 31, 2009                              |   |  498  |   | $ |  3,239  |   | $ |  5,824  |   | $ |  4,451  |   | $ |  (374) |   | $ |  -  |   | $ |  13,140  |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of Common Stock                                            |   |  2  |   |   |  9  |   |   |  34  |   |   |   |   |   |   |   |   |   |   |   |  43  |
| Common Stock Dividends                                              |   |   |   |   |   |   |   |   |   |   |  (398) |   |   |   |   |   |  (1) |   |   |  (399) |
| Preferred Stock Dividend Requirements of                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                | Subsidiaries |   |   |   |   |   |   |   |   |   |   |  (1) |   |   |   |   |   |   |   |   |  (1) |
| Other Changes in Equity                                             |   |   |   |   |   |   |   |  2  |   |   |   |   |   |   |   |   |   |   |   |  2  |
| SUBTOTAL – EQUITY                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  12,785  |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income (Loss), Net of                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                | Taxes: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   | Cash Flow Hedges, Net of Tax of $1 |   |   |   |   |   |   |   |   |   |   |   |   |   |  2  |   |   |   |   |   |  2  |
|                                                                |   | Securities Available for Sale, Net of Tax of $6 |   |   |   |   |   |   |   |   |   |   |   |   |   |  (11) |   |   |   |   |   |  (11) |
|                                                                |   | Amortization of Pension and OPEB Deferred |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   |   | Costs, Net of Tax of $6 |   |   |   |   |   |   |   |   |   |   |   |   |   |  11  |   |   |   |   |   |  11  |
| NET INCOME                                                          |   |   |   |   |   |   |   |   |   |   |  481  |   |   |   |   |   |  2  |   |   |  483  |
| TOTAL COMPREHENSIVE INCOME                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  485  |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – JUNE 30, 2010                                  |   |  500  |   | $ |  3,248  |   | $ |  5,860  |   | $ |  4,533  |   | $ |  (372) |   | $ |  1  |   | $ |  13,270  |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – DECEMBER 31, 2010                              |   |  501  |   | $ |  3,257  |   | $ |  5,904  |   | $ |  4,842  |   | $ |  (381) |   | $ |  -  |   | $ |  13,622  |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of Common Stock                                            |   |  1  |   |   |  9  |   |   |  40  |   |   |   |   |   |   |   |   |   |   |   |  49  |
| Common Stock Dividends                                              |   |   |   |   |   |   |   |   |   |   |  (444) |   |   |   |   |   |  (2) |   |   |  (446) |
| Preferred Stock Dividend Requirements of                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                | Subsidiaries |   |   |   |   |   |   |   |   |   |   |  (1) |   |   |   |   |   |   |   |   |  (1) |
| Other Changes in Equity                                             |   |   |   |   |   |   |   |  (12) |   |   |   |   |   |   |   |   |   |   |   |  (12) |
| SUBTOTAL – EQUITY                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  13,212  |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income, Net of                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                | Taxes: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   | Cash Flow Hedges, Net of Tax of $3 |   |   |   |   |   |   |   |   |   |   |   |   |   |  6  |   |   |   |   |   |  6  |
|                                                                |   | Securities Available for Sale, Net of Tax of $- |   |   |   |   |   |   |   |   |   |   |   |   |   |  1  |   |   |   |   |   |  1  |
|                                                                |   | Amortization of Pension and OPEB Deferred |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   |   | Costs, Net of Tax of $6 |   |   |   |   |   |   |   |   |   |   |   |   |   |  12  |   |   |   |   |   |  12  |
| NET INCOME                                                          |   |   |   |   |   |   |   |   |   |   |  706  |   |   |   |   |   |  2  |   |   |  708  |
| TOTAL COMPREHENSIVE INCOME                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  727  |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – JUNE 30, 2011                                  |   |  502  |   | $ |  3,266  |   | $ |  5,932  |   | $ |  5,103  |   | $ |  (362) |   | $ |  -  |   | $ |  13,939  |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Consolidated Financial Statements. |   |   |   |   |   |   |   |   |   |   |   |   |

----

| AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES               |
|------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                        |
| ASSETS                                                                       |
| June 30, 2011 and December 31, 2010                                          |
| (in millions)                                                                |
| (Unaudited)                                                                  |
|                                                                         |
|                                                                         |   | 2011  |   | 2010  |
| CURRENT ASSETS                                                               |   |   |   |   |   |   |
| Cash and Cash Equivalents                                                    |   | $ |  417  |   | $ |  294  |
| Other Temporary Investments                                                  |   |   |   |   |   |   |
|                                                                         | (June 30, 2011 and December 31, 2010 amounts include $250 and $287, respectively, related to Transition Funding and EIS) |   |   |  311  |   |   |  416  |
| Accounts Receivable:                                                         |   |   |   |   |   |   |
|                                                                         | Customers |   |   |  711  |   |   |  683  |
|                                                                         | Accrued Unbilled Revenues |   |   |  74  |   |   |  195  |
|                                                                         | Pledged Accounts Receivable - AEP Credit |   |   |  1,023  |   |   |  949  |
|                                                                         | Miscellaneous |   |   |  95  |   |   |  137  |
|                                                                         | Allowance for Uncollectible Accounts |   |   |  (37) |   |   |  (41) |
|                                                                         |   | Total Accounts Receivable |   |   |  1,866  |   |   |  1,923  |
| Fuel                                                                         |   |   |  680  |   |   |  837  |
| Materials and Supplies                                                       |   |   |  625  |   |   |  611  |
| Risk Management Assets                                                       |   |   |  173  |   |   |  232  |
| Accrued Tax Benefits                                                         |   |   |  331  |   |   |  389  |
| Regulatory Asset for Under-Recovered Fuel Costs                              |   |   |  93  |   |   |  81  |
| Margin Deposits                                                              |   |   |  86  |   |   |  88  |
| Prepayments and Other Current Assets                                         |   |   |  172  |   |   |  145  |
| TOTAL CURRENT ASSETS                                                         |   |   |  4,754  |   |   |  5,016  |
|                                                                         |   |   |   |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT                                                |   |   |   |   |   |   |
| Electric:                                                                    |   |   |   |   |   |   |
|                                                                         | Generation |   |   |  24,841  |   |   |  24,352  |
|                                                                         | Transmission |   |   |  8,779  |   |   |  8,576  |
|                                                                         | Distribution |   |   |  14,465  |   |   |  14,208  |
| Other Property, Plant and Equipment (including nuclear fuel and coal mining) |   |   |  3,870  |   |   |  3,846  |
| Construction Work in Progress                                                |   |   |  2,714  |   |   |  2,758  |
| Total Property, Plant and Equipment                                          |   |   |  54,669  |   |   |  53,740  |
| Accumulated Depreciation and Amortization                                    |   |   |  18,605  |   |   |  18,066  |
| TOTAL PROPERTY, PLANT AND EQUIPMENT - NET                                    |   |   |  36,064  |   |   |  35,674  |
|                                                                         |   |   |   |   |   |   |
| OTHER NONCURRENT ASSETS                                                      |   |   |   |   |   |   |
| Regulatory Assets                                                            |   |   |  5,004  |   |   |  4,943  |
| Securitized Transition Assets                                                |   |   |  1,673  |   |   |  1,742  |
| Spent Nuclear Fuel and Decommissioning Trusts                                |   |   |  1,574  |   |   |  1,515  |
| Goodwill                                                                     |   |   |  76  |   |   |  76  |
| Long-term Risk Management Assets                                             |   |   |  343  |   |   |  410  |
| Deferred Charges and Other Noncurrent Assets                                 |   |   |  1,264  |   |   |  1,079  |
| TOTAL OTHER NONCURRENT ASSETS                                                |   |   |  9,934  |   |   |  9,765  |
|                                                                         |   |   |   |   |   |   |
| TOTAL ASSETS                                                                 |   | $ |  50,752  |   | $ |  50,455  |
|                                                                         |   |   |   |   |   |   |
| See Condensed Notes to Condensed Consolidated Financial Statements.          |   |   |   |   |   |   |

----

| AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES                   |
|----------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                            |
| LIABILITIES AND EQUITY                                                           |
| June 30, 2011 and December 31, 2010                                              |
| (dollars in millions)                                                            |
| (Unaudited)                                                                      |
|                                                                             |
|                                                                             |   | 2011  |   | 2010  |
| CURRENT LIABILITIES                                                              |   |   |
| Accounts Payable                                                                 |   | $ |  969  |   | $ |  1,061  |
| Short-term Debt:                                                                 |   |   |   |   |   |   |
|                                                                             | Securitized Debt for Receivables - AEP Credit |   |   |   |  695  |   |   |  690  |
|                                                                             | Other Short-term Debt |   |   |   |  944  |   |   |  656  |
|                                                                             |   | Total Short-term Debt |   |   |   |  1,639  |   |   |  1,346  |
| Long-term Debt Due Within One Year                                               |   |   |  1,071  |   |   |  1,309  |
| Risk Management Liabilities                                                      |   |   |  94  |   |   |  129  |
| Customer Deposits                                                                |   |   |  284  |   |   |  273  |
| Accrued Taxes                                                                    |   |   |  597  |   |   |  702  |
| Accrued Interest                                                                 |   |   |  282  |   |   |  281  |
| Regulatory Liability for Over-Recovered Fuel Costs                               |   |   |  9  |   |   |  17  |
| Deferred Gain and Accrued Litigation Costs                                       |   |   |  -  |   |   |  448  |
| Other Current Liabilities                                                        |   |   |  942  |   |   |  952  |
| TOTAL CURRENT LIABILITIES                                                        |   |   |  5,887  |   |   |  6,518  |
|                                                                             |   |   |   |   |   |   |
| NONCURRENT LIABILITIES                                                           |   |   |   |   |   |   |
| Long-term Debt                                                                   |   |   |   |   |   |   |
|                                                                             | (June 30, 2011 and December 31, 2010 amounts include $1,703 and $1,857, respectively, related to Transition Funding, DCC Fuel and Sabine) |   |   |  15,564  |   |   |  15,502  |
| Long-term Risk Management Liabilities                                            |   |   |  124  |   |   |  141  |
| Deferred Income Taxes                                                            |   |   |  7,716  |   |   |  7,359  |
| Regulatory Liabilities and Deferred Investment Tax Credits                       |   |   |  3,246  |   |   |  3,171  |
| Asset Retirement Obligations                                                     |   |   |  1,429  |   |   |  1,394  |
| Employee Benefits and Pension Obligations                                        |   |   |  1,790  |   |   |  1,893  |
| Deferred Credits and Other Noncurrent Liabilities                                |   |   |  997  |   |   |  795  |
| TOTAL NONCURRENT LIABILITIES                                                     |   |   |  30,866  |   |   |  30,255  |
|                                                                             |   |   |   |   |   |   |
| TOTAL LIABILITIES                                                                |   |   |  36,753  |   |   |  36,773  |
|                                                                             |   |   |   |   |   |   |
| Cumulative Preferred Stock Not Subject to Mandatory Redemption                   |   |   |  60  |   |   |  60  |
|                                                                             |   |   |   |   |   |   |
| Rate Matters (Note 3)                                                            |   |   |   |   |   |   |
| Commitments and Contingencies (Note 4)                                           |   |   |   |   |   |   |
|                                                                             |   |   |   |   |   |   |
| EQUITY                                                                           |   |   |   |   |   |   |
| Common Stock – Par Value – $6.50 Per Share:                          |   |   |   |   |   |   |
|                                                                             |   |   | 2011  |   | 2010  |   |   |   |   |   |   |   |
|                                                                             | Shares Authorized | 600,000,000  |   | 600,000,000  |   |   |   |   |   |   |   |
|                                                                             | Shares Issued | 502,534,747  |   | 501,114,881  |   |   |   |   |   |   |   |
| (20,307,725 shares were held in treasury at June 30, 2011 and December 31, 2010) |   |   |  3,266  |   |   |  3,257  |
| Paid-in Capital                                                                  |   |   |  5,932  |   |   |  5,904  |
| Retained Earnings                                                                |   |   |  5,103  |   |   |  4,842  |
| Accumulated Other Comprehensive Income (Loss)                                    |   |   |  (362) |   |   |  (381) |
| TOTAL AEP COMMON SHAREHOLDERS’ EQUITY                                      |   |   |  13,939  |   |   |  13,622  |
|                                                                             |   |   |   |   |   |   |
| TOTAL EQUITY                                                                     |   |   |  13,939  |   |   |  13,622  |
|                                                                             |   |   |   |   |   |   |
| TOTAL LIABILITIES AND EQUITY                                                     |   | $ |  50,752  |   | $ |  50,455  |
|                                                                             |   |   |   |   |   |   |
| See Condensed Notes to Condensed Consolidated Financial Statements.              |   |   |   |   |   |   |

----

| AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES                   |
|----------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                  |
| For the Six Months Ended June 30, 2011 and 2010                                  |
| (in millions)                                                                    |
| (Unaudited)                                                                      |
|                                                                             |
|                                                                             |   | 2011  |   | 2010  |
| OPERATING ACTIVITIES                                                             |   |   |   |   |   |   |
| Net Income                                                                       |   | $ |  708  |   | $ |  483  |
| Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities: |   |   |   |   |   |   |
|                                                                             | Depreciation and Amortization |   |   |  813  |   |   |  813  |
|                                                                             | Deferred Income Taxes |   |   |  525  |   |   |  212  |
|                                                                             | Gain on Settlement with BOA and Enron |   |   |  (51) |   |   |  -  |
|                                                                             | Settlement of Litigation with BOA and Enron |   |   |  (211) |   |   |  -  |
|                                                                             | Carrying Costs Income |   |   |  (32) |   |   |  (33) |
|                                                                             | Allowance for Equity Funds Used During Construction |   |   |  (43) |   |   |  (43) |
|                                                                             | Mark-to-Market of Risk Management Contracts |   |   |  61  |   |   |  4  |
|                                                                             | Amortization of Nuclear Fuel |   |   |  72  |   |   |  69  |
|                                                                             | Property Taxes |   |   |  62  |   |   |  54  |
|                                                                             | Fuel Over/Under-Recovery, Net |   |   |  (93) |   |   |  (181) |
|                                                                             | Change in Other Noncurrent Assets |   |   |  (11) |   |   |  (21) |
|                                                                             | Change in Other Noncurrent Liabilities |   |   |  83  |   |   |  65  |
|                                                                             | Changes in Certain Components of Working Capital: |   |   |   |   |   |   |
|                                                                             |   | Accounts Receivable, Net |   |   |  53  |   |   |  (802) |
|                                                                             |   | Fuel, Materials and Supplies |   |   |  146  |   |   |  71  |
|                                                                             |   | Accounts Payable |   |   |  (87) |   |   |  (168) |
|                                                                             |   | Accrued Taxes, Net |   |   |  (198) |   |   |  (164) |
|                                                                             |   | Other Current Assets |   |   |  (9) |   |   |  66  |
|                                                                             |   | Other Current Liabilities |   |   |  (56) |   |   |  157  |
| Net Cash Flows from Operating Activities                                         |   |   |  1,732  |   |   |  582  |
|                                                                             |   |   |   |   |   |   |
| INVESTING ACTIVITIES                                                             |   |   |   |   |   |   |
| Construction Expenditures                                                        |   |   |  (1,113) |   |   |  (1,104) |
| Change in Other Temporary Investments, Net                                       |   |   |  11  |   |   |  31  |
| Purchases of Investment Securities                                               |   |   |  (645) |   |   |  (838) |
| Sales of Investment Securities                                                   |   |   |  712  |   |   |  849  |
| Acquisitions of Nuclear Fuel                                                     |   |   |  (93) |   |   |  (41) |
| Acquisitions of Assets                                                           |   |   |  (10) |   |   |  (12) |
| Acquisition of Cushion Gas from BOA                                              |   |   |  (214) |   |   |  -  |
| Proceeds from Sales of Assets                                                    |   |   |  94  |   |   |  147  |
| Other Investing Activities                                                       |   |   |  (22) |   |   |  (24) |
| Net Cash Flows Used for Investing Activities                                     |   |   |  (1,280) |   |   |  (992) |
|                                                                             |   |   |   |   |   |   |
| FINANCING ACTIVITIES                                                             |   |   |   |   |   |   |
| Issuance of Common Stock, Net                                                    |   |   |  49  |   |   |  42  |
| Issuance of Long-term Debt                                                       |   |   |  1,074  |   |   |  1,161  |
| Commercial Paper and Credit Facility Borrowings                                  |   |   |  357  |   |   |  50  |
| Change in Short-term Debt, Net                                                   |   |   |  566  |   |   |  1,345  |
| Retirement of Long-term Debt                                                     |   |   |  (1,263) |   |   |  (1,341) |
| Commercial Paper and Credit Facility Repayments                                  |   |   |  (630) |   |   |  (49) |
| Principal Payments for Capital Lease Obligations                                 |   |   |  (35) |   |   |  (49) |
| Dividends Paid on Common Stock                                                   |   |   |  (446) |   |   |  (399) |
| Dividends Paid on Cumulative Preferred Stock                                     |   |   |  (1) |   |   |  (1) |
| Other Financing Activities                                                       |   |   |  -  |   |   |  (1) |
| Net Cash Flows from (Used for) Financing Activities                              |   |   |  (329) |   |   |  758  |
|                                                                             |   |   |   |   |   |   |
| Net Increase in Cash and Cash Equivalents                                        |   |   |  123  |   |   |  348  |
| Cash and Cash Equivalents at Beginning of Period                                 |   |   |  294  |   |   |  490  |
| Cash and Cash Equivalents at End of Period                                       |   | $ |  417  |   | $ |  838  |
|                                                                             |   |   |   |   |   |   |
| SUPPLEMENTARY INFORMATION                                                        |   |   |   |   |   |   |
| Cash Paid for Interest, Net of Capitalized Amounts                               |   | $ |  442  |   | $ |  487  |
| Net Cash Paid for Income Taxes                                                   |   |   |  15  |   |   |  174  |
| Noncash Acquisitions Under Capital Leases                                        |   |   |  28  |   |   |  176  |
| Government Grants Included in Accounts Receivable at June 30,                    |   |   |  6  |   |   |  -  |
| Construction Expenditures Included in Current Liabilities at June 30,            |   |   |  292  |   |   |  205  |
|                                                                             |   |   |   |   |   |   |
| 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.     | Acquisition and Dispositions              |
|   |                                      |
| 6.     | Benefit Plans                             |
|   |                                      |
| 7.     | Business Segments                         |
|   |                                      |
| 8.     | Derivatives and Hedging                   |
|   |                                      |
| 9.     | Fair Value Measurements                   |
|   |                                      |
| 10.    | Income Taxes                              |
|   |                                      |
| 11.    | Financing Activities                      |
|   |                                      |
| 12.    | Cost Reduction Initiatives                |

----

| CONDENSED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
|----------------------------------------------------------------|

----

----

| AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES |
|----------------------------------------------------------------|
| VARIABLE INTEREST ENTITIES                                     |
| June 30, 2011                                                  |
| (in millions)                                                  |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           | SWEPCo |   | I&M |   | Protected Cell |   |   |   | Transition |
|                                                           | Sabine |   | DCC Fuel |   | of EIS |   | AEP Credit |   | Funding |
| ASSETS                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Assets                                                 |   | $ | 42 |   |   | $ | 85 |   |   | $ | 125 |   |   | $ | 1,010 |   |   | $ | 197 |
| Net Property, Plant and Equipment                              |   |   | 140 |   |   |   | 127 |   |   |   | - |   |   |   | - |   |   |   | - |
| Other Noncurrent Assets                                        |   |   | 34 |   |   |   | 80 |   |   |   | 7 |   |   |   | - |   |   |   | 1,678 |
| Total Assets                                                   |   | $ | 216 |   |   | $ | 292 |   |   | $ | 132 |   |   | $ | 1,010 |   |   | $ | 1,875 |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND EQUITY                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Liabilities                                            |   | $ | 46 |   |   | $ | 76 |   |   | $ | 39 |   |   | $ | 925 |   |   | $ | 224 |
| Noncurrent Liabilities                                         |   |   | 170 |   |   |   | 216 |   |   |   | 78 |   |   |   | 1 |   |   |   | 1,637 |
| Equity                                                         |   |   | - |   |   |   | - |   |   |   | 15 |   |   |   | 84 |   |   |   | 14 |
| Total Liabilities and Equity                                   |   | $ | 216 |   |   | $ | 292 |   |   | $ | 132 |   |   | $ | 1,010 |   |   | $ | 1,875 |

| AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES |
|----------------------------------------------------------------|
| VARIABLE INTEREST ENTITIES                                     |
| December 31, 2010                                              |
| (in millions)                                                  |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           | SWEPCo |   | I&M |   | Protected Cell |   |   |   | Transition |
|                                                           | Sabine |   | DCC Fuel |   | of EIS |   | AEP Credit |   | Funding |
| ASSETS                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Assets                                                 |   | $ | 50 |   |   | $ | 92 |   |   | $ | 131 |   |   | $ | 924 |   |   | $ | 214 |
| Net Property, Plant and Equipment                              |   |   | 139 |   |   |   | 173 |   |   |   | - |   |   |   | - |   |   |   | - |
| Other Noncurrent Assets                                        |   |   | 34 |   |   |   | 112 |   |   |   | 1 |   |   |   | 10 |   |   |   | 1,746 |
| Total Assets                                                   |   | $ | 223 |   |   | $ | 377 |   |   | $ | 132 |   |   | $ | 934 |   |   | $ | 1,960 |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND EQUITY                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Liabilities                                            |   | $ | 33 |   |   | $ | 79 |   |   | $ | 33 |   |   | $ | 886 |   |   | $ | 221 |
| Noncurrent Liabilities                                         |   |   | 190 |   |   |   | 298 |   |   |   | 85 |   |   |   | 1 |   |   |   | 1,725 |
| Equity                                                         |   |   | - |   |   |   | - |   |   |   | 14 |   |   |   | 47 |   |   |   | 14 |
| Total Liabilities and Equity                                   |   | $ | 223 |   |   | $ | 377 |   |   | $ | 132 |   |   | $ | 934 |   |   | $ | 1,960 |

----

|                             | June 30, 2011    |   | December 31, 2010 |   |
|----------------------------------|------------------|--------|-------------------|--------|
|                             | As Reported on   |   |              |   | As Reported on |   |   |   |
|                             | the Consolidated |   | Maximum           |   | the Consolidated |   | Maximum |   |
|                             | Balance Sheet    |   | Exposure          |   | Balance Sheet |   | Exposure |   |
|                             | (in millions)    |   |
| Capital Contribution from SWEPCo |             | $      | 8                 |   |   | $ | 8 |   |   | $ | 6 |   |   | $ | 6 |   |
| Retained Earnings                |             |   | 1                 |   |   |   | 1 |   |   |   | 2 |   |   |   | 2 |   |
| SWEPCo's Guarantee of Debt       |             |   | -                 |   |   |   | 54 |   |   |   | - |   |   |   | 48 |   |
|                             |             |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Investment in DHLC         |             | $      | 9                 |   |   | $ | 63 |   |   | $ | 8 |   |   | $ | 56 |   |

|                          | June 30, 2011    |   | December 31, 2010 |          |
|-------------------------------|------------------|--------|-------------------|---------------|
|                          | As Reported on   |   |              |          |   | As Reported on |   |   |   |   |
|                          | the Consolidated |   | Maximum           |          | the Consolidated |   | Maximum |   |
|                          | Balance Sheet    |   | Exposure          |          | Balance Sheet |   | Exposure |   |
|                          |             |   |              | (in millions) |   |   |   |   |
| Capital Contribution from AEP |             | $      | 19                |          |   | $ | 19 |   |   | $ | 18 |   |   | $ | 18 |   |
| Retained Earnings             |             |   | 8                 |          |   |   | 8 |   |   |   | 6 |   |   |   | 6 |   |
|                          |             |   |              |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Investment in PATH-WV   |             | $      | 27                |          |   | $ | 27 |   |   | $ | 24 |   |   | $ | 24 |   |

----

|                                                  |   | Three Months Ended June 30,          |   |
|-------------------------------------------------------|--------|--------------------------------------|--------|
|                                                  |   | 2011                                 |   |   | 2010 |   |
|                                                  |   | (in millions, except per share data) |   |
|                                                  |   |                                 |   | $/share |   |   |   |   | $/share |   |
| Earnings Applicable to AEP Common Shareholders        |   | $                                    | 352    |   |   |   |   |   | $ | 136 |   |   |   |   |
|                                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted Average Number of Basic Shares Outstanding   |   |                                 | 481.9  |   |   | $ | 0.73 |   |   |   | 479.1 |   |   | $ | 0.28 |   |
| Weighted Average Dilutive Effect of:                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock Options                                         |   |                                 | 0.1    |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Restricted Stock Units                                |   |                                 | 0.2    |   |   |   | - |   |   |   | 0.1 |   |   |   | - |   |
| Weighted Average Number of Diluted Shares Outstanding |   |                                 | 482.2  |   |   | $ | 0.73 |   |   |   | 479.2 |   |   | $ | 0.28 |   |

|                                                  |   | Six Months Ended June 30,            |   |
|-------------------------------------------------------|--------|--------------------------------------|--------|
|                                                  |   | 2011                                 |   |   | 2010 |   |
|                                                  |   | (in millions, except per share data) |   |
|                                                  |   |                                 |   |   | $/share |   |   |   |   |   | $/share |   |
| Earnings Applicable to AEP Common Shareholders        |   | $                                    | 705    |   |   |   |   |   | $ | 480 |   |   |   |   |
|                                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted Average Number of Basic Shares Outstanding   |   |                                 | 481.5  |   |   | $ | 1.46 |   |   |   | 478.7 |   |   | $ | 1.00 |   |
| Weighted Average Dilutive Effect of:                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Performance Share Units                               |   |                                 | -      |   |   |   | - |   |   |   | 0.1 |   |   |   | - |   |
| Stock Options                                         |   |                                 | 0.1    |   |   |   | - |   |   |   | 0.1 |   |   |   | - |   |
| Restricted Stock Units                                |   |                                 | 0.2    |   |   |   | - |   |   |   | 0.1 |   |   |   | - |   |
| Weighted Average Number of Diluted Shares Outstanding |   |                                 | 481.8  |   |   | $ | 1.46 |   |   |   | 479.0 |   |   | $ | 1.00 |   |

----

| Regulatory Assets Not Yet Being Recovered                                     |   |          |   |   |         |   |
|-------------------------------------------------------------------------------|--------|---------------|--------|--------|--------------|--------|
|                                                                          |   | June 30,      |   |   | December 31, |   |
|                                                                          |   | 2011          |   |   | 2010         |   |
|                                                                          |   | (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                                  |   |          |   |   |         |   |
| Line Extension Carrying Costs - CSPCo, OPCo (a)                               |   | $             | 61     |   |         | $      | 55 |   |
| Customer Choice Deferrals - CSPCo, OPCo (a)                                   |   |          | 60     |   |         |   | 59 |   |
| Storm Related Costs - CSPCo, OPCo (a)                                         |   |          | 31     |   |         |   | 30 |   |
| Storm Related Costs - TCC                                                     |   |          | 25     |   |         |   | 25 |   |
| Storm Related Costs - PSO (c)                                                 |   |          | 18     |   |         |   | - |   |
| Acquisition of Monongahela Power - CSPCo (a)                                  |   |          | 9      |   |         |   | 8 |   |
| Other Regulatory Assets Not Yet Being Recovered                               |   |          | 7      |   |         |   | 7 |   |
| Regulatory Assets Currently Not Earning a Return                              |   |          |   |   |         |   |   |   |
| Environmental Rate Adjustment Clause - APCo                                   |   |          | 65     |   |         |   | 56 |   |
| Storm Related Costs - APCo, KGPCo, SWEPCo                                     |   |          | 28     |   |         |   | 28 |   |
| Deferred Wind Power Costs - APCo                                              |   |          | 38     |   |         |   | 29 |   |
| Mountaineer Carbon Capture and Storage Product Validation Facility - APCo (b) |   |          | 19     |   |         |   | 60 |   |
| Special Rate Mechanism for Century Aluminum - APCo                            |   |          | 13     |   |         |   | 13 |   |
| Acquisition of Monongahela Power - CSPCo (a)                                  |   |          | 4      |   |         |   | 4 |   |
| Storm Related Costs - PSO (c)                                            |   |          | -      |   |         |   |  17 |   |
| Other Regulatory Assets Not Yet Being Recovered                               |   |          | 5      |   |         |   | 4 |   |
| Total Regulatory Assets Not Yet Being Recovered                               |   | $             | 383    |   |         | $      | 395 |   |

| (a) | Requested to be recovered in a distribution asset recovery rider.  See the "2011 Ohio Distribution Base Rate Case" section below. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | APCo wrote off a portion of the Mountaineer Carbon Capture and Storage Product Validation Facility as denied for recovery by the WVPSC in March 2011.  See "Mountaineer Carbon Capture and Storage Project Product Validation Facility" section below. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | In June 2011, an order was received approving recovery of PSO storm costs and associated carrying costs with recovery to begin in August 2011.  Starting in the second quarter of 2011, and in accordance with the order received from the OCC, PSO recorded a return on its storm related costs. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

----

| ·   | The PUCT’s order denying recovery of capacity auction true-up amounts was reversed.  We estimate that, in the remand to the PUCT, TCC will be entitled to recover approximately $420 million, plus interest from January 1, 2002. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Supreme Court of Texas reversed the Texas Court of Appeals decision and found that the PUCT could adjust the net book value for what it determined to be commercially unreasonable conduct.  This portion of the decision is unfavorable, but was already reflected in our financial statements. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Supreme Court of Texas affirmed the PUCT’s finding that the sales price should be used to value TCC’s nuclear generation.  This portion of the decision is favorable, but this issue will have no impact on TCC’s rate recovery as this was already reflected in our financial statements. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Supreme Court of Texas reversed the Court of Appeal’s decision and found it was appropriate for the PUCT to take into account previously refunded excess mitigation credits to affiliate retail electricity providers.  This portion of the decision upheld the PUCT’s decision.  However, resolution of related issues will be addressed on remand. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The PUCT decisions allowing recovery of construction work in progress balances and specifying the interest rate on stranded costs were upheld.  These decisions are already reflected in our financial statements and will not be addressed in the remand proceeding. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

| Michigan 2009 and 2010 Power Supply Cost Recovery (PSCR) Reconciliations (Cook Plant Unit 1 Fire and Shutdown) |
|----------------------------------------------------------------------------------------------------------------|

| 2011 Michigan Base Rate Case |
|------------------------------|

----

----

----

----

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

----

----

----

|                                                                                  |   | (in millions) |   |
|---------------------------------------------------------------------------------------|--------|---------------|--------|
| Income Statement:                                                                     |   |          |   |
|   Other Operation Expense - Pretax Gain on Settlement                       |   | $             | 51     |   |
|   Income Tax Expense                                                        |   |          | 73     |   |
| Net Loss After Tax                                                                    |   | $             | (22    | ) |
|                                                                                  |   |          |   |   |
| Cash Flow Statement:                                                                  |   |          |   |   |
|   Net Income - Loss on Settlement with BOA and Enron                        |   | $             | (22    | ) |
|   Deferred Income Taxes                                                     |   |          | 91     |   |
|   Gain on Settlement with BOA and Enron                                     |   |          | (51    | ) |
|   Settlement of Litigation with BOA and Enron                               |   |          | (211   | ) |
|   Accrued Taxes, Net                                                        |   |          | (18    | ) |
|   Acquisition of Cushion Gas from BOA                                       |   |          | (214   | ) |
| Cash Paid                                                                             |   | $             | (425   | ) |
|                                                                                  |   |          |   |   |
| Balance Sheet:                                                                        |   |          |   |   |
|   Deferred Charges and Other Noncurrent Assets - Gas Acquired               |   | $             | 214    |   |
|   Deferred Credits and Other Noncurrent Liabilities - Gas Service Liability |   |          | 187    |   |
|   Accrued Taxes - Tax Benefit on Settlement with BOA and Enron              |   |          | 18     |   |
|   Deferred Income Taxes - Deferred Tax Benefit on Gas Service Liability     |   |          | 66     |   |

----

|                                  |                        |   | Other Postretirement        |   |
|---------------------------------------|-----------------------------|--------|-----------------------------|--------|
|                                  | Pension Plans               |   | Benefit Plans               |   |
|                                  | Three Months Ended June 30, |   | Three Months Ended June 30, |   |
|                                  | 2011                        |   | 2010                        |   | 2011 |   | 2010 |   |
|                                  | (in millions)               |   |
| Service Cost                          |                        | $      | 18                          |   |   | $ | 27 |   |   | $ | 10 |   |   | $ | 11 |   |
| Interest Cost                         |                        |   | 60                          |   |   |   | 64 |   |   |   | 27 |   |   |   | 28 |   |
| Expected Return on Plan Assets        |                        |   | (78                         | )      |   |   | (78 | ) |   |   | (27 | ) |   |   | (26 | ) |
| Amortization of Transition Obligation |                        |   | -                           |   |   |   | - |   |   |   | - |   |   |   | 7 |   |
| Amortization of Net Actuarial Loss    |                        |   | 31                          |   |   |   | 23 |   |   |   | 8 |   |   |   | 7 |   |
| Net Periodic Benefit Cost             |                        | $      | 31                          |   |   | $ | 36 |   |   | $ | 18 |   |   | $ | 27 |   |

|                                  |                      |   | Other Postretirement      |   |
|---------------------------------------|---------------------------|--------|---------------------------|--------|
|                                  | Pension Plans             |   | Benefit Plans             |   |
|                                  | Six Months Ended June 30, |   | Six Months Ended June 30, |   |
|                                  | 2011                      |   | 2010                      |   | 2011 |   | 2010 |   |
|                                  | (in millions)             |   |
| Service Cost                          |                      | $      | 36                        |   |   | $ | 55 |   |   | $ | 21 |   |   | $ | 23 |   |
| Interest Cost                         |                      |   | 119                       |   |   |   | 127 |   |   |   | 54 |   |   |   | 56 |   |
| Expected Return on Plan Assets        |                      |   | (157                      | )      |   |   | (156 | ) |   |   | (54 | ) |   |   | (52 | ) |
| Amortization of Transition Obligation |                      |   | -                         |   |   |   | - |   |   |   | - |   |   |   | 14 |   |
| Amortization of Net Actuarial Loss    |                      |   | 61                        |   |   |   | 45 |   |   |   | 15 |   |   |   | 14 |   |
| Net Periodic Benefit Cost             |                      | $      | 59                        |   |   | $ | 71 |   |   | $ | 36 |   |   | $ | 55 |   |

----

| ·   | Commercial barging operations that 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 and, to a lesser extent, Ohio in PJM and MISO. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------|

| ·   | 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 settle and expire in the fourth quarter of 2011. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Revenue sharing related to the Plaquemine Cogeneration Facility which ends in the fourth quarter of 2011. |
|--------------------|-----------------------------------------------------------------------------------------------------------|

|                             |       |          |              |   | Nonutility Operations |            |      |       |              |   |         |           |   |   |
|----------------------------------|------------|---------------|-------------------|--------|-----------------------|-----------------|-----------|------------|-------------------|--------|--------------|----------------|--------|--------|
|                             |       |          |              |   |                  |            |      | Generation |              |   |         |           |   |   |   |   |   |
|                             | Utility    |          | AEP River         |   | and                   |            | All Other |       | Reconciling       |   |         |           |
|                             | Operations |          | Operations        |   | Marketing             |            | (a)       |       |  Adjustments |   | Consolidated |
|                             |       | (in millions) |
| Three Months Ended June 30, 2011 |       |          |              |   |                  |            |      |       |              |   |         |           |   |   |   |   |   |   |
| Revenues from:                   |       |          |              |   |                  |            |      |       |              |   |         |           |   |   |   |   |   |   |
| External Customers               |       | $             |  3,360  |   | $                     |  162  |      | $          |  79     |   | $            |  8   |   | $      |  -  |   | $ |  3,609  |
| Other Operating Segments         |       |          |  29     |   |                  |  4    |      |       |  -      |   |         |  2   |   |   |  (35) |   |   |  -  |
| Total Revenues                   |       | $             |  3,389  |   | $                     |  166  |      | $          |  79     |   | $            |  10  |   | $      |  (35) |   | $ |  3,609  |
|                             |       |          |              |   |                  |            |      |       |              |   |         |           |   |   |   |   |   |   |
| Net Income (Loss)                |       | $             |  356    |   | $                     |  (1)       |      | $          |  11     |   | $            |  (13)     |   | $      |  -  |   | $ |  353  |
|                             |       |          |              |   |                  |            |      |       |              |   |         |           |   |   |   |   |   |   |
|                             |       |          |              |   | Nonutility Operations |            |      |       |              |   |         |           |   |   |
|                             |       |          |              |   |                  |            |      | Generation |              |   |         |           |   |   |   |   |   |
|                             | Utility    |          | AEP River         |   | and                   |            | All Other |       | Reconciling       |   |         |           |
|                             | Operations |          | Operations        |   | Marketing             |            | (a)       |       |  Adjustments |   | Consolidated |
|                             |       | (in millions) |
| Three Months Ended June 30, 2010 |       |          |              |   |                  |            |      |       |              |   |         |           |   |   |   |   |   |   |
| Revenues from:                   |       |          |              |   |                  |            |      |       |              |   |         |           |   |   |   |   |   |   |
| External Customers               |       | $             |  3,186  |   | $                     |  127  |      | $          |  42     |   | $            |  5   |   | $      |  -  |   | $ |  3,360  |
| Other Operating Segments         |       |          |  25     |   |                  |  5    |      |       |  -      |   |         |  (1)      |   |   |  (29) |   |   |  -  |
| Total Revenues                   |       | $             |  3,211  |   | $                     |  132  |      | $          |  42     |   | $            |  4   |   | $      |  (29) |   | $ |  3,360  |
|                             |       |          |              |   |                  |            |      |       |              |   |         |           |   |   |   |   |   |   |
| Net Income (Loss)                |       | $             |  132    |   | $                     |  (1)       |      | $          |  7      |   | $            |  (1)      |   | $      |  -  |   | $ |  137  |

----

|                           |       |          |              |   | Nonutility Operations |            |      |       |              |   |         |           |   |   |
|--------------------------------|------------|---------------|-------------------|--------|-----------------------|-----------------|-----------|------------|-------------------|--------|--------------|----------------|--------|--------|
|                           |       |          |              |   |                  |            |      | Generation |              |   |         |           |   |   |   |   |   |
|                           | Utility    |          | AEP River         |   | and                   |            | All Other |       | Reconciling       |   |         |           |
|                           | Operations |          | Operations        |   | Marketing             |            | (a)       |       |  Adjustments |   | Consolidated |
|                           |       | (in millions) |
| Six Months Ended June 30, 2011 |       |          |              |   |                  |            |      |       |              |   |         |           |   |   |   |   |   |   |
| Revenues from:                 |       |          |              |   |                  |            |      |       |              |   |         |           |   |   |   |   |   |   |
| External Customers             |       | $             |  6,857  |   | $                     |  329  |      | $          |  141    |   | $            |  12  |   | $      |  -  |   | $ |  7,339  |
| Other Operating Segments       |       |          |  56     |   |                  |  9    |      |       |  1      |   |         |  3   |   |   |  (69) |   |   |  -  |
| Total Revenues                 |       | $             |  6,913  |   | $                     |  338  |      | $          |  142    |   | $            |  15  |   | $      |  (69) |   | $ |  7,339  |
|                           |       |          |              |   |                  |            |      |       |              |   |         |           |   |   |   |   |   |   |
| Net Income (Loss)              |       | $             |  734    |   | $                     |  6    |      | $          |  12     |   | $            |  (44)     |   | $      |  -  |   | $ |  708  |
|                           |       |          |              |   |                  |            |      |       |              |   |         |           |   |   |   |   |   |   |
|                           |       |          |              |   | Nonutility Operations |            |      |       |              |   |         |           |   |   |
|                           |       |          |              |   |                  |            |      | Generation |              |   |         |           |   |   |   |   |   |
|                           | Utility    |          | AEP River         |   | and                   |            | All Other |       | Reconciling       |   |         |           |
|                           | Operations |          | Operations        |   | Marketing             |            | (a)       |       |  Adjustments |   | Consolidated |
|                           |       | (in millions) |
| Six Months Ended June 30, 2010 |       |          |              |   |                  |            |      |       |              |   |         |           |   |   |   |   |   |   |
| Revenues from:                 |       |          |              |   |                  |            |      |       |              |   |         |           |   |   |   |   |   |   |
| External Customers             |       | $             |  6,592  |   | $                     |  248  |      | $          |  89     |   | $            |  -   |   | $      |  -  |   | $ |  6,929  |
| Other Operating Segments       |       |          |  45     |   |                  |  10   |      |       |  -      |   |         |  7   |   |   |  (62) |   |   |  -  |
| Total Revenues                 |       | $             |  6,637  |   | $                     |  258  |      | $          |  89     |   | $            |  7   |   | $      |  (62) |   | $ |  6,929  |
|                           |       |          |              |   |                  |            |      |       |              |   |         |           |   |   |   |   |   |   |
| Net Income (Loss)              |       | $             |  476    |   | $                     |  2    |      | $          |  17     |   | $            |  (12)     |   | $      |  -  |   | $ |  483  |

|                                      |          |   |       | Nonutility Operations |                  |       |      |       |        |        |   |         |        |
|-------------------------------------------|---------------|--------|------------|-----------------------|-----------------------|------------|-----------|------------|-------------|-------------|--------|--------------|-------------|
|                                      |          |   |       |                  |                  | Generation |      |       |        | Reconciling |   |         |        |   |
|                                      | Utility       |   | AEP River  |                  | and                   |       | All Other |       | Adjustments |        |   |         |        |
|                                      | Operations    |   | Operations |                  | Marketing             |       | (a)       |       | (b)         |        |   | Consolidated |        |
|                                      | (in millions) |   |
| June 30, 2011                             |          |   |       |                  |                  |       |      |       |        |        |   |         |        |   |   |
| Total Property, Plant and Equipment       |          | $      | 53,735     |                  | $                     | 590        |      | $          | 591         |        | $      | 11           |        |   | $ | (258 | ) |   | $ | 54,669 |   |
| Accumulated Depreciation and Amortization |          |   | 18,315     |                  |                  | 124        |      |       | 209         |        |   | 9            |        |   |   | (52 | ) |   |   | 18,605 |   |
| Total Property, Plant and Equipment - Net |          | $      | 35,420     |                  | $                     | 466        |      | $          | 382         |        | $      | 2            |        |   | $ | (206 | ) |   | $ | 36,064 |   |
|                                      |          |   |       |                  |                  |       |      |       |        |        |   |         |        |   |   |   |   |   |   |   |   |
| Total Assets                              |          | $      | 48,858     |                  | $                     | 647        |      | $          | 864         |        | $      | 15,974       |        |   | $ | (15,591 | ) | (c) | $ | 50,752 |   |
|                                      |          |   |       |                  |                  |       |      |       |        |        |   |         |        |   |   |   |   |   |   |   |   |
|                                      |          |   |       |                  | Nonutility Operations |       |      |       |        |        |   |         |        |   |   |   |   |
|                                      |          |   |       |                  |                  |       |      | Generation |        |        |   |         | Reconciling |   |   |   |   |   |
|                                      | Utility       |   | AEP River  |                  | and                   |       | All Other |       | Adjustments |        |   |         |        |   |
|                                      | Operations    |   | Operations |                  | Marketing             |       | (a)       |       | (b)         |        |   | Consolidated |        |
|                                      | (in millions) |   |
| December 31, 2010                         |          |   |       |                  |                  |       |      |       |        |        |   |         |        |   |   |   |   |   |   |   |   |
| Total Property, Plant and Equipment       |          | $      | 52,822     |                  | $                     | 574        |      | $          | 584         |        | $      | 11           |        |   | $ | (251 | ) |   | $ | 53,740 |   |
| Accumulated Depreciation and Amortization |          |   | 17,795     |                  |                  | 110        |      |       | 198         |        |   | 9            |        |   |   | (46 | ) |   |   | 18,066 |   |
| Total Property, Plant and Equipment - Net |          | $      | 35,027     |                  | $                     | 464        |      | $          | 386         |        | $      | 2            |        |   | $ | (205 | ) |   | $ | 35,674 |   |
|                                      |          |   |       |                  |                  |       |      |       |        |        |   |         |        |   |   |   |   |   |   |   |   |
| Total Assets                              |          | $      | 48,780     |                  | $                     | 621        |      | $          | 881         |        | $      | 15,942       |        |   | $ | (15,769 | ) | (c) | $ | 50,455 |   |

| (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 settle and expire in the fourth quarter of 2011. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Revenue sharing related to the Plaquemine Cogeneration Facility which ends in the fourth quarter of 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. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Notional Volume of Derivative Instruments |
|-------------------------------------------|
|                                      |   |   |   |   |   |   |   |
|                                      | Volume |   |   |
|                                      | June 30, |   | December 31, |   | Unit of |
|                                      | 2011 |   | 2010 |   | Measure |
|                                      | (in millions) |   |   |
| Commodity:                                |   |   |   |   |   |   |   |
| Power                                     |   |   | 875 |   |   |   | 652 |   | MWHs |
| Coal                                      |   |   | 48 |   |   |   | 63 |   | Tons |
| Natural Gas                               |   |   | 91 |   |   |   | 94 |   | MMBtus |
| Heating Oil and Gasoline                  |   |   | 7 |   |   |   | 6 |   | Gallons |
| Interest Rate                             |   | $ | 267 |   |   | $ | 171 |   | USD |
|                                      |   |   |   |   |   |   |   |   |   |
| Interest Rate and Foreign Currency        |   | $ | 597 |   |   | $ | 907 |   | USD |

----

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

----

| Fair Value of Derivative Instruments     |   |
|------------------------------------------|--------|
| June 30, 2011                            |   |
|                                     |   |
|                                     |   | Risk Management |   |   |   |   |   |   |   |   |   |
|                                     |   | Contracts |   | Hedging Contracts |   |   |   |   |   |
|                                     |   |   |   |   |   | Interest Rate |   |   |   |   |   |
|                                     |   |   |   |   |   | and Foreign |   |   |   |   |   |
| Balance Sheet Location                   |   | Commodity (a) |   | Commodity (a) |   | Currency (a) |   | Other (a)(b) |   | Total |   |
|                                     |   | (in millions) |   |
| Current Risk Management Assets           |   | $ | 669 |   | $ | 26 |   | $ | 6 |   | $ | (528 | ) |   | $ | 173 |   |
| Long-term Risk Management Assets         |   |   | 482 |   |   | 13 |   |   | 3 |   |   | (155 | ) |   |   | 343 |   |
| Total Assets                             |   |   | 1,151 |   |   | 39 |   |   | 9 |   |   | (683 | ) |   |   | 516 |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities      |   |   | 636 |   |   | 14 |   |   | 2 |   |   | (558 | ) |   |   | 94 |   |
| Long-term Risk Management Liabilities    |   |   | 317 |   |   | 6 |   |   | 1 |   |   | (200 | ) |   |   | 124 |   |
| Total Liabilities                        |   |   | 953 |   |   | 20 |   |   | 3 |   |   | (758 | ) |   |   | 218 |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net Assets |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  (Liabilities)                      |   | $ | 198 |   | $ | 19 |   | $ | 6 |   | $ | 75 |   |   | $ | 298 |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair Value of Derivative Instruments     |   |
| December 31, 2010                        |   |
|                                     |   |
|                                     |   | Risk Management |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                     |   | Contracts |   | Hedging Contracts |   |   |   |   |   |   |   |   |
|                                     |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |   |   |   |   |
|                                     |   |   |   |   |   |   |   | and Foreign |   |   |   |   |   |   |   |   |
| Balance Sheet Location                   |   | Commodity (a) |   | Commodity (a) |   | Currency (a) |   | Other (a)(b) |   | Total |   |
|                                     |   | (in millions) |   |
| Current Risk Management Assets           |   | $ | 1,023 |   | $ | 18 |   | $ | 30 |   | $ | (839 | ) |   | $ | 232 |   |
| Long-term Risk Management Assets         |   |   | 546 |   |   | 12 |   |   | 2 |   |   | (150 | ) |   |   | 410 |   |
| Total Assets                             |   |   | 1,569 |   |   | 30 |   |   | 32 |   |   | (989 | ) |   |   | 642 |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities      |   |   | 995 |   |   | 13 |   |   | 2 |   |   | (881 | ) |   |   | 129 |   |
| Long-term Risk Management Liabilities    |   |   | 387 |   |   | 6 |   |   | 3 |   |   | (255 | ) |   |   | 141 |   |
| Total Liabilities                        |   |   | 1,382 |   |   | 19 |   |   | 5 |   |   | (1,136 | ) |   |   | 270 |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net Assets |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  (Liabilities)                      |   | $ | 187 |   | $ | 11 |   | $ | 27 |   | $ | 147 |   |   | $ | 372 |   |

|   | (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 Sheets on a net basis in accordance with the accounting guidance for "Derivatives and Hedging." |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Amounts include counterparty netting of risk management and hedging contracts and associated cash collateral in accordance with the accounting guidance for "Derivatives and Hedging."  Amounts also include dedesignated risk management contracts. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Amount of Gain (Loss) Recognized on               |
|---------------------------------------------------|
| Risk Management Contracts                         |
| For the Three Months Ended June 30, 2011 and 2010 |
|                                              |   |   |   |   |
| Location of Gain (Loss)                           |   | 2011  |   | 2010  |
|                                              |   | (in millions) |
| Utility Operations Revenue                        |   | $ |  18  |   | $ |  7  |
| Other Revenue                                     |   |   |  13  |   |   |  8  |
| Regulatory Assets (a)                             |   |   |  (5) |   |   |  (14) |
| Regulatory Liabilities (a)                        |   |   |  5  |   |   |  (4) |
| Total Gain (Loss) on Risk Management Contracts    |   | $ |  31  |   | $ |  (3) |

| Amount of Gain (Loss) Recognized on             |
|-------------------------------------------------|
| Risk Management Contracts                       |
| For the Six Months Ended June 30, 2011 and 2010 |
|                                            |   |   |   |   |
| Location of Gain (Loss)                         |   | 2011  |   | 2010  |
|                                            |   | (in millions) |
| Utility Operations Revenue                      |   | $ |  38  |   | $ |  45  |
| Other Revenue                                   |   |   |  15  |   |   |  9  |
| Regulatory Assets (a)                           |   |   |  (1) |   |   |  (3) |
| Regulatory Liabilities (a)                      |   |   |  11  |   |   |  27  |
| Total Gain (Loss) on Risk Management Contracts  |   | $ |  63  |   | $ |  78  |

----

----

| Total Accumulated Other Comprehensive Income (Loss) Activity for Cash Flow Hedges |          |
|-----------------------------------------------------------------------------------|---------------|
| For the Three Months Ended June 30, 2011                                          |          |
|                                                                              |          |   |   | Interest Rate |   |   |   |   |
|                                                                              |          |   |   | and Foreign |   |   |   |   |
|                                                                              | Commodity     |   | Currency |   | Total |   |
|                                                                              | (in millions) |   |
| Balance in AOCI as of March 31, 2011                                              |          | $ | 8 |   |   | $ | 4 |   |   | $ | 12 |   |
| 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                                                                     |          |   | (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 June 30, 2011                                               |          | $ | 12 |   |   | $ | 5 |   |   | $ | 17 |   |

| Total Accumulated Other Comprehensive Income (Loss) Activity for Cash Flow Hedges |          |
|-----------------------------------------------------------------------------------|---------------|
| For the Three Months Ended June 30, 2010                                          |          |
|                                                                              |          |   |   |   | Interest Rate |   |   |   |   |   |
|                                                                              |          |   |   |   | and Foreign |   |   |   |   |   |
|                                                                              | Commodity     |   | Currency |   | Total |   |
|                                                                              | (in millions) |   |
| Balance in AOCI as of March 31, 2010                                              |          | $ | 2 |   |   | $ | (13 | ) |   | $ | (11 | ) |
| Changes in Fair Value Recognized in AOCI                                          |          |   | 1 |   |   |   | (3 | ) |   |   | (2 | ) |
| Amount of (Gain) or Loss Reclassified from AOCI                                   |          |   |   |   |   |   |   |   |   |   |   |   |
| to Income Statement/within Balance Sheet:                                         |          |   |   |   |   |   |   |   |   |   |   |   |
| Utility Operations Revenue                                                        |          |   | - |   |   |   | - |   |   |   | - |   |
| Other Revenue                                                                     |          |   | (2 | ) |   |   | - |   |   |   | (2 | ) |
| Purchased Electricity for Resale                                                  |          |   | 1 |   |   |   | - |   |   |   | 1 |   |
| Interest Expense                                                                  |          |   | - |   |   |   | 1 |   |   |   | 1 |   |
| Regulatory Assets (a)                                                             |          |   | - |   |   |   | - |   |   |   | - |   |
| Regulatory Liabilities (a)                                                        |          |   | - |   |   |   | - |   |   |   | - |   |
| Balance in AOCI as of June 30, 2010                                               |          | $ | 2 |   |   | $ | (15 | ) |   | $ | (13 | ) |

----

| Total Accumulated Other Comprehensive Income (Loss) Activity for Cash Flow Hedges |          |
|-----------------------------------------------------------------------------------|---------------|
| For the Six Months Ended June 30, 2011                                            |          |
|                                                                              |          |   |   | Interest Rate |   |   |   |   |
|                                                                              |          |   |   | and Foreign |   |   |   |   |
|                                                                              | Commodity     |   | Currency |   | Total |   |
|                                                                              | (in millions) |   |
| Balance in AOCI as of December 31, 2010                                           |          | $ | 7 |   |   | $ | 4 |   |   | $ | 11 |   |
| Changes in Fair Value Recognized in AOCI                                          |          |   | 5 |   |   |   | (1 | ) |   |   | 4 |   |
| 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                                                  |          |   | (1 | ) |   |   | - |   |   |   | (1 | ) |
| Interest Expense                                                                  |          |   | - |   |   |   | 2 |   |   |   | 2 |   |
| Regulatory Assets (a)                                                             |          |   | 1 |   |   |   | - |   |   |   | 1 |   |
| Regulatory Liabilities (a)                                                        |          |   | - |   |   |   | - |   |   |   | - |   |
| Balance in AOCI as of June 30, 2011                                               |          | $ | 12 |   |   | $ | 5 |   |   | $ | 17 |   |

| Total Accumulated Other Comprehensive Income (Loss) Activity for Cash Flow Hedges |          |
|-----------------------------------------------------------------------------------|---------------|
| For the Six Months Ended June 30, 2010                                            |          |
|                                                                              |          |   |   |   | Interest Rate |   |   |   |   |   |
|                                                                              |          |   |   |   | and Foreign |   |   |   |   |   |
|                                                                              | Commodity     |   | Currency |   | Total |   |
|                                                                              | (in millions) |   |
| Balance in AOCI as of December 31, 2009                                           |          | $ | (2 | ) |   | $ | (13 | ) |   | $ | (15 | ) |
| Changes in Fair Value Recognized in AOCI                                          |          |   | 4 |   |   |   | (4 | ) |   |   | - |   |
| Amount of (Gain) or Loss Reclassified from AOCI                                   |          |   |   |   |   |   |   |   |   |   |   |   |
| to Income Statement/within Balance Sheet:                                         |          |   |   |   |   |   |   |   |   |   |   |   |
| Utility Operations Revenue                                                        |          |   | - |   |   |   | - |   |   |   | - |   |
| Other Revenue                                                                     |          |   | (3 | ) |   |   | - |   |   |   | (3 | ) |
| Purchased Electricity for Resale                                                  |          |   | 2 |   |   |   | - |   |   |   | 2 |   |
| Interest Expense                                                                  |          |   | - |   |   |   | 2 |   |   |   | 2 |   |
| Regulatory Assets (a)                                                             |          |   | 1 |   |   |   | - |   |   |   | 1 |   |
| Regulatory Liabilities (a)                                                        |          |   | - |   |   |   | - |   |   |   | - |   |
| Balance in AOCI as of June 30, 2010                                               |          | $ | 2 |   |   | $ | (15 | ) |   | $ | (13 | ) |

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

----

| Impact of Cash Flow Hedges on our Condensed Consolidated Balance Sheet |          |
|------------------------------------------------------------------------|---------------|
| June 30, 2011                                                          |          |
|                                                                   |          |   |   |   |   |   |   |   |   |
|                                                                   |          |   |   | Interest Rate |   |   |   |   |
|                                                                   |          |   |   | and Foreign |   |   |   |   |
|                                                                   | Commodity     |   | Currency |   | Total |   |
|                                                                   | (in millions) |   |
| Hedging Assets (a)                                                     |          | $ | 21 |   |   | $ | 1 |   |   | $ | 22 |   |
| Hedging Liabilities (a)                                                |          |   | 2 |   |   |   | 3 |   |   |   | 5 |   |
| AOCI Gain (Loss) Net of Tax                                            |          |   | 12 |   |   |   | 5 |   |   |   | 17 |   |
| Portion Expected to be Reclassified to Net                             |          |   |   |   |   |   |   |   |   |   |   |   |
| Income During the Next Twelve Months                                   |          |   | 7 |   |   |   | (2 | ) |   |   | 5 |   |
|                                                                   |          |   |   |   |   |   |   |   |   |   |   |   |
| Impact of Cash Flow Hedges on our Condensed Consolidated Balance Sheet |          |
| December 31, 2010                                                      |          |
|                                                                   |          |   |   |   |   |   |   |   |   |   |   |   |
|                                                                   |          |   |   |   | Interest Rate |   |   |   |   |   |
|                                                                   |          |   |   |   | and Foreign |   |   |   |   |   |
|                                                                   | Commodity     |   | Currency |   | Total |   |
|                                                                   | (in millions) |   |
| Hedging Assets (a)                                                     |          | $ | 13 |   |   | $ | 25 |   |   | $ | 38 |   |
| Hedging Liabilities (a)                                                |          |   | 2 |   |   |   | 4 |   |   |   | 6 |   |
| AOCI Gain (Loss) Net of Tax                                            |          |   | 7 |   |   |   | 4 |   |   |   | 11 |   |
| Portion Expected to be Reclassified to Net                             |          |   |   |   |   |   |   |   |   |   |   |   |
| Income During the Next Twelve Months                                   |          |   | 3 |   |   |   | (2 | ) |   |   | 1 |   |

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

----

|                                                                   | June 30,      |     | December 31, |   |
|------------------------------------------------------------------------|---------------|----------|--------------|--------|
|                                                                   | 2011          |     | 2010         |   |
|                                                                   | (in millions) |     |
| Liabilities for Derivative Contracts with Credit Downgrade Triggers    | $             | 29       |         | $      | 20 |   |
| Amount of Collateral AEP Subsidiaries Would Have Been Required to Post |          |  34 |         |   |  45 |   |
| Amount Attributable to RTO and ISO Activities                          |          | 34       |         |   | 44 |   |

|                                                                                                   | June 30,      |   | December 31, |   |
|--------------------------------------------------------------------------------------------------------|---------------|--------|--------------|--------|
|                                                                                                   | 2011          |   | 2010         |   |
|                                                                                                   | (in millions) |   |
| Liabilities for Contracts with Cross Default Provisions Prior to Contractual Netting Arrangements | $             | 344    |         | $      | 401 |   |
| Amount of Cash Collateral Posted                                                                       |          | 35     |         |   | 81 |   |
| Additional Settlement Liability if Cross Default Provision is Triggered                                |          | 179    |         |   | 213 |   |

----

|                                      |   | 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                             |   |   |   |   |

----

|   |           |   | June 30, 2011 |               | December 31, 2010 |
|--------|----------------|--------|---------------|--------------------|-------------------|
|   |           |   | Book Value    |               | Fair Value        |   | Book Value |   | Fair Value |
|   |           |   | (in millions) |
|   | Long-term Debt |   | $             |  16,635  |              | $ |  18,251  |   | $ |  16,811  |   | $ |  18,285  |

|                              |   | June 30, 2011 |
|-----------------------------------|--------|---------------|
|                              |   |          |   | Gross |   | Gross |   | Estimated |
|                              |   |          |   | Unrealized |   | Unrealized |   | Fair |
| Other Temporary Investments       |   | Cost          |   | Gains |   | Losses |   | Value |
|                              |   | (in millions) |
| Restricted Cash (a)               |   | $             | 212 |   | $ | - |   | $ | - |   | $ | 212 |
| Fixed Income Securities:          |   |          |   |   |   |   |   |   |   |   |   |   |
| Mutual Funds                      |   |          | 63 |   |   | - |   |   | - |   |   | 63 |
| Variable Rate Demand Notes        |   |          | 21 |   |   | - |   |   | - |   |   | 21 |
| Equity Securities - Mutual Funds  |   |          | 7 |   |   | 8 |   |   | - |   |   | 15 |
| Total Other Temporary Investments |   | $             | 303 |   | $ | 8 |   | $ | - |   | $ | 311 |

|                              |   | December 31, 2010 |
|-----------------------------------|--------|-------------------|
|                              |   |              |   |   | Gross |   | Gross |   | Estimated |
|                              |   |              |   |   | Unrealized |   | Unrealized |   | Fair |
| Other Temporary Investments       |   | Cost              |   | Gains |   | Losses |   | Value |
|                              |   | (in millions)     |
| Restricted Cash (a)               |   | $                 | 225 |   | $ | - |   | $ | - |   | $ | 225 |
| Fixed Income Securities:          |   |              |   |   |   |   |   |   |   |   |   |   |
| Mutual Funds                      |   |              | 69 |   |   | - |   |   | - |   |   | 69 |
| Variable Rate Demand Notes        |   |              | 97 |   |   | - |   |   | - |   |   | 97 |
| Equity Securities - Mutual Funds  |   |              | 18 |   |   | 7 |   |   | - |   |   | 25 |
| Total Other Temporary Investments |   | $                 | 409 |   | $ | 7 |   | $ | - |   | $ | 416 |

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

|                                      | Three Months Ended June 30, |   | Six Months Ended June 30, |
|-------------------------------------------|-----------------------------|--------|---------------------------|
|                                      | 2011                        |   | 2010                      |   | 2011 |   | 2010 |
|                                      | (in millions)               |
| Proceeds from Investment Sales            | $                           | 51     |                      | $ | 16 |   | $ | 247 |   | $ | 257 |
| Purchases of Investments                  |                        | 5      |                      |   | 24 |   |   | 153 |   |   | 221 |
| Gross Realized Gains on Investment Sales  |                        | -      |                      |   | 16 |   |   | - |   |   | 16 |
| Gross Realized Losses on Investment Sales |                        | -      |                      |   | - |   |   | - |   |   | - |

----

| ·   | 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. |
|--------------------|-------------------------------------------------------------------------------------|

|                                         | June 30, 2011 |   | December 31, 2010 |   |
|----------------------------------------------|---------------|--------|-------------------|--------|
|                                         | Estimated     |   | Gross             |   | Other-Than- |   | Estimated |   | Gross |   | Other-Than- |   |
|                                         | Fair          |   | Unrealized        |   | Temporary |   | Fair |   | Unrealized |   | Temporary |   |
|                                         | Value         |   | Gains             |   | Impairments |   | Value |   | Gains |   | Impairments |   |
|                                         | (in millions) |   |
| Cash and Cash Equivalents                    | $             | 17     |              | $      | - |   | $ | - |   | $ | 20 |   | $ | - |   | $ | - |   |
| Fixed Income Securities:                     |          |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| United States Government                     |          | 484    |              |   | 27 |   |   | (1 | ) |   | 461 |   |   | 23 |   |   | (1 | ) |
| Corporate Debt                               |          | 57     |              |   | 3 |   |   | (1 | ) |   | 59 |   |   | 4 |   |   | (2 | ) |
| State and Local Government                   |          | 338    |              |   | 1 |   |   | (1 | ) |   | 341 |   |   | (1 | ) |   | - |   |
|   Subtotal Fixed Income Securities |          | 879    |              |   | 31 |   |   | (3 | ) |   | 861 |   |   | 26 |   |   | (3 | ) |
| Equity Securities - Domestic                 |          | 678    |              |   | 231 |   |   | (105 | ) |   | 634 |   |   | 183 |   |   | (123 | ) |
| Spent Nuclear Fuel and                       |          |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Decommissioning Trusts                  | $             | 1,574  |              | $      | 262 |   | $ | (108 | ) | $ | 1,515 |   | $ | 209 |   | $ | (126 | ) |

----

|                                      | Three Months Ended June 30, |   | Six Months Ended June 30, |   |
|-------------------------------------------|-----------------------------|--------|---------------------------|--------|
|                                      | 2011                        |   | 2010                      |   | 2011 |   | 2010 |   |
|                                      | (in millions)               |   |
| Proceeds from Investment Sales            | $                           | 177    |                      | $      | 360 |   | $ | 465 |   | $ | 592 |   |
| Purchases of Investments                  |                        | 186    |                      |   | 369 |   |   | 492 |   |   | 617 |   |
| Gross Realized Gains on Investment Sales  |                        | 7      |                      |   | 1 |   |   | 12 |   |   | 6 |   |
| Gross Realized Losses on Investment Sales |                        | 4      |                      |   | - |   |   | 9 |   |   | - |   |

|                     | Fair Value    |
|--------------------------|---------------|
|                     | of Debt       |
|                     | Securities    |
|                     | (in millions) |
| Within 1 year            |          | $ | 77 |
| 1 year – 5 years   |          |   | 256 |
| 5 years – 10 years |          |   | 281 |
| After 10 years           |          |   | 265 |
| Total                    |          | $ | 879 |

----

| Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|--------------------------------------------------------------------|
| June 30, 2011                                                      |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Other |   |   | Total |
| Assets:                                                            |   | (in millions) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents (a)                                      |   | $ | 208 |   |   | $ | - |   |   | $ | - |   |   | $ | 209 |   |   | $ | 417 |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Temporary Investments                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Restricted Cash (a)                                                |   |   | 160 |   |   |   | - |   |   |   | - |   |   |   | 52 |   |   |   | 212 |
| Fixed Income Securities:                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mutual Funds                                                       |   |   | 63 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 63 |
| Variable Rate Demand Notes                                         |   |   | - |   |   |   | 21 |   |   |   | - |   |   |   | - |   |   |   | 21 |
| Equity Securities - Mutual Funds (b)                               |   |   | 15 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 15 |
| TotalOther Temporary Investments                                   |   |   | 238 |   |   |   | 21 |   |   |   | - |   |   |   | 52 |   |   |   | 311 |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (c) (f)                        |   |   | 17 |   |   |   | 1,006 |   |   |   | 113 |   |   |   | (686 | ) |   |   | 450 |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodity Hedges (c)                                               |   |   | 8 |   |   |   | 30 |   |   |   | - |   |   |   | (17 | ) |   |   | 21 |
| Interest Rate/Foreign Currency Hedges                              |   |   | - |   |   |   | 1 |   |   |   | - |   |   |   | - |   |   |   | 1 |
| Fair Value Hedges                                                  |   |   | - |   |   |   | 8 |   |   |   | - |   |   |   | - |   |   |   | 8 |
| Dedesignated Risk Management Contracts (d)                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 36 |   |   |   | 36 |
| Total Risk Management Assets                                       |   |   | 25 |   |   |   | 1,045 |   |   |   | 113 |   |   |   | (667 | ) |   |   | 516 |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Spent Nuclear Fuel and Decommissioning Trusts                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents (e)                                      |   |   | - |   |   |   | 5 |   |   |   | - |   |   |   | 12 |   |   |   | 17 |
| Fixed Income Securities:                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| United States Government                                           |   |   | - |   |   |   | 484 |   |   |   | - |   |   |   | - |   |   |   | 484 |
| Corporate Debt                                                     |   |   | - |   |   |   | 57 |   |   |   | - |   |   |   | - |   |   |   | 57 |
| State and Local Government                                         |   |   | - |   |   |   | 338 |   |   |   | - |   |   |   | - |   |   |   | 338 |
| Subtotal Fixed Income Securities                                   |   |   | - |   |   |   | 879 |   |   |   | - |   |   |   | - |   |   |   | 879 |
| Equity Securities - Domestic (b)                                   |   |   | 678 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 678 |
| TotalSpent Nuclear Fuel and Decommissioning Trusts                 |   |   | 678 |   |   |   | 884 |   |   |   | - |   |   |   | 12 |   |   |   | 1,574 |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                                                       |   | $ | 1,149 |   |   | $ | 1,950 |   |   | $ | 113 |   |   | $ | (394 | ) |   | $ | 2,818 |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (c) (f)                        |   | $ | 20 |   |   | $ | 882 |   |   | $ | 36 |   |   | $ | (725 | ) |   | $ | 213 |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodity Hedges (c)                                               |   |   | 2 |   |   |   | 17 |   |   |   | - |   |   |   | (17 | ) |   |   | 2 |
| Interest Rate/Foreign Currency Hedges                              |   |   | - |   |   |   | 3 |   |   |   | - |   |   |   | - |   |   |   | 3 |
| Total Risk Management Liabilities                                  |   | $ | 22 |   |   | $ | 902 |   |   | $ | 36 |   |   | $ | (742 | ) |   | $ | 218 |

----

| Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|--------------------------------------------------------------------|
| December 31, 2010                                                  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Other |   |   | Total |
| Assets:                                                            |   | (in millions) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents (a)                                      |   | $ | 170 |   |   | $ | - |   |   | $ | - |   |   | $ | 124 |   |   | $ | 294 |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Temporary Investments                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Restricted Cash (a)                                                |   |   | 184 |   |   |   | - |   |   |   | - |   |   |   | 41 |   |   |   | 225 |
| Fixed Income Securities:                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mutual Funds                                                       |   |   | 69 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 69 |
| Variable Rate Demand Notes                                         |   |   | - |   |   |   | 97 |   |   |   | - |   |   |   | - |   |   |   | 97 |
| Equity Securities - Mutual Funds (b)                               |   |   | 25 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 25 |
| TotalOther Temporary Investments                                   |   |   | 278 |   |   |   | 97 |   |   |   | - |   |   |   | 41 |   |   |   | 416 |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (c) (g)                        |   |   | 20 |   |   |   | 1,432 |   |   |   | 112 |   |   |   | (1,013 | ) |   |   | 551 |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodity Hedges (c)                                               |   |   | 11 |   |   |   | 17 |   |   |   | - |   |   |   | (15 | ) |   |   | 13 |
| Interest Rate/Foreign Currency Hedges                              |   |   | - |   |   |   | 25 |   |   |   | - |   |   |   | - |   |   |   | 25 |
| Fair Value Hedges                                                  |   |   | - |   |   |   | 7 |   |   |   | - |   |   |   | - |   |   |   | 7 |
| Dedesignated Risk Management Contracts (d)                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 46 |   |   |   | 46 |
| Total Risk Management Assets                                       |   |   | 31 |   |   |   | 1,481 |   |   |   | 112 |   |   |   | (982 | ) |   |   | 642 |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Spent Nuclear Fuel and Decommissioning Trusts                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents (e)                                      |   |   | - |   |   |   | 8 |   |   |   | - |   |   |   | 12 |   |   |   | 20 |
| Fixed Income Securities:                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| United States Government                                           |   |   | - |   |   |   | 461 |   |   |   | - |   |   |   | - |   |   |   | 461 |
| Corporate Debt                                                     |   |   | - |   |   |   | 59 |   |   |   | - |   |   |   | - |   |   |   | 59 |
| State and Local Government                                         |   |   | - |   |   |   | 341 |   |   |   | - |   |   |   | - |   |   |   | 341 |
| Subtotal Fixed Income Securities                                   |   |   | - |   |   |   | 861 |   |   |   | - |   |   |   | - |   |   |   | 861 |
| Equity Securities - Domestic (b)                                   |   |   | 634 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 634 |
| TotalSpent Nuclear Fuel and Decommissioning Trusts                 |   |   | 634 |   |   |   | 869 |   |   |   | - |   |   |   | 12 |   |   |   | 1,515 |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                                                       |   | $ | 1,113 |   |   | $ | 2,447 |   |   | $ | 112 |   |   | $ | (805 | ) |   | $ | 2,867 |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (c) (g)                        |   | $ | 25 |   |   | $ | 1,325 |   |   | $ | 27 |   |   | $ | (1,114 | ) |   | $ | 263 |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodity Hedges (c)                                               |   |   | 4 |   |   |   | 13 |   |   |   | - |   |   |   | (15 | ) |   |   | 2 |
| Interest Rate/Foreign Currency Hedges                              |   |   | - |   |   |   | 4 |   |   |   | - |   |   |   | - |   |   |   | 4 |
| Fair Value Hedges                                                  |   |   | - |   |   |   | 1 |   |   |   | - |   |   |   | - |   |   |   | 1 |
| Total Risk Management Liabilities                                  |   | $ | 29 |   |   | $ | 1,343 |   |   | $ | 27 |   |   | $ | (1,129 | ) |   | $ | 270 |

| (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 publicly traded equity securities and equity-based mutual funds. |
|-----|------------------------------------------------------------------------------------|

| (c) | 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.'' |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | 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. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e) | Amounts in ''Other'' column primarily represent accrued interest receivables from financial institutions.  Level 2 amounts primarily represent investments in money market funds. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (f) | The June 30, 2011 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 2011, $3 million in periods 2012-2014 and ($5) million in periods 2015-2018;  Level 2 matures $13 million in 2011, $75 million in periods 2012-2014, $18 million in periods 2015-2016 and $18 million in periods 2017-2028;  Level 3 matures $11 million in 2011, $25 million in periods 2012-2014, $15 million in periods 2015-2016 and $26 million in periods 2017-2028.  Risk management commodity contracts are substantially comprised of power contracts. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g) | The December 31, 2010 maturity of the net fair value of risk management contracts prior to cash collateral, assets/(liabilities), is as follows:  Level 1 matures ($2) million in 2011, $2 million in periods 2012-2014 and ($5) million in periods 2015-2018;  Level 2 matures $13 million in 2011, $66 million in periods 2012-2014, $12 million in periods 2015-2016 and $16 million in periods 2017-2028;  Level 3 matures $18 million in 2011, $24 million in periods 2012-2014, $16 million in periods 2015-2016 and $27 million in periods 2017-2028.  Risk management commodity contracts are substantially comprised of power contracts. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                               |   | Net Risk             |   |
|------------------------------------------------------------------------------------|--------|----------------------|--------|
|                                                                               |   | Management           |   |
| Three Months Ended June 30, 2011                                                   |   | Assets (Liabilities) |   |
|                                                                               |   | (in millions)        |   |
| Balance as of March 31, 2011                                                       |   | $                    | 73     |   |
| Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)     |   |                 | (10    | ) |
| Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets)      |   |                 |   |   |
| Relating to Assets Still Held at the Reporting Date (a)                            |   |                 | 10     |   |
| Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income |   |                 | -      |   |
| Purchases, Issuances and Settlements (c)                                           |   |                 | 14     |   |
| Transfers into Level 3 (d) (f)                                                     |   |                 | 3      |   |
| Transfers out of Level 3 (e) (f)                                                   |   |                 | (4     | ) |
| Changes in Fair Value Allocated to Regulated Jurisdictions (g)                     |   |                 | (9     | ) |
| Balance as of June 30, 2011                                                        |   | $                    | 77     |   |

|                                                                               |   | Net Risk Management  |   |
|------------------------------------------------------------------------------------|--------|----------------------|--------|
| Three Months Ended June 30, 2010                                                   |   | Assets (Liabilities) |   |
|                                                                               |   | (in millions)        |   |
| Balance as of March 31, 2010                                                       |   | $                    | 116    |   |
| Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)     |   |                 | (25    | ) |
| Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets)      |   |                 |   |   |
| Relating to Assets Still Held at the Reporting Date (a)                            |   |                 | 10     |   |
| Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income |   |                 | -      |   |
| Purchases, Issuances and Settlements (c)                                           |   |                 | 14     |   |
| Transfers into Level 3 (d) (f)                                                     |   |                 | 1      |   |
| Transfers out of Level 3 (e) (f)                                                   |   |                 | (6     | ) |
| Changes in Fair Value Allocated to Regulated Jurisdictions (g)                     |   |                 | (10    | ) |
| Balance as of June 30, 2010                                                        |   | $                    | 100    |   |

|                                                                               |   | Net Risk Management  |   |
|------------------------------------------------------------------------------------|--------|----------------------|--------|
| Six Months Ended June 30, 2011                                                     |   | Assets (Liabilities) |   |
|                                                                               |   | (in millions)        |   |
| Balance as of December 31, 2010                                                    |   | $                    | 85     |   |
| Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)     |   |                 | (9     | ) |
| Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets)      |   |                 |   |   |
| Relating to Assets Still Held at the Reporting Date (a)                            |   |                 | 7      |   |
| Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income |   |                 | -      |   |
| Purchases, Issuances and Settlements (c)                                           |   |                 | 6      |   |
| Transfers into Level 3 (d) (f)                                                     |   |                 | 4      |   |
| Transfers out of Level 3 (e) (f)                                                   |   |                 | (12    | ) |
| Changes in Fair Value Allocated to Regulated Jurisdictions (g)                     |   |                 | (4     | ) |
| Balance as of June 30, 2011                                                        |   | $                    | 77     |   |

----

|                                                                               |   | Net Risk Management  |   |
|------------------------------------------------------------------------------------|--------|----------------------|--------|
| Six Months Ended June 30, 2010                                                     |   | Assets (Liabilities) |   |
|                                                                               |   | (in millions)        |   |
| Balance as of December 31, 2009                                                    |   | $                    | 62     |   |
| Realized Gain (Loss) Included in Net Income (or Changes in Net Assets) (a) (b)     |   |                 | 4      |   |
| Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets)      |   |                 |   |   |
| Relating to Assets Still Held at the Reporting Date (a)                            |   |                 | 33     |   |
| Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income |   |                 | -      |   |
| Purchases, Issuances and Settlements (c)                                           |   |                 | (13    | ) |
| Transfers into Level 3 (d) (f)                                                     |   |                 | 12     |   |
| Transfers out of Level 3 (e) (f)                                                   |   |                 | (5     | ) |
| Changes in Fair Value Allocated to Regulated Jurisdictions (g)                     |   |                 | 7      |   |
| Balance as of June 30, 2010                                                        |   | $                    | 100    |   |

| (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) | Transfers are recognized based on their value at the beginning of the reporting period that the transfer occurred. |
|-----|--------------------------------------------------------------------------------------------------------------------|

| (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. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Type of Debt                      |   | June 30, 2011 |   | December 31, 2010 |   |
|-----------------------------------|--------|---------------|--------|-------------------|--------|
|                              |   | (in millions) |   |
| Senior Unsecured Notes            |   | $             | 11,750 |              | $      | 11,669 |   |
| Pollution Control Bonds           |   |          | 2,153  |              |   | 2,263 |   |
| Notes Payable                     |   |          | 347    |              |   | 396 |   |
| Securitization Bonds              |   |          | 1,755  |              |   | 1,847 |   |
| Junior Subordinated Debentures    |   |          | 315    |              |   | 315 |   |
| Spent Nuclear Fuel Obligation (a) |   |          | 265    |              |   | 265 |   |
| Other Long-term Debt              |   |          | 92     |              |   | 91 |   |
| Unamortized Discount (net)        |   |          | (42    | )                 |   | (35 | ) |
| Total Long-term Debt Outstanding  |   |          | 16,635 |              |   | 16,811 |   |
| Less Portion Due Within One Year  |   |          | 1,071  |              |   | 1,309 |   |
| Long-term Portion                 |   | $             | 15,564 |              | $      | 15,502 |   |

| (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 were $307 million at June 30, 2011 and December 31, 2010, and are included in Spent Nuclear Fuel and Decommissioning Trusts on our Condensed Consolidated Balance Sheets. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|            |   |                    |          | Principal |              | Interest |        |     |
|-----------------|--------|-------------------------|---------------|-----------|-------------------|----------|-------------|----------|
| Company         |   | Type of Debt            |          | Amount    |              | Rate     |        | Due Date |
| Issuances:      |   |                    | (in millions) | (%)       |              |     |
| APCo            |   | Senior Unsecured Notes  |          | $         |  350    |     | 4.60   |     | 2021  |
| APCo            |   | Pollution Control Bonds |          |      |  65     |     | 2.00   |     | 2012  |
| APCo            |   | Pollution Control Bonds |          |      |  75     | (a)      | Variable    |     | 2036  |
| APCo            |   | Pollution Control Bonds |          |      |  54     | (a)      | Variable    |     | 2042  |
| APCo            |   | Pollution Control Bonds |          |      |  50     | (a)      | Variable    |     | 2036  |
| APCo            |   | Pollution Control Bonds |          |      |  50     | (a)      | Variable    |     | 2042  |
| I&M         |   | Pollution Control Bonds |          |      |  52     | (a)      | Variable    |     | 2021  |
| I&M         |   | Pollution Control Bonds |          |      |  25     | (a)      | Variable    |     | 2019  |
| OPCo            |   | Pollution Control Bonds |          |      |  50     | (a)      | Variable    |     | 2014  |
| PSO             |   | Senior Unsecured Notes  |          |      |  250    |     | 4.40   |     | 2021  |
| PSO             |   | Notes Payable           |          |      |  2      |     | 3.00   |     | 2026  |
| TCC             |   | Pollution Control Bonds |          |      |  60     | (a)      | 1.125  |     | 2012  |
| Total Issuances |   |                    |          | $         |  1,083  | (b)      |        |     |   |

| (a) | These pollution control bonds are subject to redemption earlier than the maturity date.  Consequently, these bonds have been classified for maturity purposes as Long-term Debt Due Within One Year on our Condensed Consolidated Balance Sheets. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Amount indicated on the statement of cash flows of $1,074 million is net of issuance costs and premium or discount. |
|-----|---------------------------------------------------------------------------------------------------------------------|

|                             |   |                    |          | Principal   |              | Interest |        |     |
|----------------------------------|--------|-------------------------|---------------|-------------|-------------------|----------|-------------|----------|
| Company                          |   | Type of Debt            |          | Amount Paid |              | Rate     |        | Due Date |
| Retirements and                  |   |                    | (in millions) | (%)         |              |     |
|    Principal Payments: |   |                    |          |        |              |     |        |     |   |
| APCo                             |   | Pollution Control Bonds |          | $           |  75     |     | Variable    |     | 2036  |
| APCo                             |   | Pollution Control Bonds |          |        |  54     |     | Variable    |     | 2042  |
| APCo                             |   | Pollution Control Bonds |          |        |  50     |     | Variable    |     | 2042  |
| APCo                             |   | Pollution Control Bonds |          |        |  50     |     | Variable    |     | 2036  |
| APCo                             |   | Senior Unsecured Notes  |          |        |  250    |     | 5.55   |     | 2011  |
| I&M                          |   | Pollution Control Bonds |          |        |  52     |     | Variable    |     | 2021  |
| I&M                          |   | Pollution Control Bonds |          |        |  25     |     | Variable    |     | 2019  |
| I&M                          |   | Notes Payable           |          |        |  13     |     | 5.16   |     | 2014  |
| I&M                          |   | Notes Payable           |          |        |  15     |     | 5.44   |     | 2013  |
| I&M                          |   | Notes Payable           |          |        |  11     |     | Variable    |     | 2015  |
| OPCo                             |   | Pollution Control Bonds |          |        |  65     |     | Variable    |     | 2036  |
| OPCo                             |   | Pollution Control Bonds |          |        |  50     |     | Variable    |     | 2014  |
| OPCo                             |   | Pollution Control Bonds |          |        |  50     |     | Variable    |     | 2014  |
| PSO                              |   | Senior Unsecured Notes  |          |        |  200    |     | 6.00   |     | 2032  |
| PSO                              |   | Senior Unsecured Notes  |          |        |  75     |     | 4.70   |     | 2011  |
|                             |   |                    |          |        |              |     |        |     |   |
| Non-Registrant:                  |   |                    |          |        |              |     |        |     |   |
| AEP Subsidiaries                 |   | Notes Payable           |          |        |  5      |     | Variable    |     | 2017  |
| AEP Subsidiaries                 |   | Notes Payable           |          |        |  6      |     | Variable    |     | 2011  |
| AEGCo                            |   | Senior Unsecured Notes  |          |        |  4      |     | 6.33   |     | 2037  |
| TCC                              |   | Securitization Bonds    |          |        |  34     |     | 5.96   |     | 2013  |
| TCC                              |   | Securitization Bonds    |          |        |  58     |     | 4.98   |     | 2013  |
| TCC                              |   | Pollution Control Bonds |          |        |  121    |     | 5.125  |     | 2011  |
| Total Retirements and            |   |                    |          |        |              |     |        |     |   |
|    Principal Payments  |   |                    |          | $           |  1,263  |     |        |     |   |

----

| Short-term Debt                                  |   |          |   |              |     |   |        |          |   |     |   |   |
|--------------------------------------------------|--------|---------------|--------|-------------------|----------|--------|-------------|---------------|--------|----------|--------|--------|
|                                             |   |          |   |              |     |   |        |          |   |     |   |   |
| Our outstanding short-term debt was as follows:  |   |          |   |              |     |   |        |          |   |     |   |   |
|                                             |   |          |   |              |     |   |        |          |   |     |   |   |
|                                             |   | June 30, 2011 |   | December 31, 2010 |
|                                             |   | Outstanding   |   |              | Interest |   | Outstanding |          |   | Interest |
| Type of Debt                                     |   | Amount        |   |              | Rate (a) |   | Amount      |          |   | Rate (a) |
|                                             |   | (in millions) |   |              |     |   |        | (in millions) |   |     |   |   |
| Securitized Debt for Receivables (b)             |   | $             | 695    |              |     |   | 0.23        | %             |   | $        | 690    |   |   |   | 0.31 | % |
| Commercial Paper                                 |   |          | 944    |              |     |   | 0.41        | %             |   |     | 650    |   |   |   | 0.52 | % |
| Line of Credit – Sabine Mining Company (c) |   |          | -      |              |     |   | -           | %             |   |     | 6      |   |   |   | 2.15 | % |
| Total Short-term Debt                            |   | $             | 1,639  |              |     |   |        |          |   | $        | 1,346  |   |   |   |   |   |

| (a) | Weighted average rate. |
|-----|------------------------|

| (b) | Amount of securitized debt for receivables as accounted for under the ''Transfers and Servicing'' accounting guidance. |
|-----|------------------------------------------------------------------------------------------------------------------------|

| (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    |   | Six Months Ended |   |
|-----------------------------------------------|-----------------------|--------|------------------|--------|
|                                          | June 30,              |   | June 30,         |   |
|                                          | 2011                  |   | 2010             |   | 2011 |   | 2010 |   |
|                                          | (dollars in millions) |   |
| Effective Interest Rates on Securitization of |                  |   |             |   |   |   |   |   |   |   |   |   |
| Accounts Receivable                           |                  |   | 0.26             | %      |   |   | 0.31 | % |   |   | 0.28 | % |   |   | 0.27 | % |
| Net Uncollectible Accounts Receivable         |                  |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Written Off                                   |                  | $      | 6                |   |   | $ | 4 |   |   | $ | 17 |   |   | $ | 12 |   |

|                                                                       |   | June 30,      |   |   | December 31, |   |
|----------------------------------------------------------------------------|--------|---------------|--------|--------|--------------|--------|
|                                                                       |   | 2011          |   |   | 2010         |   |
|                                                                       |   | (in millions) |   |
| Accounts Receivable Retained Interest and Pledged as Collateral            |   |          |   |   |         |   |
|   Less Uncollectible Accounts                                         |   | $             | 1,001  |   |         | $      | 923 |   |
| Total Principal Outstanding                                                |   |          | 695    |   |         |   | 690 |   |
| Delinquent Securitized Accounts Receivable                                 |   |          | 39     |   |         |   | 50 |   |
| Bad Debt Reserves Related to Securitization/Sale of Accounts Receivable    |   |          | 22     |   |         |   | 26 |   |
| Unbilled Receivables Related to Securitization/Sale of Accounts Receivable |   |          | 413    |   |         |   | 354 |   |

----

|                            |   | Total         |   |
|---------------------------------|--------|---------------|--------|
|                            |   | (in millions) |   |
| Balance as of December 31, 2010 |   | $             | 17     |   |
| Incurred                        |   |          | -      |   |
| Settled                         |   |          | (9     | ) |
| Adjustments                     |   |          | (2     | ) |
| Balance as of June 30, 2011     |   | $             | 6      |   |

----

----

----

| RESULTS OF OPERATIONS       |          |                 |              |             |              |              |       |               |              |   |               |
|-----------------------------|---------------|----------------------|-------------------|------------------|-------------------|-------------------|------------|--------------------|-------------------|--------|--------------------|
|                        |          |                 |              |             |              |              |       |               |              |   |               |   |
| KWH Sales/Degree Days       |          |                 |              |             |              |              |       |               |              |   |               |
|                        |          |                 |              |             |              |              |       |               |              |   |               |   |
| Summary of KWH Energy Sales |
|                        |          |                 |              |             |              |              |       |               |              |   |               |   |
|                        |          | Three Months Ended   |              | Six Months Ended |
|                        |          | June 30,             |              | June 30,         |
|                        | 2011     |                 | 2010         |             | 2011         |              | 2010  |
|                        |          | (in millions of KWH) |
| Retail:                     |          |                 |              |             |              |              |       |               |              |   |               |
|                        | Residential   |                 |  2,367  |             |              |  2,291  |       |               |  6,326  |   |               |  6,820  |
|                        | Commercial    |                 |  1,696  |             |              |  1,750  |       |               |  3,394  |   |               |  3,536  |
|                        | Industrial    |                 |  2,699  |             |              |  2,722  |       |               |  5,318  |   |               |  5,186  |
|                        | Miscellaneous |                 |  204    |             |              |  213    |       |               |  414    |   |               |  435  |
| Total Retail                |          |  6,966     |              |             |  6,976  |              |       |  15,452  |              |   |  15,977  |
|                        |          |                 |              |             |              |              |       |               |              |   |               |
| Wholesale                   |          |  2,336     |              |             |  1,416  |              |       |  4,163   |              |   |  3,119   |
|                        |          |                 |              |             |              |              |       |               |              |   |               |
| Total KWHs                  |          |  9,302     |              |             |  8,392  |              |       |  19,615  |              |   |  19,096  |

----

| Summary of Heating and Cooling Degree Days |
|--------------------------------------------|
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   | Three Months Ended |   | Six Months Ended |
|                                       |   | June 30, | June 30, |
|                                       |   | 2011  |   | 2010  |   | 2011  |   | 2010  |
|                                       |   | (in degree days) |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual - Heating (a)                       |   |  56  |   |   |  34  |   |   |  1,387  |   |   |  1,611  |
| Normal - Heating (b)                       |   |  100  |   |   |  101  |   |   |  1,437  |   |   |  1,440  |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual - Cooling (c)                       |   |  464  |   |   |  540  |   |   |  470  |   |   |  540  |
| Normal - Cooling (b)                       |   |  348  |   |   |  342  |   |   |  354  |   |   |  348  |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| (a)                                        | Eastern 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. |

----

| Second Quarter of 2011 Compared to Second Quarter of 2010 |
|-----------------------------------------------------------|

|                                                               |   |   |   |
|--------------------------------------------------------------------|--------|--------|--------|
| Reconciliation of Second Quarter of 2010 to Second Quarter of 2011 |   |
| Net Income (Loss)                                                  |   |
| (in millions)                                                      |   |
|                                                               |   |   |   |
| Second Quarter of 2010                                             |   | $      | (20    | ) |
|                                                               |   |   |   |   |
| Changes in Gross Margin:                                           |   |   |   |   |
| Retail Margins                                                     |   |   | 10     |   |
| Off-system Sales                                                   |   |   | 3      |   |
| Transmission Revenue                                               |   |   | 4      |   |
| Total Change in Gross Margin                                       |   |   | 17     |   |
|                                                               |   |   |   |   |
| Changes in Expenses and Other:                                     |   |   |   |   |
| Other Operation and Maintenance                                    |   |   | 53     |   |
| Depreciation and Amortization                                      |   |   | 6      |   |
| Taxes Other Than Income Taxes                                      |   |   | 4      |   |
| Carrying Costs Income                                              |   |   | (4     | ) |
| Other Income                                                       |   |   | 1      |   |
| Interest Expense                                                   |   |   | (1     | ) |
| Total Change in Expenses and Other                                 |   |   | 59     |   |
|                                                               |   |   |   |   |
| Income Tax Expense                                                 |   |   | (24    | ) |
|                                                               |   |   |   |   |
| Second Quarter of 2011                                             |   | $      | 32     |   |

| · | Retail Margins increased $10 million primarily due to the following:                                                        |
|--------|-----------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                      | A $27 million increase due to higher base rates in Virginia and West Virginia. |
|   | ·                                                                                                                      | A $6 million increase due to lower capacity settlement expenses under the Interconnection Agreement net of recovery in West Virginia and environmental deferrals in Virginia. |
|   | These increases were partially offset by:                                                                                   |
|   | ·                                                                                                                      | A $21 million decrease due to the expiration of E&R cost recovery in Virginia. |
|   | ·                                                                                                                      | A $3 million decrease in weather-related usage primarily due to a 14% decrease in cooling degree days. |
| · | Margins from Off-system Sales increased $3 million primarily due to higher physical sales volumes.                          |
| · | Transmission Revenue increased $4 million primarily due to the Transmission Agreement modification effective November 2010. |

----

| ·       | Other Operation and Maintenance expenses decreased $53 million primarily due to the following:                                                                                                                                                                          |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         | ·                                                                                                                                                                                                                                                                  | A $55 million decrease due to expenses related to the cost reduction initiatives recorded in the second quarter of 2010. |
|         | ·                                                                                                                                                                                                                                                                  | A $54 million decrease due to the second quarter 2010 write-off of the Virginia share of the Mountaineer Carbon Capture and Storage Project Product Validation Facility as denied for recovery by the Virginia SCC. |
|         | These decreases were partially offset by:                                                                                                                                                                                                                               |
|         | ·                                                                                                                                                                                                                                                                  | A $25 million increase due to the second quarter 2010 deferral of 2009 storm costs as allowed by the Virginia SCC. |
|         | ·                                                                                                                                                                                                                                                                  | An $18 million increase in storm-related expenses.  |
|         | ·                                                                                                                                                                                                                                                                  | A $5 million increase in transmission expenses primarily due to the Transmission Agreement modification effective November 2010. |
|  · | Depreciation and Amortization expenses decreased $6 million primarily due to the expiration of E&R amortization of deferred carrying costs in Virginia, partially offset by an increased depreciation base resulting from environmental upgrades at the Amos Plant. |
|  · | Taxes Other Than Income Taxes decreased $4 million primarily due to recording a West Virginia franchise tax audit settlement and additional employer payroll taxes incurred related to the cost reduction initiatives in the second quarter of 2010.                    |
|  · | Carrying Costs Income decreased $4 million primarily due to decreased environmental deferrals in Virginia.                                                                                                                                                              |
|  · | Income Tax Expense increased $24 million primarily due to an increase in pretax book income.                                                                                                                                                                       |

----

| Six Months Ended June 30, 2011 Compared to Six Months Ended June 30, 2010 |
|---------------------------------------------------------------------------|

|                                                                               |   |   |           |   |
|------------------------------------------------------------------------------------|--------|--------|----------------|--------|
| Reconciliation of Six Months Ended June 30, 2010 to Six Months Ended June 30, 2011 |
| Net Income (Loss)                                                                  |
| (in millions)                                                                      |
|                                                                               |   |   |           |   |
| Six Months Ended June 30, 2010                                                     |   | $      |  51  |   |
|                                                                               |   |   |           |   |
| Changes in Gross Margin:                                                           |   |   |           |   |
| Retail Margins                                                                     |   |   |  (50)     |   |
| Off-system Sales                                                                   |   |   |  5   |   |
| Transmission Revenue                                                               |   |   |  6   |   |
| Other Revenues                                                                     |   |   |  (1)      |   |
| Total Change in Gross Margin                                                       |   |   |  (40)     |   |
|                                                                               |   |   |           |   |
| Changes in Expenses and Other:                                                     |   |   |           |   |
| Other Operation and Maintenance                                                    |   |   |  61  |   |
| Depreciation and Amortization                                                      |   |   |  14  |   |
| Taxes Other Than Income Taxes                                                      |   |   |  3   |   |
| Carrying Costs Income                                                              |   |   |  (6)      |   |
| Other Income                                                                       |   |   |  1   |   |
| Interest Expense                                                                   |   |   |  (3)      |   |
| Total Change in Expenses and Other                                                 |   |   |  70  |   |
|                                                                               |   |   |           |   |
| Income Tax Expense                                                                 |   |   |  (10)     |   |
|                                                                               |   |   |           |   |
| Six Months Ended June 30, 2011                                                     |   | $      |  71  |   |

| · | Retail Margins decreased $50 million primarily due to the following:                                                                        |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                      | A $37 million decrease due to the expiration of E&R cost recovery in Virginia. |
|   | ·                                                                                                                                      | A $22 million decrease in variable electric generation expenses. |
|   | ·                                                                                                                                      | A $19 million decrease in weather-related usage primarily due to a 14% decrease in heating degree days and a 13% decrease in cooling degree days. |
|   | ·                                                                                                                                      | A $10 million decrease in residential and commercial margins primarily due to lower non-weather related usage. |
|   | These decreases were partially offset by:                                                                                                   |
|   | ·                                                                                                                                      | A $27 million increase due to lower capacity settlement expenses under the Interconnection Agreement net of recovery in West Virginia and environmental deferrals in Virginia. |
|   | ·                                                                                                                                      | A $27 million increase due to higher base rates in Virginia and West Virginia. |
| · | Margins from Off-system Sales increased $5 million primarily due to higher physical sales volumes and higher trading and marketing margins. |
| · | Transmission Revenue increased $6 million primarily due to the Transmission Agreement modification effective November 2010.                 |

----

| ·       | Other Operation and Maintenance expenses decreased $61 million primarily due to the following:                                                                                                                                                                           |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         | ·                                                                                                                                                                                                                                                                   | A $55 million decrease due to expenses related to the cost reduction initiatives recorded in the second quarter of 2010. |
|         | ·                                                                                                                                                                                                                                                                   | A $54 million decrease due to the second quarter 2010 write-off of the Virginia share of the Mountaineer Carbon Capture and Storage Product Validation Facility as denied for recovery by the Virginia SCC. |
|         | ·                                                                                                                                                                                                                                                                   | A $32 million decrease due to the first quarter 2011 deferral of 2010 storm costs and costs related to 2010 cost reduction initiatives.  These costs were deferred as a result of the approved modified settlement agreement of APCo’s West Virginia base rate case in March 2011. |
|         | These decreases were partially offset by:                                                                                                                                                                                                                                |
|         | ·                                                                                                                                                                                                                                                                   | A $41 million increase due to the first quarter 2011 write-off of a portion of the West Virginia share of the Mountaineer Carbon Capture and Storage Product Validation Facility as denied for recovery by the WVPSC. |
|         | ·                                                                                                                                                                                                                                                                   | A $25 million increase due to the second quarter 2010 deferral of 2009 storm costs as allowed by the Virginia SCC. |
|         | ·                                                                                                                                                                                                                                                                   | A $15 million increase in storm-related expenses. |
|         | ·                                                                                                                                                                                                                                                                   | An $8 million increase in transmission expenses primarily due to the Transmission Agreement modification effective November 2010. |
|  · | Depreciation and Amortization expenses decreased $14 million primarily due to the expiration of E&R amortization of deferred carrying costs in Virginia, partially offset by an increased depreciation base resulting from environmental upgrades at the Amos Plant. |
|  · | Taxes Other Than Income Taxes decreased $3 million primarily due to recording a West Virginia franchise tax audit settlement and additional employer payroll taxes incurred related to the cost reduction initiatives in the second quarter of 2010.                     |
|  · | Carrying Costs Income decreased $6 million primarily due to decreased environmental deferrals in Virginia.                                                                                                                                                               |
|  · | Income Tax Expense increased $10 million primarily due to an increase in pretax book income.                                                                                                                                                                             |

----

|                                                 |   | 2011           |     |   | 2010   |   |
|------------------------------------------------------|--------|----------------|----------|--------|--------|--------|
|                                                 |   | (in thousands) |     |
| Cash and Cash Equivalents at Beginning of Period     |   | $              | 951      |   |   | $      | 2,006 |   |
| Net Cash Flows from Operating Activities             |   |           | 386,198  |   |   |   | 252,172 |   |
| Net Cash Flows Used for Investing Activities         |   |           | (346,080 | )      |   |   | (252,171 | ) |
| Net Cash Flows Used for Financing Activities         |   |           | (39,437  | )      |   |   | (181 | ) |
| Net Increase (Decrease) in Cash and Cash Equivalents |   |           | 681      |   |   |   | (180 | ) |
| Cash and Cash Equivalents at End of Period           |   | $              | 1,632    |   |   | $      | 1,826 |   |

----

| Issuances |                    |   |           |                |     |       |   |       |
|-----------|-------------------------|--------|----------------|---------------------|----------|------------|--------|------------|
|      |                    |   | Principal      |                | Interest |       | Due    |
|      | Type of Debt            |   | Amount         |                | Rate     |       | Date   |
|      |                    |   | (in thousands) |                | (%)      |       |   |
|      | Senior Unsecured Notes  |   | $              |  350,000  |     | 4.60  |   | 2021  |
|      | Pollution Control Bonds |   |           |  65,350   |     | 2.00  |   | 2012  |
|      | Pollution Control Bonds |   |           |  75,000   | (a)      | Variable   |   | 2036  |
|      | Pollution Control Bonds |   |           |  50,275   | (a)      | Variable   |   | 2036  |
|      | Pollution Control Bonds |   |           |  54,375   | (a)      | Variable   |   | 2042  |
|      | Pollution Control Bonds |   |           |  50,000   | (a)      | Variable   |   | 2042  |

| (a)   | These pollution control bonds are subject to redemption earlier than the maturity date.  Consequently, these bonds have been classified for maturity purposes as Long-term Debt Due Within One Year - Nonaffiliated on APCo’s Condensed Consolidated Balance Sheets. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Retirements and Principal Payments |                    |   |           |                |     |         |   |
|------------------------------------|-------------------------|--------|----------------|---------------------|----------|--------------|--------|
|                               |                    |   | Principal      |                | Interest |         | Due    |
|                               | Type of Debt            |   | Amount Paid    |                | Rate     |         | Date   |
|                               |                    |   | (in thousands) |                | (%)      |         |   |
|                               | Pollution Control Bonds |   | $              |  75,000   |     | Variable     |   | 2036  |
|                               | Pollution Control Bonds |   |           |  50,275   |     | Variable     |   | 2036  |
|                               | Pollution Control Bonds |   |           |  54,375   |     | Variable     |   | 2042  |
|                               | Pollution Control Bonds |   |           |  50,000   |     | Variable     |   | 2042  |
|                               | Senior Unsecured Notes  |   |           |  250,000  |     | 5.55    |   | 2011  |
|                               | Land Note               |   |           |  11       |     | 13.718  |   | 2026  |

----

| APPALACHIAN POWER COMPANY AND SUBSIDIARIES                                                              |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                                                         |   |
| For the Three and Six Months Ended June 30, 2011 and 2010                                               |   |
| (in thousands)                                                                                          |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   |
|                                                                                                    |   | Three Months Ended |   |   | Six Months Ended |   |
|                                                                                                    |   | 2011 |   |   | 2010 |   |   | 2011 |   |   | 2010 |   |
| REVENUES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Electric Generation, Transmission and Distribution                                                      |   | $ | 666,785 |   |   | $ | 633,140 |   |   | $ | 1,417,797 |   |   | $ | 1,479,130 |   |
| Sales to AEP Affiliates                                                                                 |   |   | 82,531 |   |   |   | 67,365 |   |   |   | 161,222 |   |   |   | 146,136 |   |
| Other Revenues                                                                                          |   |   | 2,129 |   |   |   | 2,769 |   |   |   | 4,246 |   |   |   | 4,631 |   |
| TOTAL REVENUES                                                                                          |   |   | 751,445 |   |   |   | 703,274 |   |   |   | 1,583,265 |   |   |   | 1,629,897 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel and Other Consumables Used for Electric Generation                                                 |   |   | 184,698 |   |   |   | 169,616 |   |   |   | 365,279 |   |   |   | 350,256 |   |
| Purchased Electricity for Resale                                                                        |   |   | 69,127 |   |   |   | 56,936 |   |   |   | 138,345 |   |   |   | 120,619 |   |
| Purchased Electricity from AEP Affiliates                                                               |   |   | 183,661 |   |   |   | 179,607 |   |   |   | 407,850 |   |   |   | 447,109 |   |
| Other Operation                                                                                         |   |   | 74,617 |   |   |   | 170,907 |   |   |   | 187,893 |   |   |   | 260,947 |   |
| Maintenance                                                                                             |   |   | 57,163 |   |   |   | 14,060 |   |   |   | 89,456 |   |   |   | 77,170 |   |
| Depreciation and Amortization                                                                           |   |   | 67,644 |   |   |   | 73,160 |   |   |   | 136,743 |   |   |   | 150,590 |   |
| Taxes Other Than Income Taxes                                                                           |   |   | 25,968 |   |   |   | 29,955 |   |   |   | 53,071 |   |   |   | 56,235 |   |
| TOTAL EXPENSES                                                                                          |   |   | 662,878 |   |   |   | 694,241 |   |   |   | 1,378,637 |   |   |   | 1,462,926 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING INCOME                                                                                        |   |   | 88,567 |   |   |   | 9,033 |   |   |   | 204,628 |   |   |   | 166,971 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income (Expense):                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Income                                                                                         |   |   | 762 |   |   |   | 662 |   |   |   | 1,082 |   |   |   | 953 |   |
| Carrying Costs Income                                                                                   |   |   | 6,542 |   |   |   | 10,298 |   |   |   | 9,981 |   |   |   | 16,062 |   |
| Allowance for Equity Funds Used During Construction                                                     |   |   | 1,212 |   |   |   | 128 |   |   |   | 2,095 |   |   |   | 1,291 |   |
| Interest Expense                                                                                        |   |   | (53,188 | ) |   |   | (51,831 | ) |   |   | (106,127 | ) |   |   | (103,558 | ) |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME (LOSS) BEFORE INCOME TAX EXPENSE                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (CREDIT)                                                                                                |   |   | 43,895 |   |   |   | (31,710 | ) |   |   | 111,659 |   |   |   | 81,719 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income Tax Expense (Credit)                                                                             |   |   | 12,268 |   |   |   | (12,091 | ) |   |   | 41,052 |   |   |   | 31,056 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME (LOSS)                                                                                       |   |   | 31,627 |   |   |   | (19,619 | ) |   |   | 70,607 |   |   |   | 50,663 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred Stock Dividend Requirements Including Capital                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock Expense                                                                                      |   |   | 200 |   |   |   | 225 |   |   |   | 400 |   |   |   | 450 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS (LOSS) ATTRIBUTABLE TO COMMON                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| STOCK                                                                                                   |   | $ | 31,427 |   |   | $ | (19,844 | ) |   | $ | 70,207 |   |   | $ | 50,213 |   |
|                                                                                                    |   |
| The common stock of APCo is wholly-owned by AEP.                                                        |   |
|                                                                                                    |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |   |

----

| APPALACHIAN POWER COMPANY AND SUBSIDIARIES                                                              |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON SHAREHOLDER'S                                    |
| EQUITY AND COMPREHENSIVE INCOME (LOSS)                                                                  |
| For the Six Months Ended June 30, 2011 and 2010                                                         |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   | Other |   |   |
|                                                                                                    |   | Common |   | Paid-in |   | Retained |   | Comprehensive |   |   |
|                                                                                                    |   | Stock |   | Capital |   | Earnings |   | Income (Loss) |   | Total |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | EQUITY – DECEMBER 31, 2009 |   | $ |  260,458  |   | $ |  1,475,393  |   | $ |  1,085,980  |   | $ |  (50,254) |   | $ |  2,771,577  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock Dividends                                                                                  |   |   |   |   |   |   |   |   |  (78,000) |   |   |   |   |   |  (78,000) |
| Preferred Stock Dividends                                                                               |   |   |   |   |   |   |   |   |  (399) |   |   |   |   |   |  (399) |
| Capital Stock Expense                                                                                   |   |   |   |   |   |  52  |   |   |  (51) |   |   |   |   |   |  1  |
| SUBTOTAL – COMMON                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | SHAREHOLDER'S EQUITY |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  2,693,179  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income (Loss), Net of                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | Taxes: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | Cash Flow Hedges, Net of Tax of $1,369 |   |   |   |   |   |   |   |   |   |   |   |  (2,542) |   |   |  (2,542) |
|                                                                                                    |   | Amortization of Pension and OPEB Deferred |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   | Costs, Net of Tax of $1,124 |   |   |   |   |   |   |   |   |   |   |   |  2,087  |   |   |  2,087  |
| NET INCOME                                                                                              |   |   |   |   |   |   |   |   |  50,663  |   |   |   |   |   |  50,663  |
| TOTAL COMPREHENSIVE INCOME                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  50,208  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | EQUITY – JUNE 30, 2010 |   | $ |  260,458  |   | $ |  1,475,445  |   | $ |  1,058,193  |   | $ |  (50,709) |   | $ |  2,743,387  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | EQUITY – DECEMBER 31, 2010 |   | $ |  260,458  |   | $ |  1,475,496  |   | $ |  1,133,748  |   | $ |  (48,023) |   | $ |  2,821,679  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock Dividends                                                                                  |   |   |   |   |   |   |   |   |  (67,500) |   |   |   |   |   |  (67,500) |
| Preferred Stock Dividends                                                                               |   |   |   |   |   |   |   |   |  (400) |   |   |   |   |   |  (400) |
| Gain on Reacquired Preferred Stock                                                                      |   |   |   |   |   |  3  |   |   |   |   |   |   |   |   |  3  |
| SUBTOTAL – COMMON                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | SHAREHOLDER'S EQUITY |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  2,753,782  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income, Net of Taxes:                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | Cash Flow Hedges, Net of Tax of $652 |   |   |   |   |   |   |   |   |   |   |   |  1,211  |   |   |  1,211  |
|                                                                                                    |   | Amortization of Pension and OPEB Deferred |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   | Costs, Net of Tax of $837 |   |   |   |   |   |   |   |   |   |   |   |  1,554  |   |   |  1,554  |
| NET INCOME                                                                                              |   |   |   |   |   |   |   |   |  70,607  |   |   |   |   |   |  70,607  |
| TOTAL COMPREHENSIVE INCOME                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  73,372  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | EQUITY – JUNE 30, 2011 |   | $ |  260,458  |   | $ |  1,475,499  |   | $ |  1,136,455  |   | $ |  (45,258) |   | $ |  2,827,154  |
|                                                                                                    |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| APPALACHIAN POWER COMPANY AND SUBSIDIARIES                                                              |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                   |
| ASSETS                                                                                                  |
| June 30, 2011 and December 31, 2010                                                                     |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | 2011  |   | 2010  |
| CURRENT ASSETS                                                                                          |   |   |   |   |   |   |
| Cash and Cash Equivalents                                                                               |   | $ |  1,632  |   | $ |  951  |
| Advances to Affiliates                                                                                  |   |   |  162,787  |   |   |  -  |
| Accounts Receivable:                                                                                    |   |   |   |   |   |   |
|                                                                                                    | Customers |   |   |  179,695  |   |   |  166,878  |
|                                                                                                    | Affiliated Companies |   |   |  107,225  |   |   |  145,972  |
|                                                                                                    | Accrued Unbilled Revenues |   |   |  52,705  |   |   |  108,210  |
|                                                                                                    | Miscellaneous |   |   |  2,961  |   |   |  3,090  |
|                                                                                                    | Allowance for Uncollectible Accounts |   |   |  (6,839) |   |   |  (6,667) |
|                                                                                                    |   | Total Accounts Receivable |   |   |  335,747  |   |   |  417,483  |
| Fuel                                                                                                    |   |   |  142,478  |   |   |  230,697  |
| Materials and Supplies                                                                                  |   |   |  92,140  |   |   |  89,370  |
| Risk Management Assets                                                                                  |   |   |  31,814  |   |   |  53,242  |
| Accrued Tax Benefits                                                                                    |   |   |  127,008  |   |   |  104,435  |
| Regulatory Asset for Under-Recovered Fuel Costs                                                         |   |   |  19,287  |   |   |  18,300  |
| Prepayments and Other Current Assets                                                                    |   |   |  29,672  |   |   |  35,811  |
| TOTAL CURRENT ASSETS                                                                                    |   |   |  942,565  |   |   |  950,289  |
|                                                                                                    |   |   |   |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT                                                                           |   |   |   |   |   |   |
| Electric:                                                                                               |   |   |   |   |   |   |
|                                                                                                    | Generation |   |   |  5,103,051  |   |   |  4,736,150  |
|                                                                                                    | Transmission |   |   |  1,889,841  |   |   |  1,852,415  |
|                                                                                                    | Distribution |   |   |  2,779,289  |   |   |  2,740,752  |
| Other Property, Plant and Equipment                                                                     |   |   |  351,076  |   |   |  348,013  |
| Construction Work in Progress                                                                           |   |   |  241,339  |   |   |  562,280  |
| Total Property, Plant and Equipment                                                                     |   |   |  10,364,596  |   |   |  10,239,610  |
| Accumulated Depreciation and Amortization                                                               |   |   |  2,927,174  |   |   |  2,843,087  |
| TOTAL PROPERTY, PLANT AND EQUIPMENT – NET                                                         |   |   |  7,437,422  |   |   |  7,396,523  |
|                                                                                                    |   |   |   |   |   |   |   |   |
| OTHER NONCURRENT ASSETS                                                                                 |   |   |   |   |   |   |
| Regulatory Assets                                                                                       |   |   |  1,506,936  |   |   |  1,486,625  |
| Long-term Risk Management Assets                                                                        |   |   |  32,146  |   |   |  38,420  |
| Deferred Charges and Other Noncurrent Assets                                                            |   |   |  119,618  |   |   |  125,296  |
| TOTAL OTHER NONCURRENT ASSETS                                                                           |   |   |  1,658,700  |   |   |  1,650,341  |
|                                                                                                    |   |   |   |   |   |   |
| TOTAL ASSETS                                                                                            |   | $ |  10,038,687  |   | $ |  9,997,153  |
|                                                                                                    |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| APPALACHIAN POWER COMPANY AND SUBSIDIARIES                                                              |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                    |
| June 30, 2011 and December 31, 2010                                                                     |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | 2011  |   | 2010  |
|                                                                                                    |   |   | (in thousands) |
| CURRENT LIABILITIES                                                                                     |   |   |   |   |   |   |
| Advances from Affiliates                                                                                |   | $ |  -  |   | $ |  128,331  |
| Accounts Payable:                                                                                       |   |   |   |   |   |   |
|                                                                                                    | General |   |   |  173,512  |   |   |  223,144  |
|                                                                                                    | Affiliated Companies |   |   |  134,238  |   |   |  166,884  |
| Long-term Debt Due Within One Year – Nonaffiliated                                                |   |   |  229,673  |   |   |  479,672  |
| Risk Management Liabilities                                                                             |   |   |  18,502  |   |   |  27,993  |
| Customer Deposits                                                                                       |   |   |  60,488  |   |   |  58,451  |
| Deferred Income Taxes                                                                                   |   |   |  36,934  |   |   |  44,180  |
| Accrued Taxes                                                                                           |   |   |  70,043  |   |   |  75,619  |
| Accrued Interest                                                                                        |   |   |  59,130  |   |   |  57,871  |
| Other Current Liabilities                                                                               |   |   |  96,315  |   |   |  93,286  |
| TOTAL CURRENT LIABILITIES                                                                               |   |   |  878,835  |   |   |  1,355,431  |
|                                                                                                    |   |   |   |   |   |   |
| NONCURRENT LIABILITIES                                                                                  |   |   |   |   |   |   |
| Long-term Debt – Nonaffiliated                                                                    |   |   |  3,496,213  |   |   |  3,081,469  |
| Long-term Risk Management Liabilities                                                                   |   |   |  10,328  |   |   |  10,873  |
| Deferred Income Taxes                                                                                   |   |   |  1,756,479  |   |   |  1,642,072  |
| Regulatory Liabilities and Deferred Investment Tax Credits                                              |   |   |  566,314  |   |   |  562,381  |
| Employee Benefits and Pension Obligations                                                               |   |   |  284,578  |   |   |  306,460  |
| Deferred Credits and Other Noncurrent Liabilities                                                       |   |   |  201,050  |   |   |  199,041  |
| TOTAL NONCURRENT LIABILITIES                                                                            |   |   |  6,314,962  |   |   |  5,802,296  |
|                                                                                                    |   |   |   |   |   |   |
| TOTAL LIABILITIES                                                                                       |   |   |  7,193,797  |   |   |  7,157,727  |
|                                                                                                    |   |   |   |   |   |   |
| Cumulative Preferred Stock Not Subject to Mandatory Redemption                                          |   |   |  17,736  |   |   |  17,747  |
|                                                                                                    |   |   |   |   |   |   |
| 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                                                                                         |   |   |  1,475,499  |   |   |  1,475,496  |
| Retained Earnings                                                                                       |   |   |  1,136,455  |   |   |  1,133,748  |
| Accumulated Other Comprehensive Income (Loss)                                                           |   |   |  (45,258) |   |   |  (48,023) |
| TOTAL COMMON SHAREHOLDER’S EQUITY                                                                 |   |   |  2,827,154  |   |   |  2,821,679  |
|                                                                                                    |   |   |   |   |   |   |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY                                                        |   | $ |  10,038,687  |   | $ |  9,997,153  |
|                                                                                                    |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| APPALACHIAN POWER COMPANY AND SUBSIDIARIES                                                              |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                         |
| For the Six Months Ended June 30, 2011 and 2010                                                         |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | 2011  |   | 2010  |
| OPERATING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Net Income                                                                                              |   | $ |  70,607  |   | $ |  50,663  |
| Adjustments to Reconcile Net Income to Net Cash Flows from                                              |   |   |   |   |   |   |
|                                                                                                    | Operating Activities: |   |   |   |   |   |   |
|                                                                                                    |   | Depreciation and Amortization |   |   |  136,743  |   |   |  150,590  |
|                                                                                                    |   | Deferred Income Taxes |   |   |  127,525  |   |   |  32,037  |
|                                                                                                    |   | Carrying Costs Income |   |   |  (9,981) |   |   |  (16,062) |
|                                                                                                    |   | Allowance for Equity Funds Used During Construction |   |   |  (2,095) |   |   |  (1,291) |
|                                                                                                    |   | Mark-to-Market of Risk Management Contracts |   |   |  7,343  |   |   |  9,975  |
|                                                                                                    |   | Fuel Over/Under-Recovery, Net |   |   |  (21,132) |   |   |  (32,329) |
|                                                                                                    |   | Change in Other Noncurrent Assets |   |   |  11,361  |   |   |  42,141  |
|                                                                                                    |   | Change in Other Noncurrent Liabilities |   |   |  5,239  |   |   |  (5,225) |
|                                                                                                    |   | Changes in Certain Components of Working Capital: |   |   |   |   |   |   |
|                                                                                                    |   |   | Accounts Receivable, Net |   |   |  84,748  |   |   |  75,903  |
|                                                                                                    |   |   | Fuel, Materials and Supplies |   |   |  85,449  |   |   |  69,469  |
|                                                                                                    |   |   | Accounts Payable |   |   |  (62,795) |   |   |  (100,171) |
|                                                                                                    |   |   | Accrued Taxes, Net |   |   |  (56,411) |   |   |  (38,806) |
|                                                                                                    |   |   | Other Current Assets |   |   |  6,281  |   |   |  5,421  |
|                                                                                                    |   |   | Other Current Liabilities |   |   |  3,316  |   |   |  9,857  |
| Net Cash Flows from Operating Activities                                                                |   |   |  386,198  |   |   |  252,172  |
|                                                                                                    |   |   |   |   |   |   |
| INVESTING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Construction Expenditures                                                                               |   |   |  (191,125) |   |   |  (254,663) |
| Change in Advances to Affiliates, Net                                                                   |   |   |  (162,787) |   |   |  -  |
| Other Investing Activities                                                                              |   |   |  7,832  |   |   |  2,492  |
| Net Cash Flows Used for Investing Activities                                                            |   |   |  (346,080) |   |   |  (252,171) |
|                                                                                                    |   |   |   |   |   |   |
| FINANCING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Issuance of Long-term Debt – Nonaffiliated                                                        |   |   |  640,164  |   |   |  363,913  |
| Change in Advances from Affiliates, Net                                                                 |   |   |  (128,331) |   |   |  17,327  |
| Retirement of Long-term Debt – Nonaffiliated                                                      |   |   |  (479,661) |   |   |  (200,009) |
| Retirement of Long-term Debt – Affiliated                                                         |   |   |  -  |   |   |  (100,000) |
| Retirement of Cumulative Preferred Stock                                                                |   |   |  (8) |   |   |  (4) |
| Principal Payments for Capital Lease Obligations                                                        |   |   |  (3,720) |   |   |  (3,600) |
| Dividends Paid on Common Stock                                                                          |   |   |  (67,500) |   |   |  (78,000) |
| Dividends Paid on Cumulative Preferred Stock                                                            |   |   |  (400) |   |   |  (399) |
| Other Financing Activities                                                                              |   |   |  19  |   |   |  591  |
| Net Cash Flows Used for Financing Activities                                                            |   |   |  (39,437) |   |   |  (181) |
|                                                                                                    |   |   |   |   |   |   |
| Net Increase (Decrease) in Cash and Cash Equivalents                                                    |   |   |  681  |   |   |  (180) |
| Cash and Cash Equivalents at Beginning of Period                                                        |   |   |  951  |   |   |  2,006  |
| Cash and Cash Equivalents at End of Period                                                              |   | $ |  1,632  |   | $ |  1,826  |
|                                                                                                    |   |   |   |   |   |   |
| SUPPLEMENTARY INFORMATION                                                                               |   |   |   |   |   |   |
| Cash Paid for Interest, Net of Capitalized Amounts                                                      |   | $ |  100,127  |   | $ |  103,271  |
| Net Cash Paid (Received) for Income Taxes                                                               |   |   |  (33,371) |   |   |  30,259  |
| Noncash Acquisitions Under Capital Leases                                                               |   |   |  565  |   |   |  22,344  |
| Government Grants Included in Accounts Receivable at June 30,                                           |   |   |  4,061  |   |   |  -  |
| Construction Expenditures Included in Current Liabilities at June 30,                                   |   |   |  52,421  |   |   |  42,890  |
|                                                                                                    |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

|                                      | 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           |
|                                      |              |
| Cost Reduction Initiatives                | Note 12           |

----

----

----

| RESULTS OF OPERATIONS       |          |                 |              |             |              |              |       |               |              |   |               |
|-----------------------------|---------------|----------------------|-------------------|------------------|-------------------|-------------------|------------|--------------------|-------------------|--------|--------------------|
|                        |          |                 |              |             |              |              |       |               |              |   |               |   |
| KWH Sales/Degree Days       |          |                 |              |             |              |              |       |               |              |   |               |
|                        |          |                 |              |             |              |              |       |               |              |   |               |   |
| Summary of KWH Energy Sales |
|                        |          |                 |              |             |              |              |       |               |              |   |               |   |
|                        |          | Three Months Ended   |              | Six Months Ended |
|                        |          | June 30,             |              | June 30,         |
|                        | 2011     |                 | 2010         |             | 2011         |              | 2010  |
|                        |          | (in millions of KWH) |
| Retail:                     |          |                 |              |             |              |              |       |               |              |   |               |
|                        | Residential   |                 |  1,594  |             |              |  1,567  |       |               |  3,722  |   |               |  3,793  |
|                        | Commercial    |                 |  2,118  |             |              |  2,213  |       |               |  4,113  |   |               |  4,214  |
|                        | Industrial    |                 |  1,359  |             |              |  1,157  |       |               |  2,629  |   |               |  2,268  |
|                        | Miscellaneous |                 |  13     |             |              |  14     |       |               |  28     |   |               |  27  |
| Total Retail                |          |  5,084     |              |             |  4,951  |              |       |  10,492  |              |   |  10,302  |
|                        |          |                 |              |             |              |              |       |               |              |   |               |
| Wholesale                   |          |  1,178     |              |             |  637    |              |       |  2,041   |              |   |  1,356   |
|                        |          |                 |              |             |              |              |       |               |              |   |               |
| Total KWHs                  |          |  6,262     |              |             |  5,588  |              |       |  12,533  |              |   |  11,658  |

----

| Summary of Heating and Cooling Degree Days |
|--------------------------------------------|
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   | Three Months Ended |   | Six Months Ended |
|                                       |   | June 30, | June 30, |
|                                       |   | 2011  |   | 2010  |   | 2011  |   | 2010  |
|                                       |   | (in degree days) |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual - Heating (a)                       |   |  122  |   |   |  70  |   |   |  2,050  |   |   |  2,035  |
| Normal - Heating (b)                       |   |  164  |   |   |  165  |   |   |  1,947  |   |   |  1,950  |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual - Cooling (c)                       |   |  369  |   |   |  430  |   |   |  370  |   |   |  430  |
| Normal - Cooling (b)                       |   |  299  |   |   |  293  |   |   |  302  |   |   |  296  |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| (a)                                        | Eastern 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. |

----

| Second Quarter of 2011 Compared to Second Quarter of 2010 |
|-----------------------------------------------------------|

|                                                               |   |   |   |
|--------------------------------------------------------------------|--------|--------|--------|
| Reconciliation of Second Quarter of 2010 to Second Quarter of 2011 |   |
| Net Income                                                         |   |
| (in millions)                                                      |   |
|                                                               |   |   |   |
| Second Quarter of 2010                                             |   | $      | 52     |   |
|                                                               |   |   |   |   |
| Changes in Gross Margin:                                           |   |   |   |   |
| Retail Margins                                                     |   |   | (30    | ) |
| Off-system Sales                                                   |   |   | 19     |   |
| Transmission Revenues                                              |   |   | 1      |   |
| Total Change in Gross Margin                                       |   |   | (10    | ) |
|                                                               |   |   |   |   |
| Changes in Expenses and Other:                                     |   |   |   |   |
| Other Operation and Maintenance                                    |   |   | 31     |   |
| Other Income                                                       |   |   | 1      |   |
| Interest Expense                                                   |   |   | 1      |   |
| Total Change in Expenses and Other                                 |   |   | 33     |   |
|                                                               |   |   |   |   |
| Income Tax Expense                                                 |   |   | (8     | ) |
|                                                               |   |   |   |   |
| Second Quarter of 2011                                             |   | $      | 67     |   |

| · | Retail Margins decreased $30 million due to the following:                                                                                   |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                       | A $22 million decrease attributable to customers switching to alternative competitive retail electric service (CRES) providers. |
|   | ·                                                                                                                                       | A $6 million decrease in residential and industrial margins primarily due to a change in the customer mix resulting in lower realizations. |
|   | ·                                                                                                                                       | A $5 million decrease in weather-related usage due to a 14% decrease in cooling degree days. |
|   | These decreases were partially offset by:                                                                                                    |
|   | ·                                                                                                                                       | A $7 million increase in revenue due to the implementation of PUCO approved rider rates in June 2010 related to the Energy Efficiency & Peak Demand Reduction (EE/PDR) Programs.  This increase in Retail Margins was offset by a corresponding increase in Other Operation and Maintenance as discussed below. |
| · | Margins from Off-system Sales increased $19 million primarily due to an increase in PJM capacity revenues and higher physical sales volumes. |

----

| · | Other Operation and Maintenance expenses decreased $31 million primarily due to:            |
|--------|---------------------------------------------------------------------------------------------|
|   | ·                                                                                      | A $31 million decrease due to expenses related to the cost reduction initiatives recorded in the second quarter of 2010. |
|   | ·                                                                                      | An $8 million decrease in transmission expense primarily due to the Transmission Agreement modification effective November 2010, a portion of which is included in the Ohio Transmission Cost Recovery Rider. |
|   | These decreases were partially offset by:                                                   |
|   | ·                                                                                      | A $7 million increase in expenses due to the implementation of PUCO approved EE/PDR programs.  This increase in Other Operation and Maintenance expense was offset by a corresponding increase in Retail Margins as discussed above. |
|   | ·                                                                                      | A $7 million increase in plant maintenance expenses primarily related to work performed at the Stuart, Waterford and Conesville plants. |
| · | Income Tax Expense increased $8 million primarily due to an increase in pretax book income. |

----

| Six Months Ended June 30, 2011 Compared to Six Months Ended June 30, 2010 |
|---------------------------------------------------------------------------|

|                                                                               |   |   |            |   |
|------------------------------------------------------------------------------------|--------|--------|-----------------|--------|
| Reconciliation of Six Months Ended June 30, 2010 to Six Months Ended June 30, 2011 |
| Net Income                                                                         |
| (in millions)                                                                      |
|                                                                               |   |   |            |   |
| Six Months Ended June 30, 2010                                                     |   | $      |  104  |   |
|                                                                               |   |   |            |   |
| Changes in Gross Margin:                                                           |   |   |            |   |
| Retail Margins                                                                     |   |   |  (20)      |   |
| Off-system Sales                                                                   |   |   |  32   |   |
| Transmission Revenues                                                              |   |   |  1    |   |
| Other Revenues                                                                     |   |   |  (1)       |   |
| Total Change in Gross Margin                                                       |   |   |  12   |   |
|                                                                               |   |   |            |   |
| Changes in Expenses and Other:                                                     |   |   |            |   |
| Other Operation and Maintenance                                                    |   |   |  32   |   |
| Depreciation and Amortization                                                      |   |   |  (4)       |   |
| Taxes Other Than Income Taxes                                                      |   |   |  (3)       |   |
| Other Income                                                                       |   |   |  2    |   |
| Interest Expense                                                                   |   |   |  3    |   |
| Total Change in Expenses and Other                                                 |   |   |  30   |   |
|                                                                               |   |   |            |   |
| Income Tax Expense                                                                 |   |   |  (14)      |   |
|                                                                               |   |   |            |   |
| Six Months Ended June 30, 2011                                                     |   | $      |  132  |   |

|   · | Retail Margins decreased $20 million primarily due to:                                                                                       |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------|
|               | ·                                                                                                                                       | A $40 million decrease attributable to customers switching to alternative competitive retail electric service (CRES) providers. |
|               | ·                                                                                                                                       | A $6 million decrease in weather-related usage due to a 14% decrease in cooling degree days. |
|               | ·                                                                                                                                       | A $3 million decrease in capacity settlements under the Interconnection Agreement. |
|               | These decreases were partially offset by:                                                                                                    |
|               | ·                                                                                                                                       | A $19 million increase in revenue due to the implementation of PUCO approved rider rates in June 2010 related to the Energy Efficiency & Peak Demand Reduction (EE/PDR) Programs.  This increase in Retail Margins was offset by a corresponding increase in Other Operation and Maintenance as discussed below. |
|               | ·                                                                                                                                       | A $10 million increase associated with the final 2009 SEET order. |
| ·             | Margins from Off-system Sales increased $32 million primarily due to an increase in PJM capacity revenues and higher physical sales volumes. |

----

|   · | Other Operation and Maintenance expenses decreased $32 million primarily due to: |
|--------------------|----------------------------------------------------------------------------------|
|               | ·                                                                           | A $31 million decrease due to expenses related to the cost reduction initiatives recorded in the second quarter of 2010. |   |
|               | ·                                                                           | A $15 million decrease in transmission expense primarily due to the Transmission Agreement modification effective November 2010, a portion of which is included in the Ohio Transmission Cost Recovery Rider. |   |
|               | ·                                                                           | A $15 million decrease in recoverable PJM expenses. |   |

|               | These decreases were partially offset by:                                                                                                                                              |                                                                                                                                                                                                                                            |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|               | ·                                                                                                                                                                                 | A $19 million increase in expenses due to the implementation of PUCO approved EE/PDR programs.  This increase in Other Operation and Maintenance expense was offset by a corresponding increase in Retail Margins as discussed above. |   |
|               | ·                                                                                                                                                                                 | A $14 million increase in plant maintenance and operation expenses primarily related to work performed at the Stuart, Waterford and Conesville plants.                                                                                          |   |
|   · | Depreciation and Amortization increased $4 million as a result of recognizing deferred debt and equity carrying charges on deferred fuel as permitted under the final 2009 SEET order. |
|   · | Taxes Other Than Income Taxes increased $3 million primarily due to an increase in property taxes.                                                                                     |
|   · | Interest Expense decreased $3 million primarily as a result of a long-term debt retirement in December 2010.                                                                           |
|   · | Income Tax Expense increased $14 million primarily due to an increase in pretax book income.                                                                                           |

----

| COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES                                                        |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME                                                             |
| For the Three and Six Months Ended June 30, 2011 and 2010                                               |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | Three Months Ended |   | Six Months Ended |
|                                                                                                    |   | 2011  |   | 2010  |   | 2011  |   | 2010  |
| REVENUES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |
| Electric Generation, Transmission and Distribution                                                      |   | $ |  482,655  |   | $ |  503,270  |   | $ |  986,026  |   | $ |  1,004,289  |
| Sales to AEP Affiliates                                                                                 |   |   |  38,421  |   |   |  20,090  |   |   |  79,146  |   |   |  35,922  |
| Other Revenues                                                                                          |   |   |  383  |   |   |  744  |   |   |  889  |   |   |  1,332  |
| TOTAL REVENUES                                                                                          |   |   |  521,459  |   |   |  524,104  |   |   |  1,066,061  |   |   |  1,041,543  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel and Other Consumables Used for Electric Generation                                                 |   |   |  93,760  |   |   |  105,290  |   |   |  206,673  |   |   |  219,731  |
| Purchased Electricity for Resale                                                                        |   |   |  24,885  |   |   |  20,138  |   |   |  48,402  |   |   |  39,783  |
| Purchased Electricity from AEP Affiliates                                                               |   |   |  105,369  |   |   |  91,287  |   |   |  206,980  |   |   |  190,086  |
| Other Operation                                                                                         |   |   |  65,113  |   |   |  103,229  |   |   |  136,180  |   |   |  180,555  |
| Maintenance                                                                                             |   |   |  32,423  |   |   |  25,114  |   |   |  61,523  |   |   |  49,397  |
| Depreciation and Amortization                                                                           |   |   |  37,531  |   |   |  37,602  |   |   |  78,957  |   |   |  75,089  |
| Taxes Other Than Income Taxes                                                                           |   |   |  44,128  |   |   |  44,294  |   |   |  94,277  |   |   |  91,351  |
| TOTAL EXPENSES                                                                                          |   |   |  403,209  |   |   |  426,954  |   |   |  832,992  |   |   |  845,992  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING INCOME                                                                                        |   |   |  118,250  |   |   |  97,150  |   |   |  233,069  |   |   |  195,551  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income (Expense):                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Income                                                                                         |   |   |  183  |   |   |  167  |   |   |  350  |   |   |  309  |
| Carrying Costs Income                                                                                   |   |   |  2,268  |   |   |  1,963  |   |   |  5,922  |   |   |  4,184  |
| Allowance for Equity Funds Used During Construction                                                     |   |   |  547  |   |   |  314  |   |   |  1,318  |   |   |  1,235  |
| Interest Expense                                                                                        |   |   |  (20,201) |   |   |  (21,091) |   |   |  (39,949) |   |   |  (42,875) |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME BEFORE INCOME TAX EXPENSE                                                                        |   |   |  101,047  |   |   |  78,503  |   |   |  200,710  |   |   |  158,404  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Income Tax Expense                                                                                      |   |   |  34,519  |   |   |  26,387  |   |   |  68,624  |   |   |  54,638  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME                                                                                              |   |   |  66,528  |   |   |  52,116  |   |   |  132,086  |   |   |  103,766  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital Stock Expense                                                                                   |   |   |  25  |   |   |  40  |   |   |  50  |   |   |  79  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS ATTRIBUTABLE TO COMMON STOCK                                                                   |   | $ |  66,503  |   | $ |  52,076  |   | $ |  132,036  |   | $ |  103,687  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| The common stock of CSPCo is wholly-owned by AEP.                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES                                                        |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON SHAREHOLDER'S                                    |
| EQUITY AND COMPREHENSIVE INCOME (LOSS)                                                                  |
| For the Six Months Ended June 30, 2011 and 2010                                                         |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   | Other |   |   |
|                                                                                                    |   | Common |   | Paid-in |   | Retained |   | Comprehensive |   |   |
|                                                                                                    |   | Stock |   | Capital |   | Earnings |   | Income (Loss) |   | Total |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | EQUITY – DECEMBER 31, 2009 |   | $ |  41,026  |   | $ |  580,663  |   | $ |  788,139  |   | $ |  (49,993) |   | $ |  1,359,835  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock Dividends                                                                                  |   |   |   |   |   |   |   |   |  (52,500) |   |   |   |   |   |  (52,500) |
| Capital Stock Expense                                                                                   |   |   |   |   |   |  79  |   |   |  (79) |   |   |   |   |   |  -  |
| SUBTOTAL – COMMON                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | SHAREHOLDER'S EQUITY |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  1,307,335  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income (Loss), Net of                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | Taxes: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | Cash Flow Hedges, Net of Tax of $232 |   |   |   |   |   |   |   |   |   |   |   |  (431) |   |   |  (431) |
|                                                                                                    |   | Amortization of Pension and OPEB Deferred |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   | Costs, Net of Tax of $667 |   |   |   |   |   |   |   |   |   |   |   |  1,238  |   |   |  1,238  |
| NET INCOME                                                                                              |   |   |   |   |   |   |   |   |  103,766  |   |   |   |   |   |  103,766  |
| TOTAL COMPREHENSIVE INCOME                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  104,573  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | EQUITY – JUNE 30, 2010 |   | $ |  41,026  |   | $ |  580,742  |   | $ |  839,326  |   | $ |  (49,186) |   | $ |  1,411,908  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | EQUITY – DECEMBER 31, 2010 |   | $ |  41,026  |   | $ |  580,812  |   | $ |  915,713  |   | $ |  (51,336) |   | $ |  1,486,215  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock Dividends                                                                                  |   |   |   |   |   |   |   |   |  (125,000) |   |   |   |   |   |  (125,000) |
| Capital Stock Expense                                                                                   |   |   |   |   |   |  50  |   |   |  (50) |   |   |   |   |   |  -  |
| SUBTOTAL – COMMON                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | SHAREHOLDER'S EQUITY |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  1,361,215  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income, Net of Taxes:                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | Cash Flow Hedges, Net of Tax of $265 |   |   |   |   |   |   |   |   |   |   |   |  492  |   |   |  492  |
|                                                                                                    |   | Amortization of Pension and OPEB Deferred |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   | Costs, Net of Tax of $688 |   |   |   |   |   |   |   |   |   |   |   |  1,278  |   |   |  1,278  |
| NET INCOME                                                                                              |   |   |   |   |   |   |   |   |  132,086  |   |   |   |   |   |  132,086  |
| TOTAL COMPREHENSIVE INCOME                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  133,856  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | EQUITY – JUNE 30, 2011 |   | $ |  41,026  |   | $ |  580,862  |   | $ |  922,749  |   | $ |  (49,566) |   | $ |  1,495,071  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES                                                        |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                   |
| ASSETS                                                                                                  |
| June 30, 2011 and December 31, 2010                                                                     |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | 2011  |   | 2010  |
| CURRENT ASSETS                                                                                          |   |   |   |   |   |   |
| Cash and Cash Equivalents                                                                               |   | $ |  1,295  |   | $ |  509  |
| Other Cash Deposits                                                                                     |   |   |  2,260  |   |   |  2,260  |
| Advances to Affiliates                                                                                  |   |   |  71,323  |   |   |  54,202  |
| Accounts Receivable:                                                                                    |   |   |   |   |   |   |
|                                                                                                    | Customers |   |   |  51,282  |   |   |  50,187  |
|                                                                                                    | Affiliated Companies |   |   |  42,371  |   |   |  66,788  |
|                                                                                                    | Accrued Unbilled Revenues |   |   |  5,657  |   |   |  32,821  |
|                                                                                                    | Miscellaneous |   |   |  5,736  |   |   |  14,374  |
|                                                                                                    | Allowance for Uncollectible Accounts |   |   |  (1,638) |   |   |  (1,584) |
|                                                                                                    |   | Total Accounts Receivable |   |   |  103,408  |   |   |  162,586  |
| Fuel                                                                                                    |   |   |  59,842  |   |   |  72,882  |
| Materials and Supplies                                                                                  |   |   |  41,409  |   |   |  42,033  |
| Emission Allowances                                                                                     |   |   |  25,272  |   |   |  28,486  |
| Risk Management Assets                                                                                  |   |   |  18,351  |   |   |  23,774  |
| Accrued Tax Benefits                                                                                    |   |   |  22,014  |   |   |  8,797  |
| Regulatory Asset for Under-Recovered Fuel Costs                                                         |   |   |  26,672  |   |   |  -  |
| Margin Deposits                                                                                         |   |   |  12,986  |   |   |  14,762  |
| Prepayments and Other Current Assets                                                                    |   |   |  8,104  |   |   |  26,864  |
| TOTAL CURRENT ASSETS                                                                                    |   |   |  392,936  |   |   |  437,155  |
|                                                                                                    |   |   |   |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT                                                                           |   |   |   |   |   |   |
| Electric:                                                                                               |   |   |   |   |   |   |
|                                                                                                    | Generation |   |   |  2,725,375  |   |   |  2,686,294  |
|                                                                                                    | Transmission |   |   |  676,863  |   |   |  662,312  |
|                                                                                                    | Distribution |   |   |  1,820,031  |   |   |  1,796,023  |
| Other Property, Plant and Equipment                                                                     |   |   |  204,858  |   |   |  203,593  |
| Construction Work in Progress                                                                           |   |   |  149,955  |   |   |  172,793  |
| Total Property, Plant and Equipment                                                                     |   |   |  5,577,082  |   |   |  5,521,015  |
| Accumulated Depreciation and Amortization                                                               |   |   |  1,989,614  |   |   |  1,927,112  |
| TOTAL PROPERTY, PLANT AND EQUIPMENT – NET                                                         |   |   |  3,587,468  |   |   |  3,593,903  |
|                                                                                                    |   |   |   |   |   |   |
| OTHER NONCURRENT ASSETS                                                                                 |   |   |   |   |   |   |
| Regulatory Assets                                                                                       |   |   |  313,651  |   |   |  298,111  |
| Long-term Risk Management Assets                                                                        |   |   |  18,578  |   |   |  22,089  |
| Deferred Charges and Other Noncurrent Assets                                                            |   |   |  98,461  |   |   |  152,932  |
| TOTAL OTHER NONCURRENT ASSETS                                                                           |   |   |  430,690  |   |   |  473,132  |
|                                                                                                    |   |   |   |   |   |   |
| TOTAL ASSETS                                                                                            |   | $ |  4,411,094  |   | $ |  4,504,190  |
|                                                                                                    |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES                                                        |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                   |
| LIABILITIES AND SHAREHOLDER'S EQUITY                                                                    |
| June 30, 2011 and December 31, 2010                                                                     |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | 2011  |   | 2010  |
|                                                                                                    |   |   | (in thousands) |
| CURRENT LIABILITIES                                                                                     |   |   |   |   |   |   |
| Accounts Payable:                                                                                       |   |   |   |   |   |   |
|                                                                                                    | General |   | $ |  80,339  |   | $ |  98,925  |
|                                                                                                    | Affiliated Companies |   |   |  70,165  |   |   |  78,617  |
| Long-term Debt Due Within One Year – Nonaffiliated                                                |   |   |  194,500  |   |   |  -  |
| Risk Management Liabilities                                                                             |   |   |  10,668  |   |   |  15,967  |
| Customer Deposits                                                                                       |   |   |  30,652  |   |   |  29,441  |
| Accrued Taxes                                                                                           |   |   |  137,197  |   |   |  226,572  |
| Accrued Interest                                                                                        |   |   |  22,580  |   |   |  22,533  |
| Other Current Liabilities                                                                               |   |   |  88,576  |   |   |  111,868  |
| TOTAL CURRENT LIABILITIES                                                                               |   |   |  634,677  |   |   |  583,923  |
|                                                                                                    |   |   |   |   |   |   |
| NONCURRENT LIABILITIES                                                                                  |   |   |   |   |   |   |
| Long-term Debt – Nonaffiliated                                                                    |   |   |  1,244,469  |   |   |  1,438,830  |
| Long-term Risk Management Liabilities                                                                   |   |   |  5,964  |   |   |  6,223  |
| Deferred Income Taxes                                                                                   |   |   |  642,748  |   |   |  604,828  |
| Regulatory Liabilities and Deferred Investment Tax Credits                                              |   |   |  168,346  |   |   |  163,888  |
| Employee Benefits and Pension Obligations                                                               |   |   |  133,149  |   |   |  136,643  |
| Deferred Credits and Other Noncurrent Liabilities                                                       |   |   |  86,670  |   |   |  83,640  |
| TOTAL NONCURRENT LIABILITIES                                                                            |   |   |  2,281,346  |   |   |  2,434,052  |
|                                                                                                    |   |   |   |   |   |   |
| TOTAL LIABILITIES                                                                                       |   |   |  2,916,023  |   |   |  3,017,975  |
|                                                                                                    |   |   |   |   |   |   |
| 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                                                                                         |   |   |  580,862  |   |   |  580,812  |
| Retained Earnings                                                                                       |   |   |  922,749  |   |   |  915,713  |
| Accumulated Other Comprehensive Income (Loss)                                                           |   |   |  (49,566) |   |   |  (51,336) |
| TOTAL COMMON SHAREHOLDER’S EQUITY                                                                 |   |   |  1,495,071  |   |   |  1,486,215  |
|                                                                                                    |   |   |   |   |   |   |
| TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY                                                              |   | $ |  4,411,094  |   | $ |  4,504,190  |
|                                                                                                    |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES                                                        |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                         |
| For the Six Months Ended June 30, 2011 and 2010                                                         |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | 2011  |   | 2010  |
| OPERATING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Net Income                                                                                              |   | $ |  132,086  |   | $ |  103,766  |
| Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:                        |   |   |   |   |   |   |
|                                                                                                    |   | Depreciation and Amortization |   |   |  78,957  |   |   |  75,089  |
|                                                                                                    |   | Deferred Income Taxes |   |   |  58,594  |   |   |  19,833  |
|                                                                                                    |   | Allowance for Equity Funds Used During Construction |   |   |  (1,318) |   |   |  (1,235) |
|                                                                                                    |   | Mark-to-Market of Risk Management Contracts |   |   |  4,206  |   |   |  1,466  |
|                                                                                                    |   | Property Taxes |   |   |  57,078  |   |   |  48,526  |
|                                                                                                    |   | Fuel Over/Under-Recovery, Net |   |   |  (12,072) |   |   |  32,120  |
|                                                                                                    |   | Change in Other Noncurrent Assets |   |   |  (24,713) |   |   |  (17,051) |
|                                                                                                    |   | Change in Other Noncurrent Liabilities |   |   |  8,023  |   |   |  (2,458) |
|                                                                                                    |   | Changes in Certain Components of Working Capital: |   |   |   |   |   |   |
|                                                                                                    |   |   | Accounts Receivable, Net |   |   |  51,840  |   |   |  (17,458) |
|                                                                                                    |   |   | Fuel, Materials and Supplies |   |   |  16,424  |   |   |  (3,512) |
|                                                                                                    |   |   | Accounts Payable |   |   |  (19,262) |   |   |  (12,744) |
|                                                                                                    |   |   | Accrued Taxes, Net |   |   |  (107,239) |   |   |  (89,647) |
|                                                                                                    |   |   | Other Current Assets |   |   |  5,200  |   |   |  8,582  |
|                                                                                                    |   |   | Other Current Liabilities |   |   |  (34,703) |   |   |  12,262  |
| Net Cash Flows from Operating Activities                                                                |   |   |  213,101  |   |   |  157,539  |
|                                                                                                    |   |   |   |   |   |   |
| INVESTING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Construction Expenditures                                                                               |   |   |  (92,578) |   |   |  (84,208) |
| Change in Other Cash Deposits                                                                           |   |   |  -  |   |   |  10,289  |
| Change in Advances to Affiliates, Net                                                                   |   |   |  (17,121) |   |   |  (57,069) |
| Acquisitions of Assets                                                                                  |   |   |  (527) |   |   |  (463) |
| Proceeds from Sales of Assets                                                                           |   |   |  6,280  |   |   |  3,410  |
| Other Investing Activities                                                                              |   |   |  18,286  |   |   |  -  |
| Net Cash Flows Used for Investing Activities                                                            |   |   |  (85,660) |   |   |  (128,041) |
|                                                                                                    |   |   |   |   |   |   |
| FINANCING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Issuance of Long-term Debt – Nonaffiliated                                                        |   |   |  -  |   |   |  149,443  |
| Change in Advances from Affiliates, Net                                                                 |   |   |  -  |   |   |  (24,202) |
| Retirement of Long-term Debt – Affiliated                                                         |   |   |  -  |   |   |  (100,000) |
| Principal Payments for Capital Lease Obligations                                                        |   |   |  (1,674) |   |   |  (2,237) |
| Dividends Paid on Common Stock                                                                          |   |   |  (125,000) |   |   |  (52,500) |
| Other Financing Activities                                                                              |   |   |  19  |   |   |  95  |
| Net Cash Flows Used for Financing Activities                                                            |   |   |  (126,655) |   |   |  (29,401) |
|                                                                                                    |   |   |   |   |   |   |
| Net Increase in Cash and Cash Equivalents                                                               |   |   |  786  |   |   |  97  |
| Cash and Cash Equivalents at Beginning of Period                                                        |   |   |  509  |   |   |  1,096  |
| Cash and Cash Equivalents at End of Period                                                              |   | $ |  1,295  |   | $ |  1,193  |
|                                                                                                    |   |   |   |   |   |   |
| SUPPLEMENTARY INFORMATION                                                                               |   |   |   |   |   |   |
| Cash Paid for Interest, Net of Capitalized Amounts                                                      |   | $ |  38,250  |   | $ |  43,615  |
| Net Cash Paid for Income Taxes                                                                          |   |   |  26,797  |   |   |  54,032  |
| Noncash Acquisitions Under Capital Leases                                                               |   |   |  580  |   |   |  9,196  |
| Government Grants Included in Accounts Receivable at June 30,                                           |   |   |  2,000  |   |   |  -  |
| Construction Expenditures Included in Current Liabilities at June 30,                                   |   |   |  8,811  |   |   |  14,594  |
|                                                                                                    |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

|                                      | 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           |
|                                      |              |
| Cost Reduction Initiatives                | Note 12           |

----

----

----

| RESULTS OF OPERATIONS       |          |                 |              |             |              |              |       |               |              |   |               |
|-----------------------------|---------------|----------------------|-------------------|------------------|-------------------|-------------------|------------|--------------------|-------------------|--------|--------------------|
|                        |          |                 |              |             |              |              |       |               |              |   |               |   |
| KWH Sales/Degree Days       |          |                 |              |             |              |              |       |               |              |   |               |
|                        |          |                 |              |             |              |              |       |               |              |   |               |   |
| Summary of KWH Energy Sales |
|                        |          |                 |              |             |              |              |       |               |              |   |               |   |
|                        |          | Three Months Ended   |              | Six Months Ended |
|                        |          | June 30,             |              | June 30,         |
|                        | 2011     |                 | 2010         |             | 2011         |              | 2010  |
|                        |          | (in millions of KWH) |
| Retail:                     |          |                 |              |             |              |              |       |               |              |   |               |
|                        | Residential   |                 |  1,170  |             |              |  1,210  |       |               |  3,006  |   |               |  2,975  |
|                        | Commercial    |                 |  1,188  |             |              |  1,279  |       |               |  2,452  |   |               |  2,487  |
|                        | Industrial    |                 |  1,871  |             |              |  1,895  |       |               |  3,715  |   |               |  3,695  |
|                        | Miscellaneous |                 |  15     |             |              |  18     |       |               |  38     |   |               |  36  |
| Total Retail                |          |  4,244     |              |             |  4,402  |              |       |  9,211   |              |   |  9,193   |
|                        |          |                 |              |             |              |              |       |               |              |   |               |
| Wholesale                   |          |  2,408     |              |             |  1,793  |              |       |  4,504   |              |   |  3,700   |
|                        |          |                 |              |             |              |              |       |               |              |   |               |
| Total KWHs                  |          |  6,652     |              |             |  6,195  |              |       |  13,715  |              |   |  12,893  |

| Summary of Heating and Cooling Degree Days |
|--------------------------------------------|
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   | Three Months Ended |   | Six Months Ended |
|                                       |   | June 30, | June 30, |
|                                       |   | 2011  |   | 2010  |   | 2011  |   | 2010  |
|                                       |   | (in degree days) |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual - Heating (a)                       |   |  228  |   |   |  95  |   |   |  2,620  |   |   |  2,278  |
| Normal - Heating (b)                       |   |  238  |   |   |  243  |   |   |  2,414  |   |   |  2,422  |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual - Cooling (c)                       |   |  304  |   |   |  379  |   |   |  304  |   |   |  379  |
| Normal - Cooling (b)                       |   |  252  |   |   |  245  |   |   |  253  |   |   |  246  |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| (a)                                        | Eastern 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. |

----

| Second Quarter of 2011 Compared to Second Quarter of 2010 |
|-----------------------------------------------------------|

|                                                               |   |   |   |
|--------------------------------------------------------------------|--------|--------|--------|
| Reconciliation of Second Quarter of 2010 to Second Quarter of 2011 |   |
| Net Income                                                         |   |
| (in millions)                                                      |   |
|                                                               |   |   |   |
| Second Quarter of 2010                                             |   | $      | 15     |   |
|                                                               |   |   |   |   |
| Changes in Gross Margin:                                           |   |   |   |   |
| Retail Margins                                                     |   |   | (9     | ) |
| FERC Municipals and Cooperatives                                   |   |   | (2     | ) |
| Off-system Sales                                                   |   |   | 4      |   |
| Other Revenues                                                     |   |   | (2     | ) |
| Total Change in Gross Margin                                       |   |   | (9     | ) |
|                                                               |   |   |   |   |
| Changes in Expenses and Other:                                     |   |   |   |   |
| Other Operation and Maintenance                                    |   |   | 32     |   |
| Depreciation and Amortization                                      |   |   | 1      |   |
| Taxes Other Than Income Taxes                                      |   |   | (2     | ) |
| Other Income                                                       |   |   | (2     | ) |
| Interest Expense                                                   |   |   | 2      |   |
| Total Change in Expenses and Other                                 |   |   | 31     |   |
|                                                               |   |   |   |   |
| Income Tax Expense                                                 |   |   | (6     | ) |
|                                                               |   |   |   |   |
| Second Quarter of 2011                                             |   | $      | 31     |   |

| · | Retail Margins decreased $9 million primarily due to the following:                               |
|--------|---------------------------------------------------------------------------------------------------|
|   | ·                                                                                            | A $6 million decrease due to customer credits for a settlement relating to the Cook Plant Unit 1 (Unit 1) fire outage.  This decrease was offset by a decrease in Other Operation and Maintenance expenses. |
|   | ·                                                                                            | A $5 million decrease in margins from commercial sales primarily due to lower usage. |
|   | ·                                                                                            | A $3 million decrease in capacity settlements under the Interconnection Agreement. |
|   | These decreases were partially offset by:                                                         |
|   | ·                                                                                            | A $7 million increase due to a Michigan rate settlement effective in December 2010. |
| · | Margins from Off-system Sales increased $4 million primarily due to higher physical sales volume. |

| · | Other Operation and Maintenance expenses decreased $32 million primarily due to the following:                                                                                                                                                                  |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                                          | A $40 million decrease due to expenses related to the cost reduction initiatives recorded in the second quarter of 2010. |
|   | ·                                                                                                                                                                                                                                                          | A $6 million decrease in steam power expenses relating to the Unit 1 fire outage.  This decrease was offset by a decrease in Retail Margins. |
|   | These decreases were partially offset by:                                                                                                                                                                                                                       |
|   | ·                                                                                                                                                                                                                                                          | A $9 million increase in transmission expense primarily due to the Transmission Agreement modification effective November 2010. |
|   | ·                                                                                                                                                                                                                                                          | A $3 million increase in steam generation maintenance costs. |
| · | Income Tax Expense increased $6 million primarily due to an increase in pre-tax book income and the regulatory accounting treatment of state income taxes, partially offset by other book/tax differences which are accounted for on a flow-through basis. |

----

| Six Months Ended June 30, 2011 Compared to Six Months Ended June 30, 2010 |
|---------------------------------------------------------------------------|

|                                                                               |   |   |           |   |
|------------------------------------------------------------------------------------|--------|--------|----------------|--------|
| Reconciliation of Six Months Ended June 30, 2010 to Six Months Ended June 30, 2011 |
| Net Income                                                                         |
| (in millions)                                                                      |
|                                                                               |   |   |           |   |
| Six Months Ended June 30, 2010                                                     |   | $      |  60  |   |
|                                                                               |   |   |           |   |
| Changes in Gross Margin:                                                           |   |   |           |   |
| Retail Margins                                                                     |   |   |  2   |   |
| Off-system Sales                                                                   |   |   |  6   |   |
| Other Revenues                                                                     |   |   |  (3)      |   |
| Total Change in Gross Margin                                                       |   |   |  5   |   |
|                                                                               |   |   |           |   |
| Changes in Expenses and Other:                                                     |   |   |           |   |
| Other Operation and Maintenance                                                    |   |   |  27  |   |
| Depreciation and Amortization                                                      |   |   |  1   |   |
| Taxes Other Than Income Taxes                                                      |   |   |  (3)      |   |
| Other Income                                                                       |   |   |  (3)      |   |
| Interest Expense                                                                   |   |   |  3   |   |
| Total Change in Expenses and Other                                                 |   |   |  25  |   |
|                                                                               |   |   |           |   |
| Income Tax Expense                                                                 |   |   |  (13)     |   |
|                                                                               |   |   |           |   |
| Six Months Ended June 30, 2011                                                     |   | $      |  77  |   |

| · | Retail Margins increased $2 million primarily due to the following:                               |
|--------|---------------------------------------------------------------------------------------------------|
|   | ·                                                                                            | A $23 million increase due to the Michigan rate settlement effective in December 2010 and recovery of costs through trackers. |
|   | This increase was offset by:                                                                      |
|   | ·                                                                                            | A $17 million decrease in capacity settlements under the Interconnection Agreement. |
|   | ·                                                                                            | A $6 million decrease due to customer credits for a settlement relating to the Unit 1 fire outage.  This decrease was offset by a decrease in Other Operation and Maintenance expenses. |
| · | Margins from Off-system Sales increased $6 million primarily due to higher physical sales volume. |

| · | Other Operation and Maintenance expenses decreased $27 million primarily due to the following:                                                                                                                                |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                        | A $40 million decrease due to expenses related to the cost reduction initiatives recorded in the second quarter of 2010. |
|   | ·                                                                                                                                                                                                                        | A $6 million decrease in steam power expenses relating to the Unit 1 fire outage.  This decrease was offset by a decrease in Retail Margins. |
|   |                                                                                                                                                                                                                          | These decreases were partially offset by: |
|   | ·                                                                                                                                                                                                                        | A $19 million increase in transmission expense primarily due to the Transmission Agreement modification effective November 2010. |
| · | Income Tax Expense increased $13 million primarily due to an increase in pre-tax book income, the regulatory accounting treatment of state income taxes and federal income tax adjustments related to prior year tax returns. |

----

----

| INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES                                                         |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME                                                             |
| For the Three and Six Months Ended June 30, 2011 and 2010                                               |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | Three Months Ended |   | Six Months Ended |
|                                                                                                    |   | 2011  |   | 2010  |   | 2011  |   | 2010  |
| REVENUES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |
| Electric Generation, Transmission and Distribution                                                      |   | $ |  419,627  |   | $ |  408,702  |   | $ |  876,489  |   | $ |  846,726  |
| Sales to AEP Affiliates                                                                                 |   |   |  70,902  |   |   |  67,473  |   |   |  145,770  |   |   |  151,690  |
| Other Revenues - Affiliated                                                                             |   |   |  28,133  |   |   |  30,685  |   |   |  52,464  |   |   |  58,651  |
| Other Revenues - Nonaffiliated                                                                          |   |   |  2,816  |   |   |  3,055  |   |   |  7,247  |   |   |  5,904  |
| TOTAL REVENUES                                                                                          |   |   |  521,478  |   |   |  509,915  |   |   |  1,081,970  |   |   |  1,062,971  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel and Other Consumables Used for Electric Generation                                                 |   |   |  108,322  |   |   |  102,258  |   |   |  223,384  |   |   |  221,439  |
| Purchased Electricity for Resale                                                                        |   |   |  31,796  |   |   |  31,444  |   |   |  61,088  |   |   |  61,211  |
| Purchased Electricity from AEP Affiliates                                                               |   |   |  82,967  |   |   |  68,496  |   |   |  162,551  |   |   |  150,746  |
| Other Operation                                                                                         |   |   |  132,846  |   |   |  162,978  |   |   |  266,057  |   |   |  293,659  |
| Maintenance                                                                                             |   |   |  47,536  |   |   |  49,633  |   |   |  98,536  |   |   |  98,077  |
| Depreciation and Amortization                                                                           |   |   |  33,263  |   |   |  33,971  |   |   |  67,350  |   |   |  67,802  |
| Taxes Other Than Income Taxes                                                                           |   |   |  20,397  |   |   |  18,995  |   |   |  42,659  |   |   |  40,027  |
| TOTAL EXPENSES                                                                                          |   |   |  457,127  |   |   |  467,775  |   |   |  921,625  |   |   |  932,961  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING INCOME                                                                                        |   |   |  64,351  |   |   |  42,140  |   |   |  160,345  |   |   |  130,010  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income (Expense):                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income                                                                                            |   |   |  3,467  |   |   |  5,601  |   |   |  7,362  |   |   |  10,521  |
| Interest Expense                                                                                        |   |   |  (24,193) |   |   |  (26,410) |   |   |  (49,384) |   |   |  (52,511) |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME BEFORE INCOME TAX EXPENSE                                                                        |   |   |  43,625  |   |   |  21,331  |   |   |  118,323  |   |   |  88,020  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income Tax Expense                                                                                      |   |   |  12,239  |   |   |  6,729  |   |   |  41,510  |   |   |  28,360  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME                                                                                              |   |   |  31,386  |   |   |  14,602  |   |   |  76,813  |   |   |  59,660  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred Stock Dividend Requirements                                                                   |   |   |  85  |   |   |  85  |   |   |  170  |   |   |  170  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS ATTRIBUTABLE TO COMMON STOCK                                                                   |   | $ |  31,301  |   | $ |  14,517  |   | $ |  76,643  |   | $ |  59,490  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The common stock of I&M is wholly-owned by AEP.                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES                                                         |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON SHAREHOLDER'S                                    |
| EQUITY AND COMPREHENSIVE INCOME (LOSS)                                                                  |
| For the Six Months Ended June 30, 2011 and 2010                                                         |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   | Other |   |   |
|                                                                                                    |   | Common |   | Paid-in |   | Retained |   | Comprehensive |   |   |
|                                                                                                    |   | Stock |   | Capital |   | Earnings |   | Income (Loss) |   | Total |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | EQUITY – DECEMBER 31, 2009 |   | $ |  56,584  |   | $ |  981,292  |   | $ |  656,608  |   | $ |  (21,701) |   | $ |  1,672,783  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock Dividends                                                                                  |   |   |   |   |   |   |   |   |  (51,500) |   |   |   |   |   |  (51,500) |
| Preferred Stock Dividends                                                                               |   |   |   |   |   |   |   |   |  (170) |   |   |   |   |   |  (170) |
| SUBTOTAL – COMMON                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | SHAREHOLDER'S EQUITY |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  1,621,113  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income, Net of Taxes:                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | Cash Flow Hedges, Net of Tax of $39 |   |   |   |   |   |   |   |   |   |   |   |  72  |   |   |  72  |
|                                                                                                    |   | Amortization of Pension and OPEB Deferred |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   | Costs, Net of Tax of $235 |   |   |   |   |   |   |   |   |   |   |   |  436  |   |   |  436  |
| NET INCOME                                                                                              |   |   |   |   |   |   |   |   |  59,660  |   |   |   |   |   |  59,660  |
| TOTAL COMPREHENSIVE INCOME                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  60,168  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | EQUITY – JUNE 30, 2010 |   | $ |  56,584  |   | $ |  981,292  |   | $ |  664,598  |   | $ |  (21,193) |   | $ |  1,681,281  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | EQUITY – DECEMBER 31, 2010 |   | $ |  56,584  |   | $ |  981,294  |   | $ |  677,360  |   | $ |  (20,889) |   | $ |  1,694,349  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock Dividends                                                                                  |   |   |   |   |   |   |   |   |  (37,500) |   |   |   |   |   |  (37,500) |
| Preferred Stock Dividends                                                                               |   |   |   |   |   |   |   |   |  (170) |   |   |   |   |   |  (170) |
| SUBTOTAL – COMMON                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | SHAREHOLDER'S EQUITY |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  1,656,679  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income, Net of Taxes:                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | Cash Flow Hedges, Net of Tax of $570 |   |   |   |   |   |   |   |   |   |   |   |  1,059  |   |   |  1,059  |
|                                                                                                    |   | Amortization of Pension and OPEB Deferred |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   | Costs, Net of Tax of $255 |   |   |   |   |   |   |   |   |   |   |   |  473  |   |   |  473  |
| NET INCOME                                                                                              |   |   |   |   |   |   |   |   |  76,813  |   |   |   |   |   |  76,813  |
| TOTAL COMPREHENSIVE INCOME                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  78,345  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | EQUITY – JUNE 30, 2011 |   | $ |  56,584  |   | $ |  981,294  |   | $ |  716,503  |   | $ |  (19,357) |   | $ |  1,735,024  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES                                                         |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                   |
| ASSETS                                                                                                  |
| June 30, 2011 and December 31, 2010                                                                     |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | 2011  |   | 2010  |
| CURRENT ASSETS                                                                                          |   |   |   |   |   |   |
| Cash and Cash Equivalents                                                                               |   | $ |  554  |   | $ |  361  |
| Accounts Receivable:                                                                                    |   |   |   |   |   |   |
|                                                                                                    | Customers |   |   |  78,902  |   |   |  76,193  |
|                                                                                                    | Affiliated Companies |   |   |  81,812  |   |   |  149,169  |
|                                                                                                    | Accrued Unbilled Revenues |   |   |  10,189  |   |   |  19,449  |
|                                                                                                    | Miscellaneous |   |   |  10,930  |   |   |  10,968  |
|                                                                                                    | Allowance for Uncollectible Accounts |   |   |  (1,986) |   |   |  (1,692) |
|                                                                                                    |   | Total Accounts Receivable |   |   |  179,847  |   |   |  254,087  |
| Fuel                                                                                                    |   |   |  66,889  |   |   |  87,551  |
| Materials and Supplies                                                                                  |   |   |  172,890  |   |   |  178,331  |
| Risk Management Assets                                                                                  |   |   |  22,341  |   |   |  27,526  |
| Accrued Tax Benefits                                                                                    |   |   |  55,784  |   |   |  71,113  |
| Deferred Cook Plant Fire Costs                                                                          |   |   |  60,207  |   |   |  45,752  |
| Prepayments and Other Current Assets                                                                    |   |   |  34,198  |   |   |  33,713  |
| TOTAL CURRENT ASSETS                                                                                    |   |   |  592,710  |   |   |  698,434  |
|                                                                                                    |   |   |   |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT                                                                           |   |   |   |   |   |   |
| Electric:                                                                                               |   |   |   |   |   |   |
|                                                                                                    | Generation |   |   |  3,803,820  |   |   |  3,774,262  |
|                                                                                                    | Transmission |   |   |  1,201,822  |   |   |  1,188,665  |
|                                                                                                    | Distribution |   |   |  1,435,632  |   |   |  1,411,095  |
| Other Property, Plant and Equipment (including nuclear fuel and coal mining)                            |   |   |  747,303  |   |   |  719,708  |
| Construction Work in Progress                                                                           |   |   |  338,627  |   |   |  301,534  |
| Total Property, Plant and Equipment                                                                     |   |   |  7,527,204  |   |   |  7,395,264  |
| Accumulated Depreciation, Depletion and Amortization                                                    |   |   |  3,180,526  |   |   |  3,124,998  |
| TOTAL PROPERTY, PLANT AND EQUIPMENT – NET                                                         |   |   |  4,346,678  |   |   |  4,270,266  |
|                                                                                                    |   |   |   |   |   |   |
| OTHER NONCURRENT ASSETS                                                                                 |   |   |   |   |   |   |
| Regulatory Assets                                                                                       |   |   |  519,181  |   |   |  556,254  |
| Spent Nuclear Fuel and Decommissioning Trusts                                                           |   |   |  1,574,142  |   |   |  1,515,227  |
| Long-term Risk Management Assets                                                                        |   |   |  25,069  |   |   |  31,485  |
| Deferred Charges and Other Noncurrent Assets                                                            |   |   |  73,782  |   |   |  77,229  |
| TOTAL OTHER NONCURRENT ASSETS                                                                           |   |   |  2,192,174  |   |   |  2,180,195  |
|                                                                                                    |   |   |   |   |   |   |
| TOTAL ASSETS                                                                                            |   | $ |  7,131,562  |   | $ |  7,148,895  |
|                                                                                                    |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES                                                         |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                    |
| June 30, 2011 and December 31, 2010                                                                     |
| (dollars in thousands)                                                                                  |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   |   |   | 2011  |   | 2010  |
| CURRENT LIABILITIES                                                                                     |   |   |   |   |   |   |
| Advances from Affiliates                                                                                |   | $ |  24,537  |   | $ |  42,769  |
| Accounts Payable:                                                                                       |   |   |   |   |   |   |
|                                                                                                    | General |   |   |  82,179  |   |   |  121,665  |
|                                                                                                    | Affiliated Companies |   |   |  78,368  |   |   |  105,221  |
| Long-term Debt Due Within One Year - Nonaffiliated                                                      |   |   |   |   |   |   |
|                                                                                                    | (June 30, 2011 and December 31, 2010 amounts include $74,100 and $77,457, |   |   |   |   |   |   |
|                                                                                                    | respectively, related to DCC Fuel) |   |   |  151,100  |   |   |  154,457  |
| Risk Management Liabilities                                                                             |   |   |  10,877  |   |   |  16,785  |
| Customer Deposits                                                                                       |   |   |  29,791  |   |   |  29,264  |
| Accrued Taxes                                                                                           |   |   |  65,150  |   |   |  62,637  |
| Accrued Interest                                                                                        |   |   |  27,425  |   |   |  27,444  |
| Other Current Liabilities                                                                               |   |   |  129,028  |   |   |  140,710  |
| TOTAL CURRENT LIABILITIES                                                                               |   |   |  598,455  |   |   |  700,952  |
|                                                                                                    |   |   |   |   |   |   |
| NONCURRENT LIABILITIES                                                                                  |   |   |   |   |   |   |
| Long-term Debt – Nonaffiliated                                                                    |   |   |  1,813,994  |   |   |  1,849,769  |
| Long-term Risk Management Liabilities                                                                   |   |   |  6,092  |   |   |  6,530  |
| Deferred Income Taxes                                                                                   |   |   |  808,287  |   |   |  760,105  |
| Regulatory Liabilities and Deferred Investment Tax Credits                                              |   |   |  868,919  |   |   |  852,197  |
| Asset Retirement Obligations                                                                            |   |   |  987,400  |   |   |  963,029  |
| Deferred Credits and Other Noncurrent Liabilities                                                       |   |   |  305,319  |   |   |  313,892  |
| TOTAL NONCURRENT LIABILITIES                                                                            |   |   |  4,790,011  |   |   |  4,745,522  |
|                                                                                                    |   |   |   |   |   |   |
| TOTAL LIABILITIES                                                                                       |   |   |  5,388,466  |   |   |  5,446,474  |
|                                                                                                    |   |   |   |   |   |   |
| Cumulative Preferred Stock Not Subject to Mandatory Redemption                                          |   |   |  8,072  |   |   |  8,072  |
|                                                                                                    |   |   |   |   |   |   |
| 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                                                                                         |   |   |  981,294  |   |   |  981,294  |
| Retained Earnings                                                                                       |   |   |  716,503  |   |   |  677,360  |
| Accumulated Other Comprehensive Income (Loss)                                                           |   |   |  (19,357) |   |   |  (20,889) |
| TOTAL COMMON SHAREHOLDER’S EQUITY                                                                 |   |   |  1,735,024  |   |   |  1,694,349  |
|                                                                                                    |   |   |   |   |   |   |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY                                                        |   | $ |  7,131,562  |   | $ |  7,148,895  |
|                                                                                                    |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES                                                         |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                         |
| For the Six Months Ended June 30, 2011 and 2010                                                         |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | 2011  |   | 2010  |
| OPERATING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Net Income                                                                                              |   | $ |  76,813  |   | $ |  59,660  |
| Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:                        |   |   |   |   |   |   |
|                                                                                                    |   | Depreciation and Amortization |   |   |  67,350  |   |   |  67,802  |
|                                                                                                    |   | Deferred Income Taxes |   |   |  42,561  |   |   |  23,213  |
|                                                                                                    |   | Amortization (Deferral) of Incremental Nuclear Refueling Outage Expenses, Net |   |   |  23,086  |   |   |  (16,103) |
|                                                                                                    |   | Allowance for Equity Funds Used During Construction |   |   |  (7,440) |   |   |  (9,002) |
|                                                                                                    |   | Mark-to-Market of Risk Management Contracts |   |   |  6,183  |   |   |  (4,314) |
|                                                                                                    |   | Amortization of Nuclear Fuel |   |   |  72,474  |   |   |  69,478  |
|                                                                                                    |   | Fuel Over/Under-Recovery, Net |   |   |  2,947  |   |   |  11,389  |
|                                                                                                    |   | Change in Other Noncurrent Assets |   |   |  4,433  |   |   |  7,224  |
|                                                                                                    |   | Change in Other Noncurrent Liabilities |   |   |  12,055  |   |   |  33,814  |
|                                                                                                    |   | Changes in Certain Components of Working Capital: |   |   |   |   |   |   |
|                                                                                                    |   |   | Accounts Receivable, Net |   |   |  74,240  |   |   |  (2,965) |
|                                                                                                    |   |   | Fuel, Materials and Supplies |   |   |  26,103  |   |   |  (26,832) |
|                                                                                                    |   |   | Accounts Payable |   |   |  (76,440) |   |   |  (31,079) |
|                                                                                                    |   |   | Accrued Taxes, Net |   |   |  13,775  |   |   |  4,470  |
|                                                                                                    |   |   | Received (Deferred) Cook Plant Fire Costs |   |   |  -  |   |   |  61,906  |
|                                                                                                    |   |   | Other Current Assets |   |   |  (887) |   |   |  (284) |
|                                                                                                    |   |   | Other Current Liabilities |   |   |  (321) |   |   |  20,087  |
| Net Cash Flows from Operating Activities                                                                |   |   |  336,932  |   |   |  268,464  |
|                                                                                                    |   |   |   |   |   |   |
| INVESTING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Construction Expenditures                                                                               |   |   |  (133,064) |   |   |  (160,797) |
| Change in Advances to Affiliates, Net                                                                   |   |   |  -  |   |   |  (12,503) |
| Purchases of Investment Securities                                                                      |   |   |  (492,162) |   |   |  (617,059) |
| Sales of Investment Securities                                                                          |   |   |  464,688  |   |   |  592,263  |
| Acquisitions of Nuclear Fuel                                                                            |   |   |  (93,230) |   |   |  (41,357) |
| Other Investing Activities                                                                              |   |   |  17,125  |   |   |  (345) |
| Net Cash Flows Used for Investing Activities                                                            |   |   |  (236,643) |   |   |  (239,798) |
|                                                                                                    |   |   |   |   |   |   |
| FINANCING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Issuance of Long-term Debt – Nonaffiliated                                                        |   |   |  76,624  |   |   |  84,564  |
| Change in Advances from Affiliates, Net                                                                 |   |   |  (18,232) |   |   |  -  |
| Retirement of Long-term Debt – Nonaffiliated                                                      |   |   |  (116,526) |   |   |  (19,208) |
| Retirement of Long-term Debt – Affiliated                                                         |   |   |  -  |   |   |  (25,000) |
| Principal Payments for Capital Lease Obligations                                                        |   |   |  (4,317) |   |   |  (17,669) |
| Dividends Paid on Common Stock                                                                          |   |   |  (37,500) |   |   |  (51,500) |
| Dividends Paid on Cumulative Preferred Stock                                                            |   |   |  (170) |   |   |  (170) |
| Other Financing Activities                                                                              |   |   |  25  |   |   |  270  |
| Net Cash Flows Used for Financing Activities                                                            |   |   |  (100,096) |   |   |  (28,713) |
|                                                                                                    |   |   |   |   |   |   |
| Net Increase (Decrease) in Cash and Cash Equivalents                                                    |   |   |  193  |   |   |  (47) |
| Cash and Cash Equivalents at Beginning of Period                                                        |   |   |  361  |   |   |  779  |
| Cash and Cash Equivalents at End of Period                                                              |   | $ |  554  |   | $ |  732  |
|                                                                                                    |   |   |   |   |   |   |
| SUPPLEMENTARY INFORMATION                                                                               |   |   |   |   |   |   |
| Cash Paid for Interest, Net of Capitalized Amounts                                                      |   | $ |  47,401  |   | $ |  50,759  |
| Net Cash Paid (Received) for Income Taxes                                                               |   |   |  (19,847) |   |   |  8,092  |
| Noncash Acquisitions Under Capital Leases                                                               |   |   |  1,218  |   |   |  8,844  |
| Construction Expenditures Included in Current Liabilities at June 30,                                   |   |   |  36,109  |   |   |  19,220  |
| Acquisition of Nuclear Fuel Included in Current Liabilities at June 30,                                 |   |   |  -  |   |   |  123  |
|                                                                                                    |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

|                                      | 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           |
|                                      |              |
| Cost Reduction Initiatives                | Note 12           |

----

----

----

| RESULTS OF OPERATIONS       |          |                 |              |             |              |              |       |               |              |   |               |
|-----------------------------|---------------|----------------------|-------------------|------------------|-------------------|-------------------|------------|--------------------|-------------------|--------|--------------------|
|                        |          |                 |              |             |              |              |       |               |              |   |               |   |
| KWH Sales/Degree Days       |          |                 |              |             |              |              |       |               |              |   |               |
|                        |          |                 |              |             |              |              |       |               |              |   |               |   |
| Summary of KWH Energy Sales |
|                        |          |                 |              |             |              |              |       |               |              |   |               |   |
|                        |          | Three Months Ended   |              | Six Months Ended |
|                        |          | June 30,             |              | June 30,         |
|                        | 2011     |                 | 2010         |             | 2011         |              | 2010  |
|                        |          | (in millions of KWH) |
| Retail:                     |          |                 |              |             |              |              |       |               |              |   |               |
|                        | Residential   |                 |  1,547  |             |              |  1,471  |       |               |  3,871  |   |               |  3,755  |
|                        | Commercial    |                 |  1,395  |             |              |  1,439  |       |               |  2,788  |   |               |  2,797  |
|                        | Industrial    |                 |  3,458  |             |              |  3,236  |       |               |  6,734  |   |               |  6,294  |
|                        | Miscellaneous |                 |  15     |             |              |  16     |       |               |  35     |   |               |  36  |
| Total Retail                |          |  6,415     |              |             |  6,162  |              |       |  13,428  |              |   |  12,882  |
|                        |          |                 |              |             |              |              |       |               |              |   |               |
| Wholesale                   |          |  1,733     |              |             |  982    |              |       |  3,641   |              |   |  2,324   |
|                        |          |                 |              |             |              |              |       |               |              |   |               |
| Total KWHs                  |          |  8,148     |              |             |  7,144  |              |       |  17,069  |              |   |  15,206  |

| Summary of Heating and Cooling Degree Days |
|--------------------------------------------|
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   | Three Months Ended |   | Six Months Ended |
|                                       |   | June 30, | June 30, |
|                                       |   | 2011  |   | 2010  |   | 2011  |   | 2010  |
|                                       |   | (in degree days) |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual - Heating (a)                       |   |  207  |   |   |  136  |   |   |  2,449  |   |   |  2,293  |
| Normal - Heating (b)                       |   |  239  |   |   |  240  |   |   |  2,281  |   |   |  2,284  |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual - Cooling (c)                       |   |  270  |   |   |  309  |   |   |  270  |   |   |  309  |
| Normal - Cooling (b)                       |   |  227  |   |   |  224  |   |   |  229  |   |   |  225  |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| (a)                                        | Eastern 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. |

----

| Second Quarter of 2011 Compared to Second Quarter of 2010 |
|-----------------------------------------------------------|

|                                                               |   |   |   |
|--------------------------------------------------------------------|--------|--------|--------|
| Reconciliation of Second Quarter of 2010 to Second Quarter of 2011 |   |
| Net Income                                                         |   |
| (in millions)                                                      |   |
|                                                               |   |   |   |
| Second Quarter of 2010                                             |   | $      | 38     |   |
|                                                               |   |   |   |   |
| Changes in Gross Margin:                                           |   |   |   |   |
| Retail Margins                                                     |   |   | (5     | ) |
| Off-system Sales                                                   |   |   | 13     |   |
| Transmission Revenues                                              |   |   | 4      |   |
| Other Revenues                                                     |   |   | (3     | ) |
| Total Change in Gross Margin                                       |   |   | 9      |   |
|                                                               |   |   |   |   |
| Changes in Expenses and Other:                                     |   |   |   |   |
| Other Operation and Maintenance                                    |   |   | 45     |   |
| Depreciation and Amortization                                      |   |   | (2     | ) |
| Taxes Other Than Income Taxes                                      |   |   | 1      |   |
| Carrying Costs Income                                              |   |   | 2      |   |
| Interest Expense                                                   |   |   | 3      |   |
| Total Change in Expenses and Other                                 |   |   | 49     |   |
|                                                               |   |   |   |   |
| Income Tax Expense                                                 |   |   | (20    | ) |
|                                                               |   |   |   |   |
| Second Quarter of 2011                                             |   | $      | 76     |   |

| · | Retail Margins decreased $5 million primarily due to the following:                                                                                                                                       |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                    | A $7 million decrease in capacity settlements under the Interconnection Agreement. |
|   | ·                                                                                                                                                                                                    | A $7 million decrease in transmission rider revenues. |
|   | ·                                                                                                                                                                                                    | A $3 million decrease in commercial revenues mainly due to reduced usage. |
|   | ·                                                                                                                                                                                                    | A $2 million decrease attributable to customers switching to alternative competitive retail electric service (CRES) providers. |
|   | ·                                                                                                                                                                                                    | A $2 million decrease related to increased consumable and allowance expenses not recovered through the FAC. |
|   | These decreases were partially offset by:                                                                                                                                                                 |
|   | ·                                                                                                                                                                                                    | A $7 million increase in revenues due to the implementation of PUCO approved rider rates in June 2010 related to the Energy Efficiency & Peak Demand Reduction (EE/PDR) Programs.  This increase in Retail Margins was offset by a corresponding increase in Other Operation and Maintenance as discussed below. |
|   | ·                                                                                                                                                                                                    | A $6 million increase in revenues due to the implementation of PUCO approved rider rates in September 2010 related to the Environmental Investment Carrying Cost Rider. |
|   | ·                                                                                                                                                                                                    | A $4 million increase in revenues due to a January 2011 Universal Service Fund surcharge rate increase.  This increase in Retail Margins was offset by a corresponding increase in Other Operation and Maintenance as discussed below. |
| · | Margins from Off-system Sales increased $13 million primarily due to higher physical sales volumes.                                                                                                       |
| · | Transmission Revenues increased $4 million primarily due to the Transmission Agreement modification effective November 2010, a portion of which is included in the Ohio Transmission Cost Recovery Rider. |

----

| · | Other Operation and Maintenance expenses decreased $45 million primarily due to the following:                                                                              |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                      | A $49 million decrease due to expenses related to the cost reduction initiatives recorded in the second quarter of 2010. |
|   | ·                                                                                                                                                                      | A $7 million decrease in recoverable PJM expenses. |
|   | These decreases were partially offset by:                                                                                                                                   |
|   | ·                                                                                                                                                                      | A $7 million increase in expenses due to the implementation of PUCO approved EE/PDR programs.  This increase in Other Operation and Maintenance expense was offset by a corresponding increase in Retail Margins as discussed above. |
|   | ·                                                                                                                                                                      | A $4 million reserve recorded in second quarter 2011 as a result of a legal proceeding. |
|   | ·                                                                                                                                                                      | A $4 million increase in remitted Universal Service Fund surcharge payments to the Ohio Department of Development to fund an energy assistance program for qualified Ohio customers.  This increase in Other Operation and Maintenance expense was offset by a corresponding increase in Retail Margins as discussed above. |
| · | Depreciation and Amortization increased $2 million primarily due to higher depreciable property balances as a result of environmental and various other property additions. |
| · | Interest Expense decreased $3 million primarily as a result of the retirement of long-term debt in November 2010.                                                           |
| · | Income Tax Expense increased $20 million primarily due to an increase in pretax book income.                                                                                |

----

| Six Months Ended June 30, 2011 Compared to Six Months Ended June 30, 2010 |
|---------------------------------------------------------------------------|

|                                                                               |   |   |            |   |
|------------------------------------------------------------------------------------|--------|--------|-----------------|--------|
| Reconciliation of Six Months Ended June 30, 2010 to Six Months Ended June 30, 2011 |
| Net Income                                                                         |
| (in millions)                                                                      |
|                                                                               |   |   |            |   |
| Six Months Ended June 30, 2010                                                     |   | $      |  129  |   |
|                                                                               |   |   |            |   |
| Changes in Gross Margin:                                                           |   |   |            |   |
| Retail Margins                                                                     |   |   |  15   |   |
| Off-system Sales                                                                   |   |   |  13   |   |
| Transmission Revenues                                                              |   |   |  8    |   |
| Total Change in Gross Margin                                                       |   |   |  36   |   |
|                                                                               |   |   |            |   |
| Changes in Expenses and Other:                                                     |   |   |            |   |
| Other Operation and Maintenance                                                    |   |   |  27   |   |
| Depreciation and Amortization                                                      |   |   |  (5)       |   |
| Taxes Other Than Income Taxes                                                      |   |   |  (1)       |   |
| Carrying Costs Income                                                              |   |   |  4    |   |
| Interest Expense                                                                   |   |   |  5    |   |
| Total Change in Expenses and Other                                                 |   |   |  30   |   |
|                                                                               |   |   |            |   |
| Income Tax Expense                                                                 |   |   |  (19)      |   |
|                                                                               |   |   |            |   |
| Six Months Ended June 30, 2011                                                     |   | $      |  176  |   |

| · | Retail Margins increased $15 million primarily due to the following:                                                                                                                                      |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                    | A $21 million increase in revenue due to the implementation of PUCO approved rider rates in June 2010 related to the Energy Efficiency & Peak Demand Reduction (EE/PDR) Programs.  This increase in Retail Margins was offset by a corresponding increase in Other Operation and Maintenance as discussed below. |
|   | ·                                                                                                                                                                                                    | A $13 million increase in revenues due to the implementation of PUCO approved rider rates in September 2010 related to the Environmental Investment Carrying Cost Rider. |
|   | ·                                                                                                                                                                                                    | A $10 million increase in margins due to increases in residential and industrial customer usage.  The industrial increase was driven primarily by increased load for Ormet, a major industrial customer. |
|   | ·                                                                                                                                                                                                    | A $9 million increase in revenues due to a January 2011 Universal Service Fund surcharge rate increase.  This increase in Retail Margins was offset by a corresponding increase in Other Operation and Maintenance as discussed below. |
|   | These increases were partially offset by:                                                                                                                                                                 |
|   | ·                                                                                                                                                                                                    | A $19 million decrease in capacity settlements under the Interconnection Agreement. |
|   | ·                                                                                                                                                                                                    | An $8 million decrease in transmission rider revenues. |
|   | ·                                                                                                                                                                                                    | A $5 million decrease related to increased consumable and allowance expenses not recovered through the FAC. |
|   | ·                                                                                                                                                                                                    | A $3 million decrease attributable to customers switching to alternative competitive retail electric service (CRES) providers. |
| · | Margins from Off-system Sales increased $13 million primarily due to higher physical sales volumes.                                                                                                       |
| · | Transmission Revenues increased $8 million primarily due to the Transmission Agreement modification effective November 2010, a portion of which is included in the Ohio Transmission Cost Recovery Rider. |

----

| · | Other Operation and Maintenance expenses decreased $27 million primarily due to the following:                                                                                                                                          |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                  | A $49 million decrease due to expenses related to the cost reduction initiatives recorded in the second quarter of 2010. |
|   | ·                                                                                                                                                                                                                                  | An $11 million gain from the sale of land in January 2011. |
|   | ·                                                                                                                                                                                                                                  | A $9 million decrease in recoverable PJM expenses. |
|   | These decreases were partially offset by:                                                                                                                                                                                               |
|   | ·                                                                                                                                                                                                                                  | A $21 million increase in expenses due to the implementation of PUCO approved EE/PDR programs.  This increase in Other Operation and Maintenance expense was offset by a corresponding increase in Retail Margins as discussed above. |
|   | ·                                                                                                                                                                                                                                  | A $9 million increase in remitted Universal Service Fund surcharge payments to the Ohio Department of Development to fund an energy assistance program for qualified Ohio customers.  This increase in Other Operation and Maintenance expense was offset by a corresponding increase in Retail Margins as discussed above. |
|   | ·                                                                                                                                                                                                                                  | A $7 million increase due to a favorable 2010 employee benefit adjustment. |
|   | ·                                                                                                                                                                                                                                  | A $4 million reserve recorded in second quarter 2011 as a result of a legal proceeding. |
| · | Depreciation and Amortization increased $5 million primarily due to higher depreciable property balances as a result of environmental and various other property additions.                                                             |
| · | Carrying Costs Income increased $4 million primarily due to a higher under-recovered fuel balance in 2011.                                                                                                                              |
| · | Interest Expense decreased $5 million primarily due to the retirement of long-term debt in November 2010.                                                                                                                               |
| · | Income Tax Expense increased $19 million primarily due to an increase in pretax book income, partially offset by the 2010 tax treatment associated with the future reimbursement of Medicare Part D retiree prescription drug benefits. |

|                                                 |   | 2011           |     |   | 2010   |   |
|------------------------------------------------------|--------|----------------|----------|--------|--------|--------|
|                                                 |   | (in thousands) |     |
| Cash and Cash Equivalents at Beginning of Period     |   | $              | 440      |   |   | $      | 1,984 |   |
| Net Cash Flows from Operating Activities             |   |           | 427,160  |   |   |   | 352,278 |   |
| Net Cash Flows from (Used for) Investing Activities  |   |           | (106,529 | )      |   |   | 119,588 |   |
| Net Cash Flows Used for Financing Activities         |   |           | (319,919 | )      |   |   | (472,912 | ) |
| Net Increase (Decrease) in Cash and Cash Equivalents |   |           | 712      |   |   |   | (1,046 | ) |
| Cash and Cash Equivalents at End of Period           |   | $              | 1,152    |   |   | $      | 938 |   |

----

----

| Issuances |                    |   |           |               |     |     |   |       |
|-----------|-------------------------|--------|----------------|--------------------|----------|----------|--------|------------|
|      |                    |   | Principal      |               | Interest |     | Due    |
|      | Type of Debt            |   | Amount         |               | Rate     |     | Date   |
|      |                    |   | (in thousands) |               | (%)      |     |   |
|      | Pollution Control Bonds |   | $              |  50,000  | (a)      | Variable |   | 2014  |

| (a)   | These pollution control bonds are subject to redemption earlier than the maturity date.  Consequently, this bond has been classified for maturity purposes as Long-term Debt Due Within One Year - Nonaffiliated on OPCo’s Condensed Consolidated Balance Sheets. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Retirements |                    |   |           |               |     |     |   |
|-------------|-------------------------|--------|----------------|--------------------|----------|----------|--------|
|        |                    |   | Principal      |               | Interest |     | Due    |
|        | Type of Debt            |   | Amount Paid    |               | Rate     |     | Date   |
|        |                    |   | (in thousands) |               | (%)      |     |   |
|        | Pollution Control Bonds |   | $              |  65,000  |     | Variable |   | 2036  |
|        | Pollution Control Bonds |   |           |  50,000  |     | Variable |   | 2014  |
|        | Pollution Control Bonds |   |           |  50,000  |     | Variable |   | 2014  |

----

| OHIO POWER COMPANY CONSOLIDATED                                                                         |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME                                                             |
| For the Three and Six Months Ended June 30, 2011 and 2010                                               |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | Three Months Ended |   | Six Months Ended |
|                                                                                                    |   | 2011  |   | 2010  |   | 2011  |   | 2010  |
| REVENUES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |
| Electric Generation, Transmission and Distribution                                                      |   | $ |  558,873  |   | $ |  490,422  |   | $ |  1,185,679  |   | $ |  1,034,122  |
| Sales to AEP Affiliates                                                                                 |   |   |  213,076  |   |   |  222,561  |   |   |  438,125  |   |   |  529,329  |
| Other Revenues - Affiliated                                                                             |   |   |  4,507  |   |   |  5,155  |   |   |  11,525  |   |   |  11,729  |
| Other Revenues - Nonaffiliated                                                                          |   |   |  3,515  |   |   |  3,826  |   |   |  7,470  |   |   |  8,057  |
| TOTAL REVENUES                                                                                          |   |   |  779,971  |   |   |  721,964  |   |   |  1,642,799  |   |   |  1,583,237  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel and Other Consumables Used for Electric Generation                                                 |   |   |  246,973  |   |   |  220,174  |   |   |  541,456  |   |   |  551,191  |
| Purchased Electricity for Resale                                                                        |   |   |  44,098  |   |   |  38,746  |   |   |  88,995  |   |   |  77,636  |
| Purchased Electricity from AEP Affiliates                                                               |   |   |  38,168  |   |   |  21,583  |   |   |  65,862  |   |   |  43,774  |
| Other Operation                                                                                         |   |   |  94,669  |   |   |  146,417  |   |   |  194,387  |   |   |  235,573  |
| Maintenance                                                                                             |   |   |  69,607  |   |   |  63,472  |   |   |  133,919  |   |   |  119,703  |
| Depreciation and Amortization                                                                           |   |   |  92,167  |   |   |  89,861  |   |   |  184,153  |   |   |  179,222  |
| Taxes Other Than Income Taxes                                                                           |   |   |  51,005  |   |   |  52,088  |   |   |  106,166  |   |   |  105,172  |
| TOTAL EXPENSES                                                                                          |   |   |  636,687  |   |   |  632,341  |   |   |  1,314,938  |   |   |  1,312,271  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING INCOME                                                                                        |   |   |  143,284  |   |   |  89,623  |   |   |  327,861  |   |   |  270,966  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income (Expense):                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Income                                                                                         |   |   |  254  |   |   |  334  |   |   |  545  |   |   |  739  |
| Carrying Costs Income                                                                                   |   |   |  7,579  |   |   |  5,681  |   |   |  14,656  |   |   |  10,555  |
| Allowance for Equity Funds Used During Construction                                                     |   |   |  961  |   |   |  986  |   |   |  1,393  |   |   |  2,017  |
| Interest Expense                                                                                        |   |   |  (36,430) |   |   |  (39,077) |   |   |  (73,702) |   |   |  (79,052) |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME BEFORE INCOME TAX EXPENSE                                                                        |   |   |  115,648  |   |   |  57,547  |   |   |  270,753  |   |   |  205,225  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Income Tax Expense                                                                                      |   |   |  39,982  |   |   |  19,999  |   |   |  94,675  |   |   |  75,774  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME                                                                                              |   |   |  75,666  |   |   |  37,548  |   |   |  176,078  |   |   |  129,451  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Less: Preferred Stock Dividend Requirements                                                             |   |   |  183  |   |   |  183  |   |   |  366  |   |   |  366  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS ATTRIBUTABLE TO COMMON STOCK                                                                   |   | $ |  75,483  |   | $ |  37,365  |   | $ |  175,712  |   | $ |  129,085  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The common stock of OPCo is wholly-owned by AEP.                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| OHIO POWER COMPANY CONSOLIDATED                                                                         |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON SHAREHOLDER'S                                    |
| EQUITY AND COMPREHENSIVE INCOME (LOSS)                                                                  |
| For the Six Months Ended June 30, 2011 and 2010                                                         |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   | Other |   |   |
|                                                                                                    |   | Common |   | Paid-in |   | Retained |   | Comprehensive |   |   |
|                                                                                                    |   | Stock |   | Capital |   | Earnings |   | Income (Loss) |   | Total |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | EQUITY – DECEMBER 31, 2009 |   | $ |  321,201  |   | $ |  1,123,149  |   | $ |  1,908,803  |   | $ |  (118,458) |   | $ |  3,234,695  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock Dividends                                                                                  |   |   |   |   |   |   |   |   |  (150,575) |   |   |   |   |   |  (150,575) |
| Preferred Stock Dividends                                                                               |   |   |   |   |   |   |   |   |  (366) |   |   |   |   |   |  (366) |
| SUBTOTAL – COMMON                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | SHAREHOLDER'S EQUITY |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  3,083,754  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income (Loss),                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | Net of Taxes: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | Cash Flow Hedges, Net of Tax of $676 |   |   |   |   |   |   |   |   |   |   |   |  (1,255) |   |   |  (1,255) |
|                                                                                                    |   | Amortization of Pension and OPEB Deferred Costs, |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   | Net of Tax of $1,897 |   |   |   |   |   |   |   |   |   |   |   |  3,523  |   |   |  3,523  |
| NET INCOME                                                                                              |   |   |   |   |   |   |   |   |  129,451  |   |   |   |   |   |  129,451  |
| TOTAL COMPREHENSIVE INCOME                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  131,719  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | EQUITY –  JUNE 30, 2010 |   | $ |  321,201  |   | $ |  1,123,149  |   | $ |  1,887,313  |   | $ |  (116,190) |   | $ |  3,215,473  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | EQUITY – DECEMBER 31, 2010 |   | $ |  321,201  |   | $ |  1,123,153  |   | $ |  1,852,889  |   | $ |  (128,819) |   | $ |  3,168,424  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock Dividends                                                                                  |   |   |   |   |   |   |   |   |  (200,000) |   |   |   |   |   |  (200,000) |
| Preferred Stock Dividends                                                                               |   |   |   |   |   |   |   |   |  (366) |   |   |   |   |   |  (366) |
| SUBTOTAL – COMMON                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | SHAREHOLDER'S EQUITY |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  2,968,058  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income, Net of Taxes:                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | Cash Flow Hedges, Net of Tax of $15 |   |   |   |   |   |   |   |   |   |   |   |  29  |   |   |  29  |
|                                                                                                    |   | Amortization of Pension and OPEB Deferred Costs, |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   | Net of Tax of $2,156 |   |   |   |   |   |   |   |   |   |   |   |  4,003  |   |   |  4,003  |
| NET INCOME                                                                                              |   |   |   |   |   |   |   |   |  176,078  |   |   |   |   |   |  176,078  |
| TOTAL COMPREHENSIVE INCOME                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  180,110  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | EQUITY –  JUNE 30, 2011 |   | $ |  321,201  |   | $ |  1,123,153  |   | $ |  1,828,601  |   | $ |  (124,787) |   | $ |  3,148,168  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| OHIO POWER COMPANY CONSOLIDATED                                                                         |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                   |
| ASSETS                                                                                                  |
| June 30, 2011 and December 31, 2010                                                                     |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | 2011  |   | 2010  |
| CURRENT ASSETS                                                                                          |   |   |   |   |   |   |
| Cash and Cash Equivalents                                                                               |   | $ |  1,152  |   | $ |  440  |
| Advances to Affiliates                                                                                  |   |   |  136,965  |   |   |  100,500  |
| Accounts Receivable:                                                                                    |   |   |   |   |   |   |
|                                                                                                    | Customers |   |   |  76,517  |   |   |  86,186  |
|                                                                                                    | Affiliated Companies |   |   |  161,076  |   |   |  198,845  |
|                                                                                                    | Accrued Unbilled Revenues |   |   |  6,626  |   |   |  27,928  |
|                                                                                                    | Miscellaneous |   |   |  350  |   |   |  2,368  |
|                                                                                                    | Allowance for Uncollectible Accounts |   |   |  (2,151) |   |   |  (2,184) |
|                                                                                                    |   | Total Accounts Receivable |   |   |  242,418  |   |   |  313,143  |
| Fuel                                                                                                    |   |   |  219,150  |   |   |  257,289  |
| Materials and Supplies                                                                                  |   |   |  122,510  |   |   |  134,181  |
| Risk Management Assets                                                                                  |   |   |  22,515  |   |   |  30,773  |
| Accrued Tax Benefits                                                                                    |   |   |  22,291  |   |   |  69,021  |
| Prepayments and Other Current Assets                                                                    |   |   |  31,081  |   |   |  33,998  |
| TOTAL CURRENT ASSETS                                                                                    |   |   |  798,082  |   |   |  939,345  |
|                                                                                                    |   |   |   |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT                                                                           |   |   |   |   |   |   |
| Electric:                                                                                               |   |   |   |   |   |   |
|                                                                                                    | Generation |   |   |  6,909,563  |   |   |  6,890,110  |
|                                                                                                    | Transmission |   |   |  1,254,300  |   |   |  1,234,677  |
|                                                                                                    | Distribution |   |   |  1,651,878  |   |   |  1,626,390  |
| Other Property, Plant and Equipment                                                                     |   |   |  357,456  |   |   |  359,254  |
| Construction Work in Progress                                                                           |   |   |  139,690  |   |   |  153,110  |
| Total Property, Plant and Equipment                                                                     |   |   |  10,312,887  |   |   |  10,263,541  |
| Accumulated Depreciation and Amortization                                                               |   |   |  3,764,752  |   |   |  3,606,777  |
| TOTAL PROPERTY, PLANT AND EQUIPMENT – NET                                                         |   |   |  6,548,135  |   |   |  6,656,764  |
|                                                                                                    |   |   |   |   |   |   |
| OTHER NONCURRENT ASSETS                                                                                 |   |   |   |   |   |   |
| Regulatory Assets                                                                                       |   |   |  1,004,684  |   |   |  934,011  |
| Long-term Risk Management Assets                                                                        |   |   |  22,980  |   |   |  28,012  |
| Deferred Charges and Other Noncurrent Assets                                                            |   |   |  142,814  |   |   |  189,195  |
| TOTAL OTHER NONCURRENT ASSETS                                                                           |   |   |  1,170,478  |   |   |  1,151,218  |
|                                                                                                    |   |   |   |   |   |   |
| TOTAL ASSETS                                                                                            |   | $ |  8,516,695  |   | $ |  8,747,327  |
|                                                                                                    |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| OHIO POWER COMPANY CONSOLIDATED                                                                         |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                    |
| June 30, 2011 and December 31, 2010                                                                     |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | 2011  |   | 2010  |
|                                                                                                    |   |   | (in thousands) |
| CURRENT LIABILITIES                                                                                     |   |   |   |   |   |   |
| Accounts Payable:                                                                                       |   |   |   |   |   |   |
|                                                                                                    | General |   | $ |  139,506  |   | $ |  170,240  |
|                                                                                                    | Affiliated Companies |   |   |  111,042  |   |   |  136,215  |
| Long-term Debt Due Within One Year – Nonaffiliated                                                |   |   |  50,000  |   |   |  165,000  |
| Risk Management Liabilities                                                                             |   |   |  13,859  |   |   |  22,166  |
| Customer Deposits                                                                                       |   |   |  24,677  |   |   |  28,228  |
| Accrued Taxes                                                                                           |   |   |  172,622  |   |   |  229,253  |
| Accrued Interest                                                                                        |   |   |  46,444  |   |   |  46,184  |
| Other Current Liabilities                                                                               |   |   |  98,589  |   |   |  98,687  |
| TOTAL CURRENT LIABILITIES                                                                               |   |   |  656,739  |   |   |  895,973  |
|                                                                                                    |   |   |   |   |   |   |
| NONCURRENT LIABILITIES                                                                                  |   |   |   |   |   |   |
| Long-term Debt – Nonaffiliated                                                                    |   |   |  2,364,781  |   |   |  2,364,522  |
| Long-term Debt – Affiliated                                                                       |   |   |  200,000  |   |   |  200,000  |
| Long-term Risk Management Liabilities                                                                   |   |   |  7,540  |   |   |  8,403  |
| Deferred Income Taxes                                                                                   |   |   |  1,558,892  |   |   |  1,531,639  |
| Regulatory Liabilities and Deferred Investment Tax Credits                                              |   |   |  131,188  |   |   |  126,403  |
| Employee Benefits and Pension Obligations                                                               |   |   |  237,579  |   |   |  246,517  |
| Deferred Credits and Other Noncurrent Liabilities                                                       |   |   |  195,194  |   |   |  188,830  |
| TOTAL NONCURRENT LIABILITIES                                                                            |   |   |  4,695,174  |   |   |  4,666,314  |
|                                                                                                    |   |   |   |   |   |   |
| TOTAL LIABILITIES                                                                                       |   |   |  5,351,913  |   |   |  5,562,287  |
|                                                                                                    |   |   |   |   |   |   |
| Cumulative Preferred Stock Not Subject to Mandatory Redemption                                          |   |   |  16,614  |   |   |  16,616  |
|                                                                                                    |   |   |   |   |   |   |
| 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                                                                                         |   |   |  1,123,153  |   |   |  1,123,153  |
| Retained Earnings                                                                                       |   |   |  1,828,601  |   |   |  1,852,889  |
| Accumulated Other Comprehensive Income (Loss)                                                           |   |   |  (124,787) |   |   |  (128,819) |
| TOTAL COMMON SHAREHOLDER’S EQUITY                                                                 |   |   |  3,148,168  |   |   |  3,168,424  |
|                                                                                                    |   |   |   |   |   |   |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                              |   | $ |  8,516,695  |   | $ |  8,747,327  |
|                                                                                                    |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| OHIO POWER COMPANY CONSOLIDATED                                                                         |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                         |
| For the Six Months Ended June 30, 2011 and 2010                                                         |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | 2011  |   | 2010  |
| OPERATING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Net Income                                                                                              |   | $ |  176,078  |   | $ |  129,451  |
| Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:                        |   |   |   |   |   |   |
|                                                                                                    |   | Depreciation and Amortization |   |   |  184,153  |   |   |  179,222  |
|                                                                                                    |   | Deferred Income Taxes |   |   |  57,132  |   |   |  72,638  |
|                                                                                                    |   | Carrying Costs Income |   |   |  (14,656) |   |   |  (10,555) |
|                                                                                                    |   | Allowance for Equity Funds Used During Construction |   |   |  (1,393) |   |   |  (2,017) |
|                                                                                                    |   | Mark-to-Market of Risk Management Contracts |   |   |  5,285  |   |   |  2,359  |
|                                                                                                    |   | Property Taxes |   |   |  50,997  |   |   |  48,578  |
|                                                                                                    |   | Fuel Over/Under-Recovery, Net |   |   |  (38,041) |   |   |  (75,987) |
|                                                                                                    |   | Change in Other Noncurrent Assets |   |   |  (35,326) |   |   |  (7,571) |
|                                                                                                    |   | Change in Other Noncurrent Liabilities |   |   |  16,911  |   |   |  (2,326) |
|                                                                                                    |   | Changes in Certain Components of Working Capital: |   |   |   |   |   |   |
|                                                                                                    |   |   | Accounts Receivable, Net |   |   |  70,725  |   |   |  44,027  |
|                                                                                                    |   |   | Fuel, Materials and Supplies |   |   |  49,810  |   |   |  25,508  |
|                                                                                                    |   |   | Accounts Payable |   |   |  (51,175) |   |   |  (23,991) |
|                                                                                                    |   |   | Accrued Taxes, Net |   |   |  (49,177) |   |   |  (71,199) |
|                                                                                                    |   |   | Other Current Assets |   |   |  1,672  |   |   |  2,680  |
|                                                                                                    |   |   | Other Current Liabilities |   |   |  4,165  |   |   |  41,461  |
| Net Cash Flows from Operating Activities                                                                |   |   |  427,160  |   |   |  352,278  |
|                                                                                                    |   |   |   |   |   |   |
| INVESTING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Construction Expenditures                                                                               |   |   |  (111,851) |   |   |  (147,831) |
| Change in Advances to Affiliates, Net                                                                   |   |   |  (36,465) |   |   |  265,601  |
| Acquisitions of Assets                                                                                  |   |   |  (1,187) |   |   |  (2,113) |
| Proceeds from Sales of Assets                                                                           |   |   |  41,766  |   |   |  4,245  |
| Other Investing Activities                                                                              |   |   |  1,208  |   |   |  (314) |
| Net Cash Flows from (Used for) Investing Activities                                                     |   |   |  (106,529) |   |   |  119,588  |
|                                                                                                    |   |   |   |   |   |   |
| FINANCING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Issuance of Long-term Debt – Nonaffiliated                                                        |   |   |  49,768  |   |   |  163,944  |
| Retirement of Long-term Debt – Nonaffiliated                                                      |   |   |  (165,000) |   |   |  (479,450) |
| Retirement of Cumulative Preferred Stock                                                                |   |   |  (1) |   |   |  -  |
| Principal Payments for Capital Lease Obligations                                                        |   |   |  (4,180) |   |   |  (3,903) |
| Dividends Paid on Common Stock                                                                          |   |   |  (200,000) |   |   |  (150,575) |
| Dividends Paid on Cumulative Preferred Stock                                                            |   |   |  (366) |   |   |  (366) |
| Other Financing Activities                                                                              |   |   |  (140) |   |   |  (2,562) |
| Net Cash Flows Used for Financing Activities                                                            |   |   |  (319,919) |   |   |  (472,912) |
|                                                                                                    |   |   |   |   |   |   |
| Net Increase (Decrease) in Cash and Cash Equivalents                                                    |   |   |  712  |   |   |  (1,046) |
| Cash and Cash Equivalents at Beginning of Period                                                        |   |   |  440  |   |   |  1,984  |
| Cash and Cash Equivalents at End of Period                                                              |   | $ |  1,152  |   | $ |  938  |
|                                                                                                    |   |   |   |   |   |   |
| SUPPLEMENTARY INFORMATION                                                                               |   |   |   |   |   |   |
| Cash Paid for Interest, Net of Capitalized Amounts                                                      |   | $ |  70,886  |   | $ |  78,747  |
| Net Cash Paid for Income Taxes                                                                          |   |   |  25,679  |   |   |  27,206  |
| Noncash Acquisitions Under Capital Leases                                                               |   |   |  422  |   |   |  23,489  |
| Construction Expenditures Included in Current Liabilities at June 30,                                   |   |   |  17,908  |   |   |  10,567  |
|                                                                                                    |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

|                                      | 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           |
|                                      |              |
| Cost Reduction Initiatives                | Note 12           |

----

----

| RESULTS OF OPERATIONS |   |   |   |   |   |   |   |   |   |   |   |
|-----------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                        |          |                 |              |             |              |              |       |              |              |   |              |              |
|-----------------------------|---------------|----------------------|-------------------|------------------|-------------------|-------------------|------------|-------------------|-------------------|--------|-------------------|-------------------|
| KWH Sales/Degree Days       |          |                 |              |             |              |              |       |              |              |   |              |
|                        |          |                 |              |             |              |              |       |              |              |   |              |              |
| Summary of KWH Energy Sales |
|                        |          |                 |              |             |              |              |       |              |              |   |              |              |
|                        |          | Three Months Ended   |              | Six Months Ended |
|                        |          | June 30,             |              | June 30,         |
|                        | 2011     |                 | 2010         |             | 2011         |              | 2010  |
|                        |          | (in millions of KWH) |
| Retail:                     |          |                 |              |             |              |              |       |              |              |   |              |
|                        | Residential   |                 |  1,537  |             |              |  1,505  |       |              |  3,077  |   |              |  3,061  |
|                        | Commercial    |                 |  1,389  |             |              |  1,374  |       |              |  2,520  |   |              |  2,443  |
|                        | Industrial    |                 |  1,243  |             |              |  1,249  |       |              |  2,366  |   |              |  2,394  |
|                        | Miscellaneous |                 |  339    |             |              |  328    |       |              |  617    |   |              |  597    |
| Total Retail                |          |  4,508     |              |             |  4,456  |              |       |  8,580  |              |   |  8,495  |
|                        |          |                 |              |             |              |              |       |              |              |   |              |
| Wholesale                   |          |  317       |              |             |  205    |              |       |  552    |              |   |  554    |
|                        |          |                 |              |             |              |              |       |              |              |   |              |
| Total KWHs                  |          |  4,825     |              |             |  4,661  |              |       |  9,132  |              |   |  9,049  |

| Summary of Heating and Cooling Degree Days |
|--------------------------------------------|
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   | Three Months Ended |   | Six Months Ended |
|                                       |   | June 30, | June 30, |
|                                       |   | 2011  |   | 2010  |   | 2011  |   | 2010  |
|                                       |   | (in degree days) |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual - Heating (a)                       |   |  19  |   |   |  14  |   |   |  1,276  |   |   |  1,344  |
| Normal - Heating (b)                       |   |  42  |   |   |  41  |   |   |  1,100  |   |   |  1,088  |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual - Cooling (c)                       |   |  912  |   |   |  769  |   |   |  945  |   |   |  777  |
| Normal - Cooling (b)                       |   |  624  |   |   |  621  |   |   |  637  |   |   |  634  |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| (a)                                        | 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)                                        | Western Region cooling degree days are calculated on a 65 degree temperature base. |

----

| Second Quarter of 2011 Compared to Second Quarter of 2010 |
|-----------------------------------------------------------|

|                                                               |   |   |   |
|--------------------------------------------------------------------|--------|--------|--------|
| Reconciliation of Second Quarter of 2010 to Second Quarter of 2011 |   |
| Net Income                                                         |   |
| (in millions)                                                      |   |
|                                                               |   |   |   |
| Second Quarter of 2010                                             |   | $      | 15     |   |
|                                                               |   |   |   |   |
| Changes in Gross Margin:                                           |   |   |   |   |
| Retail Margins (a)                                                 |   |   | (2     | ) |
| Total Change in Gross Margin                                       |   |   | (2     | ) |
|                                                               |   |   |   |   |
| Changes in Expenses and Other:                                     |   |   |   |   |
| Other Operation and Maintenance                                    |   |   | 24     |   |
| Depreciation and Amortization                                      |   |   | 3      |   |
| Taxes Other Than Income Taxes                                      |   |   | 1      |   |
| Other Income                                                       |   |   | 1      |   |
| Interest Expense                                                   |   |   | 2      |   |
| Total Change in Expenses and Other                                 |   |   | 31     |   |
|                                                               |   |   |   |   |
| Income Tax Expense                                                 |   |   | (12    | ) |
|                                                               |   |   |   |   |
| Second Quarter of 2011                                             |   | $      | 32     |   |

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

| · | Retail Margins decreased $2 million primarily due to the following: |
|--------|---------------------------------------------------------------------|
|   | ·                                                              | A $5 million decrease primarily due to revenue decreases from rate riders.  This decrease in retail margins had corresponding decreases to riders/trackers recognized in other expense items. |
|   | ·                                                              | A $4 million decrease in residential and commercial margins primarily due to lower non-weather related usage. |
|   | These decreases were partially offset by:                           |
|   | ·                                                              | A $5 million increase in residential weather-related usage primarily due to a 19% increase in cooling degree days. |
|   | ·                                                              | A $3 million increase primarily due to decreased capacity and fuel costs. |

| · | Other Operation and Maintenance expenses decreased $24 million primarily due to expenses related to the cost reduction initiatives recorded in the second quarter of 2010.                              |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Depreciation and Amortization expenses decreased $3 million primarily due to a decrease in amortization of regulatory assets related to the Lawton settlement which was fully recovered in August 2010. |
| · | Income Tax Expense increased $12 million primarily due to an increase in pretax book income.                                                                                                       |

----

| Six Months Ended June 30, 2011 Compared to Six Months Ended June 30, 2010 |
|---------------------------------------------------------------------------|

|                                                                               |   |   |           |   |
|------------------------------------------------------------------------------------|--------|--------|----------------|--------|
| Reconciliation of Six Months Ended June 30, 2010 to Six Months Ended June 30, 2011 |
| Net Income                                                                         |
| (in millions)                                                                      |
|                                                                               |   |   |           |   |
| Six Months Ended June 30, 2010                                                     |   | $      |  20  |   |
|                                                                               |   |   |           |   |
| Changes in Gross Margin:                                                           |   |   |           |   |
| Retail Margins (a)                                                                 |   |   |  (2)      |   |
| Off-system Sales                                                                   |   |   |  (1)      |   |
| Other Revenues                                                                     |   |   |  (2)      |   |
| Total Change in Gross Margin                                                       |   |   |  (5)      |   |
|                                                                               |   |   |           |   |
| Changes in Expenses and Other:                                                     |   |   |           |   |
| Other Operation and Maintenance                                                    |   |   |  40  |   |
| Depreciation and Amortization                                                      |   |   |  6   |   |
| Other Income                                                                       |   |   |  1   |   |
| Interest Expense                                                                   |   |   |  3   |   |
| Total Change in Expenses and Other                                                 |   |   |  50  |   |
|                                                                               |   |   |           |   |
| Income Tax Expense                                                                 |   |   |  (18)     |   |
|                                                                               |   |   |           |   |
| Six Months Ended June 30, 2011                                                     |   | $      |  47  |   |

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

| · | Retail Margins decreased $2 million primarily due to the following:                                  |
|--------|------------------------------------------------------------------------------------------------------|
|   | ·                                                                                               | A $10 million decrease primarily due to revenue decreases from rate riders.  This decrease in retail margins had corresponding decreases to riders/trackers recognized in other expense items. |
|   | This decrease was partially offset by:                                                               |
|   | ·                                                                                               | A $6 million increase primarily due to decreased capacity and fuel costs. |
|   | ·                                                                                               | A $4 million increase in weather-related usage primarily due to a 21% increase in cooling degree days, partially offset by lower industrial rates. |
| · | Other Revenues decreased $2 million primarily due to lower gains on the sale of emission allowances. |

| · | Other Operation and Maintenance expenses decreased $40 million primarily due to the following:                                                                                                          |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                  | A $23 million decrease due to expenses related to the cost reduction initiatives recorded in the second quarter of 2010. |
|   | ·                                                                                                                                                                                                  | A $7 million decrease in maintenance of overhead lines primarily due to a decrease in vegetation management activities. |
|   | ·                                                                                                                                                                                                  | A $5 million decrease in operation expenses due to lower employee-related expenses. |
|   | ·                                                                                                                                                                                                  | A $4 million decrease in plant maintenance expenses resulting primarily from the 2011 deferral of generation maintenance expenses as a result of PSO’s base rate case. |
| · | Depreciation and Amortization expenses decreased $6 million primarily due to a decrease in amortization of regulatory assets related to the Lawton settlement which was fully recovered in August 2010. |
| · | Interest Expense decreased $3 million primarily due to 2010 Oklahoma income tax settlements and lower interest on long-term debt in 2011.                                                               |
| · | Income Tax Expense increased $18 million primarily due to an increase in pretax book income.                                                                                                            |

----

|                                                |   |   | 2011           |   | 2010  |
|-----------------------------------------------------|--------|--------|---------------------|--------|------------|
|                                                |   |   | (in thousands)      |
| Cash and Cash Equivalents at Beginning of Period    |   | $      |  470      |   | $          |  796  |
| Net Cash Flows from Operating Activities            |   |   |  218,684  |   |       |  8,473  |
| Net Cash Flows Used for Investing Activities        |   |   |  (64,693)      |   |       |  (46,697) |
| Net Cash Flows from (Used for) Financing Activities |   |   |  (153,488)     |   |       |  38,517  |
| Net Increase in Cash and Cash Equivalents           |   |   |  503      |   |       |  293  |
| Cash and Cash Equivalents at End of Period          |   | $      |  973      |   | $          |  1,089  |

----

| Issuances |                   |   |           |                |     |       |   |       |
|-----------|------------------------|--------|----------------|---------------------|----------|------------|--------|------------|
|      |                   |   | Principal      |                | Interest |       | Due    |
|      | Type of Debt           |   | Amount         |                | Rate     |       | Date   |
|      |                   |   | (in thousands) |                | (%)      |       |   |
|      | Senior Unsecured Notes |   | $              |  250,000  |     | 4.40  |   | 2021  |
|      | Notes Payable          |   |           |  1,187    |     | 3.00  |   | 2026  |

| Retirements |                   |   |           |                |     |       |   |       |
|-------------|------------------------|--------|----------------|---------------------|----------|------------|--------|------------|
|        |                   |   | Principal      |                | Interest |       | Due    |
|        | Type of Debt           |   | Amount Paid    |                | Rate     |       | Date   |
|        |                   |   | (in thousands) |                | (%)      |       |   |
|        | Senior Unsecured Notes |   | $              |  200,000  |     | 6.00  |   | 2032  |
|        | Senior Unsecured Notes |   |           |  75,000   |     | 4.70  |   | 2011  |

----

| PUBLIC SERVICE COMPANY OF OKLAHOMA                                                                      |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED STATEMENTS OF INCOME                                                                          |
| For the Three and Six Months Ended June 30, 2011 and 2010                                               |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | Three Months Ended |   | Six Months Ended |
|                                                                                                    |   | 2011  |   | 2010  |   | 2011  |   | 2010  |
| REVENUES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |
| Electric Generation, Transmission and Distribution                                                      |   | $ |  322,028  |   | $ |  322,394  |   | $ |  606,615  |   | $ |  550,945  |
| Sales to AEP Affiliates                                                                                 |   |   |  5,785  |   |   |  4,481  |   |   |  8,581  |   |   |  13,151  |
| Other Revenues                                                                                          |   |   |  775  |   |   |  811  |   |   |  1,395  |   |   |  1,345  |
| TOTAL REVENUES                                                                                          |   |   |  328,588  |   |   |  327,686  |   |   |  616,591  |   |   |  565,441  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel and Other Consumables Used for Electric Generation                                                 |   |   |  100,796  |   |   |  88,615  |   |   |  192,544  |   |   |  129,587  |
| Purchased Electricity for Resale                                                                        |   |   |  46,018  |   |   |  53,555  |   |   |  87,197  |   |   |  98,535  |
| Purchased Electricity from AEP Affiliates                                                               |   |   |  9,111  |   |   |  10,471  |   |   |  25,722  |   |   |  21,463  |
| Other Operation                                                                                         |   |   |  48,736  |   |   |  70,837  |   |   |  93,140  |   |   |  120,499  |
| Maintenance                                                                                             |   |   |  25,152  |   |   |  27,038  |   |   |  45,873  |   |   |  57,977  |
| Depreciation and Amortization                                                                           |   |   |  24,096  |   |   |  26,920  |   |   |  47,959  |   |   |  54,208  |
| Taxes Other Than Income Taxes                                                                           |   |   |  10,494  |   |   |  10,985  |   |   |  21,090  |   |   |  21,285  |
| TOTAL EXPENSES                                                                                          |   |   |  264,403  |   |   |  288,421  |   |   |  513,525  |   |   |  503,554  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING INCOME                                                                                        |   |   |  64,185  |   |   |  39,265  |   |   |  103,066  |   |   |  61,887  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income (Expense):                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Income                                                                                         |   |   |  28  |   |   |  93  |   |   |  80  |   |   |  275  |
| Carrying Costs Income                                                                                   |   |   |  1,876  |   |   |  819  |   |   |  2,523  |   |   |  1,686  |
| Allowance for Equity Funds Used During Construction                                                     |   |   |  284  |   |   |  119  |   |   |  650  |   |   |  366  |
| Interest Expense                                                                                        |   |   |  (14,258) |   |   |  (15,765) |   |   |  (30,196) |   |   |  (33,128) |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME BEFORE INCOME TAX EXPENSE                                                                        |   |   |  52,115  |   |   |  24,531  |   |   |  76,123  |   |   |  31,086  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Income Tax Expense                                                                                      |   |   |  20,555  |   |   |  9,042  |   |   |  29,174  |   |   |  11,458  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME                                                                                              |   |   |  31,560  |   |   |  15,489  |   |   |  46,949  |   |   |  19,628  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred Stock Dividend Requirements                                                                   |   |   |  49  |   |   |  49  |   |   |  98  |   |   |  103  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS ATTRIBUTABLE TO COMMON STOCK                                                                   |   | $ |  31,511  |   | $ |  15,440  |   | $ |  46,851  |   | $ |  19,525  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| The common stock of PSO is wholly-owned by AEP.                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| PUBLIC SERVICE COMPANY OF OKLAHOMA                                                                      |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED STATEMENTS OF CHANGES IN COMMON SHAREHOLDER'S                                                 |
| EQUITY AND COMPREHENSIVE INCOME (LOSS)                                                                  |
| For the Six Months Ended June 30, 2011 and 2010                                                         |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   | Other |   |   |
|                                                                                                    |   | Common |   | Paid-in |   | Retained |   | Comprehensive |   |   |
|                                                                                                    |   |   |   |   | Stock |   | Capital |   | Earnings |   | Income (Loss) |   | Total |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | EQUITY – DECEMBER 31, 2009 |   | $ |  157,230  |   | $ |  364,231  |   | $ |  290,880  |   | $ |  (599) |   | $ |  811,742  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock Dividends                                                                                  |   |   |   |   |   |   |   |   |  (25,375) |   |   |   |   |   |  (25,375) |
| Preferred Stock Dividends                                                                               |   |   |   |   |   |   |   |   |  (103) |   |   |   |   |   |  (103) |
| Gain on Reacquired Preferred Stock                                                                      |   |   |   |   |   |  76  |   |   |   |   |   |   |   |   |  76  |
| SUBTOTAL – COMMON                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | SHAREHOLDER'S EQUITY |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  786,340  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income, Net of Taxes:                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | Cash Flow Hedges, Net of Tax of $39 |   |   |   |   |   |   |   |   |   |   |   |  72  |   |   |  72  |
| NET INCOME                                                                                              |   |   |   |   |   |   |   |   |  19,628  |   |   |   |   |   |  19,628  |
| TOTAL COMPREHENSIVE INCOME                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  19,700  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | EQUITY – JUNE 30, 2010 |   | $ |  157,230  |   | $ |  364,307  |   | $ |  285,030  |   | $ |  (527) |   | $ |  806,040  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | EQUITY – DECEMBER 31, 2010 |   | $ |  157,230  |   | $ |  364,307  |   | $ |  312,441  |   | $ |  8,494  |   | $ |  842,472  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock Dividends                                                                                  |   |   |   |   |   |   |   |   |  (32,500) |   |   |   |   |   |  (32,500) |
| Preferred Stock Dividends                                                                               |   |   |   |   |   |   |   |   |  (98) |   |   |   |   |   |  (98) |
| SUBTOTAL – COMMON                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | SHAREHOLDER'S EQUITY |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  809,874  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Loss, Net of Taxes:                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | Cash Flow Hedges, Net of Tax of $407 |   |   |   |   |   |   |   |   |   |   |   |  (756) |   |   |  (756) |
| NET INCOME                                                                                              |   |   |   |   |   |   |   |   |  46,949  |   |   |   |   |   |  46,949  |
| TOTAL COMPREHENSIVE INCOME                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  46,193  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | EQUITY – JUNE 30, 2011 |   | $ |  157,230  |   | $ |  364,307  |   | $ |  326,792  |   | $ |  7,738  |   | $ |  856,067  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| PUBLIC SERVICE COMPANY OF OKLAHOMA                                                                      |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED BALANCE SHEETS                                                                                |
| ASSETS                                                                                                  |
| June 30, 2011 and December 31, 2010                                                                     |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | 2011  |   | 2010  |
| CURRENT ASSETS                                                                                          |   |   |   |   |   |   |
| Cash and Cash Equivalents                                                                               |   | $ |  973  |   | $ |  470  |
| Advances to Affiliates                                                                                  |   |   |  110  |   |   |  -  |
| Accounts Receivable:                                                                                    |   |   |   |   |   |   |
|                                                                                                    | Customers |   |   |  41,221  |   |   |  43,049  |
|                                                                                                    | Affiliated Companies |   |   |  34,822  |   |   |  65,070  |
|                                                                                                    | Miscellaneous |   |   |  4,353  |   |   |  5,497  |
|                                                                                                    | Allowance for Uncollectible Accounts |   |   |  (354) |   |   |  (971) |
|                                                                                                    |   | Total Accounts Receivable |   |   |  80,042  |   |   |  112,645  |
| Fuel                                                                                                    |   |   |  21,806  |   |   |  20,176  |
| Materials and Supplies                                                                                  |   |   |  48,361  |   |   |  46,247  |
| Risk Management Assets                                                                                  |   |   |  490  |   |   |  14,225  |
| Accrued Tax Benefits                                                                                    |   |   |  31,824  |   |   |  38,589  |
| Regulatory Asset for Under-Recovered Fuel Costs                                                         |   |   |  37,317  |   |   |  37,262  |
| Prepayments and Other Current Assets                                                                    |   |   |  14,564  |   |   |  9,416  |
| TOTAL CURRENT ASSETS                                                                                    |   |   |  235,487  |   |   |  279,030  |
|                                                                                                    |   |   |   |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT                                                                           |   |   |   |   |   |   |
| Electric:                                                                                               |   |   |   |   |   |   |
|                                                                                                    | Generation |   |   |  1,336,982  |   |   |  1,330,368  |
|                                                                                                    | Transmission |   |   |  680,619  |   |   |  663,994  |
|                                                                                                    | Distribution |   |   |  1,728,067  |   |   |  1,686,470  |
| Other Property, Plant and Equipment                                                                     |   |   |  237,963  |   |   |  235,406  |
| Construction Work in Progress                                                                           |   |   |  43,372  |   |   |  59,091  |
| Total Property, Plant and Equipment                                                                     |   |   |  4,027,003  |   |   |  3,975,329  |
| Accumulated Depreciation and Amortization                                                               |   |   |  1,290,500  |   |   |  1,255,064  |
| TOTAL PROPERTY, PLANT AND EQUIPMENT – NET                                                         |   |   |  2,736,503  |   |   |  2,720,265  |
|                                                                                                    |   |   |   |   |   |   |
| OTHER NONCURRENT ASSETS                                                                                 |   |   |   |   |   |   |
| Regulatory Assets                                                                                       |   |   |  261,716  |   |   |  263,545  |
| Long-term Risk Management Assets                                                                        |   |   |  685  |   |   |  252  |
| Deferred Charges and Other Noncurrent Assets                                                            |   |   |  30,431  |   |   |  20,979  |
| TOTAL OTHER NONCURRENT ASSETS                                                                           |   |   |  292,832  |   |   |  284,776  |
|                                                                                                    |   |   |   |   |   |   |
| TOTAL ASSETS                                                                                            |   | $ |  3,264,822  |   | $ |  3,284,071  |
|                                                                                                    |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| PUBLIC SERVICE COMPANY OF OKLAHOMA                                                                      |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED BALANCE SHEETS                                                                                |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                    |
| June 30, 2011 and December 31, 2010                                                                     |
| (Unaudited)                                                                                             |
|                                                                                                    |   |   |   |   |   |   |
|                                                                                                    |   | 2011  |   | 2010  |
|                                                                                                    |   |   | (in thousands) |
| CURRENT LIABILITIES                                                                                     |   |   |   |   |   |   |
| Advances from Affiliates                                                                                |   | $ |  -  |   | $ |  91,382  |
| Accounts Payable:                                                                                       |   |   |   |   |   |   |
|                                                                                                    | General |   |   |  93,693  |   |   |  69,155  |
|                                                                                                    | Affiliated Companies |   |   |  57,990  |   |   |  53,179  |
| Long-term Debt Due Within One Year – Nonaffiliated                                                |   |   |  233  |   |   |  25,000  |
| Risk Management Liabilities                                                                             |   |   |  876  |   |   |  922  |
| Customer Deposits                                                                                       |   |   |  44,161  |   |   |  41,217  |
| Accrued Taxes                                                                                           |   |   |  43,701  |   |   |  25,390  |
| Accrued Interest                                                                                        |   |   |  13,124  |   |   |  9,238  |
| Other Current Liabilities                                                                               |   |   |  43,262  |   |   |  38,095  |
| TOTAL CURRENT LIABILITIES                                                                               |   |   |  297,040  |   |   |  353,578  |
|                                                                                                    |   |   |   |   |   |   |
| NONCURRENT LIABILITIES                                                                                  |   |   |   |   |   |   |
| Long-term Debt – Nonaffiliated                                                                    |   |   |  945,417  |   |   |  946,186  |
| Long-term Risk Management Liabilities                                                                   |   |   |  159  |   |   |  197  |
| Deferred Income Taxes                                                                                   |   |   |  686,476  |   |   |  660,783  |
| Regulatory Liabilities and Deferred Investment Tax Credits                                              |   |   |  329,669  |   |   |  336,961  |
| Employee Benefits and Pension Obligations                                                               |   |   |  95,247  |   |   |  98,107  |
| Deferred Credits and Other Noncurrent Liabilities                                                       |   |   |  49,865  |   |   |  40,905  |
| TOTAL NONCURRENT LIABILITIES                                                                            |   |   |  2,106,833  |   |   |  2,083,139  |
|                                                                                                    |   |   |   |   |   |   |
| TOTAL LIABILITIES                                                                                       |   |   |  2,403,873  |   |   |  2,436,717  |
|                                                                                                    |   |   |   |   |   |   |
| Cumulative Preferred Stock Not Subject to Mandatory Redemption                                          |   |   |  4,882  |   |   |  4,882  |
|                                                                                                    |   |   |   |   |   |   |
| 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                                                                                         |   |   |  364,307  |   |   |  364,307  |
| Retained Earnings                                                                                       |   |   |  326,792  |   |   |  312,441  |
| Accumulated Other Comprehensive Income (Loss)                                                           |   |   |  7,738  |   |   |  8,494  |
| TOTAL COMMON SHAREHOLDER’S EQUITY                                                                 |   |   |  856,067  |   |   |  842,472  |
|                                                                                                    |   |   |   |   |   |   |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY                                                        |   | $ |  3,264,822  |   | $ |  3,284,071  |
|                                                                                                    |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| PUBLIC SERVICE COMPANY OF OKLAHOMA                                                                      |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED STATEMENTS OF CASH FLOWS                                                                      |
| For the Six Months Ended June 30, 2011 and 2010                                                         |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | 2011  |   | 2010  |
| OPERATING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Net Income                                                                                              |   | $ |  46,949  |   | $ |  19,628  |
| Adjustments to Reconcile Net Income to Net Cash Flows from Operating                                    |   |   |   |   |   |   |
|                                                                                                    | Activities: |   |   |   |   |   |   |
|                                                                                                    |   | Depreciation and Amortization |   |   |  47,959  |   |   |  54,208  |
|                                                                                                    |   | Deferred Income Taxes |   |   |  33,821  |   |   |  33,402  |
|                                                                                                    |   | Carrying Costs Income |   |   |  (2,523) |   |   |  (1,686) |
|                                                                                                    |   | Allowance for Equity Funds Used During Construction |   |   |  (650) |   |   |  (366) |
|                                                                                                    |   | Mark-to-Market of Risk Management Contracts |   |   |  (292) |   |   |  (2,448) |
|                                                                                                    |   | Property Taxes |   |   |  (18,742) |   |   |  (18,532) |
|                                                                                                    |   | Fuel Over/Under-Recovery, Net |   |   |  (55) |   |   |  (99,776) |
|                                                                                                    |   | Change in Other Noncurrent Assets |   |   |  8,705  |   |   |  (13,891) |
|                                                                                                    |   | Change in Other Noncurrent Liabilities |   |   |  21,377  |   |   |  2,900  |
|                                                                                                    |   | Changes in Certain Components of Working Capital: |   |   |   |   |   |   |
|                                                                                                    |   |   | Accounts Receivable, Net |   |   |  32,603  |   |   |  (1,789) |
|                                                                                                    |   |   | Fuel, Materials and Supplies |   |   |  (3,744) |   |   |  (3,280) |
|                                                                                                    |   |   | Accounts Payable |   |   |  29,830  |   |   |  37,817  |
|                                                                                                    |   |   | Accrued Taxes, Net |   |   |  16,468  |   |   |  4,838  |
|                                                                                                    |   |   | Other Current Assets |   |   |  (3,070) |   |   |  2,760  |
|                                                                                                    |   |   | Other Current Liabilities |   |   |  10,048  |   |   |  (5,312) |
| Net Cash Flows from Operating Activities                                                                |   |   |  218,684  |   |   |  8,473  |
|                                                                                                    |   |   |   |   |   |   |
| INVESTING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Construction Expenditures                                                                               |   |   |  (65,343) |   |   |  (107,213) |
| Change in Advances to Affiliates, Net                                                                   |   |   |  (110) |   |   |  62,695  |
| Other Investing Activities                                                                              |   |   |  760  |   |   |  (2,179) |
| Net Cash Flows Used for Investing Activities                                                            |   |   |  (64,693) |   |   |  (46,697) |
|                                                                                                    |   |   |   |   |   |   |
| FINANCING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Issuance of Long-term Debt – Nonaffiliated                                                        |   |   |  247,554  |   |   |  -  |
| Change in Advances from Affiliates, Net                                                                 |   |   |  (91,382) |   |   |  66,229  |
| Retirement of Long-term Debt – Nonaffiliated                                                      |   |   |  (275,000) |   |   |  -  |
| Retirement of Cumulative Preferred Stock                                                                |   |   |  -  |   |   |  (301) |
| Principal Payments for Capital Lease Obligations                                                        |   |   |  (2,068) |   |   |  (2,040) |
| Dividends Paid on Common Stock                                                                          |   |   |  (32,500) |   |   |  (25,375) |
| Dividends Paid on Cumulative Preferred Stock                                                            |   |   |  (98) |   |   |  (103) |
| Other Financing Activities                                                                              |   |   |  6  |   |   |  107  |
| Net Cash Flows from (Used for) Financing Activities                                                     |   |   |  (153,488) |   |   |  38,517  |
|                                                                                                    |   |   |   |   |   |   |
| Net Increase in Cash and Cash Equivalents                                                               |   |   |  503  |   |   |  293  |
| Cash and Cash Equivalents at Beginning of Period                                                        |   |   |  470  |   |   |  796  |
| Cash and Cash Equivalents at End of Period                                                              |   | $ |  973  |   | $ |  1,089  |
|                                                                                                    |   |   |   |   |   |   |
| SUPPLEMENTARY INFORMATION                                                                               |   |   |   |   |   |   |
| Cash Paid for Interest, Net of Capitalized Amounts                                                      |   | $ |  12,293  |   | $ |  30,152  |
| Net Cash Paid (Received) for Income Taxes                                                               |   |   |  383  |   |   |  (8,073) |
| Noncash Acquisitions Under Capital Leases                                                               |   |   |  415  |   |   |  13,434  |
| Construction Expenditures Included in Current Liabilities at June 30,                                   |   |   |  8,319  |   |   |  13,534  |
|                                                                                                    |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

|                                      | 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           |
|                                      |              |
| Cost Reduction Initiatives                | Note 12           |

----

----

----

| RESULTS OF OPERATIONS       |          |                 |              |             |              |              |       |               |              |   |               |
|-----------------------------|---------------|----------------------|-------------------|------------------|-------------------|-------------------|------------|--------------------|-------------------|--------|--------------------|
|                        |          |                 |              |             |              |              |       |               |              |   |               |   |
| KWH Sales/Degree Days       |          |                 |              |             |              |              |       |               |              |   |               |
|                        |          |                 |              |             |              |              |       |               |              |   |               |   |
| Summary of KWH Energy Sales |
|                        |          |                 |              |             |              |              |       |               |              |   |               |   |
|                        |          | Three Months Ended   |              | Six Months Ended |
|                        |          | June 30,             |              | June 30,         |
|                        | 2011     |                 | 2010         |             | 2011         |              | 2010  |
|                        |          | (in millions of KWH) |
| Retail:                     |          |                 |              |             |              |              |       |               |              |   |               |
|                        | Residential   |                 |  1,645  |             |              |  1,390  |       |               |  3,249  |   |               |  2,989  |
|                        | Commercial    |                 |  1,664  |             |              |  1,598  |       |               |  3,029  |   |               |  2,912  |
|                        | Industrial    |                 |  1,425  |             |              |  1,383  |       |               |  2,676  |   |               |  2,529  |
|                        | Miscellaneous |                 |  22     |             |              |  21     |       |               |  41     |   |               |  40  |
| Total Retail                |          |  4,756     |              |             |  4,392  |              |       |  8,995   |              |   |  8,470   |
|                        |          |                 |              |             |              |              |       |               |              |   |               |
| Wholesale                   |          |  1,787     |              |             |  1,738  |              |       |  3,665   |              |   |  3,551   |
|                        |          |                 |              |             |              |              |       |               |              |   |               |
| Total KWHs                  |          |  6,543     |              |             |  6,130  |              |       |  12,660  |              |   |  12,021  |

| Summary of Heating and Cooling Degree Days |
|--------------------------------------------|
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   | Three Months Ended |   | Six Months Ended |
|                                       |   | June 30, | June 30, |
|                                       |   | 2011  |   | 2010  |   | 2011  |   | 2010  |
|                                       |   | (in degree days) |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual - Heating (a)                       |   |  17  |   |   |  5  |   |   |  866  |   |   |  1,043  |
| Normal - Heating (b)                       |   |  28  |   |   |  28  |   |   |  773  |   |   |  766  |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual - Cooling (c)                       |   |  934  |   |   |  893  |   |   |  985  |   |   |  898  |
| Normal - Cooling (b)                       |   |  700  |   |   |  692  |   |   |  731  |   |   |  723  |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| (a)                                        | 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)                                        | Western Region cooling degree days are calculated on a 65 degree temperature base. |

----

| Second Quarter of 2011 Compared to Second Quarter of 2010 |
|-----------------------------------------------------------|

|                                                               |   |   |   |
|--------------------------------------------------------------------|--------|--------|--------|
| Reconciliation of Second Quarter of 2010 to Second Quarter of 2011 |   |
| Net Income                                                         |   |
| (in millions)                                                      |   |
|                                                               |   |   |   |
| Second Quarter of 2010                                             |   | $      | 27     |   |
|                                                               |   |   |   |   |
| Changes in Gross Margin:                                           |   |   |   |   |
| Retail Margins (a)                                                 |   |   | 16     |   |
| Transmission Revenues                                              |   |   | (1     | ) |
| Total Change in Gross Margin                                       |   |   | 15     |   |
|                                                               |   |   |   |   |
| Changes in Expenses and Other:                                     |   |   |   |   |
| Other Operation and Maintenance                                    |   |   | 25     |   |
| Depreciation and Amortization                                      |   |   | (3     | ) |
| Taxes Other Than Income Taxes                                      |   |   | (1     | ) |
| Other Income                                                       |   |   | (1     | ) |
| Interest Expense                                                   |   |   | 1      |   |
| Total Change in Expenses and Other                                 |   |   | 21     |   |
|                                                               |   |   |   |   |
| Income Tax Expense                                                 |   |   | (12    | ) |
|                                                               |   |   |   |   |
| Second Quarter of 2011                                             |   | $      | 51     |   |

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

| · | Retail Margins increased $16 million primarily due to: |
|--------|--------------------------------------------------------|
|   | ·                                                 | An $11 million increase in retail sales primarily due to increases in residential and commercial customers. |
|   | ·                                                 | A $7 million increase due to rate increases, including revenue increases from base rates in Texas and rate riders in Arkansas. |
|   | These increases were partially offset by:              |
|   | ·                                                 | A $2 million decrease in wholesale fuel recovery. |

| · | Other Operation and Maintenance expenses decreased $25 million primarily due to:                                                                                                               |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                         | A $29 million decrease due to expenses related to the cost reduction initiatives recorded in the second quarter of 2010. |
|   | ·                                                                                                                                                                                         | A $3 million decrease in operation expenses due to lower employee-related expenses. |
|   | These decreases were partially offset by:                                                                                                                                                      |
|   | ·                                                                                                                                                                                         | A $5 million increase related to scheduled generation plant maintenance. |
| · | Depreciation and Amortization expenses increased $3 million primarily due to a greater depreciation base, including the addition of the Stall Unit which was placed into service in June 2010. |
| · | Income Tax Expense increased $12 million primarily due to an increase in pretax book income.                                                                                                   |

----

| Six Months Ended June 30, 2011 Compared to Six Months Ended June 30, 2010 |
|---------------------------------------------------------------------------|

|                                                                               |   |   |           |   |
|------------------------------------------------------------------------------------|--------|--------|----------------|--------|
| Reconciliation of Six Months Ended June 30, 2010 to Six Months Ended June 30, 2011 |
| Net Income                                                                         |
| (in millions)                                                                      |
|                                                                               |   |   |           |   |
| Six Months Ended June 30, 2010                                                     |   | $      |  58  |   |
|                                                                               |   |   |           |   |
| Changes in Gross Margin:                                                           |   |   |           |   |
| Retail Margins (a)                                                                 |   |   |  38  |   |
| Off-system Sales                                                                   |   |   |  (1)      |   |
| Transmission Revenues                                                              |   |   |  (3)      |   |
| Other Revenues                                                                     |   |   |  1   |   |
| Total Change in Gross Margin                                                       |   |   |  35  |   |
|                                                                               |   |   |           |   |
| Changes in Expenses and Other:                                                     |   |   |           |   |
| Other Operation and Maintenance                                                    |   |   |  17  |   |
| Depreciation and Amortization                                                      |   |   |  (3)      |   |
| Taxes Other Than Income Taxes                                                      |   |   |  (2)      |   |
| Allowance for Equity Funds Used During Construction                                |   |   |  (6)      |   |
| Interest Expense                                                                   |   |   |  (3)      |   |
| Total Change in Expenses and Other                                                 |   |   |  3   |   |
|                                                                               |   |   |           |   |
| Income Tax Expense                                                                 |   |   |  (15)     |   |
|                                                                               |   |   |           |   |
| Six Months Ended June 30, 2011                                                     |   | $      |  81  |   |

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

| · | Retail Margins increased $38 million primarily due to:                           |
|--------|----------------------------------------------------------------------------------|
|   | ·                                                                           | A $20 million increase due to rate increases, including revenue increases from base rates in Texas and rate riders in Arkansas. |
|   | ·                                                                           | A $16 million increase in retail sales primarily due to increases in residential and commercial customers. |
| · | Transmission Revenues decreased $3 million due to lower rates in the SPP region. |

| · | Other Operation and Maintenance expenses decreased $17 million primarily due to:                                                                                                               |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                         | A $29 million decrease due to expenses related to the cost reduction initiatives recorded in the second quarter of 2010. |
|   | ·                                                                                                                                                                                         | A $5 million decrease in operation expenses due to lower employee-related expenses. |
|   | These decreases were partially offset by:                                                                                                                                                      |
|   | ·                                                                                                                                                                                         | A $10 million increase in distribution maintenance resulting from increased storm-related expenses. |
|   | ·                                                                                                                                                                                         | An $8 million increase related to scheduled generation plant maintenance. |
| · | Depreciation and Amortization expenses increased $3 million primarily due to a greater depreciation base, including the addition of the Stall Unit which was placed into service in June 2010. |
| · | Allowance for Equity Funds Used During Construction decreased $6 million primarily due to the completed construction of the Stall Unit in June 2010.                                           |
| · | Interest Expense increased $3 million primarily due to increased long-term debt outstanding.                                                                                                   |
| · | Income Tax Expense increased $15 million primarily due an increase in pretax book income and other book/tax differences which are accounted for on a flow-through basis.                       |

----

|                                                 |   |   | 2011           |   | 2010  |
|------------------------------------------------------|--------|--------|---------------------|--------|------------|
|                                                 |   |   | (in thousands)      |
| Cash and Cash Equivalents at Beginning of Period     |   | $      |  1,514    |   | $          |  1,661  |
| Net Cash Flows from Operating Activities             |   |   |  209,863  |   |       |  80,809  |
| Net Cash Flows Used for Investing Activities         |   |   |  (194,249)     |   |       |  (371,560) |
| Net Cash Flows from (Used for) Financing Activities  |   |   |  (15,039)      |   |       |  290,652  |
| Net Increase (Decrease) in Cash and Cash Equivalents |   |   |  575      |   |       |  (99) |
| Cash and Cash Equivalents at End of Period           |   | $      |  2,089    |   | $          |  1,562  |

----

----

| SOUTHWESTERN ELECTRIC POWER COMPANY CONSOLIDATED                                                        |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME                                                             |
| For the Three and Six Months Ended June 30, 2011 and 2010                                               |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | Three Months Ended |   | Six Months Ended |
|                                                                                                    |   | 2011  |   | 2010  |   | 2011  |   | 2010  |
| REVENUES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |
| Electric Generation, Transmission and Distribution                                                      |   | $ |  388,197  |   | $ |  347,657  |   | $ |  735,264  |   | $ |  680,735  |
| Sales to AEP Affiliates                                                                                 |   |   |  10,671  |   |   |  13,231  |   |   |  26,250  |   |   |  22,564  |
| Other Revenues                                                                                          |   |   |  666  |   |   |  579  |   |   |  975  |   |   |  972  |
| TOTAL REVENUES                                                                                          |   |   |  399,534  |   |   |  361,467  |   |   |  762,489  |   |   |  704,271  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel and Other Consumables Used for Electric Generation                                                 |   |   |  139,713  |   |   |  135,051  |   |   |  273,725  |   |   |  257,939  |
| Purchased Electricity for Resale                                                                        |   |   |  39,691  |   |   |  22,841  |   |   |  78,280  |   |   |  64,727  |
| Purchased Electricity from AEP Affiliates                                                               |   |   |  5,116  |   |   |  4,211  |   |   |  7,227  |   |   |  13,963  |
| Other Operation                                                                                         |   |   |  50,722  |   |   |  82,265  |   |   |  104,790  |   |   |  140,518  |
| Maintenance                                                                                             |   |   |  34,790  |   |   |  28,133  |   |   |  64,181  |   |   |  45,552  |
| Depreciation and Amortization                                                                           |   |   |  32,718  |   |   |  29,868  |   |   |  66,008  |   |   |  63,111  |
| Taxes Other Than Income Taxes                                                                           |   |   |  16,730  |   |   |  15,580  |   |   |  33,696  |   |   |  31,475  |
| TOTAL EXPENSES                                                                                          |   |   |  319,480  |   |   |  317,949  |   |   |  627,907  |   |   |  617,285  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING INCOME                                                                                        |   |   |  80,054  |   |   |  43,518  |   |   |  134,582  |   |   |  86,986  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income (Expense):                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Income                                                                                         |   |   |  167  |   |   |  169  |   |   |  111  |   |   |  248  |
| Allowance for Equity Funds Used During Construction                                                     |   |   |  11,573  |   |   |  12,462  |   |   |  22,169  |   |   |  27,979  |
| Interest Expense                                                                                        |   |   |  (20,835) |   |   |  (21,475) |   |   |  (43,260) |   |   |  (40,019) |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME BEFORE INCOME TAX EXPENSE AND                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | EQUITY EARNINGS |   |   |  70,959  |   |   |  34,674  |   |   |  113,602  |   |   |  75,194  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Income Tax Expense                                                                                      |   |   |  20,571  |   |   |  8,707  |   |   |  33,967  |   |   |  18,863  |
| Equity Earnings of Unconsolidated Subsidiary                                                            |   |   |  683  |   |   |  738  |   |   |  1,263  |   |   |  1,457  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME                                                                                              |   |   |  51,071  |   |   |  26,705  |   |   |  80,898  |   |   |  57,788  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Less: Net Income Attributable to Noncontrolling Interest                                                |   |   |  1,036  |   |   |  1,273  |   |   |  2,118  |   |   |  2,424  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME ATTRIBUTABLE TO SWEPCo                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | SHAREHOLDERS |   |   |  50,035  |   |   |  25,432  |   |   |  78,780  |   |   |  55,364  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Less: Preferred Stock Dividend Requirements                                                             |   |   |  57  |   |   |  57  |   |   |  114  |   |   |  114  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS ATTRIBUTABLE TO SWEPCo COMMON                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | SHAREHOLDER |   | $ |  49,978  |   | $ |  25,375  |   | $ |  78,666  |   | $ |  55,250  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| The common stock of SWEPCo is wholly-owned by AEP.                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| SOUTHWESTERN ELECTRIC POWER COMPANY CONSOLIDATED                                                        |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN                                                         |
| EQUITY AND COMPREHENSIVE INCOME (LOSS)                                                                  |
| For the Six Months Ended June 30, 2011 and 2010                                                         |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | SWEPCo Common Shareholder |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   | Other |   |   |   |   |   |
|                                                                                                    |   | Common |   | Paid-in |   | Retained |   | Comprehensive |   | Noncontrolling |   |   |
|                                                                                                    |   | Stock |   | Capital |   | Earnings |   | Income (Loss) |   | Interest |   | Total |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – DECEMBER 31, 2009                                                                  |   | $ |  135,660  |   | $ |  674,979  |   | $ |  726,478  |   | $ |  (12,991) |   | $ |  31  |   | $ |  1,524,157  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock Dividends – Nonaffiliated                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  (1,892) |   |   |  (1,892) |
| Preferred Stock Dividends                                                                               |   |   |   |   |   |   |   |   |  (114) |   |   |   |   |   |   |   |   |  (114) |
| SUBTOTAL – EQUITY                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  1,522,151  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income, Net of Taxes:                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | Cash Flow Hedges, Net of Tax of $48 |   |   |   |   |   |   |   |   |   |   |   |  90  |   |   |   |   |   |  90  |
|                                                                                                    |   | Amortization of Pension and OPEB Deferred Costs, |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   | Net of Tax of $253 |   |   |   |   |   |   |   |   |   |   |   |  469  |   |   |   |   |   |  469  |
| NET INCOME                                                                                              |   |   |   |   |   |   |   |   |  55,364  |   |   |   |   |   |  2,424  |   |   |  57,788  |
| TOTAL COMPREHENSIVE INCOME                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  58,347  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – JUNE 30, 2010                                                                      |   | $ |  135,660  |   | $ |  674,979  |   | $ |  781,728  |   | $ |  (12,432) |   | $ |  563  |   | $ |  1,580,498  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – DECEMBER 31, 2010                                                                  |   | $ |  135,660  |   | $ |  674,979  |   | $ |  868,840  |   | $ |  (12,491) |   | $ |  361  |   | $ |  1,667,349  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock Dividends – Nonaffiliated                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  (2,126) |   |   |  (2,126) |
| Preferred Stock Dividends                                                                               |   |   |   |   |   |   |   |   |  (114) |   |   |   |   |   |   |   |   |  (114) |
| SUBTOTAL – EQUITY                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  1,665,109  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income, Net of Taxes:                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | Cash Flow Hedges, Net of Tax of $137 |   |   |   |   |   |   |   |   |   |   |   |  255  |   |   |   |   |   |  255  |
|                                                                                                    |   | Amortization of Pension and OPEB Deferred Costs, |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   | Net of Tax of $681 |   |   |   |   |   |   |   |   |   |   |   |  1,265  |   |   |   |   |   |  1,265  |
| NET INCOME                                                                                              |   |   |   |   |   |   |   |   |  78,780  |   |   |   |   |   |  2,118  |   |   |  80,898  |
| TOTAL COMPREHENSIVE INCOME                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  82,418  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – JUNE 30, 2011                                                                      |   | $ |  135,660  |   | $ |  674,979  |   | $ |  947,506  |   | $ |  (10,971) |   | $ |  353  |   | $ |  1,747,527  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| SOUTHWESTERN ELECTRIC POWER COMPANY CONSOLIDATED                                                        |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                   |
| ASSETS                                                                                                  |
| June 30, 2011 and December 31, 2010                                                                     |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | 2011  |   | 2010  |
| CURRENT ASSETS                                                                                          |   |   |   |   |   |   |
| Cash and Cash Equivalents                                                                               |   | $ |  2,089  |   | $ |  1,514  |
| Advances to Affiliates                                                                                  |   |   |  34,684  |   |   |  86,222  |
| Accounts Receivable:                                                                                    |   |   |   |   |   |   |
|                                                                                                    |   | Customers |   |   |  35,361  |   |   |  34,434  |
|                                                                                                    |   | Affiliated Companies |   |   |  31,179  |   |   |  43,219  |
|                                                                                                    |   | Miscellaneous |   |   |  19,953  |   |   |  17,739  |
|                                                                                                    |   | Allowance for Uncollectible Accounts |   |   |  (666) |   |   |  (588) |
|                                                                                                    |   |   | Total Accounts Receivable |   |   |  85,827  |   |   |  94,804  |
| Fuel                                                                                                    |   |   |   |   |   |   |
|                                                                                                    |   | (June 30, 2011 and December 31, 2010 amounts include $30,966 and |   |   |   |   |   |   |
|                                                                                                    |   | $35,055, respectively, related to Sabine) |   |   |  96,458  |   |   |  91,777  |
| Materials and Supplies                                                                                  |   |   |  54,643  |   |   |  50,395  |
| Risk Management Assets                                                                                  |   |   |  1,613  |   |   |  1,209  |
| Deferred Income Tax Benefits                                                                            |   |   |  11,719  |   |   |  15,529  |
| Accrued Tax Benefits                                                                                    |   |   |  39,235  |   |   |  37,900  |
| Regulatory Asset for Under-Recovered Fuel Costs                                                         |   |   |  9,470  |   |   |  758  |
| Prepayments and Other Current Assets                                                                    |   |   |  24,451  |   |   |  24,270  |
| TOTAL CURRENT ASSETS                                                                                    |   |   |  360,189  |   |   |  404,378  |
|                                                                                                    |   |   |   |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT                                                                           |   |   |   |   |   |   |
| Electric:                                                                                               |   |   |   |   |   |   |
|                                                                                                    |   | Generation |   |   |  2,302,981  |   |   |  2,297,463  |
|                                                                                                    |   | Transmission |   |   |  957,937  |   |   |  943,724  |
|                                                                                                    |   | Distribution |   |   |  1,635,200  |   |   |  1,611,129  |
| Other Property, Plant and Equipment                                                                     |   |   |   |   |   |   |
|                                                                                                    |   | (June 30, 2011 and December 31, 2010 amounts include $229,068 and |   |   |   |   |   |   |
|                                                                                                    |   | $224,857, respectively, related to Sabine) |   |   |  636,532  |   |   |  632,158  |
| Construction Work in Progress                                                                           |   |   |  1,268,429  |   |   |  1,071,603  |
| Total Property, Plant and Equipment                                                                     |   |   |  6,801,079  |   |   |  6,556,077  |
| Accumulated Depreciation and Amortization                                                               |   |   |   |   |   |   |
|                                                                                                    |   | (June 30, 2011 and December 31, 2010 amounts include $96,217 and |   |   |   |   |   |   |
|                                                                                                    |   | $91,840, respectively, related to Sabine) |   |   |  2,183,940  |   |   |  2,130,351  |
| TOTAL PROPERTY, PLANT AND EQUIPMENT – NET                                                         |   |   |  4,617,139  |   |   |  4,425,726  |
|                                                                                                    |   |   |   |   |   |   |
| OTHER NONCURRENT ASSETS                                                                                 |   |   |   |   |   |   |
| Regulatory Assets                                                                                       |   |   |  349,174  |   |   |  332,698  |
| Long-term Risk Management Assets                                                                        |   |   |  296  |   |   |  438  |
| Deferred Charges and Other Noncurrent Assets                                                            |   |   |  102,471  |   |   |  80,327  |
| TOTAL OTHER NONCURRENT ASSETS                                                                           |   |   |  451,941  |   |   |  413,463  |
|                                                                                                    |   |   |   |   |   |   |
| TOTAL ASSETS                                                                                            |   | $ |  5,429,269  |   | $ |  5,243,567  |
|                                                                                                    |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| SOUTHWESTERN ELECTRIC POWER COMPANY CONSOLIDATED                                                        |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                   |
| LIABILITIES AND EQUITY                                                                                  |
| June 30, 2011 and December 31, 2010                                                                     |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | 2011  |   | 2010  |
|                                                                                                    |   |   | (in thousands) |
| CURRENT LIABILITIES                                                                                     |   |   |   |   |   |   |
| Accounts Payable:                                                                                       |   |   |   |   |   |   |
|                                                                                                    |   | General |   | $ |  172,556  |   | $ |  162,271  |
|                                                                                                    |   | Affiliated Companies |   |   |  90,178  |   |   |  64,474  |
| Short-term Debt – Nonaffiliated                                                                   |   |   |  -  |   |   |  6,217  |
| Long-term Debt Due Within One Year – Nonaffiliated                                                |   |   |  61,135  |   |   |  41,135  |
| Risk Management Liabilities                                                                             |   |   |  1,378  |   |   |  4,067  |
| Customer Deposits                                                                                       |   |   |  54,411  |   |   |  48,245  |
| Accrued Taxes                                                                                           |   |   |  62,715  |   |   |  30,516  |
| Accrued Interest                                                                                        |   |   |  40,034  |   |   |  39,856  |
| Obligations Under Capital Leases                                                                        |   |   |  13,921  |   |   |  13,265  |
| Regulatory Liability for Over-Recovered Fuel Costs                                                      |   |   |  -  |   |   |  16,432  |
| Other Current Liabilities                                                                               |   |   |  66,334  |   |   |  67,118  |
| TOTAL CURRENT LIABILITIES                                                                               |   |   |  562,662  |   |   |  493,596  |
|                                                                                                    |   |   |   |   |   |   |
| NONCURRENT LIABILITIES                                                                                  |   |   |   |   |   |   |
| Long-term Debt – Nonaffiliated                                                                    |   |   |  1,708,511  |   |   |  1,728,385  |
| Long-term Risk Management Liabilities                                                                   |   |   |  156  |   |   |  338  |
| Deferred Income Taxes                                                                                   |   |   |  645,390  |   |   |  624,333  |
| Regulatory Liabilities and Deferred Investment Tax Credits                                              |   |   |  417,571  |   |   |  393,673  |
| Asset Retirement Obligations                                                                            |   |   |  55,217  |   |   |  56,632  |
| Employee Benefits and Pension Obligations                                                               |   |   |  92,697  |   |   |  96,314  |
| Obligations Under Capital Leases                                                                        |   |   |  112,632  |   |   |  115,399  |
| Deferred Credits and Other Noncurrent Liabilities                                                       |   |   |  82,211  |   |   |  62,852  |
| TOTAL NONCURRENT LIABILITIES                                                                            |   |   |  3,114,385  |   |   |  3,077,926  |
|                                                                                                    |   |   |   |   |   |   |
| TOTAL LIABILITIES                                                                                       |   |   |  3,677,047  |   |   |  3,571,522  |
|                                                                                                    |   |   |   |   |   |   |
| Cumulative Preferred Stock Not Subject to Mandatory Redemption                                          |   |   |  4,695  |   |   |  4,696  |
|                                                                                                    |   |   |   |   |   |   |
| 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                                                                                       |   |   |  947,506  |   |   |  868,840  |
| Accumulated Other Comprehensive Income (Loss)                                                           |   |   |  (10,971) |   |   |  (12,491) |
| TOTAL COMMON SHAREHOLDER’S EQUITY                                                                 |   |   |  1,747,174  |   |   |  1,666,988  |
|                                                                                                    |   |   |   |   |   |   |
| Noncontrolling Interest                                                                                 |   |   |  353  |   |   |  361  |
|                                                                                                    |   |   |   |   |   |   |
| TOTAL EQUITY                                                                                            |   |   |  1,747,527  |   |   |  1,667,349  |
|                                                                                                    |   |   |   |   |   |   |
| TOTAL LIABILITIES AND EQUITY                                                                            |   | $ |  5,429,269  |   | $ |  5,243,567  |
|                                                                                                    |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

| SOUTHWESTERN ELECTRIC POWER COMPANY CONSOLIDATED                                                        |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                         |
| For the Six Months Ended June 30, 2011 and 2010                                                         |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | 2011  |   | 2010  |
| OPERATING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Net Income                                                                                              |   | $ |  80,898  |   | $ |  57,788  |
| Adjustments to Reconcile Net Income to Net Cash Flows from                                              |   |   |   |   |   |   |
|                                                                                                    |  Operating Activities: |   |   |   |   |   |   |
|                                                                                                    |   | Depreciation and Amortization |   |   |  66,008  |   |   |  63,111  |
|                                                                                                    |   | Deferred Income Taxes |   |   |  23,562  |   |   |  (5,742) |
|                                                                                                    |   | Allowance for Equity Funds Used During Construction |   |   |  (22,169) |   |   |  (27,979) |
|                                                                                                    |   | Mark-to-Market of Risk Management Contracts |   |   |  (1,863) |   |   |  715  |
|                                                                                                    |   | Property Taxes |   |   |  (20,356) |   |   |  (18,105) |
|                                                                                                    |   | Fuel Over/Under-Recovery, Net |   |   |  (25,144) |   |   |  (15,619) |
|                                                                                                    |   | Change in Other Noncurrent Assets |   |   |  17,791  |   |   |  (11,364) |
|                                                                                                    |   | Change in Other Noncurrent Liabilities |   |   |  27,255  |   |   |  17,928  |
|                                                                                                    |   | Changes in Certain Components of Working Capital: |   |   |   |   |   |   |
|                                                                                                    |   |   | Accounts Receivable, Net |   |   |  9,062  |   |   |  (24,733) |
|                                                                                                    |   |   | Fuel, Materials and Supplies |   |   |  (8,929) |   |   |  20,096  |
|                                                                                                    |   |   | Accounts Payable |   |   |  37,823  |   |   |  (10,505) |
|                                                                                                    |   |   | Accrued Taxes, Net |   |   |  24,753  |   |   |  32,339  |
|                                                                                                    |   |   | Other Current Assets |   |   |  (1,485) |   |   |  (825) |
|                                                                                                    |   |   | Other Current Liabilities |   |   |  2,657  |   |   |  3,704  |
| Net Cash Flows from Operating Activities                                                                |   |   |  209,863  |   |   |  80,809  |
|                                                                                                    |   |   |   |   |   |   |
| INVESTING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Construction Expenditures                                                                               |   |   |  (237,834) |   |   |  (176,107) |
| Change in Advances to Affiliates, Net                                                                   |   |   |  51,538  |   |   |  (193,437) |
| Other Investing Activities                                                                              |   |   |  (7,953) |   |   |  (2,016) |
| Net Cash Flows Used for Investing Activities                                                            |   |   |  (194,249) |   |   |  (371,560) |
|                                                                                                    |   |   |   |   |   |   |
| FINANCING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Issuance of Long-term Debt – Nonaffiliated                                                        |   |   |  -  |   |   |  399,411  |
| Credit Facility Borrowings                                                                              |   |   |  27,413  |   |   |  50,339  |
| Retirement of Long-term Debt – Nonaffiliated                                                      |   |   |  -  |   |   |  (53,500) |
| Retirement of Long-term Debt – Affiliated                                                         |   |   |  -  |   |   |  (50,000) |
| Retirement of Cumulative Preferred Stock                                                                |   |   |  (1) |   |   |  -  |
| Credit Facility Repayments                                                                              |   |   |  (33,630) |   |   |  (48,512) |
| Principal Payments for Capital Lease Obligations                                                        |   |   |  (6,655) |   |   |  (5,944) |
| Dividends Paid on Common Stock – Nonaffiliated                                                    |   |   |  (2,126) |   |   |  (1,892) |
| Dividends Paid on Cumulative Preferred Stock                                                            |   |   |  (114) |   |   |  (114) |
| Other Financing Activities                                                                              |   |   |  74  |   |   |  864  |
| Net Cash Flows from (Used for) Financing Activities                                                     |   |   |  (15,039) |   |   |  290,652  |
|                                                                                                    |   |   |   |   |   |   |
| Net Increase (Decrease) in Cash and Cash Equivalents                                                    |   |   |  575  |   |   |  (99) |
| Cash and Cash Equivalents at Beginning of Period                                                        |   |   |  1,514  |   |   |  1,661  |
| Cash and Cash Equivalents at End of Period                                                              |   | $ |  2,089  |   | $ |  1,562  |
|                                                                                                    |   |   |   |   |   |   |
| SUPPLEMENTARY INFORMATION                                                                               |   |   |   |   |   |   |
| Cash Paid for Interest, Net of Capitalized Amounts                                                      |   | $ |  37,681  |   | $ |  29,649  |
| Net Cash Paid for Income Taxes                                                                          |   |   |  8,026  |   |   |  19,663  |
| Noncash Acquisitions Under Capital Leases                                                               |   |   |  4,378  |   |   |  380  |
| Construction Expenditures Included in Current Liabilities at June 30,                                   |   |   |  96,959  |   |   |  85,870  |
|                                                                                                    |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 162. |

----

|                                      | FootnoteReference |
|-------------------------------------------|-------------------|
|                                      |              |
| Significant Accounting Matters            | Note 1            |
|                                      |              |
| New Accounting Pronouncements             | Note 2            |
|                                      |              |
| Rate Matters                              | Note 3            |
|                                      |              |
| Commitments, Guarantees and Contingencies | Note 4            |
|                                      |              |
| Acquisition                               | Note 5            |
|                                      |              |
| Benefit Plans                             | Note 6            |
|                                      |              |
| Business Segments                         | Note 7            |
|                                      |              |
| Derivatives and Hedging                   | Note 8            |
|                                      |              |
| Fair Value Measurements                   | Note 9            |
|                                      |              |
| Income Taxes                              | Note 10           |
|                                      |              |
| Financing Activities                      | Note 11           |
|                                      |              |
| Cost Reduction Initiatives                | Note 12           |

----

| INDEX OF CONDENSED NOTES TO CONDENSED FINANCIAL STATEMENTS OF |
|---------------------------------------------------------------|

| The condensed notes to condensed financial statements that follow are a combined presentation for the Registrant Subsidiaries.  The following list indicates the registrants to which the footnotes apply: |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                 |   |   |
| 1.                                                                                                                                                                                                                   | Significant Accounting Matters | APCo, CSPCo, I&M, OPCo, PSO, SWEPCo |
|                                                                                                                                                                                                                 |   |   |
| 2.                                                                                                                                                                                                                   | New Accounting Pronouncements | APCo, CSPCo, I&M, OPCo, PSO, SWEPCo |
|                                                                                                                                                                                                                 |   |   |
| 3.                                                                                                                                                                                                                   | Rate Matters | APCo, CSPCo, I&M, OPCo, PSO, SWEPCo |
|                                                                                                                                                                                                                 |   |   |
| 4.                                                                                                                                                                                                                   | Commitments, Guarantees and Contingencies | APCo, CSPCo, I&M, OPCo, PSO, SWEPCo |
|                                                                                                                                                                                                                 |   |   |
| 5.                                                                                                                                                                                                                   | Acquisition | 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. | Cost Reduction Initiatives | APCo, CSPCo, I&M, OPCo, PSO, SWEPCo |
|-----|----------------------------|-----------------------------------------|

----

----

| SOUTHWESTERN ELECTRIC POWER COMPANY CONSOLIDATED |
|--------------------------------------------------|
| VARIABLE INTEREST ENTITIES                       |
| June 30, 2011 and December 31, 2010              |
| (in millions)                                    |
|                                             |   | Sabine |
| ASSETS                                           |   | 2011  |   | 2010  |
| Current Assets                                   |   | $ |  42  |   | $ |  50  |
| Net Property, Plant and Equipment                |   |   |  140  |   |   |  139  |
| Other Noncurrent Assets                          |   |   |  34  |   |   |  34  |
| Total Assets                                     |   | $ |  216  |   | $ |  223  |
|                                             |   |   |   |   |   |   |
| LIABILITIES AND EQUITY                           |   |   |   |   |   |   |
| Current Liabilities                              |   | $ |  46  |   | $ |  33  |
| Noncurrent Liabilities                           |   |   |  170  |   |   |  190  |
| Total Liabilities and Equity                     |   | $ |  216  |   | $ |  223  |

| INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES |
|-------------------------------------------------|
| VARIABLE INTEREST ENTITIES                      |
| June 30, 2011 and December 31, 2010             |
| (in millions)                                   |
|                                            |   | DCC Fuel |
| ASSETS                                          |   | 2011  |   | 2010  |
| Current Assets                                  |   | $ |  85  |   | $ |  92  |
| Net Property, Plant and Equipment               |   |   |  127  |   |   |  173  |
| Other Noncurrent Assets                         |   |   |  80  |   |   |  112  |
| Total Assets                                    |   | $ |  292  |   | $ |  377  |
|                                            |   |   |   |   |   |   |
| LIABILITIES AND EQUITY                          |   |   |   |   |   |   |
| Current Liabilities                             |   | $ |  76  |   | $ |  79  |
| Noncurrent Liabilities                          |   |   |  216  |   |   |  298  |
| Total Liabilities and Equity                    |   | $ |  292  |   | $ |  377  |

----

|                             | June 30, 2011    |          | December 31, 2010 |
|----------------------------------|------------------|---------------|-------------------|
|                             | As Reported on   |          |              |   |   | As Reported on |   |   |   |
|                             | the Consolidated | Maximum       | the Consolidated  |   | Maximum |
|                             | Balance Sheet    | Exposure      | Balance Sheet     |   | Exposure |
|                             | (in millions)    |
| Capital Contribution from SWEPCo | $                |  8  |              | $ |  8  |   | $ |  6  |   | $ |  6  |
| Retained Earnings                |             |  1  |              |   |  1  |   |   |  2  |   |   |  2  |
| SWEPCo's Guarantee of Debt       |             |  -  |              |   |  54  |   |   |  -  |   |   |  48  |
|                             |             |          |              |   |   |   |   |   |   |   |   |
| Total Investment in DHLC         | $                |  9  |              | $ |  63  |   | $ |  8  |   | $ |  56  |

| Total AEPSC billings to the Registrant Subsidiaries were as follows: |
|----------------------------------------------------------------------|

|    |   | Three Months Ended June 30, |               | Six Months Ended June 30, |
|---------|--------|-----------------------------|--------------------|---------------------------|
| Company |   | 2011                   |               | 2010                 |   | 2011  |   | 2010  |
|    |   | (in thousands)              |
| APCo    |   | $                           |  47,352  |                      | $ |  66,769  |   | $ |  92,293  |   | $ |  126,158  |
| CSPCo   |   |                        |  28,456  |                      |   |  39,883  |   |   |  54,501  |   |   |  74,494  |
| I&M |   |                        |  31,006  |                      |   |  40,932  |   |   |  62,834  |   |   |  75,180  |
| OPCo    |   |                        |  44,536  |                      |   |  62,675  |   |   |  82,368  |   |   |  111,779  |
| PSO     |   |                        |  21,130  |                      |   |  31,443  |   |   |  40,548  |   |   |  55,179  |
| SWEPCo  |   |                        |  31,560  |                      |   |  43,636  |   |   |  61,393  |   |   |  78,537  |

----

| The carrying amount and classification of variable interest in AEPSC's accounts payable are as follows: |
|---------------------------------------------------------------------------------------------------------|

|    |   | June 30, 2011      |               | December 31, 2010 |
|---------|--------|--------------------|--------------------|-------------------|
|    |   | As Reported on the |               | Maximum           |   | As Reported on the |   | Maximum |
| Company |   | Balance Sheet      |               | Exposure          |   | Balance Sheet |   | Exposure |
|    |   | (in thousands)     |
| APCo    |   | $                  |  17,942  |              | $ |  17,942  |   | $ |  23,230  |   | $ |  23,230  |
| CSPCo   |   |               |  11,581  |              |   |  11,581  |   |   |  12,676  |   |   |  12,676  |
| I&M |   |               |  11,674  |              |   |  11,674  |   |   |  12,980  |   |   |  12,980  |
| OPCo    |   |               |  17,010  |              |   |  17,010  |   |   |  16,927  |   |   |  16,927  |
| PSO     |   |               |  8,119   |              |   |  8,119  |   |   |  9,384  |   |   |  9,384  |
| SWEPCo  |   |               |  11,932  |              |   |  11,932  |   |   |  14,465  |   |   |  14,465  |

| Total billings from AEGCo were as follows: |
|--------------------------------------------|

|    |   | Three Months Ended June 30, |               | Six Months Ended June 30, |
|---------|--------|-----------------------------|--------------------|---------------------------|
| Company |   | 2011                   |               | 2010                 |   | 2011  |   | 2010  |
|    |   | (in thousands)              |
| CSPCo   |   | $                           |  40,983  |                      | $ |  21,474  |   | $ |  92,017  |   | $ |  36,701  |
| I&M |   |                        |  49,852  |                      |   |  48,502  |   |   |  102,673  |   |   |  104,651  |

|    |   |             |               |              |   |               |           |     |               |   |   |               |
|---------|--------|------------------|--------------------|-------------------|--------|--------------------|----------------|----------|--------------------|--------|--------|--------------------|
|    |   | June 30, 2011    |               | December 31, 2010 |
|    |   | As Reported in   |               |              |   |               | As Reported in |     |               |   |
|    |   | the Consolidated |               | Maximum           |   | the Consolidated   |           | Maximum  |
| Company |   | Balance Sheet    |               | Exposure          |   | Balance Sheet      |           | Exposure |
|    |   | (in thousands)   |
| CSPCo   |   | $                |  13,392  |              | $      |  13,392  |           | $        |  18,165  |   | $      |  18,165  |
| I&M |   |             |  26,956  |              |   |  26,956  |           |     |  27,899  |   |   |  27,899  |

----

| Regulatory Assets Not Yet Being Recovered |   |   |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|

|                                             |                                            |                            |                | APCo               |               | I&M             |
|--------------------------------------------------|-------------------------------------------------|---------------------------------|---------------------|--------------------|--------------------|---------------------|
|                                             |                                            |                            |                | June 30,           |               | December 31,        |   | June 30, |   | December 31, |
|                                             |                                            |                            |                | 2011          |               | 2010           |   | 2011  |   | 2010  |
| 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 |                                            |                            |                |               |               |                |   |   |   |   |   |   |
|                                             | Virginia Environmental Rate Adjustment Clause   |                            | $                   |  65,348  |               | $                   |  55,724  |   | $ |  -  |   | $ |  -  |
|                                             | Deferred Wind Power Costs                       |                            |                |  37,839  |               |                |  28,584  |   |   |  -  |   |   |  -  |
|                                             | Storm Related Costs                             |                            |                |  25,225  |               |                |  25,225  |   |   |  -  |   |   |  -  |
|                                             | Mountaineer Carbon Capture and Storage          |                            |                |               |               |                |   |   |   |   |   |   |   |
|                                             |                                            | Product Validation Facility (a) |                |               |  19,254  |                |   |  59,866  |   |   |  -  |   |   |  -  |
|                                             | Special Rate Mechanism for Century Aluminum     |                            |                |  12,708  |               |                |  12,628  |   |   |  -  |   |   |  -  |
|                                             | Other Regulatory Assets Not Yet Being Recovered |                            |                |  1,469   |               |                |  604  |   |   |  -  |   |   |  -  |
| Total Regulatory Assets Not Yet Being Recovered  |                                            | $                               |  161,843  |               | $                  |  182,631  |   | $ |  -  |   | $ |  -  |
|                                             |                                            |                            |                |               |               |                |   |   |   |   |   |   |   |   |
|                                             |                                            |                            |                | CSPCo              |               | OPCo                |
|                                             |                                            |                            |                | June 30,           |               | December 31,        |   | June 30, |   | December 31, |
|                                             |                                            |                            |                | 2011          |               | 2010           |   | 2011  |   | 2010  |
| 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     |                                            |                            |                |               |               |                |   |   |   |   |   |   |
|                                             | Line Extension Carrying Costs (b)               |                            | $                   |  37,240  |               | $                   |  33,709  |   | $ |  23,709  |   | $ |  21,246  |
|                                             | Customer Choice Deferrals (b)                   |                            |                |  30,108  |               |                |  29,716  |   |   |  29,492  |   |   |  29,141  |
|                                             | Storm Related Costs (b)                         |                            |                |  19,609  |               |                |  19,122  |   |   |  11,301  |   |   |  11,021  |
|                                             | Acquisition of Monongahela Power (b)            |                            |                |  8,592   |               |                |  7,929  |   |   |  -  |   |   |  -  |
|                                             | Economic Development Rider                      |                            |                |  3,143   |               |                |  3,057  |   |   |  3,143  |   |   |  3,057  |
|                                             | Other Regulatory Assets Not Yet Being Recovered |                            |                |  291     |               |                |  287  |   |   |  396  |   |   |  391  |
| Regulatory Assets Currently Not Earning a Return |                                            |                            |                |               |               |                |   |   |   |   |   |   |
|                                             | Acquisition of Monongahela Power (b)            |                            |                |  4,052   |               |                |  4,052  |   |   |  -  |   |   |  -  |
|                                             | Other Regulatory Assets Not Yet Being Recovered |                            |                |  48      |               |                |  43  |   |   |  65  |   |   |  58  |
| Total Regulatory Assets Not Yet Being Recovered  |                                            | $                               |  103,083  |               | $                  |  97,915   |   | $ |  68,106  |   | $ |  64,914  |
|                                             |                                            |                            |                |               |               |                |   |   |   |   |   |   |   |   |

----

|                                             |                                            |           |               | PSO                |   | SWEPCo             |
|--------------------------------------------------|-------------------------------------------------|----------------|--------------------|--------------------|--------|--------------------|
|                                             |                                            |           |               | June 30,           |   | December 31,       |   | June 30, |   | December 31, |
|                                             |                                            |           |               | 2011          |   | 2010          |   | 2011  |   | 2010  |
| 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     |                                            |           |               |               |   |               |   |   |   |   |   |   |
|                                             | Storm Related Costs (c)                         |           | $                  |  18,426  |   | $                  |  -  |   | $ |  -  |   | $ |  -  |
| Regulatory Assets Currently Not Earning a Return |                                            |           |               |               |   |               |   |   |   |   |   |   |
|                                             | Storm Related Costs (c)                         |           |               |  -       |   |               |  17,256  |   |   |  1,239  |   |   |  1,239  |
|                                             | Other Regulatory Assets Not Yet Being Recovered |           |               |  -       |   |               |  574  |   |   |  740  |   |   |  613  |
| Total Regulatory Assets Not Yet Being Recovered  |                                            | $              |  18,426  |               | $      |  17,830  |   | $ |  1,979  |   | $ |  1,852  |

| (a) | APCo wrote off a portion of the Mountaineer Carbon Capture and Storage Product Validation Facility as denied for recovery by the WVPSC in March 2011.  See "Mountaineer Carbon Capture and Storage Project Product Validation Facility" section below. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Requested to be recovered in a distribution asset recovery rider.  See the "2011 Ohio Distribution Base Rate Case" section below. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | In June 2011, an order was received approving recovery of PSO storm costs and associated carrying costs with recovery to begin in August 2011.  Starting in the second quarter of 2011, and in accordance with the order received from the OCC, PSO recorded a return on its storm related costs. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

----

----

----

----

| Michigan 2009 and 2010 Power Supply Cost Recovery (PSCR) Reconciliations (Cook Plant Unit 1 Fire and Shutdown) |
|----------------------------------------------------------------------------------------------------------------|

| 2011 Michigan Base Rate Case |
|------------------------------|

| Seams Elimination Cost Allocation (SECA) Revenue Subject to Refund – Affecting APCo, CSPCo, I&M and OPCo |
|--------------------------------------------------------------------------------------------------------------------|

| 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 |   | June 30, 2011 |
|---------|--------|---------------|
|    |   | (in millions) |
| APCo    |   | $             |  10.0  |
| CSPCo   |   |          |  5.6  |
| I&M |   |          |  5.9  |
| OPCo    |   |          |  7.6  |

|    |   | Potential     |            | Potential   |
|---------|--------|---------------|-----------------|-------------|
|    |   | Refund        |            | Payments to |
| Company |   | Payments      |            | be Received |
|    |   | (in millions) |
| APCo    |   | $             |  6.4  |        | $ |  3.2  |
| CSPCo   |   |          |  3.5  |        |   |  1.8  |
| I&M |   |          |  3.7  |        |   |  1.9  |
| OPCo    |   |          |  4.8  |        |   |  2.4  |

| Possible Termination of the Interconnection Agreement – Affecting APCo, CSPCo, I&M and OPCo |
|-------------------------------------------------------------------------------------------------------|

----

| Company |   | Amount         |              | Maturity |
|---------|--------|----------------|-------------------|----------|
|    |   | (in thousands) |              |     |
| I&M |   | $              |  150    |     | March 2012 |
| SWEPCo  |   |           |  4,448  |     | March 2012 |

----

|    |   | June 30, 2011  |
|---------|--------|----------------|
|    |   |           |   |   |   |   |   |   |   |   |   |
|    |   |           |   |   | Reacquired |   | Bilateral |   | Maturity of |
|    |   |           |   |   | and Held |   | Letters of |   | Bilateral Letters |
| Company |   | Remarketed     |   | in Trust |   | Credit Issued |   | of Credit |
|    |   | (in thousands) |   |   |
| APCo    |   | $              | 229,650  |   | $ |  -  |   | $ |  232,293  |   | March 2013 to March 2014 |
| I&M |   |           | 77,000  |   |   |  -  |   |   |  77,886  |   | March 2013 |
| OPCo    |   |           | 50,000  |   |   | 115,000  |   |   |  50,575  |   | March 2013 |

----

|    |   | Maximum        |
|---------|--------|----------------|
| Company |   | Potential Loss |
|    |   | (in thousands) |
| APCo    |   | $              |  1,450  |
| CSPCo   |   |           |  986  |
| I&M |   |           |  1,867  |
| OPCo    |   |           |  1,381  |
| PSO     |   |           |  768  |
| SWEPCo  |   |           |  2,727  |

----

| The Comprehensive Environmental Response Compensation and Liability Act (Superfund) and State Remediation – Affecting I&M |
|-------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

| APCo                                        |                        |              | Other Postretirement        |
|---------------------------------------------|-----------------------------|-------------------|-----------------------------|
|                                        | Pension Plans               |              | Benefit Plans               |
|                                        | Three Months Ended June 30, |              | Three Months Ended June 30, |
|                                        | 2011                   |              | 2010                   |   | 2011  |   | 2010  |
|                                        | (in thousands)              |
| Service Cost                                | $                           |  1,800  |                        | $ |  3,227  |   | $ |  1,246  |   | $ |  1,430  |
| Interest Cost                               |                        |  8,076  |                        |   |  8,489  |   |   |  4,867  |   |   |  5,075  |
| Expected Return on Plan Assets              |                        |  (10,458)    |                        |   |  (10,951) |   |   |  (4,496) |   |   |  (4,407) |
| Amortization of Transition Obligation       |                        |  -      |                        |   |  -  |   |   |  287  |   |   |  1,311  |
| Amortization of Prior Service Cost (Credit) |                        |  229    |                        |   |  229  |   |   |  (43) |   |   |  -  |
| Amortization of Net Actuarial Loss          |                        |  4,144  |                        |   |  2,961  |   |   |  1,459  |   |   |  1,353  |
| Net Periodic Benefit Cost                   | $                           |  3,791  |                        | $ |  3,955  |   | $ |  3,320  |   | $ |  4,762  |

|                                        |                      |               | Other Postretirement      |
|---------------------------------------------|---------------------------|--------------------|---------------------------|
|                                        | Pension Plans             |               | Benefit Plans             |
|                                        | Six Months Ended June 30, |               | Six Months Ended June 30, |
|                                        | 2011                 |               | 2010                 |   | 2011  |   | 2010  |
|                                        | (in thousands)            |
| Service Cost                                | $                         |  3,600   |                      | $ |  6,454  |   | $ |  2,492  |   | $ |  2,860  |
| Interest Cost                               |                      |  16,146  |                      |   |  16,978  |   |   |  9,734  |   |   |  10,150  |
| Expected Return on Plan Assets              |                      |  (20,916)     |                      |   |  (21,902) |   |   |  (8,992) |   |   |  (8,813) |
| Amortization of Transition Obligation       |                      |  -       |                      |   |  -  |   |   |  573  |   |   |  2,622  |
| Amortization of Prior Service Cost (Credit) |                      |  458     |                      |   |  458  |   |   |  (86) |   |   |  -  |
| Amortization of Net Actuarial Loss          |                      |  8,285   |                      |   |  5,921  |   |   |  2,914  |   |   |  2,705  |
| Net Periodic Benefit Cost                   | $                         |  7,573   |                      | $ |  7,909  |   | $ |  6,635  |   | $ |  9,524  |

----

| CSPCo                                       |                        |              | Other Postretirement        |
|---------------------------------------------|-----------------------------|-------------------|-----------------------------|
|                                        | Pension Plans               |              | Benefit Plans               |
|                                        | Three Months Ended June 30, |              | Three Months Ended June 30, |
|                                        | 2011                   |              | 2010                   |   | 2011  |   | 2010  |
|                                        | (in thousands)              |
| Service Cost                                | $                           |  850    |                        | $ |  1,468  |   | $ |  608  |   | $ |  690  |
| Interest Cost                               |                        |  4,302  |                        |   |  4,789  |   |   |  2,039  |   |   |  2,179  |
| Expected Return on Plan Assets              |                        |  (5,725)     |                        |   |  (6,589) |   |   |  (1,986) |   |   |  (1,979) |
| Amortization of Transition Obligation       |                        |  -      |                        |   |  -  |   |   |  11  |   |   |  608  |
| Amortization of Prior Service Cost (Credit) |                        |  141    |                        |   |  141  |   |   |  (19) |   |   |  -  |
| Amortization of Net Actuarial Loss          |                        |  2,210  |                        |   |  1,677  |   |   |  578  |   |   |  565  |
| Net Periodic Benefit Cost                   | $                           |  1,778  |                        | $ |  1,486  |   | $ |  1,231  |   | $ |  2,063  |

|                                        |                      |              | Other Postretirement      |
|---------------------------------------------|---------------------------|-------------------|---------------------------|
|                                        | Pension Plans             |              | Benefit Plans             |
|                                        | Six Months Ended June 30, |              | Six Months Ended June 30, |
|                                        | 2011                 |              | 2010                 |   | 2011  |   | 2010  |
|                                        | (in thousands)            |
| Service Cost                                | $                         |  1,699  |                      | $ |  2,936  |   | $ |  1,217  |   | $ |  1,380  |
| Interest Cost                               |                      |  8,604  |                      |   |  9,578  |   |   |  4,079  |   |   |  4,357  |
| Expected Return on Plan Assets              |                      |  (11,449)    |                      |   |  (13,178) |   |   |  (3,973) |   |   |  (3,958) |
| Amortization of Transition Obligation       |                      |  -      |                      |   | - |   |   |  22  |   |   |  1,216  |
| Amortization of Prior Service Cost (Credit) |                      |  282    |                      |   |  282  |   |   |  (37) |   |   | - |
| Amortization of Net Actuarial Loss          |                      |  4,420  |                      |   |  3,354  |   |   |  1,155  |   |   |  1,130  |
| Net Periodic Benefit Cost                   | $                         |  3,556  |                      | $ |  2,972  |   | $ |  2,463  |   | $ |  4,125  |

| I&M                                     |                        |              | Other Postretirement        |
|---------------------------------------------|-----------------------------|-------------------|-----------------------------|
|                                        | Pension Plans               |              | Benefit Plans               |
|                                        | Three Months Ended June 30, |              | Three Months Ended June 30, |
|                                        | 2011                   |              | 2010                   |   | 2011  |   | 2010  |
|                                        | (in thousands)              |
| Service Cost                                | $                           |  2,365  |                        | $ |  3,821  |   | $ |  1,529  |   | $ |  1,688  |
| Interest Cost                               |                        |  6,934  |                        |   |  7,271  |   |   |  3,402  |   |   |  3,541  |
| Expected Return on Plan Assets              |                        |  (9,214)     |                        |   |  (8,760) |   |   |  (3,471) |   |   |  (3,349) |
| Amortization of Transition Obligation       |                        |  -      |                        |   |  -  |   |   |  47  |   |   |  704  |
| Amortization of Prior Service Cost (Credit) |                        |  186    |                        |   |  186  |   |   |  (59) |   |   |  -  |
| Amortization of Net Actuarial Loss          |                        |  3,538  |                        |   |  2,516  |   |   |  892  |   |   |  881  |
| Net Periodic Benefit Cost                   | $                           |  3,809  |                        | $ |  5,034  |   | $ |  2,340  |   | $ |  3,465  |

|                                        |                      |               | Other Postretirement      |
|---------------------------------------------|---------------------------|--------------------|---------------------------|
|                                        | Pension Plans             |               | Benefit Plans             |
|                                        | Six Months Ended June 30, |               | Six Months Ended June 30, |
|                                        | 2011                 |               | 2010                 |   | 2011  |   | 2010  |
|                                        | (in thousands)            |
| Service Cost                                | $                         |  4,723   |                      | $ |  7,642  |   | $ |  3,059  |   | $ |  3,375  |
| Interest Cost                               |                      |  13,863  |                      |   |  14,543  |   |   |  6,805  |   |   |  7,082  |
| Expected Return on Plan Assets              |                      |  (18,428)     |                      |   |  (17,520) |   |   |  (6,943) |   |   |  (6,698) |
| Amortization of Transition Obligation       |                      |  -       |                      |   |  -  |   |   |  94  |   |   |  1,407  |
| Amortization of Prior Service Cost (Credit) |                      |  372     |                      |   |  372  |   |   |  (118) |   |   |  -  |
| Amortization of Net Actuarial Loss          |                      |  7,072   |                      |   |  5,032  |   |   |  1,783  |   |   |  1,763  |
| Net Periodic Benefit Cost                   | $                         |  7,602   |                      | $ |  10,069  |   | $ |  4,680  |   | $ |  6,929  |

----

| OPCo                                        |                        |              | Other Postretirement        |
|---------------------------------------------|-----------------------------|-------------------|-----------------------------|
|                                        | Pension Plans               |              | Benefit Plans               |
|                                        | Three Months Ended June 30, |              | Three Months Ended June 30, |
|                                        | 2011                   |              | 2010                   |   | 2011  |   | 2010  |
|                                        | (in thousands)              |
| Service Cost                                | $                           |  1,708  |                        | $ |  2,845  |   | $ |  1,348  |   | $ |  1,357  |
| Interest Cost                               |                        |  7,796  |                        |   |  8,186  |   |   |  4,334  |   |   |  4,446  |
| Expected Return on Plan Assets              |                        |  (10,642)    |                        |   |  (10,680) |   |   |  (4,141) |   |   |  (4,044) |
| Amortization of Transition Obligation       |                        |  -      |                        |   |  -  |   |   |  27  |   |   |  1,053  |
| Amortization of Prior Service Cost (Credit) |                        |  227    |                        |   |  227  |   |   |  (35) |   |   |  -  |
| Amortization of Net Actuarial Loss          |                        |  4,004  |                        |   |  2,861  |   |   |  1,267  |   |   |  1,154  |
| Net Periodic Benefit Cost                   | $                           |  3,093  |                        | $ |  3,439  |   | $ |  2,800  |   | $ |  3,966  |

|                                        |                      |               | Other Postretirement      |
|---------------------------------------------|---------------------------|--------------------|---------------------------|
|                                        | Pension Plans             |               | Benefit Plans             |
|                                        | Six Months Ended June 30, |               | Six Months Ended June 30, |
|                                        | 2011                 |               | 2010                 |   | 2011  |   | 2010  |
|                                        | (in thousands)            |
| Service Cost                                | $                         |  3,416   |                      | $ |  5,691  |   | $ |  2,696  |   | $ |  2,713  |
| Interest Cost                               |                      |  15,572  |                      |   |  16,372  |   |   |  8,669  |   |   |  8,893  |
| Expected Return on Plan Assets              |                      |  (21,284)     |                      |   |  (21,360) |   |   |  (8,283) |   |   |  (8,089) |
| Amortization of Transition Obligation       |                      |  -       |                      |   |  -  |   |   |  53  |   |   |  2,106  |
| Amortization of Prior Service Cost (Credit) |                      |  454     |                      |   |  454  |   |   |  (70) |   |   |  -  |
| Amortization of Net Actuarial Loss          |                      |  7,994   |                      |   |  5,721  |   |   |  2,494  |   |   |  2,308  |
| Net Periodic Benefit Cost                   | $                         |  6,152   |                      | $ |  6,878  |   | $ |  5,559  |   | $ |  7,931  |

| PSO                                   |                        |              | Other Postretirement        |
|---------------------------------------|-----------------------------|-------------------|-----------------------------|
|                                  | Pension Plans               |              | Benefit Plans               |
|                                  | Three Months Ended June 30, |              | Three Months Ended June 30, |
|                                  | 2011                   |              | 2010                   |   | 2011  |   | 2010  |
|                                  | (in thousands)              |
| Service Cost                          | $                           |  1,442  |                        | $ |  1,513  |   | $ |  656  |   | $ |  704  |
| Interest Cost                         |                        |  3,338  |                        |   |  3,722  |   |   |  1,511  |   |   |  1,590  |
| Expected Return on Plan Assets        |                        |  (4,366)     |                        |   |  (4,935) |   |   |  (1,566) |   |   |  (1,528) |
| Amortization of Transition Obligation |                        |  -      |                        |   |  -  |   |   |  -  |   |   |  701  |
| Amortization of Prior Service Credit  |                        |  (239)       |                        |   |  (238) |   |   |  (19) |   |   |  -  |
| Amortization of Net Actuarial Loss    |                        |  1,700  |                        |   |  1,297  |   |   |  388  |   |   |  393  |
| Net Periodic Benefit Cost             | $                           |  1,875  |                        | $ |  1,359  |   | $ |  970  |   | $ |  1,860  |

|                                  |                      |              | Other Postretirement      |
|---------------------------------------|---------------------------|-------------------|---------------------------|
|                                  | Pension Plans             |              | Benefit Plans             |
|                                  | Six Months Ended June 30, |              | Six Months Ended June 30, |
|                                  | 2011                 |              | 2010                 |   | 2011  |   | 2010  |
|                                  | (in thousands)            |
| Service Cost                          | $                         |  2,880  |                      | $ |  3,026  |   | $ |  1,311  |   | $ |  1,407  |
| Interest Cost                         |                      |  6,643  |                      |   |  7,444  |   |   |  3,023  |   |   |  3,180  |
| Expected Return on Plan Assets        |                      |  (8,732)     |                      |   |  (9,870) |   |   |  (3,132) |   |   |  (3,055) |
| Amortization of Transition Obligation |                      |  -      |                      |   |  -  |   |   |  -  |   |   |  1,403  |
| Amortization of Prior Service Credit  |                      |  (475)       |                      |   |  (475) |   |   |  (38) |   |   |  -  |
| Amortization of Net Actuarial Loss    |                      |  3,378  |                      |   |  2,594  |   |   |  776  |   |   |  786  |
| Net Periodic Benefit Cost             | $                         |  3,694  |                      | $ |  2,719  |   | $ |  1,940  |   | $ |  3,721  |

----

| SWEPCo                                      |                        |              | Other Postretirement        |
|---------------------------------------------|-----------------------------|-------------------|-----------------------------|
|                                        | Pension Plans               |              | Benefit Plans               |
|                                        | Three Months Ended June 30, |              | Three Months Ended June 30, |
|                                        | 2011                   |              | 2010                   |   | 2011  |   | 2010  |
|                                        | (in thousands)              |
| Service Cost                                | $                           |  1,644  |                        | $ |  1,761  |   | $ |  757  |   | $ |  777  |
| Interest Cost                               |                        |  3,348  |                        |   |  3,773  |   |   |  1,743  |   |   |  1,735  |
| Expected Return on Plan Assets              |                        |  (4,595)     |                        |   |  (4,872) |   |   |  (1,800) |   |   |  (1,661) |
| Amortization of Transition Obligation       |                        |  -      |                        |   |  -  |   |   |  -  |   |   |  615  |
| Amortization of Prior Service Cost (Credit) |                        |  (200)       |                        |   |  (199) |   |   |  64  |   |   |  -  |
| Amortization of Net Actuarial Loss          |                        |  1,700  |                        |   |  1,311  |   |   |  446  |   |   |  428  |
| Net Periodic Benefit Cost                   | $                           |  1,897  |                        | $ |  1,774  |   | $ |  1,210  |   | $ |  1,894  |

|                                        |                      |              | Other Postretirement      |
|---------------------------------------------|---------------------------|-------------------|---------------------------|
|                                        | Pension Plans             |              | Benefit Plans             |
|                                        | Six Months Ended June 30, |              | Six Months Ended June 30, |
|                                        | 2011                 |              | 2010                 |   | 2011  |   | 2010  |
|                                        | (in thousands)            |
| Service Cost                                | $                         |  3,286  |                      | $ |  3,523  |   | $ |  1,514  |   | $ |  1,554  |
| Interest Cost                               |                      |  6,666  |                      |   |  7,547  |   |   |  3,485  |   |   |  3,470  |
| Expected Return on Plan Assets              |                      |  (9,190)     |                      |   |  (9,745) |   |   |  (3,600) |   |   |  (3,323) |
| Amortization of Transition Obligation       |                      |  -      |                      |   |  -  |   |   |  -  |   |   |  1,230  |
| Amortization of Prior Service Cost (Credit) |                      |  (398)       |                      |   |  (398) |   |   |  129  |   |   |  -  |
| Amortization of Net Actuarial Loss          |                      |  3,380  |                      |   |  2,621  |   |   |  892  |   |   |  856  |
| Net Periodic Benefit Cost                   | $                         |  3,744  |                      | $ |  3,548  |   | $ |  2,420  |   | $ |  3,787  |

----

| Notional Volume of Derivative Instruments |
|-------------------------------------------|
| June 30, 2011                             |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Primary Risk                              |   | Unit of |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exposure                                  |   | Measure |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                      |   |   |   |   |   | (in thousands) |
| Commodity:                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                      | Power |   | MWHs |   |   |  265,492  |   |   |  153,624  |   |   |  158,358  |   |   |  184,179  |   |   |  14  |   |   |  17  |
|                                      | Coal |   | Tons |   |   |  8,572  |   |   |  4,602  |   |   |  4,071  |   |   |  16,841  |   |   |  6,473  |   |   |  5,204  |
|                                      | Natural Gas |   | MMBtus |   |   |  2,736  |   |   |  1,583  |   |   |  1,623  |   |   |  1,898  |   |   |  24  |   |   |  28  |
|                                      | Heating Oil and |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                      |   | Gasoline |   | Gallons |   |   |  1,248  |   |   |  556  |   |   |  620  |   |   |  926  |   |   |  731  |   |   |  673  |
|                                      | Interest Rate |   | USD |   | $ |  41,997  |   | $ |  24,295  |   | $ |  24,896  |   | $ |  29,320  |   | $ |  283  |   | $ |  322  |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Rate and                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                      | Foreign Currency |   | USD |   | $ |  -  |   | $ |  -  |   | $ |  -  |   | $ |  -  |   | $ |  -  |   | $ |  100,069  |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Notional Volume of Derivative Instruments |
| December 31, 2010                         |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Primary Risk                              |   | Unit of |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exposure                                  |   | Measure |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                      |   |   |   |   |   | (in thousands) |
| Commodity:                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                      | Power |   | MWHs |   |   |  194,217  |   |   |  111,959  |   |   |  117,862  |   |   |  136,657  |   |   |  21  |   |   |  34  |
|                                      | Coal |   | Tons |   |   |  11,195  |   |   |  5,550  |   |   |  6,571  |   |   |  23,033  |   |   |  4,936  |   |   |  8,777  |
|                                      | Natural Gas |   | MMBtus |   |   |  2,166  |   |   |  1,248  |   |   |  1,302  |   |   |  1,524  |   |   |  15  |   |   |  19  |
|                                      | Heating Oil and |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                      |   | Gasoline |   | Gallons |   |   |  1,054  |   |   |  467  |   |   |  521  |   |   |  776  |   |   |  616  |   |   |  564  |
|                                      | Interest Rate |   | USD |   | $ |  9,541  |   | $ |  5,471  |   | $ |  5,732  |   | $ |  7,185  |   | $ |  609  |   | $ |  793  |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Rate and                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                      | Foreign Currency |   | USD |   | $ |  200,000  |   | $ |  -  |   | $ |  -  |   | $ |  -  |   | $ |  200,000  |   | $ |  189  |

----

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

----

|    |   |   | June 30, 2011     |        | December 31, 2010 |
|---------|--------|--------|-------------------|-------------|-------------------|
|    |   |   | 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    |   | $      |  2,825  |        | $                 |  10,214  |   | $ |  1,809  |   | $ |  16,229  |
| CSPCo   |   |   |  1,635  |        |              |  5,906  |   |   |  1,042  |   |   |  9,347  |
| I&M |   |   |  1,676  |        |              |  6,050  |   |   |  1,087  |   |   |  9,757  |
| OPCo    |   |   |  1,960  |        |              |  7,180  |   |   |  1,272  |   |   |  11,561  |
| PSO     |   |   |  1      |        |              |  45  |   |   |  -  |   |   |  44  |
| SWEPCo  |   |   |  1      |        |              |  44  |   |   |  -  |   |   |  72  |

----

| Fair Value of Derivative Instruments  |
|---------------------------------------|
| June 30, 2011                         |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| APCo                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   |   | Management |   |   |   |   |   |   |   |   |
|                                  |   |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   |   |   |   |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | Commodity (a) |   | Commodity (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 178,531  |   | $ | 3,663  |   | $ | -  |   | $ | (150,380) |   | $ | 31,814  |
| Long-term Risk Management Assets      |   |   | 73,791  |   |   | 672  |   |   | -  |   |   | (42,317) |   |   | 32,146  |
| Total Assets                          |   |   | 252,322  |   |   | 4,335  |   |   | -  |   |   | (192,697) |   |   | 63,960  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 173,214  |   |   | 2,724  |   |   | -  |   |   | (157,436) |   |   | 18,502  |
| Long-term Risk Management Liabilities |   |   | 55,201  |   |   | 439  |   |   | -  |   |   | (45,312) |   |   | 10,328  |
| Total Liabilities                     |   |   | 228,415  |   |   | 3,163  |   |   | -  |   |   | (202,748) |   |   | 28,830  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | 23,907  |   | $ | 1,172  |   | $ | -  |   | $ | 10,051  |   | $ | 35,130  |
| Fair Value of Derivative Instruments  |
|---------------------------------------|
| December 31, 2010                     |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| APCo                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   |   | Management |   |   |   |   |   |   |   |   |
|                                  |   |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   |   |   |   |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | Commodity (a) |   | Commodity (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 267,702  |   | $ | 1,956  |   | $ | 11,888  |   | $ | (228,304) |   | $ | 53,242  |
| Long-term Risk Management Assets      |   |   | 79,560  |   |   | 714  |   |   | -  |   |   | (41,854) |   |   | 38,420  |
| Total Assets                          |   |   | 347,262  |   |   | 2,670  |   |   | 11,888  |   |   | (270,158) |   |   | 91,662  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 262,027  |   |   | 2,363  |   |   | -  |   |   | (236,397) |   |   | 27,993  |
| Long-term Risk Management Liabilities |   |   | 61,724  |   |   | 701  |   |   | -  |   |   | (51,552) |   |   | 10,873  |
| Total Liabilities                     |   |   | 323,751  |   |   | 3,064  |   |   | -  |   |   | (287,949) |   |   | 38,866  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | 23,511  |   | $ | (394) |   | $ | 11,888  |   | $ | 17,791  |   | $ | 52,796  |

----

| Fair Value of Derivative Instruments  |
|---------------------------------------|
| June 30, 2011                         |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CSPCo                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   |   | Management |   |   |   |   |   |   |   |   |
|                                  |   |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   |   |   |   |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | Commodity (a) |   | Commodity (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 102,340  |   | $ | 2,076  |   | $ | -  |   | $ | (86,065) |   | $ | 18,351  |
| Long-term Risk Management Assets      |   |   | 42,560  |   |   | 388  |   |   | -  |   |   | (24,370) |   |   | 18,578  |
| Total Assets                          |   |   | 144,900  |   |   | 2,464  |   |   | -  |   |   | (110,435) |   |   | 36,929  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 99,241  |   |   | 1,572  |   |   | -  |   |   | (90,145) |   |   | 10,668  |
| Long-term Risk Management Liabilities |   |   | 31,814  |   |   | 251  |   |   | -  |   |   | (26,101) |   |   | 5,964  |
| Total Liabilities                     |   |   | 131,055  |   |   | 1,823  |   |   | -  |   |   | (116,246) |   |   | 16,632  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | 13,845  |   | $ | 641  |   | $ | -  |   | $ | 5,811  |   | $ | 20,297  |
| Fair Value of Derivative Instruments  |
|---------------------------------------|
| December 31, 2010                     |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CSPCo                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   |   | Management |   |   |   |   |   |   |   |   |
|                                  |   |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   |   |   |   |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | Commodity (a) |   | Commodity (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 149,886  |   | $ | 1,164  |   | $ | -  |   | $ | (127,276) |   | $ | 23,774  |
| Long-term Risk Management Assets      |   |   | 45,413  |   |   | 412  |   |   | -  |   |   | (23,736) |   |   | 22,089  |
| Total Assets                          |   |   | 195,299  |   |   | 1,576  |   |   | -  |   |   | (151,012) |   |   | 45,863  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 146,540  |   |   | 1,362  |   |   | -  |   |   | (131,935) |   |   | 15,967  |
| Long-term Risk Management Liabilities |   |   | 35,144  |   |   | 404  |   |   | -  |   |   | (29,325) |   |   | 6,223  |
| Total Liabilities                     |   |   | 181,684  |   |   | 1,766  |   |   | -  |   |   | (161,260) |   |   | 22,190  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | 13,615  |   | $ | (190) |   | $ | -  |   | $ | 10,248  |   | $ | 23,673  |

----

| Fair Value of Derivative Instruments  |
|---------------------------------------|
| June 30, 2011                         |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| I&M                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   |   | Management |   |   |   |   |   |   |   |   |
|                                  |   |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   |   |   |   |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | Commodity (a) |   | Commodity (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 106,718  |   | $ | 2,142  |   | $ | -  |   | $ | (86,519) |   | $ | 22,341  |
| Long-term Risk Management Assets      |   |   | 49,448  |   |   | 398  |   |   | -  |   |   | (24,777) |   |   | 25,069  |
| Total Assets                          |   |   | 156,166  |   |   | 2,540  |   |   | -  |   |   | (111,296) |   |   | 47,410  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 99,960  |   |   | 1,614  |   |   | -  |   |   | (90,697) |   |   | 10,877  |
| Long-term Risk Management Liabilities |   |   | 32,385  |   |   | 259  |   |   | -  |   |   | (26,552) |   |   | 6,092  |
| Total Liabilities                     |   |   | 132,345  |   |   | 1,873  |   |   | -  |   |   | (117,249) |   |   | 16,969  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | 23,821  |   | $ | 667  |   | $ | -  |   | $ | 5,953  |   | $ | 30,441  |
| Fair Value of Derivative Instruments  |
|---------------------------------------|
| December 31, 2010                     |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| I&M                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   |   | Management |   |   |   |   |   |   |   |   |
|                                  |   |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   |   |   |   |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | Commodity (a) |   | Commodity (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 162,896  |   | $ | 1,151  |   | $ | -  |   | $ | (136,521) |   | $ | 27,526  |
| Long-term Risk Management Assets      |   |   | 56,154  |   |   | 429  |   |   | -  |   |   | (25,098) |   |   | 31,485  |
| Total Assets                          |   |   | 219,050  |   |   | 1,580  |   |   | -  |   |   | (161,619) |   |   | 59,011  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 156,750  |   |   | 1,421  |   |   | -  |   |   | (141,386) |   |   | 16,785  |
| Long-term Risk Management Liabilities |   |   | 37,039  |   |   | 421  |   |   | -  |   |   | (30,930) |   |   | 6,530  |
| Total Liabilities                     |   |   | 193,789  |   |   | 1,842  |   |   | -  |   |   | (172,316) |   |   | 23,315  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | 25,261  |   | $ | (262) |   | $ | -  |   | $ | 10,697  |   | $ | 35,696  |

----

| Fair Value of Derivative Instruments  |
|---------------------------------------|
| June 30, 2011                         |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPCo                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   |   | Management |   |   |   |   |   |   |   |   |
|                                  |   |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   |   |   |   |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | Commodity (a) |   | Commodity (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 153,202  |   | $ | 2,558  |   | $ | -  |   | $ | (133,245) |   | $ | 22,515  |
| Long-term Risk Management Assets      |   |   | 55,377  |   |   | 467  |   |   | -  |   |   | (32,864) |   |   | 22,980  |
| Total Assets                          |   |   | 208,579  |   |   | 3,025  |   |   | -  |   |   | (166,109) |   |   | 45,495  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 150,203  |   |   | 1,890  |   |   | -  |   |   | (138,234) |   |   | 13,859  |
| Long-term Risk Management Liabilities |   |   | 42,177  |   |   | 305  |   |   | -  |   |   | (34,942) |   |   | 7,540  |
| Total Liabilities                     |   |   | 192,380  |   |   | 2,195  |   |   | -  |   |   | (173,176) |   |   | 21,399  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | 16,199  |   | $ | 830  |   | $ | -  |   | $ | 7,067  |   | $ | 24,096  |
| Fair Value of Derivative Instruments  |
|---------------------------------------|
| December 31, 2010                     |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPCo                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   |   | Management |   |   |   |   |   |   |   |   |
|                                  |   |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   |   |   |   |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | Commodity (a) |   | Commodity (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 262,751  |   | $ | 1,316  |   | $ | -  |   | $ | (233,294) |   | $ | 30,773  |
| Long-term Risk Management Assets      |   |   | 63,533  |   |   | 503  |   |   | -  |   |   | (36,024) |   |   | 28,012  |
| Total Assets                          |   |   | 326,284  |   |   | 1,819  |   |   | -  |   |   | (269,318) |   |   | 58,785  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 259,635  |   |   | 1,663  |   |   | -  |   |   | (239,132) |   |   | 22,166  |
| Long-term Risk Management Liabilities |   |   | 50,757  |   |   | 493  |   |   | -  |   |   | (42,847) |   |   | 8,403  |
| Total Liabilities                     |   |   | 310,392  |   |   | 2,156  |   |   | -  |   |   | (281,979) |   |   | 30,569  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | 15,892  |   | $ | (337) |   | $ | -  |   | $ | 12,661  |   | $ | 28,216  |

----

| Fair Value of Derivative Instruments  |
|---------------------------------------|
| June 30, 2011                         |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| PSO                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   |   | Management |   |   |   |   |   |   |   |   |
|                                  |   |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   |   |   |   |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | Commodity (a) |   | Commodity (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 12,380  |   | $ | 193  |   | $ | -  |   | $ | (12,083) |   | $ | 490  |
| Long-term Risk Management Assets      |   |   | 2,155  |   |   | 9  |   |   | -  |   |   | (1,479) |   |   | 685  |
| Total Assets                          |   |   | 14,535  |   |   | 202  |   |   | -  |   |   | (13,562) |   |   | 1,175  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 12,989  |   |   | 11  |   |   | -  |   |   | (12,124) |   |   | 876  |
| Long-term Risk Management Liabilities |   |   | 1,633  |   |   | 8  |   |   | -  |   |   | (1,482) |   |   | 159  |
| Total Liabilities                     |   |   | 14,622  |   |   | 19  |   |   | -  |   |   | (13,606) |   |   | 1,035  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | (87) |   | $ | 183  |   | $ | -  |   | $ | 44  |   | $ | 140  |
| Fair Value of Derivative Instruments  |
|---------------------------------------|
| December 31, 2010                     |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| PSO                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   |   | Management |   |   |   |   |   |   |   |   |
|                                  |   |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   |   |   |   |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | Commodity (a) |   | Commodity (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 19,174  |   | $ | 134  |   | $ | 13,558  |   | $ | (18,641) |   | $ | 14,225  |
| Long-term Risk Management Assets      |   |   | 1,944  |   |   | -  |   |   | -  |   |   | (1,692) |   |   | 252  |
| Total Assets                          |   |   | 21,118  |   |   | 134  |   |   | 13,558  |   |   | (20,333) |   |   | 14,477  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 19,607  |   |   | -  |   |   | -  |   |   | (18,685) |   |   | 922  |
| Long-term Risk Management Liabilities |   |   | 1,889  |   |   | -  |   |   | -  |   |   | (1,692) |   |   | 197  |
| Total Liabilities                     |   |   | 21,496  |   |   | -  |   |   | -  |   |   | (20,377) |   |   | 1,119  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | (378) |   | $ | 134  |   | $ | 13,558  |   | $ | 44  |   | $ | 13,358  |

----

| Fair Value of Derivative Instruments  |
|---------------------------------------|
| June 30, 2011                         |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SWEPCo                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   | Management |   |   |   |   |   |   |   |   |
|                                  |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   |   |   |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | Commodity (a) |   | Commodity (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 12,172  |   | $ | 178  |   | $ | 1,217  |   | $ | (11,954) |   | $ | 1,613  |
| Long-term Risk Management Assets      |   |   | 1,730  |   |   | 8  |   |   | 10  |   |   | (1,452) |   |   | 296  |
| Total Assets                          |   |   | 13,902  |   |   | 186  |   |   | 1,227  |   |   | (13,406) |   |   | 1,909  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 13,362  |   |   | 9  |   |   | -  |   |   | (11,993) |   |   | 1,378  |
| Long-term Risk Management Liabilities |   |   | 1,605  |   |   | 7  |   |   | -  |   |   | (1,456) |   |   | 156  |
| Total Liabilities                     |   |   | 14,967  |   |   | 16  |   |   | -  |   |   | (13,449) |   |   | 1,534  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | (1,065) |   | $ | 170  |   | $ | 1,227  |   | $ | 43  |   | $ | 375  |
| Fair Value of Derivative Instruments  |
|---------------------------------------|
| December 31, 2010                     |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SWEPCo                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   | Management |   |   |   |   |   |   |   |   |
|                                  |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   |   |   |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | Commodity (a) |   | Commodity (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 33,284  |   | $ | 123  |   | $ | -  |   | $ | (32,198) |   | $ | 1,209  |
| Long-term Risk Management Assets      |   |   | 3,346  |   |   | -  |   |   | 5  |   |   | (2,913) |   |   | 438  |
| Total Assets                          |   |   | 36,630  |   |   | 123  |   |   | 5  |   |   | (35,111) |   |   | 1,647  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 36,338  |   |   | -  |   |   | -  |   |   | (32,271) |   |   | 4,067  |
| Long-term Risk Management Liabilities |   |   | 3,250  |   |   | -  |   |   | -  |   |   | (2,912) |   |   | 338  |
| Total Liabilities                     |   |   | 39,588  |   |   | -  |   |   | -  |   |   | (35,183) |   |   | 4,405  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | (2,958) |   | $ | 123  |   | $ | 5  |   | $ | 72  |   | $ | (2,758) |

| (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 include counterparty netting of risk management and hedging contracts and associated cash collateral in accordance with the accounting guidance for "Derivatives and Hedging."  Amounts also include dedesignated risk management contracts. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Amount of Gain (Loss) Recognized on      |
|------------------------------------------|
| Risk Management Contracts                |
| For the Three Months Ended June 30, 2011 |
|                                     |
| Location of Gain (Loss)                  |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                     |   |   |   | (in thousands) |
| Electric Generation, Transmission and    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                     | Distribution Revenues |   | $ |  883  |   | $ |  5,134  |   | $ |  3,702  |   | $ |  6,430  |   | $ |  539  |   | $ |  403  |
| Sales to AEP Affiliates                  |   |   |  13  |   |   |  6  |   |   |  6  |   |   |  7  |   |   |  (1) |   |   |  (1) |
| Regulatory Assets (a)                    |   |   |  (150) |   |   |  (2,183) |   |   |  (1,018) |   |   |  (2,420) |   |   |  644  |   |   |  404  |
| Regulatory Liabilities (a)               |   |   |  4,142  |   |   |  -  |   |   |  (1,077) |   |   |  -  |   |   |  461  |   |   |  692  |
| Total Gain (Loss) on Risk Management     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                     | Contracts |   | $ |  4,888  |   | $ |  2,957  |   | $ |  1,613  |   | $ |  4,017  |   | $ |  1,643  |   | $ |  1,498  |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amount of Gain (Loss) Recognized on      |
| Risk Management Contracts                |
| For the Three Months Ended June 30, 2010 |
|                                     |
| Location of Gain (Loss)                  |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                     |   |   |   | (in thousands) |
| Electric Generation, Transmission and    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                     | Distribution Revenues |   | $ |  (1,693) |   | $ |  3,469  |   | $ |  2,503  |   | $ |  2,010  |   | $ |  347  |   | $ |  613  |
| Sales to AEP Affiliates                  |   |   |  786  |   |   |  113  |   |   |  102  |   |   |  2,156  |   |   |  (121) |   |   |  (229) |
| Regulatory Assets (a)                    |   |   |  (1,046) |   |   |  (5,225) |   |   |  (2,238) |   |   |  (5,754) |   |   |  (25) |   |   |  120  |
| Regulatory Liabilities (a)               |   |   |  (834) |   |   |  -  |   |   |  (4,393) |   |   |  -  |   |   |  126  |   |   |  1,524  |
| Total Gain (Loss) on Risk Management     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                     | Contracts |   | $ |  (2,787) |   | $ |  (1,643) |   | $ |  (4,026) |   | $ |  (1,588) |   | $ |  327  |   | $ |  2,028  |

| Amount of Gain (Loss) Recognized on                                                                                                                                                     |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Risk Management Contracts                                                                                                                                                               |
| For the Six Months Ended June 30, 2011                                                                                                                                                  |
|                                                                                                                                                                                    |
| Location of Gain (Loss)                                                                                                                                                                 |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                                                                                                                                    |   |   | (in thousands) |
| Electric Generation, Transmission and                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                    | Distribution Revenues |   | $ |  2,699  |   | $ |  9,924  |   | $ |  9,117  |   | $ |  12,230  |   | $ |  658  |   | $ |  526  |
| Sales to AEP Affiliates                                                                                                                                                                 |   |   |  33  |   |   |  19  |   |   |  23  |   |   |  26  |   |   |  -  |   |   |  -  |
| Regulatory Assets (a)                                                                                                                                                                   |   |   |  223  |   |   |  (2,095) |   |   |  115  |   |   |  (2,113) |   |   |  276  |   |   |  2,046  |
| Regulatory Liabilities (a)                                                                                                                                                              |   |   |  10,896  |   |   |  -  |   |   |  (1,664) |   |   |  (105) |   |   |  853  |   |   |  1,032  |
| Total Gain (Loss) on Risk Management                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                    | Contracts |   | $ |  13,851  |   | $ |  7,848  |   | $ |  7,591  |   | $ |  10,038  |   | $ |  1,787  |   | $ |  3,604  |
|                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amount of Gain (Loss) Recognized on                                                                                                                                                     |
| Risk Management Contracts                                                                                                                                                               |
| For the Six Months Ended June 30, 2010                                                                                                                                                  |
|                                                                                                                                                                                    |
| Location of Gain (Loss)                                                                                                                                                                 |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                                                                                                                                    |   |   | (in thousands) |
| Electric Generation, Transmission and                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                    | Distribution Revenues |   | $ |  2,480  |   | $ |  13,076  |   | $ |  9,388  |   | $ |  12,231  |   | $ |  1,030  |   | $ |  1,402  |
| Sales to AEP Affiliates                                                                                                                                                                 |   |   |  (1,575) |   |   |  (1,449) |   |   |  (1,341) |   |   |  2,409  |   |   |  (297) |   |   |  (538) |
| Regulatory Assets (a)                                                                                                                                                                   |   |   |  -  |   |   |  (1,544) |   |   |  -  |   |   |  (1,690) |   |   |  306  |   |   |  73  |
| Regulatory Liabilities (a)                                                                                                                                                              |   |   |  15,147  |   |   |  -  |   |   |  8,461  |   |   |  29  |   |   |  2,764  |   |   |  513  |
| Total Gain (Loss) on Risk Management                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                    | Contracts |   | $ |  16,052  |   | $ |  10,083  |   | $ |  16,508  |   | $ |  12,979  |   | $ |  3,803  |   | $ |  1,450  |
|                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (a)  Represents realized and unrealized gains and losses subject to regulatory accounting treatment recorded as either current  or noncurrent on the balance sheet. |

----

----

----

| Total Accumulated Other Comprehensive Income (Loss) Activity for Cash Flow Hedges |
|-----------------------------------------------------------------------------------|
| For the Three Months Ended June 30, 2011                                          |
|                                                                              |
| Commodity Contracts                                                               |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                              |   | (in thousands) |
| Balance in AOCI as of March 31, 2011                                              |   | $ |  238  |   | $ |  79  |   | $ |  101  |   | $ |  190  |   | $ |  264  |   | $ |  244  |
| Changes in Fair Value Recognized in AOCI                                          |   |   |  (55) |   |   |  (24) |   |   |  (25) |   |   |  (40) |   |   |  (32) |   |   |  (26) |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Electric Generation, Transmission, and |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Distribution Revenues |   |   |  175  |   |   |  482  |   |   |  396  |   |   |  578  |   |   |  -  |   |   |  -  |
|                                                                              |   | Fuel and Other Consumables Used for |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Electric Generation |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Purchased Electricity for Resale |   |   |  (41) |   |   |  (112) |   |   |  (92) |   |   |  (134) |   |   |  -  |   |   |  -  |
|                                                                              |   | Other Operation Expense |   |   |  (31) |   |   |  (26) |   |   |  (28) |   |   |  (34) |   |   |  (34) |   |   |  (33) |
|                                                                              |   | Maintenance Expense |   |   |  (65) |   |   |  (18) |   |   |  (22) |   |   |  (33) |   |   |  (22) |   |   |  (24) |
|                                                                              |   | Property, Plant and Equipment |   |   |  (57) |   |   |  (23) |   |   |  (28) |   |   |  (48) |   |   |  (36) |   |   |  (29) |
|                                                                              |   | Regulatory Assets (a) |   |   |  505  |   |   |  -  |   |   |  76  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Regulatory Liabilities (a) |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |
| Balance in AOCI as of June 30, 2011                                               |   | $ |  669  |   | $ |  358  |   | $ |  378  |   | $ |  479  |   | $ |  140  |   | $ |  132  |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Rate and Foreign Currency                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Contracts                                                                         |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                              |   |   |   |   | (in thousands) |
| Balance in AOCI as of March 31, 2011                                              |   | $ |  217  |   | $ |  -  |   | $ |  (8,255) |   | $ |  10,473  |   | $ |  7,787  |   | $ |  (4,058) |
| Changes in Fair Value Recognized in AOCI                                          |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  794  |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Depreciation and Amortization |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  1  |   |   |  -  |   |   |  -  |
|                                                                              |   | Other Operation Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Interest Expense |   |   |  269  |   |   |  -  |   |   |  251  |   |   |  (341) |   |   |  (189) |   |   |  207  |
| Balance in AOCI as of June 30, 2011                                               |   | $ |  486  |   | $ |  -  |   | $ |  (8,004) |   | $ |  10,133  |   | $ |  7,598  |   | $ |  (3,057) |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Contracts                                                                   |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                              |   |   |   |   | (in thousands) |
| Balance in AOCI as of March 31, 2011                                              |   | $ |  455  |   | $ |  79  |   | $ |  (8,154) |   | $ |  10,663  |   | $ |  8,051  |   | $ |  (3,814) |
| Changes in Fair Value Recognized in AOCI                                          |   |   |  (55) |   |   |  (24) |   |   |  (25) |   |   |  (40) |   |   |  (32) |   |   |  768  |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Electric Generation, Transmission, and |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Distribution Revenues |   |   |  175  |   |   |  482  |   |   |  396  |   |   |  578  |   |   |  -  |   |   |  -  |
|                                                                              |   | Fuel and Other Consumables Used for |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Electric Generation |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Purchased Electricity for Resale |   |   |  (41) |   |   |  (112) |   |   |  (92) |   |   |  (134) |   |   |  -  |   |   |  -  |
|                                                                              |   | Other Operation Expense |   |   |  (31) |   |   |  (26) |   |   |  (28) |   |   |  (34) |   |   |  (34) |   |   |  (33) |
|                                                                              |   | Maintenance Expense |   |   |  (65) |   |   |  (18) |   |   |  (22) |   |   |  (33) |   |   |  (22) |   |   |  (24) |
|                                                                              |   | Depreciation and Amortization |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  1  |   |   |  -  |   |   |  -  |
|                                                                              |   | Interest Expense |   |   |  269  |   |   |  -  |   |   |  251  |   |   |  (341) |   |   |  (189) |   |   |  207  |
|                                                                              |   | Property, Plant and Equipment |   |   |  (57) |   |   |  (23) |   |   |  (28) |   |   |  (48) |   |   |  (36) |   |   |  (29) |
|                                                                              |   | Regulatory Assets (a) |   |   |  505  |   |   |  -  |   |   |  76  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Regulatory Liabilities (a) |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |
| Balance in AOCI as of June 30, 2011                                               |   | $ |  1,155  |   | $ |  358  |   | $ |  (7,626) |   | $ |  10,612  |   | $ |  7,738  |   | $ |  (2,925) |

----

| Total Accumulated Other Comprehensive Income (Loss) Activity for Cash Flow Hedges |
|-----------------------------------------------------------------------------------|
| For the Three Months Ended June 30, 2010                                          |
|                                                                              |
| Commodity Contracts                                                               |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                              |   | (in thousands) |
| Balance in AOCI as of March 31, 2010                                              |   | $ |  (2,451) |   | $ |  (1,407) |   | $ |  (1,418) |   | $ |  (1,543) |   | $ |  (8) |   | $ |  100  |
| Changes in Fair Value Recognized in AOCI                                          |   |   |  642  |   |   |  380  |   |   |  388  |   |   |  370  |   |   |  (191) |   |   |  (99) |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Electric Generation, Transmission, and |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Distribution Revenues |   |   |  31  |   |   |  79  |   |   |  66  |   |   |  91  |   |   |  -  |   |   |  -  |
|                                                                              |   | Fuel and Other Consumables Used for |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Electric Generation |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  (4) |   |   |  150  |   |   |  -  |
|                                                                              |   | Purchased Electricity for Resale |   |   |  65  |   |   |  168  |   |   |  139  |   |   |  193  |   |   |  -  |   |   |  -  |
|                                                                              |   | Other Operation Expense |   |   |  (18) |   |   |  (11) |   |   |  (11) |   |   |  (15) |   |   |  (13) |   |   |  (16) |
|                                                                              |   | Maintenance Expense |   |   |  (22) |   |   |  (6) |   |   |  (9) |   |   |  (11) |   |   |  (8) |   |   |  (8) |
|                                                                              |   | Property, Plant and Equipment |   |   |  (24) |   |   |  (10) |   |   |  (12) |   |   |  (17) |   |   |  (14) |   |   |  (10) |
|                                                                              |   | Regulatory Assets (a) |   |   |  340  |   |   |  -  |   |   |  44  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Regulatory Liabilities (a) |   |   | - |   |   |  -  |   |   |  -  |   |   |  (5) |   |   |  -  |   |   |  -  |
| Balance in AOCI as of June 30, 2010                                               |   | $ |  (1,437) |   | $ |  (807) |   | $ |  (813) |   | $ |  (941) |   | $ |  (84) |   | $ |  (33) |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Rate and Foreign Currency                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Contracts                                                                         |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                              |   |   |   |   | (in thousands) |
| Balance in AOCI as of March 31, 2010                                              |   | $ |  (6,488) |   | $ |  -  |   | $ |  (9,262) |   | $ |  11,832  |   | $ |  (475) |   | $ |  (4,947) |
| Changes in Fair Value Recognized in AOCI                                          |   |   |  (2,229) |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  (96) |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Depreciation and Amortization |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  1  |   |   |  -  |   |   |  -  |
|                                                                              |   | Other Operation Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  24  |
|                                                                              |   | Interest Expense |   |   |  419  |   |   |  -  |   |   |  251  |   |   |  (341) |   |   |  32  |   |   |  207  |
| Balance in AOCI as of June 30, 2010                                               |   | $ |  (8,298) |   | $ |  -  |   | $ |  (9,011) |   | $ |  11,492  |   | $ |  (443) |   | $ |  (4,812) |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Contracts                                                                   |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                              |   |   |   |   | (in thousands) |
| Balance in AOCI as of March 31, 2010                                              |   | $ |  (8,939) |   | $ |  (1,407) |   | $ |  (10,680) |   | $ |  10,289  |   | $ |  (483) |   | $ |  (4,847) |
| Changes in Fair Value Recognized in AOCI                                          |   |   |  (1,587) |   |   |  380  |   |   |  388  |   |   |  370  |   |   |  (191) |   |   |  (195) |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Electric Generation, Transmission, and |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Distribution Revenues |   |   |  31  |   |   |  79  |   |   |  66  |   |   |  91  |   |   |  -  |   |   |  -  |
|                                                                              |   | Fuel and Other Consumables Used for |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Electric Generation |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  (4) |   |   |  150  |   |   |  -  |
|                                                                              |   | Purchased Electricity for Resale |   |   |  65  |   |   |  168  |   |   |  139  |   |   |  193  |   |   |  -  |   |   |  -  |
|                                                                              |   | Other Operation Expense |   |   |  (18) |   |   |  (11) |   |   |  (11) |   |   |  (15) |   |   |  (13) |   |   |  8  |
|                                                                              |   | Maintenance Expense |   |   |  (22) |   |   |  (6) |   |   |  (9) |   |   |  (11) |   |   |  (8) |   |   |  (8) |
|                                                                              |   | Depreciation and Amortization |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  1  |   |   |  -  |   |   |  -  |
|                                                                              |   | Interest Expense |   |   |  419  |   |   |  -  |   |   |  251  |   |   |  (341) |   |   |  32  |   |   |  207  |
|                                                                              |   | Property, Plant and Equipment |   |   |  (24) |   |   |  (10) |   |   |  (12) |   |   |  (17) |   |   |  (14) |   |   |  (10) |
|                                                                              |   | Regulatory Assets (a) |   |   |  340  |   |   |  -  |   |   |  44  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Regulatory Liabilities (a) |   |   | - |   |   |  -  |   |   |  -  |   |   |  (5) |   |   |  -  |   |   |  -  |
| Balance in AOCI as of June 30, 2010                                               |   | $ |  (9,735) |   | $ |  (807) |   | $ |  (9,824) |   | $ |  10,551  |   | $ |  (527) |   | $ |  (4,845) |

----

| Total Accumulated Other Comprehensive Income (Loss) Activity for Cash Flow Hedges |
|-----------------------------------------------------------------------------------|
| For the Six Months Ended June 30, 2011                                            |
|                                                                              |
| Commodity Contracts                                                               |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                              |   | (in thousands) |
| Balance in AOCI as of December 31, 2010                                           |   | $ |  (273) |   | $ |  (134) |   | $ |  (178) |   | $ |  (230) |   | $ |  88  |   | $ |  82  |
| Changes in Fair Value Recognized in AOCI                                          |   |   |  123  |   |   |  (12) |   |   |  53  |   |   |  155  |   |   |  180  |   |   |  168  |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Electric Generation, Transmission, and |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Distribution Revenues |   |   |  171  |   |   |  470  |   |   |  386  |   |   |  564  |   |   |  -  |   |   |  -  |
|                                                                              |   | Fuel and Other Consumables Used for |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Electric Generation |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Purchased Electricity for Resale |   |   |  46  |   |   |  125  |   |   |  102  |   |   |  150  |   |   |  -  |   |   |  -  |
|                                                                              |   | Other Operation Expense |   |   |  (44) |   |   |  (35) |   |   |  (37) |   |   |  (48) |   |   |  (47) |   |   |  (46) |
|                                                                              |   | Maintenance Expense |   |   |  (90) |   |   |  (24) |   |   |  (32) |   |   |  (46) |   |   |  (29) |   |   |  (32) |
|                                                                              |   | Property, Plant and Equipment |   |   |  (80) |   |   |  (32) |   |   |  (39) |   |   |  (66) |   |   |  (52) |   |   |  (40) |
|                                                                              |   | Regulatory Assets (a) |   |   |  816  |   |   |  -  |   |   |  123  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Regulatory Liabilities (a) |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |
| Balance in AOCI as of June 30, 2011                                               |   | $ |  669  |   | $ |  358  |   | $ |  378  |   | $ |  479  |   | $ |  140  |   | $ |  132  |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Rate and Foreign Currency                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Contracts                                                                         |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                              |   |   |   |   | (in thousands) |
| Balance in AOCI as of December 31, 2010                                           |   | $ |  217  |   | $ |  -  |   | $ |  (8,507) |   | $ |  10,813  |   | $ |  8,406  |   | $ |  (4,272) |
| Changes in Fair Value Recognized in AOCI                                          |   |   |  (373) |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  (476) |   |   |  801  |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Depreciation and Amortization |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  2  |   |   |  -  |   |   |  -  |
|                                                                              |   | Other Operation Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Interest Expense |   |   |  642  |   |   |  -  |   |   |  503  |   |   |  (682) |   |   |  (332) |   |   |  414  |
| Balance in AOCI as of June 30, 2011                                               |   | $ |  486  |   | $ |  -  |   | $ |  (8,004) |   | $ |  10,133  |   | $ |  7,598  |   | $ |  (3,057) |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Contracts                                                                   |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                              |   |   |   |   | (in thousands) |
| Balance in AOCI as of December 31, 2010                                           |   | $ |  (56) |   | $ |  (134) |   | $ |  (8,685) |   | $ |  10,583  |   | $ |  8,494  |   | $ |  (4,190) |
| Changes in Fair Value Recognized in AOCI                                          |   |   |  (250) |   |   |  (12) |   |   |  53  |   |   |  155  |   |   |  (296) |   |   |  969  |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Electric Generation, Transmission, and |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Distribution Revenues |   |   |  171  |   |   |  470  |   |   |  386  |   |   |  564  |   |   |  -  |   |   |  -  |
|                                                                              |   | Fuel and Other Consumables Used for |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Electric Generation |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Purchased Electricity for Resale |   |   |  46  |   |   |  125  |   |   |  102  |   |   |  150  |   |   |  -  |   |   |  -  |
|                                                                              |   | Other Operation Expense |   |   |  (44) |   |   |  (35) |   |   |  (37) |   |   |  (48) |   |   |  (47) |   |   |  (46) |
|                                                                              |   | Maintenance Expense |   |   |  (90) |   |   |  (24) |   |   |  (32) |   |   |  (46) |   |   |  (29) |   |   |  (32) |
|                                                                              |   | Depreciation and Amortization |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  2  |   |   |  -  |   |   |  -  |
|                                                                              |   | Interest Expense |   |   |  642  |   |   |  -  |   |   |  503  |   |   |  (682) |   |   |  (332) |   |   |  414  |
|                                                                              |   | Property, Plant and Equipment |   |   |  (80) |   |   |  (32) |   |   |  (39) |   |   |  (66) |   |   |  (52) |   |   |  (40) |
|                                                                              |   | Regulatory Assets (a) |   |   |  816  |   |   |  -  |   |   |  123  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Regulatory Liabilities (a) |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |
| Balance in AOCI as of June 30, 2011                                               |   | $ |  1,155  |   | $ |  358  |   | $ |  (7,626) |   | $ |  10,612  |   | $ |  7,738  |   | $ |  (2,925) |

----

| Total Accumulated Other Comprehensive Income (Loss) Activity for Cash Flow Hedges |
|-----------------------------------------------------------------------------------|
| For the Six Months Ended June 30, 2010                                            |
|                                                                              |
| Commodity Contracts                                                               |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                              |   | (in thousands) |
| Balance in AOCI as of December 31, 2009                                           |   | $ |  (743) |   | $ |  (376) |   | $ |  (382) |   | $ |  (366) |   | $ |  (78) |   | $ |  112  |
| Changes in Fair Value Recognized in AOCI                                          |   |   |  (1,857) |   |   |  (1,077) |   |   |  (1,083) |   |   |  (1,300) |   |   |  (105) |   |   |  (96) |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Electric Generation, Transmission, and |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Distribution Revenues |   |   |  57  |   |   |  144  |   |   |  120  |   |   |  167  |   |   |  -  |   |   |  -  |
|                                                                              |   | Fuel and Other Consumables Used for |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Electric Generation |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  (13) |   |   |  150  |   |   |  -  |
|                                                                              |   | Purchased Electricity for Resale |   |   |  211  |   |   |  550  |   |   |  455  |   |   |  633  |   |   |  -  |   |   |  -  |
|                                                                              |   | Other Operation Expense |   |   |  (24) |   |   |  (19) |   |   |  (17) |   |   |  (20) |   |   |  (19) |   |   |  (23) |
|                                                                              |   | Maintenance Expense |   |   |  (36) |   |   |  (12) |   |   |  (14) |   |   |  (15) |   |   |  (12) |   |   |  (12) |
|                                                                              |   | Property, Plant and Equipment |   |   |  (33) |   |   |  (17) |   |   |  (17) |   |   |  (22) |   |   |  (20) |   |   |  (14) |
|                                                                              |   | Regulatory Assets (a) |   |   |  988  |   |   |  -  |   |   |  125  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Regulatory Liabilities (a) |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  (5) |   |   |  -  |   |   |  -  |
| Balance in AOCI as of June 30, 2010                                               |   | $ |  (1,437) |   | $ |  (807) |   | $ |  (813) |   | $ |  (941) |   | $ |  (84) |   | $ |  (33) |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Rate and Foreign Currency                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Contracts                                                                         |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                              |   |   |   |   | (in thousands) |
| Balance in AOCI as of December 31, 2009                                           |   | $ |  (6,450) |   | $ |  -  |   | $ |  (9,514) |   | $ |  12,172  |   | $ |  (521) |   | $ |  (5,047) |
| Changes in Fair Value Recognized in AOCI                                          |   |   |  (2,685) |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  (203) |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Depreciation and Amortization |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  2  |   |   |  -  |   |   |  -  |
|                                                                              |   | Other Operation Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  24  |
|                                                                              |   | Interest Expense |   |   |  837  |   |   |  -  |   |   |  503  |   |   |  (682) |   |   |  78  |   |   |  414  |
| Balance in AOCI as of June 30, 2010                                               |   | $ |  (8,298) |   | $ |  -  |   | $ |  (9,011) |   | $ |  11,492  |   | $ |  (443) |   | $ |  (4,812) |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Contracts                                                                   |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                              |   |   |   |   | (in thousands) |
| Balance in AOCI as of December 31, 2009                                           |   | $ |  (7,193) |   | $ |  (376) |   | $ |  (9,896) |   | $ |  11,806  |   | $ |  (599) |   | $ |  (4,935) |
| Changes in Fair Value Recognized in AOCI                                          |   |   |  (4,542) |   |   |  (1,077) |   |   |  (1,083) |   |   |  (1,300) |   |   |  (105) |   |   |  (299) |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Electric Generation, Transmission, and |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Distribution Revenues |   |   |  57  |   |   |  144  |   |   |  120  |   |   |  167  |   |   |  -  |   |   |  -  |
|                                                                              |   | Fuel and Other Consumables Used for |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Electric Generation |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  (13) |   |   |  150  |   |   |  -  |
|                                                                              |   | Purchased Electricity for Resale |   |   |  211  |   |   |  550  |   |   |  455  |   |   |  633  |   |   |  -  |   |   |  -  |
|                                                                              |   | Other Operation Expense |   |   |  (24) |   |   |  (19) |   |   |  (17) |   |   |  (20) |   |   |  (19) |   |   |  1  |
|                                                                              |   | Maintenance Expense |   |   |  (36) |   |   |  (12) |   |   |  (14) |   |   |  (15) |   |   |  (12) |   |   |  (12) |
|                                                                              |   | Depreciation and Amortization |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  2  |   |   |  -  |   |   |  -  |
|                                                                              |   | Interest Expense |   |   |  837  |   |   |  -  |   |   |  503  |   |   |  (682) |   |   |  78  |   |   |  414  |
|                                                                              |   | Property, Plant and Equipment |   |   |  (33) |   |   |  (17) |   |   |  (17) |   |   |  (22) |   |   |  (20) |   |   |  (14) |
|                                                                              |   | Regulatory Assets (a) |   |   |  988  |   |   |  -  |   |   |  125  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Regulatory Liabilities (a) |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  (5) |   |   |  -  |   |   |  -  |
| Balance in AOCI as of June 30, 2010                                               |   | $ |  (9,735) |   | $ |  (807) |   | $ |  (9,824) |   | $ |  10,551  |   | $ |  (527) |   | $ |  (4,845) |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (a)                                                                               |   | Represents realized and unrealized gains and losses subject to regulatory accounting treatment recorded as either current or noncurrent on the Condensed Balance Sheets. |

----

| Impact of Cash Flow Hedges on the Registrant Subsidiaries’ |
|------------------------------------------------------------------|
| Condensed Balance Sheets                                         |
| June 30, 2011                                                    |
|                                                             |
|                                                             |   |   | 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                                                             |   | $ |  1,693  |   | $ |  -  |   | $ |  521  |   | $ |  -  |   | $ |  669  |   | $ |  486  |
| CSPCo                                                            |   |   |  938  |   |   |  -  |   |   |  297  |   |   |  -  |   |   |  358  |   |   |  -  |
| I&M                                                          |   |   |  974  |   |   |  -  |   |   |  307  |   |   |  -  |   |   |  378  |   |   |  (8,004) |
| OPCo                                                             |   |   |  1,192  |   |   |  -  |   |   |  362  |   |   |  -  |   |   |  479  |   |   |  10,133  |
| PSO                                                              |   |   |  195  |   |   |  -  |   |   |  12  |   |   |  -  |   |   |  140  |   |   |  7,598  |
| SWEPCo                                                           |   |   |  181  |   |   |  1,227  |   |   |  11  |   |   |  -  |   |   |  132  |   |   |  (3,057) |

|    |   |      | 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    |   | $         |  507                 |     | $             |  (1,076)     |   |   |  35  |
| CSPCo   |   |      |  264                 |     |          |  -      |   |   |  35  |
| I&M |   |      |  280                 |     |          |  (750)       |   |   |  35  |
| OPCo    |   |      |  365                 |     |          |  1,359  |   |   |  35  |
| PSO     |   |      |  140                 |     |          |  759    |   |   |  18  |
| SWEPCo  |   |      |  129                 |     |          |  (766)       |   |   |  18  |

----

| Impact of Cash Flow Hedges on the Registrant Subsidiaries’ |
|------------------------------------------------------------------|
| Condensed Balance Sheets                                         |
| December 31, 2010                                                |
|                                                             |
|                                                             |   |   | 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                                                             |   | $ |  333  |   | $ |  11,888  |   | $ |  727  |   | $ |  -  |   | $ |  (273) |   | $ |  217  |
| CSPCo                                                            |   |   |  229  |   |   |  -  |   |   |  419  |   |   |  -  |   |   |  (134) |   |   |  -  |
| I&M                                                          |   |   |  175  |   |   |  -  |   |   |  437  |   |   |  -  |   |   |  (178) |   |   |  (8,507) |
| OPCo                                                             |   |   |  174  |   |   |  -  |   |   |  511  |   |   |  -  |   |   |  (230) |   |   |  10,813  |
| PSO                                                              |   |   |  134  |   |   |  13,558  |   |   |  -  |   |   |  -  |   |   |  88  |   |   |  8,406  |
| SWEPCo                                                           |   |   |  123  |   |   |  5  |   |   |  -  |   |   |  -  |   |   |  82  |   |   |  (4,272) |

|    |   |      | Expected to be Reclassified to |     |
|---------|--------|-----------|--------------------------------|----------|
|    |   |      | Net Income During the Next     |     |
|    |   |      | Twelve Months                  |     |
|    |   |      |                           |     | Interest Rate |   |
|    |   |      |                           |     | and Foreign |   |
| Company |   | Commodity |                           | Currency |   |
|    |   |      | (in thousands)                 |     |
| APCo    |   | $         |  (280)                    |     | $ |  (1,173) |   |
| CSPCo   |   |      |  (137)                    |     |   |  -  |   |
| I&M |   |      |  (184)                    |     |   |  (955) |   |
| OPCo    |   |      |  (236)                    |     |   |  1,359  |   |
| PSO     |   |      |  88                  |     |   |  735  |   |
| SWEPCo  |   |      |  82                  |     |   |  (829) |   |

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

----

|    |   |               | June 30, 2011        |
|---------|--------|--------------------|----------------------|
|    |   |               | Liabilities for      |   | Amount of Collateral the |   | Amount |
|    |   |               | Derivative Contracts |   | Registrant Subsidiaries |   | Attributable to |
|    |   |               | with Credit          |   | Would Have Been |   | RTO and ISO |
| Company |   | Downgrade Triggers |                 | Required to Post |   | Activities |
|    |   |               | (in thousands)       |
| APCo    |   | $                  |  9,515     |   | $ |  7,366  |   | $ |  7,366  |
| CSPCo   |   |               |  5,506     |   |   |  4,262  |   |   |  4,262  |
| I&M |   |               |  5,644     |   |   |  4,370  |   |   |  4,370  |
| OPCo    |   |               |  6,601     |   |   |  5,110  |   |   |  5,110  |
| PSO     |   |               |  -         |   |   |  3,196  |   |   |  2,913  |
| SWEPCo  |   |               |  -         |   |   |  3,830  |   |   |  3,490  |

|    |   |               | December 31, 2010    |
|---------|--------|--------------------|----------------------|
|    |   |               | Liabilities for      |   | Amount of Collateral the |   | Amount |
|    |   |               | Derivative Contracts |   | Registrant Subsidiaries |   | Attributable to |
|    |   |               | with Credit          |   | Would Have Been |   | RTO and ISO |
| Company |   | Downgrade Triggers |                 | Required to Post |   | Activities |
|    |   |               | (in thousands)       |
| APCo    |   | $                  |  6,594     |   | $ |  12,607  |   | $ |  12,574  |
| CSPCo   |   |               |  3,801     |   |   |  7,267  |   |   |  7,248  |
| I&M |   |               |  3,965     |   |   |  7,581  |   |   |  7,561  |
| OPCo    |   |               |  4,640     |   |   |  8,871  |   |   |  8,847  |
| PSO     |   |               |  16        |   |   |  1,785  |   |   |  1,385  |
| SWEPCo  |   |               |  19        |   |   |  2,139  |   |   |  1,659  |

----

|    |   |                 | June 30, 2011        |
|---------|--------|----------------------|----------------------|
|    |   |                 | Liabilities for      |   |   |   | Additional |
|    |   |                 | Contracts with Cross |   |   |   | Settlement |
|    |   |                 | Default Provisions   |   |   |   | Liability if Cross |
|    |   |                 | Prior to Contractual |   | Amount of Cash |   | Default Provision |
| Company |   | Netting Arrangements |                 | Collateral Posted |   | is Triggered |
|    |   |                 | (in thousands)       |
| APCo    |   | $                    |  63,340    |   | $ |  3,006  |   | $ |  18,543  |
| CSPCo   |   |                 |  36,650    |   |   |  1,739  |   |   |  10,729  |
| I&M |   |                 |  37,574    |   |   |  1,783  |   |   |  10,999  |
| OPCo    |   |                 |  43,952    |   |   |  2,085  |   |   |  12,875  |
| PSO     |   |                 |  31        |   |   |  -  |   |   |  19  |
| SWEPCo  |   |                 |  36        |   |   |  -  |   |   |  21  |
|    |   |                 |                 |   |   |   |   |   |   |   |
|    |   |                 | December 31, 2010    |
|    |   |                 | Liabilities for      |   |   |   | Additional |
|    |   |                 | Contracts with Cross |   |   |   | Settlement |
|    |   |                 | Default Provisions   |   |   |   | Liability if Cross |
|    |   |                 | Prior to Contractual |   | Amount of Cash |   | Default Provision |
| Company |   | Netting Arrangements |                 | Collateral Posted |   | is Triggered |
|    |   |                 | (in thousands)       |
| APCo    |   | $                    |  76,810    |   | $ |  6,637  |   | $ |  23,748  |
| CSPCo   |   |                 |  44,277    |   |   |  3,826  |   |   |  13,689  |
| I&M |   |                 |  46,188    |   |   |  3,991  |   |   |  14,280  |
| OPCo    |   |                 |  54,066    |   |   |  4,670  |   |   |  16,731  |
| PSO     |   |                 |  60        |   |   |  -  |   |   |  28  |
| SWEPCo  |   |                 |  75        |   |   |  -  |   |   |  37  |

----

|                    |    |       | 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          |                          |   |   |   |

----

|    |   | June 30, 2011  |                  | December 31, 2010 |
|---------|--------|----------------|-----------------------|-------------------|
| Company |   | Book Value     |                  | Fair Value        |   | Book Value |   | Fair Value |
|    |   | (in thousands) |
| APCo    |   | $              |  3,725,886  |              | $ |  4,075,642  |   | $ |  3,561,141  |   | $ |  3,878,557  |
| CSPCo   |   |           |  1,438,969  |              |   |  1,581,261  |   |   |  1,438,830  |   |   |  1,571,219  |
| I&M |   |           |  1,965,094  |              |   |  2,141,768  |   |   |  2,004,226  |   |   |  2,169,520  |
| OPCo    |   |           |  2,614,781  |              |   |  2,855,349  |   |   |  2,729,522  |   |   |  2,945,280  |
| PSO     |   |           |  945,650    |              |   |  1,035,124  |   |   |  971,186  |   |   |  1,040,656  |
| SWEPCo  |   |           |  1,769,646  |              |   |  1,941,357  |   |   |  1,769,520  |   |   |  1,931,516  |

| ·   | 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. |
|--------------------|-------------------------------------------------------------------------------------|

----

|                         |                                         |   | June 30, 2011       |                  | December 31, 2010 |
|------------------------------|----------------------------------------------|--------|---------------------|-----------------------|-------------------|
|                         |                                         |   | 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    |                                         | $      |  17,114   |                  | $                 |  -  |   | $ |  -  |   | $ |  20,039  |   | $ |  -  |   | $ |  -  |
| Fixed Income Securities:     |                                         |   |                |                  |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                         | United States Government                     |   |                |  483,677    |              |   |  27,160  |   |   |  (1,269) |   |   |  461,084  |   |   |  22,582  |   |   |  (1,489) |
|                         | Corporate Debt                               |   |                |  56,617     |              |   |  3,495  |   |   |  (785) |   |   |  59,463  |   |   |  3,716  |   |   |  (1,905) |
|                         | State and Local Government                   |   |                |  338,145    |              |   |  1,031  |   |   |  (1,169) |   |   |  340,786  |   |   |  (975) |   |   |  (340) |
|                         |   Subtotal Fixed Income Securities |   |  878,439  |                  |              |  31,686  |   |   |  (3,223) |   |   |  861,333  |   |   |  25,323  |   |   |  (3,734) |
| Equity Securities - Domestic |                                         |   |  678,589  |                  |              |  231,186  |   |   |  (104,828) |   |   |  633,855  |   |   |  183,447  |   |   |  (122,889) |
| Spent Nuclear Fuel and       |                                         |   |                |                  |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                         | Decommissioning Trusts                  |   | $                   |  1,574,142  |              | $ |  262,872  |   | $ |  (108,051) |   | $ |  1,515,227  |   | $ |  208,770  |   | $ |  (126,623) |

|                                      | Three Months Ended June 30, |                | Six Months Ended June 30, |
|-------------------------------------------|-----------------------------|---------------------|---------------------------|
|                                      | 2011                   |                | 2010                 |   | 2011  |   | 2010  |
|                                      | (in thousands)              |
| Proceeds from Investment Sales            | $                           |  176,927  |                      | $ |  360,185  |   | $ |  464,688  |   | $ |  592,263  |
| Purchases of Investments                  |                        |  186,217  |                      |   |  369,427  |   |   |  492,162  |   |   |  617,059  |
| Gross Realized Gains on Investment Sales  |                        |  7,392    |                      |   |  1,022  |   |   |  12,405  |   |   |  6,350  |
| Gross Realized Losses on Investment Sales |                        |  4,043    |                      |   |  236  |   |   |  9,290  |   |   |  417  |

|                     | Fair Value     |    |
|--------------------------|----------------|---------|
|                     | of Debt        |    |
|                     | Securities     |    |
|                     | (in thousands) |    |
| Within 1 year            |  $        | 77,143  |   |
| 1 year – 5 years   |           |    | 256,056 |   |
| 5 years – 10 years |           |    | 281,130 |   |
| After 10 years           |           | 264,110 |   |
| Total                    |  $        | 878,439 |   |

----

| Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|--------------------------------------------------------------------|
| June 30, 2011                                                      |
| APCo                                                               |   |   |   |   |   |   |   |   |   |
|                                                               |   | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                                            | (in thousands) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f)                        | $ |  935  |   | $ |  230,136  |   | $ |  16,634  |   | $ |  (188,100) |   | $ |  59,605  |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | Commodity Hedges (a) |   |  -  |   |   |  4,289  |   |   |  -  |   |   |  (2,596) |   |   |  1,693  |
| Dedesignated Risk Management Contracts (b)                         |   |  -  |   |   |  -  |   |   |  -  |   |   |  2,662  |   |   |  2,662  |
| Total Risk Management Assets                                       | $ |  935  |   | $ |  234,425  |   | $ |  16,634  |   | $ |  (188,034) |   | $ |  63,960  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f)                        | $ |  901  |   | $ |  211,634  |   | $ |  11,263  |   | $ |  (195,489) |   | $ |  28,309  |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | Commodity Hedges (a) |   |  -  |   |   |  3,067  |   |   |  50  |   |   |  (2,596) |   |   |  521  |
| Total Risk Management Liabilities                                  | $ |  901  |   | $ |  214,701  |   | $ |  11,313  |   | $ |  (198,085) |   | $ |  28,830  |

| Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|--------------------------------------------------------------------|
| December 31, 2010                                                  |
| APCo                                                               |   |   |   |   |   |   |   |   |   |
|                                                               |   | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                                            | (in thousands) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f)                        | $ |  1,686  |   | $ |  330,605  |   | $ |  13,791  |   | $ |  (270,012) |   | $ |  76,070  |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | Commodity Hedges (a) |   |  -  |   |   |  2,591  |   |   |  -  |   |   |  (2,258) |   |   |  333  |
|                                                               | Interest Rate/Foreign Currency Hedges |   |  -  |   |   |  11,888  |   |   |  -  |   |   |  -  |   |   |  11,888  |
| Dedesignated Risk Management Contracts (b)                         |   |  -  |   |   |  -  |   |   |  -  |   |   |  3,371  |   |   |  3,371  |
| Total Risk Management Assets                                       | $ |  1,686  |   | $ |  345,084  |   | $ |  13,791  |   | $ |  (268,899) |   | $ |  91,662  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f)                        | $ |  1,653  |   | $ |  312,258  |   | $ |  8,660  |   | $ |  (284,432) |   | $ |  38,139  |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | Commodity Hedges (a) |   |  -  |   |   |  2,985  |   |   |  -  |   |   |  (2,258) |   |   |  727  |
| Total Risk Management Liabilities                                  | $ |  1,653  |   | $ |  315,243  |   | $ |  8,660  |   | $ |  (286,690) |   | $ |  38,866  |

----

| Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|--------------------------------------------------------------------|
| June 30, 2011                                                      |
| CSPCo                                                              |   |   |   |   |   |   |   |   |   |
|                                                               |   | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                                            | (in thousands) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f)                        | $ |  542  |   | $ |  132,069  |   | $ |  9,623  |   | $ |  (107,783) |   | $ |  34,451  |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | Commodity Hedges (a) |   |  -  |   |   |  2,438  |   |   |  -  |   |   |  (1,500) |   |   |  938  |
| Dedesignated Risk Management Contracts (b)                         |   |  -  |   |   |  -  |   |   |  -  |   |   |  1,540  |   |   |  1,540  |
| Total Risk Management Assets                                       | $ |  542  |   | $ |  134,507  |   | $ |  9,623  |   | $ |  (107,743) |   | $ |  36,929  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f)                        | $ |  521  |   | $ |  121,351  |   | $ |  6,517  |   | $ |  (112,054) |   | $ |  16,335  |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | Commodity Hedges (a) |   |  -  |   |   |  1,768  |   |   |  29  |   |   |  (1,500) |   |   |  297  |
| Total Risk Management Liabilities                                  | $ |  521  |   | $ |  123,119  |   | $ |  6,546  |   | $ |  (113,554) |   | $ |  16,632  |

|                                        | Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|---------------------------------------------|--------------------------------------------------------------------|
|                                        | December 31, 2010                                                  |
| CSPCo                                       |                                                               |   |   |   |   |   |   |   |   |
|                                        |                                                               | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                     | (in thousands)                                                     |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                      |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f) | $                                                                  |  972  |   | $ |  185,699  |   | $ |  7,950  |   | $ |  (150,930) |   | $ |  43,691  |
| Cash Flow Hedges:                           |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        | Commodity Hedges (a)                                               |   |  -  |   |   |  1,531  |   |   |  -  |   |   |  (1,302) |   |   |  229  |
| Dedesignated Risk Management Contracts (b)  |                                                               |  -  |   |   |  -  |   |   |  -  |   |   |  1,943  |   |   |  1,943  |
| Total Risk Management Assets                | $                                                                  |  972  |   | $ |  187,230  |   | $ |  7,950  |   | $ |  (150,289) |   | $ |  45,863  |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                 |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f) | $                                                                  |  953  |   | $ |  175,078  |   | $ |  4,975  |   | $ |  (159,235) |   | $ |  21,771  |
| Cash Flow Hedges:                           |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        | Commodity Hedges (a)                                               |   |  -  |   |   |  1,721  |   |   |  -  |   |   |  (1,302) |   |   |  419  |
| Total Risk Management Liabilities           | $                                                                  |  953  |   | $ |  176,799  |   | $ |  4,975  |   | $ |  (160,537) |   | $ |  22,190  |

----

| Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|--------------------------------------------------------------------|
| June 30, 2011                                                      |
| I&M                                                            |   |   |   |   |   |   |   |   |   |
|                                                               |   |   | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                                            | (in thousands) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f)                        | $ |  555  |   | $ |  143,023  |   | $ |  9,864  |   | $ |  (108,585) |   | $ |  44,857  |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | Commodity Hedges (a) |   |  -  |   |   |  2,512  |   |   |  -  |   |   |  (1,538) |   |   |  974  |
| Dedesignated Risk Management Contracts (b)                         |   |  -  |   |   |  -  |   |   |  -  |   |   |  1,579  |   |   |  1,579  |
| Total Risk Management Assets                                       |   |  555  |   |   |  145,535  |   |   |  9,864  |   |   |  (108,544) |   |   |  47,410  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Spent Nuclear Fuel and Decommissioning Trusts                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents (d)                                      |   |  -  |   |   |  4,699  |   |   |  -  |   |   |  12,415  |   |   |  17,114  |
| Fixed Income Securities:                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | United States Government |   |  -  |   |   |  483,677  |   |   |  -  |   |   |  -  |   |   |  483,677  |
|                                                               | Corporate Debt |   |  -  |   |   |  56,617  |   |   |  -  |   |   |  -  |   |   |  56,617  |
|                                                               | State and Local Government |   |  -  |   |   |  338,145  |   |   |  -  |   |   |  -  |   |   |  338,145  |
|                                                               |   | Subtotal Fixed Income Securities |   |  -  |   |   |  878,439  |   |   |  -  |   |   |  -  |   |   |  878,439  |
| Equity Securities - Domestic (e)                                   |   |  678,589  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  678,589  |
| TotalSpent Nuclear Fuel and Decommissioning Trusts                 |   |  678,589  |   |   |  883,138  |   |   |  -  |   |   |  12,415  |   |   |  1,574,142  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                                                       | $ |  679,144  |   | $ |  1,028,673  |   | $ |  9,864  |   | $ |  (96,129) |   | $ |  1,621,552  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f)                        | $ |  534  |   | $ |  122,403  |   | $ |  6,684  |   | $ |  (112,959) |   | $ |  16,662  |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | Commodity Hedges (a) |   |  -  |   |   |  1,815  |   |   |  30  |   |   |  (1,538) |   |   |  307  |
| Total Risk Management Liabilities                                  | $ |  534  |   | $ |  124,218  |   | $ |  6,714  |   | $ |  (114,497) |   | $ |  16,969  |

----

|                                               |                       | Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|----------------------------------------------------|----------------------------|--------------------------------------------------------------------|
|                                               |                       | December 31, 2010                                                  |
| I&M                                            |                       |                                                               |   |   |   |   |   |   |   |
|                                               |                       |                                                               | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                            | (in thousands)             |
|                                               |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                             |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f)        | $                          |  1,014                                                   |   | $ |  209,031  |   | $ |  8,295  |   | $ |  (161,531) |   | $ |  56,809  |
| Cash Flow Hedges:                                  |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
|                                               | Commodity Hedges (a)       |                                                               |  -  |   |   |  1,533  |   |   |  -  |   |   |  (1,358) |   |   |  175  |
| Dedesignated Risk Management Contracts (b)         |                       |  -                                                       |   |   |  -  |   |   |  -  |   |   |  2,027  |   |   |  2,027  |
| Total Risk Management Assets                       |                       |  1,014                                                   |   |   |  210,564  |   |   |  8,295  |   |   |  (160,862) |   |   |  59,011  |
|                                               |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Spent Nuclear Fuel and Decommissioning Trusts      |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents (d)                      |                       |  -                                                       |   |   |  7,898  |   |   |  -  |   |   |  12,141  |   |   |  20,039  |
| Fixed Income Securities:                           |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
|                                               | United States Government   |                                                               |  -  |   |   |  461,084  |   |   |  -  |   |   |  -  |   |   |  461,084  |
|                                               | Corporate Debt             |                                                               |  -  |   |   |  59,463  |   |   |  -  |   |   |  -  |   |   |  59,463  |
|                                               | State and Local Government |                                                               |  -  |   |   |  340,786  |   |   |  -  |   |   |  -  |   |   |  340,786  |
|                                               |                       | Subtotal Fixed Income Securities                                   |   |  -  |   |   |  861,333  |   |   |  -  |   |   |  -  |   |   |  861,333  |
| Equity Securities - Domestic (e)                   |                       |  633,855                                                 |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  633,855  |
| TotalSpent Nuclear Fuel and Decommissioning Trusts |                       |  633,855                                                 |   |   |  869,231  |   |   |  -  |   |   |  12,141  |   |   |  1,515,227  |
|                                               |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                                       | $                          |  634,869                                                 |   | $ |  1,079,795  |   | $ |  8,295  |   | $ |  (148,721) |   | $ |  1,574,238  |
|                                               |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                       |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
|                                               |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                        |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f)        | $                          |  994                                                     |   | $ |  186,898  |   | $ |  5,187  |   | $ |  (170,201) |   | $ |  22,878  |
| Cash Flow Hedges:                                  |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
|                                               | Commodity Hedges (a)       |                                                               |  -  |   |   |  1,795  |   |   |  -  |   |   |  (1,358) |   |   |  437  |
| Total Risk Management Liabilities                  | $                          |  994                                                     |   | $ |  188,693  |   | $ |  5,187  |   | $ |  (171,559) |   | $ |  23,315  |

----

|                                        | Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|---------------------------------------------|--------------------------------------------------------------------|
|                                        | June 30, 2011                                                      |
| OPCo                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |                                                               | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                     | (in thousands)                                                     |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Cash Deposits (c)                     | $                                                                  |  26  |   | $ |  -  |   | $ |  -  |   | $ |  22  |   | $ |  48  |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                      |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f) |                                                               |  649  |   |   |  193,046  |   |   |  11,535  |   |   |  (162,774) |   |   |  42,456  |
| Cash Flow Hedges:                           |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        | Commodity Hedges (a)                                               |   |  -  |   |   |  2,993  |   |   |  -  |   |   |  (1,801) |   |   |  1,192  |
| Dedesignated Risk Management Contracts (b)  |                                                               |  -  |   |   |  -  |   |   |  -  |   |   |  1,847  |   |   |  1,847  |
| Total Risk Management Assets                |                                                               |  649  |   |   |  196,039  |   |   |  11,535  |   |   |  (162,728) |   |   |  45,495  |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                                | $                                                                  |  675  |   | $ |  196,039  |   | $ |  11,535  |   | $ |  (162,706) |   | $ |  45,543  |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                 |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f) | $                                                                  |  625  |   | $ |  180,588  |   | $ |  7,818  |   | $ |  (167,994) |   | $ |  21,037  |
| Cash Flow Hedges:                           |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        | Commodity Hedges (a)                                               |   |  -  |   |   |  2,128  |   |   |  35  |   |   |  (1,801) |   |   |  362  |
| Total Risk Management Liabilities           | $                                                                  |  625  |   | $ |  182,716  |   | $ |  7,853  |   | $ |  (169,795) |   | $ |  21,399  |

|                                        | Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|---------------------------------------------|--------------------------------------------------------------------|
|                                        | December 31, 2010                                                  |
| OPCo                                        |                                                               |   |   |   |   |   |   |   |   |
|                                        |                                                               | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                     | (in thousands)                                                     |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Cash Deposits (c)                     | $                                                                  |  26  |   | $ |  -  |   | $ |  -  |   | $ |  -  |   | $ |  26  |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                      |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f) |                                                               |  1,186  |   |   |  314,560  |   |   |  9,709  |   |   |  (269,216) |   |   |  56,239  |
| Cash Flow Hedges:                           |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        | Commodity Hedges (a)                                               |   |  -  |   |   |  1,764  |   |   |  -  |   |   |  (1,590) |   |   |  174  |
| Dedesignated Risk Management Contracts (b)  |                                                               |  -  |   |   |  -  |   |   |  -  |   |   |  2,372  |   |   |  2,372  |
| Total Risk Management Assets                |                                                               |  1,186  |   |   |  316,324  |   |   |  9,709  |   |   |  (268,434) |   |   |  58,785  |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                                | $                                                                  |  1,212  |   | $ |  316,324  |   | $ |  9,709  |   | $ |  (268,434) |   | $ |  58,811  |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                 |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f) | $                                                                  |  1,163  |   | $ |  302,299  |   | $ |  6,101  |   | $ |  (279,505) |   | $ |  30,058  |
| Cash Flow Hedges:                           |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        | Commodity Hedges (a)                                               |   |  -  |   |   |  2,101  |   |   |  -  |   |   |  (1,590) |   |   |  511  |
| Total Risk Management Liabilities           | $                                                                  |  1,163  |   | $ |  304,400  |   | $ |  6,101  |   | $ |  (281,095) |   | $ |  30,569  |

----

|                                        | Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|---------------------------------------------|--------------------------------------------------------------------|
|                                        | June 30, 2011                                                      |
| PSO                                         |                                                               |   |   |   |   |   |   |   |   |
|                                        |                                                               | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                     | (in thousands)                                                     |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                      |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f) | $                                                                  |  2  |   | $ |  14,471  |   | $ |  -  |   | $ |  (13,493) |   | $ |  980  |
| Cash Flow Hedges:                           |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        | Commodity Hedges (a)                                               |   |  -  |   |   |  202  |   |   |  -  |   |   |  (7) |   |   |  195  |
| Total Risk Management Assets                | $                                                                  |  2  |   | $ |  14,673  |   | $ |  -  |   | $ |  (13,500) |   | $ |  1,175  |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                 |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f) | $                                                                  |  1  |   | $ |  14,559  |   | $ |  -  |   | $ |  (13,537) |   | $ |  1,023  |
| Cash Flow Hedges:                           |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        | Commodity Hedges (a)                                               |   |  -  |   |   |  19  |   |   |  -  |   |   |  (7) |   |   |  12  |
| Total Risk Management Liabilities           | $                                                                  |  1  |   | $ |  14,578  |   | $ |  -  |   | $ |  (13,544) |   | $ |  1,035  |

|                                        | Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|---------------------------------------------|--------------------------------------------------------------------|
|                                        | December 31, 2010                                                  |
| PSO                                         |                                                               |   |   |   |   |   |   |   |   |
|                                        |                                                               | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                     | (in thousands)                                                     |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                      |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f) | $                                                                  |  -  |   | $ |  21,119  |   | $ |  1  |   | $ |  (20,335) |   | $ |  785  |
| Cash Flow Hedges:                           |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        | Commodity Hedges                                                   |   |  -  |   |   |  134  |   |   |  -  |   |   |  -  |   |   |  134  |
|                                        | Interest Rate/Foreign Currency Hedges                              |   |  -  |   |   |  13,558  |   |   |  -  |   |   |  -  |   |   |  13,558  |
| Total Risk Management Assets                | $                                                                  |  -  |   | $ |  34,811  |   | $ |  1  |   | $ |  (20,335) |   | $ |  14,477  |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                 |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f) | $                                                                  |  -  |   | $ |  21,498  |   | $ |  -  |   | $ |  (20,379) |   | $ |  1,119  |

----

| Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|--------------------------------------------------------------------|
| June 30, 2011                                                      |
| SWEPCo                                                             |   |   |   |   |   |   |   |   |   |
|                                                               |   | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                                            | (in thousands) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f)                        | $ |  2  |   | $ |  13,840  |   | $ |  -  |   | $ |  (13,341) |   | $ |  501  |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | Commodity Hedges (a) |   |  -  |   |   |  186  |   |   |  -  |   |   |  (5) |   |   |  181  |
|                                                               | Interest Rate/Foreign Currency Hedges |   |  -  |   |   |  1,227  |   |   |  -  |   |   |  -  |   |   |  1,227  |
| Total Risk Management Assets                                       | $ |  2  |   | $ |  15,253  |   | $ |  -  |   | $ |  (13,346) |   | $ |  1,909  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f)                        | $ |  1  |   | $ |  14,906  |   | $ |  -  |   | $ |  (13,384) |   | $ |  1,523  |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | Commodity Hedges (a) |   |  -  |   |   |  16  |   |   |  -  |   |   |  (5) |   |   |  11  |
| Total Risk Management Liabilities                                  | $ |  1  |   | $ |  14,922  |   | $ |  -  |   | $ |  (13,389) |   | $ |  1,534  |

|                                        | Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|---------------------------------------------|--------------------------------------------------------------------|
|                                        | December 31, 2010                                                  |
| SWEPCo                                      |                                                               |   |   |   |   |   |   |   |   |
|                                        |                                                               | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                     | (in thousands)                                                     |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                      |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f) | $                                                                  |  -  |   | $ |  36,632  |   | $ |  2  |   | $ |  (35,115) |   | $ |  1,519  |
| Cash Flow Hedges:                           |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        | Commodity Hedges                                                   |   |  -  |   |   |  123  |   |   |  -  |   |   |  -  |   |   |  123  |
|                                        | Interest Rate/Foreign Currency Hedges                              |   |  -  |   |   |  5  |   |   |  -  |   |   |  -  |   |   |  5  |
| Total Risk Management Assets                | $                                                                  |  -  |   | $ |  36,760  |   | $ |  2  |   | $ |  (35,115) |   | $ |  1,647  |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                 |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (f) | $                                                                  |  -  |   | $ |  39,592  |   | $ |  -  |   | $ |  (35,187) |   | $ |  4,405  |

| (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) | Level 1 amounts primarily represent investments in money market funds. |
|-----|------------------------------------------------------------------------|

| (d) | Amounts in “Other” column primarily represent accrued interest receivables from financial institutions.  Level 2 amounts primarily represent investments in money market funds. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e) | Amounts represent publicly traded equity securities and equity-based mutual funds. |
|-----|------------------------------------------------------------------------------------|

| (f) | Substantially comprised of power contracts for APCo, CSPCo, I&M and OPCo and coal contracts for PSO and SWEPCo. |
|-----|---------------------------------------------------------------------------------------------------------------------|

----

| Three Months Ended June 30, 2011             |                                           | APCo           |              | CSPCo         |   | I&M           |            | OPCo   |              | PSO           |   | SWEPCo            |
|----------------------------------------------|------------------------------------------------|----------------|-------------------|---------------|--------|-------------------|-----------------|--------|-------------------|---------------|--------|-------------------|
|                                         |                                           | (in thousands) |
| Balance as of March 31, 2011                 |                                           | $              |  5,472  |          | $      |  3,134  |            | $      |  3,209  |          | $      |  3,759  |   | $ |  -  |   | $ |  -  |
| Realized Gain (Loss) Included in Net Income  |                                           |           |              |          |   |              |            |   |              |          |   |              |   |   |   |   |   |   |
|                                         | (or Changes in Net Assets) (a) (b)             |           |              |  (3,219) |   |              |  (1,863)   |   |              |  (1,910) |   |              |  (2,233) |   |   |  -  |   |   |  -  |
| Unrealized Gain (Loss) Included in Net       |                                           |           |              |          |   |              |            |   |              |          |   |              |   |   |   |   |   |   |
|                                         | Income (or Changes in Net Assets) Relating     |           |              |          |   |              |            |   |              |          |   |              |   |   |   |   |   |   |   |
|                                         | to Assets Still Held at the Reporting Date (a) |           |              |  -  |   |              |  527  |   |              |  -  |   |              |  622  |   |   |  -  |   |   |  -  |
| Realized and Unrealized Gains (Losses)       |                                           |           |              |          |   |              |            |   |              |          |   |              |   |   |   |   |   |   |
|                                         | Included in Other Comprehensive Income         |           |              |  (50)    |   |              |  (29)      |   |              |  (30)    |   |              |  (35) |   |   |  -  |   |   |  -  |
| Purchases, Issuances and Settlements (c)     |                                           |           |  4,814  |          |   |  2,786  |            |   |  2,856  |          |   |  3,340  |   |   |  -  |   |   |  -  |
| Transfers into Level 3 (d) (f)               |                                           |           |  1,125  |          |   |  644    |            |   |  661    |          |   |  773    |   |   |  -  |   |   |  -  |
| Transfers out of Level 3 (e) (f)             |                                           |           |  (213)       |          |   |  (122)       |            |   |  (125)       |          |   |  (147)       |   |   |  -  |   |   |  -  |
| Changes in Fair Value Allocated to Regulated |                                           |           |              |          |   |              |            |   |              |          |   |              |   |   |   |   |   |   |
|                                         | Jurisdictions (g)                              |           |              |  (2,608) |   |              |  (2,000)   |   |              |  (1,511) |   |              |  (2,397) |   |   |  -  |   |   |  -  |
| Balance as of June 30, 2011                  |                                           | $              |  5,321  |          | $      |  3,077  |            | $      |  3,150  |          | $      |  3,682  |   | $ |  -  |   | $ |  -  |

| Three Months Ended June 30, 2010             |                                           | APCo           |               | CSPCo         |   | I&M            |          | OPCo   |               | PSO           |   | SWEPCo             |
|----------------------------------------------|------------------------------------------------|----------------|--------------------|---------------|--------|--------------------|---------------|--------|--------------------|---------------|--------|--------------------|
|                                         |                                           | (in thousands) |
| Balance as of March 31, 2010                 |                                           | $              |  18,687  |          | $      |  10,570  |          | $      |  10,662  |          | $      |  12,180  |   | $ |  2  |   | $ |  4  |
| Realized Gain (Loss) Included in Net Income  |                                           |           |               |          |   |               |          |   |               |          |   |               |   |   |   |   |   |   |
|                                         | (or Changes in Net Assets) (a) (b)             |           |               |  (8,409) |   |               |  (4,753) |   |               |  (4,794) |   |               |  (5,471) |   |   |  (1) |   |   |  (1) |
| Unrealized Gain (Loss) Included in Net       |                                           |           |               |          |   |               |          |   |               |          |   |               |   |   |   |   |   |   |
|                                         | Income (or Changes in Net Assets) Relating     |           |               |          |   |               |          |   |               |          |   |               |   |   |   |   |   |   |   |
|                                         | to Assets Still Held at the Reporting Date (a) |           |               |  -  |   |               |  (556)   |   |               |  -  |   |               |  (667) |   |   |  -  |   |   |  -  |
| Realized and Unrealized Gains (Losses)       |                                           |           |               |          |   |               |          |   |               |          |   |               |   |   |   |   |   |   |
|                                         | Included in Other Comprehensive Income         |           |               |  -  |   |               |  -  |   |               |  -  |   |               |  -  |   |   |  -  |   |   |  -  |
| Purchases, Issuances and Settlements (c)     |                                           |           |  4,845   |          |   |  2,741   |          |   |  2,764   |          |   |  3,154   |   |   |  (4) |   |   |  (5) |
| Transfers into Level 3 (d) (f)               |                                           |           |  1,332   |          |   |  753     |          |   |  760     |          |   |  867     |   |   |  -  |   |   |  -  |
| Transfers out of Level 3 (e) (f)             |                                           |           |  (2,006)      |          |   |  (1,135)      |          |   |  (1,145)      |          |   |  (1,306)      |   |   |  -  |   |   |  -  |
| Changes in Fair Value Allocated to Regulated |                                           |           |               |          |   |               |          |   |               |          |   |               |   |   |   |   |   |   |
|                                         | Jurisdictions (g)                              |           |               |  (3,575) |   |               |  (1,467) |   |               |  (2,038) |   |               |  (1,688) |   |   |  1  |   |   |  -  |
| Balance as of June 30, 2010                  |                                           | $              |  10,874  |          | $      |  6,153   |          | $      |  6,209   |          | $      |  7,069   |   | $ |  (2) |   | $ |  (2) |

| Six Months Ended June 30, 2011               |                                           | APCo           |              | CSPCo           |   | I&M           |              | OPCo   |              | PSO             |   | SWEPCo            |
|----------------------------------------------|------------------------------------------------|----------------|-------------------|-----------------|--------|-------------------|-------------------|--------|-------------------|-----------------|--------|-------------------|
|                                         |                                           | (in thousands) |
| Balance as of December 31, 2010              |                                           | $              |  5,131  |            | $      |  2,975  |              | $      |  3,108  |            | $      |  3,608  |   | $ |  1  |   | $ |  2  |
| Realized Gain (Loss) Included in Net Income  |                                           |           |              |            |   |              |              |   |              |            |   |              |   |   |   |   |   |   |
|                                         | (or Changes in Net Assets) (a) (b)             |           |              |  (2,489)   |   |              |  (1,436)     |   |              |  (1,473)   |   |              |  (1,722) |   |   |  -  |   |   |  -  |
| Unrealized Gain (Loss) Included in Net       |                                           |           |              |            |   |              |              |   |              |            |   |              |   |   |   |   |   |   |
|                                         | Income (or Changes in Net Assets) Relating     |           |              |            |   |              |              |   |              |            |   |              |   |   |   |   |   |   |   |
|                                         | to Assets Still Held at the Reporting Date (a) |           |              |  -    |   |              |  2,258  |   |              |  -    |   |              |  2,691  |   |   |  -  |   |   |  -  |
| Realized and Unrealized Gains (Losses)       |                                           |           |              |            |   |              |              |   |              |            |   |              |   |   |   |   |   |   |
|                                         | Included in Other Comprehensive Income         |           |              |  (50)      |   |              |  (29)        |   |              |  (30)      |   |              |  (35) |   |   |  -  |   |   |  -  |
| Purchases, Issuances and Settlements (c)     |                                           |           |  3,881  |            |   |  2,254  |              |   |  2,311  |            |   |  2,701  |   |   |  -  |   |   |  -  |
| Transfers into Level 3 (d) (f)               |                                           |           |  1,221  |            |   |  699    |              |   |  718    |            |   |  840    |   |   |  -  |   |   |  -  |
| Transfers out of Level 3 (e) (f)             |                                           |           |  (2,853)     |            |   |  (1,644)     |              |   |  (1,713)     |            |   |  (2,004)     |   |   |  -  |   |   |  -  |
| Changes in Fair Value Allocated to Regulated |                                           |           |              |            |   |              |              |   |              |            |   |              |   |   |   |   |   |   |
|                                         | Jurisdictions (g)                              |           |              |  480  |   |              |  (2,000)     |   |              |  229  |   |              |  (2,397) |   |   |  (1) |   |   |  (2) |
| Balance as of June 30, 2011                  |                                           | $              |  5,321  |            | $      |  3,077  |              | $      |  3,150  |            | $      |  3,682  |   | $ |  -  |   | $ |  -  |

----

| Six Months Ended June 30, 2010               |                                           | APCo           |               | CSPCo             |   | I&M           |              | OPCo   |              | PSO               |   | SWEPCo            |
|----------------------------------------------|------------------------------------------------|----------------|--------------------|-------------------|--------|-------------------|-------------------|--------|-------------------|-------------------|--------|-------------------|
|                                         |                                           | (in thousands) |
| Balance as of December 31, 2009              |                                           | $              |  9,428   |              | $      |  4,776  |              | $      |  4,816  |              | $      |  5,569  |   | $ |  2  |   | $ |  3  |
| Realized Gain (Loss) Included in Net Income  |                                           |           |               |              |   |              |              |   |              |              |   |              |   |   |   |   |   |   |
|                                         | (or Changes in Net Assets) (a) (b)             |           |               |  1,232  |   |              |  693    |   |              |  698    |   |              |  797  |   |   |  7  |   |   |  9  |
| Unrealized Gain (Loss) Included in Net       |                                           |           |               |              |   |              |              |   |              |              |   |              |   |   |   |   |   |   |
|                                         | Income (or Changes in Net Assets) Relating     |           |               |              |   |              |              |   |              |              |   |              |   |   |   |   |   |   |   |
|                                         | to Assets Still Held at the Reporting Date (a) |           |               |  -      |   |              |  5,157  |   |              |  -      |   |              |  5,849  |   |   |  -  |   |   |  -  |
| Realized and Unrealized Gains (Losses)       |                                           |           |               |              |   |              |              |   |              |              |   |              |   |   |   |   |   |   |
|                                         | Included in Other Comprehensive Income         |           |               |  -      |   |              |  -      |   |              |  -      |   |              |  -  |   |   |  -  |   |   |  -  |
| Purchases, Issuances and Settlements (c)     |                                           |           |  (4,173)      |              |   |  (2,321)     |              |   |  (2,341)     |              |   |  (2,675)     |   |   |  (6) |   |   |  (7) |
| Transfers into Level 3 (d) (f)               |                                           |           |  603     |              |   |  315    |              |   |  318    |              |   |  366    |   |   |  -  |   |   |  -  |
| Transfers out of Level 3 (e) (f)             |                                           |           |  (1,738)      |              |   |  (999)       |              |   |  (1,008)     |              |   |  (1,148)     |   |   |  -  |   |   |  -  |
| Changes in Fair Value Allocated to Regulated |                                           |           |               |              |   |              |              |   |              |              |   |              |   |   |   |   |   |   |
|                                         | Jurisdictions (g)                              |           |               |  5,522  |   |              |  (1,468)     |   |              |  3,726  |   |              |  (1,689) |   |   |  (5) |   |   |  (7) |
| Balance as of June 30, 2010                  |                                           | $              |  10,874  |              | $      |  6,153  |              | $      |  6,209  |              | $      |  7,069  |   | $ |  (2) |   | $ |  (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) | Transfers are recognized based on their value at the beginning of the reporting period that the transfer occurred. |
|-----|--------------------------------------------------------------------------------------------------------------------|

| (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. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|    |   | 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   |
| Issuances: |   |                    |   | (in thousands) |                | (%)      |       |   |
| APCo       |   | Senior Unsecured Notes  |   | $              |  350,000  |     | 4.60  |   | 2021  |
| APCo       |   | Pollution Control Bonds |   |           |  65,350   |     | 2.00  |   | 2012  |
| APCo       |   | Pollution Control Bonds |   |           |  75,000   | (a)      | Variable   |   | 2036  |
| APCo       |   | Pollution Control Bonds |   |           |  54,375   | (a)      | Variable   |   | 2042  |
| APCo       |   | Pollution Control Bonds |   |           |  50,275   | (a)      | Variable   |   | 2036  |
| APCo       |   | Pollution Control Bonds |   |           |  50,000   | (a)      | Variable   |   | 2042  |
| I&M    |   | Pollution Control Bonds |   |           |  52,000   | (a)      | Variable   |   | 2021  |
| I&M    |   | Pollution Control Bonds |   |           |  25,000   | (a)      | Variable   |   | 2019  |
| OPCo       |   | Pollution Control Bonds |   |           |  50,000   | (a)      | Variable   |   | 2014  |
| PSO        |   | Senior Unsecured Notes  |   |           |  250,000  |     | 4.40  |   | 2021  |
| PSO        |   | Notes Payable           |   |           |  1,187    |     | 3.00  |   | 2026  |

| (a)   | These pollution control bonds are subject to redemption earlier than the maturity date.  Consequently, these bonds have been classified for maturity purposes as Long-term Debt Due Within One Year – Nonaffiliated on the balance sheets. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|            |                |                    |   |           | Principal           |   | Interest     |   | Due        |
|-----------------|---------------------|-------------------------|--------|----------------|---------------------|--------|--------------|--------|------------|
| Company         |                | Type of Debt            |   | Amount Paid    |                | Rate   |         | Date   |
| Retirements and |                |                    |   | (in thousands) |                | (%)    |         |   |
|            | Principal Payments: |                    |   |           |                |   |         |   |       |   |
| APCo            |                | Pollution Control Bonds |   | $              |  75,000   |   | Variable     |   | 2036  |
| APCo            |                | Pollution Control Bonds |   |           |  54,375   |   | Variable     |   | 2042  |
| APCo            |                | Pollution Control Bonds |   |           |  50,000   |   | Variable     |   | 2042  |
| APCo            |                | Pollution Control Bonds |   |           |  50,275   |   | Variable     |   | 2036  |
| APCo            |                | Senior Unsecured Notes  |   |           |  250,000  |   | 5.55    |   | 2011  |
| APCo            |                | Land Note               |   |           |  11       |   | 13.718  |   | 2026  |
| I&M         |                | Pollution Control Bonds |   |           |  52,000   |   | Variable     |   | 2021  |
| I&M         |                | Pollution Control Bonds |   |           |  25,000   |   | Variable     |   | 2019  |
| I&M         |                | Notes Payable           |   |           |  10,894   |   | Variable     |   | 2015  |
| I&M         |                | Notes Payable           |   |           |  13,150   |   | 5.16    |   | 2014  |
| I&M         |                | Notes Payable           |   |           |  15,482   |   | 5.44    |   | 2013  |
| OPCo            |                | Pollution Control Bonds |   |           |  65,000   |   | Variable     |   | 2036  |
| OPCo            |                | Pollution Control Bonds |   |           |  50,000   |   | Variable     |   | 2014  |
| OPCo            |                | Pollution Control Bonds |   |           |  50,000   |   | Variable     |   | 2014  |
| PSO             |                | Senior Unsecured Notes  |   |           |  200,000  |   | 6.00    |   | 2032  |
| PSO             |                | Senior Unsecured Notes  |   |           |  75,000   |   | 4.70    |   | 2011  |

----

|    |   |           |                |       |   |                |   |       |                |             |   |                |   | 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 |                | June 30, 2011    |   | Limit               |
|    |   | (in thousands) |
| APCo    |   | $              |  195,945  |       | $      |  393,811  |   | $          |  102,608  |             | $      |  154,349  |   | $      |  162,787  |   | $      |  600,000  |
| CSPCo   |   |           |  17,256   |       |   |  130,250  |   |       |  10,098   |             |   |  78,172   |   |   |  71,323   |   |   |  350,000  |
| I&M |   |           |  52,098   |       |   |  89,276   |   |       |  22,098   |             |   |  32,773   |   |   |  (24,537)      |   |   |  500,000  |
| OPCo    |   |           |  51,169   |       |   |  237,196  |   |       |  17,873   |             |   |  116,937  |   |   |  136,965  |   |   |  600,000  |
| PSO     |   |           |  96,034   |       |   |  255,611  |   |       |  45,042   |             |   |  95,323   |   |   |  110      |   |   |  300,000  |
| SWEPCo  |   |           |  26,424   |       |   |  105,184  |   |       |  11,178   |             |   |  38,798   |   |   |  34,684   |   |   |  350,000  |

----

|                  |   | Six Months Ended June 30, |
|-----------------------|--------|---------------------------|
|                  |   | 2011                      |   | 2010 |
| Maximum Interest Rate |   |                      | 0.56 | % |   |   | 0.51 | % |
| Minimum Interest Rate |   |                      | 0.06 | % |   |   | 0.09 | % |

|    |   | Average Interest Rate       |   | Average Interest Rate     |
|---------|--------|-----------------------------|--------|---------------------------|
|    |   | for Funds Borrowed          |   | for Funds Loaned          |
|    |   | from Utility Money Pool for |   | to Utility Money Pool for |
|    |   | Six Months Ended June 30,   |   | Six Months Ended June 30, |
| Company |   | 2011                        |   | 2010                      |   | 2011 |   | 2010 |
|    |   |                        |   |                      |   |   |   |   |   |   |   |   |
| APCo    |   |                        | 0.38   | %                         |   |   | 0.23 | % |   |   | 0.27 | % |   |   | - | % |
| CSPCo   |   |                        | 0.52   | %                         |   |   | 0.18 | % |   |   | 0.27 | % |   |   | 0.26 | % |
| I&M |   |                        | 0.44   | %                         |   |   | - | % |   |   | 0.23 | % |   |   | 0.21 | % |
| OPCo    |   |                        | 0.41   | %                         |   |   | - | % |   |   | 0.24 | % |   |   | 0.18 | % |
| PSO     |   |                        | 0.41   | %                         |   |   | 0.28 | % |   |   | 0.19 | % |   |   | 0.16 | % |
| SWEPCo  |   |                        | 0.25   | %                         |   |   | 0.19 | % |   |   | 0.33 | % |   |   | 0.25 | % |

| Short-term Debt                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
|--------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The Registrant Subsidiaries’ outstanding short-term debt was as follows: |
|    |                                                              |                              |   |     | June 30, 2011  |   | December 31, 2010 |
|---------|-------------------------------------------------------------------|-----------------------------------|--------|----------|----------------|--------|-------------------|
|    |                                                              |                              |   |     | Outstanding    |   | Interest          |   | Outstanding |   | Interest |
| Company |                                                              | Type of Debt                      | Amount | Rate (b) |           | Amount | Rate (b)          |
|    |                                                              |                              |   |     | (in thousands) |   |              |   |   | (in thousands) |   |   |   |
| SWEPCo  |                                                              | Line of Credit – Sabine (a) |   | $        |  -   |   |  -      | % |   | $ |  6,217  |   |  2.15  | % |
|    |                                                              |                              |   |     |           |   |              |   |   |   |   |   |   |   |   |
| (a)     | Sabine Mining Company is a consolidated variable interest entity. |
| (b)     | Weighted average rate.                                            |

----

|    |   | June 30, 2011  |
|---------|--------|----------------|
|    |   |           |   |   | Reacquired and |   | Bilateral Letters |
| Company |   | Remarketed     |   | Held in Trust |   | of Credit Issued |
|    |   | (in thousands) |
| APCo    |   | $              | 229,650  |   | $ |  -  |   | $ |  232,293  |
| I&M |   |           | 77,000  |   |   |  -  |   |   |  77,886  |
| OPCo    |   |           | 50,000  |   |   | 115,000  |   |   |  50,575  |

|    |   |       | June 30,            |       | December 31, |
|---------|--------|------------|---------------------|------------|--------------|
| Company |   | 2011  |                | 2010  |
|    |   |       | (in thousands)      |
| APCo    |   | $          |  123,959  |       | $            |  145,515  |
| CSPCo   |   |       |  179,639  |       |         |  175,997  |
| I&M |   |       |  132,772  |       |         |  123,366  |
| OPCo    |   |       |  192,529  |       |         |  168,701  |
| PSO     |   |       |  150,689  |       |         |  121,679  |
| SWEPCo  |   |       |  174,496  |       |         |  135,092  |

----

|    |   |       | Three Months Ended June 30, |       | Six Months Ended June 30, |
|---------|--------|------------|-----------------------------|------------|---------------------------|
| Company |   | 2011  |                        | 2010  |                      | 2011  |   | 2010  |
|    |   |       | (in thousands)              |
| APCo    |   | $          |  2,239            |       | $                         |  1,895  |   | $ |  4,814  |   | $ |  3,776  |
| CSPCo   |   |       |  2,594            |       |                      |  2,782  |   |   |  4,926  |   |   |  5,690  |
| I&M |   |       |  1,508            |       |                      |  1,657  |   |   |  3,135  |   |   |  3,444  |
| OPCo    |   |       |  1,811            |       |                      |  2,449  |   |   |  3,514  |   |   |  5,149  |
| PSO     |   |       |  1,483            |       |                      |  1,367  |   |   |  2,717  |   |   |  2,750  |
| SWEPCo  |   |       |  1,303            |       |                      |  1,462  |   |   |  2,403  |   |   |  3,133  |

|    |   |       | Three Months Ended June 30, |       | Six Months Ended June 30, |
|---------|--------|------------|-----------------------------|------------|---------------------------|
| Company |   | 2011  |                        | 2010  |                      | 2011  |   | 2010  |
|    |   |       | (in thousands)              |
| APCo    |   | $          |  284,715          |       | $                         |  317,120  |   | $ |  650,924  |   | $ |  758,830  |
| CSPCo   |   |       |  374,925          |       |                      |  422,628  |   |   |  781,571  |   |   |  847,313  |
| I&M |   |       |  315,551          |       |                      |  297,384  |   |   |  666,572  |   |   |  636,593  |
| OPCo    |   |       |  456,910          |       |                      |  410,331  |   |   |  961,302  |   |   |  851,840  |
| PSO     |   |       |  317,060          |       |                      |  311,883  |   |   |  585,629  |   |   |  526,530  |
| SWEPCo  |   |       |  375,903          |       |                      |  338,286  |   |   |  690,027  |   |   |  657,245  |

| Company |   | Total Cost Incurred |
|---------|--------|---------------------|
|    |   | (in thousands)      |
| APCo    |   | $                   |  56,925  |
| CSPCo   |   |                |  32,292  |
| I&M |   |                |  45,036  |
| OPCo    |   |                |  53,108  |
| PSO     |   |                |  24,005  |
| SWEPCo  |   |                |  29,662  |

|    |   | Balance at        |              |     |   |          |   |        |          |          | Balance at |
|---------|--------|-------------------|-------------------|----------|--------|---------------|--------|-------------|---------------|---------------|------------|
| Company |   | December 31, 2010 |              | Incurred |   | Settled       |   | Adjustments |          | June 30, 2011 |
|    |   | (in thousands)    |
| APCo    |   | $                 |  3,726  |     | $      |  -  |   | $           |  (2,327) |          | $          |  (452) |   | $ |  947  |
| CSPCo   |   |              |  1,454  |     |   |  -  |   |        |  (1,346) |          |       |  (4) |   |   |  104  |
| I&M |   |              |  2,198  |     |   |  -  |   |        |  (1,650) |          |       |  (136) |   |   |  412  |
| OPCo    |   |              |  2,919  |     |   |  -  |   |        |  (2,242) |          |       |  (128) |   |   |  549  |
| PSO     |   |              |  1,526  |     |   |  -  |   |        |  (1,048) |          |       |  (167) |   |   |  311  |
| SWEPCo  |   |              |  1,753  |     |   |  -  |   |        |  (1,325) |          |       |  (38) |   |   |  390  |

----

|    |   |          | 2012 to 2020                       |
|---------|--------|---------------|------------------------------------|
|    |   |          | Estimated Environmental Investment |
| Company |   | Low           |                               | High |
|    |   | (in millions) |
| APCo    |   | $             |  580                     |   | $ |  765  |
| CSPCo   |   |          |  552                     |   |   |  736  |
| I&M |   |          |  660                     |   |   |  885  |
| OPCo    |   |          |  1,549                   |   |   |  2,065  |
| PSO     |   |          |  700                     |   |   |  940  |
| SWEPCo  |   |          |  900                     |   |   |  1,200  |

----

|      |   |                             |   | Generating |
|-----------|--------|----------------------------------|--------|------------|
| Company   |   | Plant Name and Unit              |   | Capacity   |
|      |   |                             |   | (in MWs)   |
| APCo      |   | Clinch River Plant, Unit 3       |   |       |  235  |
| APCo      |   | Glen Lyn Plant                   |   |       |  335  |
| APCo      |   | Kanawha River Plant              |   |       |  400  |
| APCo/OPCo |   | Philip Sporn Plant               |   |       |  1,050  |
| CSPCo     |   | Conesville Plant, Unit 3         |   |       |  165  |
| CSPCo     |   | Picway Plant                     |   |       |  100  |
| I&M   |   | Tanners Creek Plant, Units 1-3   |   |       |  495  |
| OPCo      |   | Kammer Plant                     |   |       |  630  |
| OPCo      |   | Muskingum River Plant, Units 1-4 |   |       |  840  |
| SWEPCo    |   | Welsh Plant, Unit 2              |   |       |  528  |

----

----

----

----

|                                                      |                                                      |   | DHLC              |          | CCPC   |            | Conner Run    |
|-----------------------------------------------------------|-----------------------------------------------------------|--------|-------------------|---------------|--------|-----------------|---------------|
| Number of Citations for Violations of Mandatory Health or |                                                      |   |              |          |   |            |          |   |   |
|                                                      | Safety Standards under 104 *                              |   |              |  -  |   |            |  -  |   |   |  -  |
| Number of Orders Issued under 104(b) *                    |                                                      |   |  -      |          |   |  -    |          |   |  -  |
| Number of Citations and Orders for Unwarrantable Failure  |                                                      |   |              |          |   |            |          |   |   |
|                                                      | to Comply with Mandatory Health or Safety Standards under |   |              |          |   |            |          |   |   |   |
|                                                      | 104(d) *                                                  |   |              |  -  |   |            |  -  |   |   |  -  |
| Number of Flagrant Violations under 110(b)(2) *           |                                                      |   |  -      |          |   |  -    |          |   |  -  |
| Number of Imminent Danger Orders Issued under 107(a) *    |                                                      |   |  -      |          |   |  -    |          |   |  -  |
| Total Dollar Value of Proposed Assessments                |                                                      | $      |  1,123  |          | $      |  400  |          | $ |  -  |
| Number of Mining-related Fatalities                       |                                                      |   |  -      |          |   |  -    |          |   |  -  |
|                                                      |                                                      |   |              |          |   |            |          |   |   |
| * References to sections under the Mine Act               |                                                      |   |              |          |   |            |          |   |   |

----

|                                                                                        | MTM Risk Management Contract Net Assets (Liabilities) |   |
|---------------------------------------------------------------------------------------------|-------------------------------------------------------|--------|
|                                                                                        | Six Months Ended June 30, 2011                        |   |
|                                                                                        | (in thousands)                                        |   |
|                                                                                        |                                                  |   |   |   |
| APCo                                                                                        |                                                  |   |   |
|                                                                                        |                                                  |   |   |   |
| Total MTM Risk Management Contract Net Assets at December 31, 2010                          |                                                  | $      | 26,882 |   |
| (Gain) Loss from Contracts Realized/Settled During the Period and Entered in a Prior Period |                                                  |   | (3,767 | ) |
| 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                                                                     |                                                  |   | (13 | ) |
| Changes in Fair Value Due to Market Fluctuations During the Period (b)            |                                                  |   | (861 | ) |
| Changes in Fair Value Allocated to Regulated Jurisdictions (c)                         |                                                  |   | 4,328 |   |
| Total MTM Risk Management Contract Net Assets at June 30, 2011                         |                                                  |   | 26,569 |   |
| Commodity Cash Flow Hedge Contracts                                                    |                                                  |   | 1,172 |   |
| Collateral Deposits                                                                         |                                                  |   | 7,389 |   |
| Total MTM Derivative Contract Net Assets at June 30, 2011                                   |                                                  | $      | 35,130 |   |
|                                                                                        |                                                  |   |   |   |   |
| OPCo                                                                                        |                                                  |   |   |   |   |
|                                                                                        |                                                  |   |   |   |   |
| Total MTM Risk Management Contract Net Assets at December 31, 2010                          |                                                  | $      | 18,264 |   |
| (Gain) Loss from Contracts Realized/Settled During the Period and Entered in a Prior Period |                                                  |   | (2,804 | ) |
| Fair Value of New Contracts at Inception When Entered During the Period (a)            |                                                  |   | 1,880 |   |
| Net Option Premiums Paid/(Received) for Unexercised or Unexpired Option Contracts Entered   |                                                  |   |   |   |
|  During the Period                                                                     |                                                  |   | (75 | ) |
| Changes in Fair Value Due to Market Fluctuations During the Period (b)            |                                                  |   | 3,180 |   |
| Changes in Fair Value Allocated to Regulated Jurisdictions (c)                         |                                                  |   | (2,399 | ) |
| Total MTM Risk Management Contract Net Assets at June 30, 2011                         |                                                  |   | 18,046 |   |
| Commodity Cash Flow Hedge Contracts                                                    |                                                  |   | 830 |   |
| Collateral Deposits                                                                         |                                                  |   | 5,220 |   |
| Total MTM Derivative Contract Net Assets at June 30, 2011                                   |                                                  | $      | 24,096 |   |

----

| PSO                                                                                         |   |   |
|---------------------------------------------------------------------------------------------|--------|--------|
|                                                                                        |   |   |   |
| Total MTM Risk Management Contract Net Assets (Liabilities) at December 31, 2010            |   | $      | (378 | ) |
| (Gain) Loss from Contracts Realized/Settled During the Period and Entered in a Prior Period |   |   | 132 |   |
| 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                                                               |   |   | (7 | ) |
| Changes in Fair Value Due to Market Fluctuations During the Period (b)            |   |   | 25 |   |
| Changes in Fair Value Allocated to Regulated Jurisdictions (c)                         |   |   | 141 |   |
| Total MTM Risk Management Contract Net Assets (Liabilities) at June 30, 2011           |   |   | (87 | ) |
| Commodity Cash Flow Hedge Contracts                                                    |   |   | 183 |   |
| Collateral Deposits                                                                         |   |   | 44 |   |
| Total MTM Derivative Contract Net Assets (Liabilities) at June 30, 2011                     |   | $      | 140 |   |
|                                                                                        |   |   |   |   |
| SWEPCo                                                                                      |   |   |   |   |
|                                                                                        |   |   |   |   |
| Total MTM Risk Management Contract Net Assets (Liabilities) at December 31, 2010            |   | $      | (2,958 | ) |
| (Gain) Loss from Contracts Realized/Settled During the Period and Entered in a Prior Period |   |   | 2,198 |   |
| 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                                                                    |   |   | (7 | ) |
| Changes in Fair Value Due to Market Fluctuations During the Period (b)            |   |   | 41 |   |
| Changes in Fair Value Allocated to Regulated Jurisdictions (c)                         |   |   | (339 | ) |
| Total MTM Risk Management Contract Net Assets (Liabilities) at June 30, 2011           |   |   | (1,065 | ) |
| Commodity Cash Flow Hedge Contracts                                                    |   |   | 1,397 |   |
| Collateral Deposits                                                                         |   |   | 43 |   |
| Total MTM Derivative Contract Net Assets (Liabilities) at June 30, 2011                     |   | $      | 375 |   |

| (a) | Reflects fair value on primarily 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) | Market fluctuations are attributable to various factors such as supply/demand, weather, etc.                                                                                                                                                                                                                                                                                                               |
| (c) | 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.                                                                                                                                                                                                      |

----

| Maturity and Source of Fair Value of MTM          |
|---------------------------------------------------|
| Risk Management Contract Net Assets (Liabilities) |
| June 30, 2011                                     |
|                                              |
|                                              |   | Remainder |   |   |   |   |   |   |   |   |   |
| APCo                                              | 2011  |   | 2012-2014 |   | 2015  |   | Total |
|                                              |   | (in thousands) |
| Level 1 (a)                                       | $ |  32  |   | $ |  2  |   | $ |  -  |   | $ |  34  |
| Level 2 (b)                                       |   |  1,966  |   |   |  15,065  |   |   |  1,471  |   |   |  18,502  |
| Level 3 (c)                                       |   |  2,211  |   |   |  2,840  |   |   |  320  |   |   |  5,371  |
| Total                                             |   |  4,209  |   |   |  17,907  |   |   |  1,791  |   |   |  23,907  |
| Dedesignated Risk Management                      |   |   |   |   |   |   |   |   |   |   |   |
|                                              | Contracts (d) |   |  1,064  |   |   |  1,598  |   |   |  -  |   |   |  2,662  |
| Total MTM Risk Management                         |   |   |   |   |   |   |   |   |   |   |   |
|                                              | Contract Net Assets | $ |  5,273  |   | $ |  19,505  |   | $ |  1,791  |   | $ |  26,569  |
|                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|                                              |   | Remainder |   |   |   |   |   |   |   |   |   |
| OPCo                                              | 2011  |   | 2012-2014 |   | 2015  |   | Total |
|                                              |   | (in thousands) |
| Level 1 (a)                                       | $ |  22  |   | $ |  2  |   | $ |  -  |   | $ |  24  |
| Level 2 (b)                                       |   |  643  |   |   |  10,794  |   |   |  1,021  |   |   |  12,458  |
| Level 3 (c)                                       |   |  1,525  |   |   |  1,970  |   |   |  222  |   |   |  3,717  |
| Total                                             |   |  2,190  |   |   |  12,766  |   |   |  1,243  |   |   |  16,199  |
| Dedesignated Risk Management                      |   |   |   |   |   |   |   |   |   |   |   |
|                                              | Contracts (d) |   |  738  |   |   |  1,109  |   |   |  -  |   |   |  1,847  |
| Total MTM Risk Management                         |   |   |   |   |   |   |   |   |   |   |   |
|                                              | Contract Net Assets | $ |  2,928  |   | $ |  13,875  |   | $ |  1,243  |   | $ |  18,046  |

|                      |                                   | Remainder      |        |   |            |            |
|---------------------------|----------------------------------------|----------------|-------------|--------|-----------------|-----------------|
| PSO                       | 2011                              |           | 2012-2014   |   | Total           |
|                      |                                   | (in thousands) |
| Level 1 (a)               | $                                      |  1   |        | $      |  -    |            | $ |  1  |
| Level 2 (b)               |                                   |  (596)    |        |   |  508  |            |   |  (88) |
| Level 3 (c)               |                                   |  -   |        |   |  -    |            |   |  -  |
| Total MTM Risk Management |                                   |           |        |   |            |            |   |   |
|                      | Contract Net Assets (Liabilities) | $              |  (595) |   | $               |  508  |   | $ |  (87) |

|                      |                                   |           |          |   |            |            |
|---------------------------|----------------------------------------|----------------|---------------|--------|-----------------|-----------------|
|                      |                                   | Remainder      |          |   |            |            |
| SWEPCo                    | 2011                              |           | 2012-2014     |   | Total           |
|                      |                                   | (in thousands) |
| Level 1 (a)               | $                                      |  1   |          | $      |  -    |            | $ |  1  |
| Level 2 (b)               |                                   |  (1,197)  |          |   |  131  |            |   |  (1,066) |
| Level 3 (c)               |                                   |  -   |          |   |  -    |            |   |  -  |
| Total MTM Risk Management |                                   |           |          |   |            |            |   |   |
|                      | Contract Net Assets (Liabilities) | $              |  (1,196) |   | $               |  131  |   | $ |  (1,065) |

----

| (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.                                                                                                                                                                                                                                                                               |

|    | Six Months Ended |   | Twelve Months Ended |
|---------|------------------|--------|---------------------|
|    | June 30, 2011    |   | December 31, 2010   |
| Company |             | End    |                | High |   | Average |   | Low |   | End |   | High |   | Average |   | Low |
|    | (in thousands)   |   | (in thousands)      |
| APCo    |             | $      | 109                 |   | $ | 553 |   | $ | 147 |   | $ | 66 |   | $ | 124 |   | $ | 659 |   | $ | 193 |   | $ | 71 |
| OPCo    |             |   | 84                  |   |   | 423 |   |   | 128 |   |   | 53 |   |   | 100 |   |   | 545 |   |   | 161 |   |   | 54 |
| PSO     |             |   | 6                   |   |   | 39 |   |   | 15 |   |   | 4 |   |   | 3 |   |   | 70 |   |   | 15 |   |   | 1 |
| SWEPCo  |             |   | 6                   |   |   | 46 |   |   | 19 |   |   | 4 |   |   | 6 |   |   | 93 |   |   | 21 |   |   | 2 |

----

|    |   | June 30,       |        | December 31, |
|---------|--------|----------------|-------------|--------------|
| Company |   | 2011           |        | 2010         |
|    |   | (in thousands) |
| APCo    |   | $              | 6,944  |         | $ | 1,165  |
| CSPCo   |   |           | 279    |         |   | 178  |
| I&M |   |           | 2,514  |         |   | 274  |
| OPCo    |   |           | 9,597  |         |   | 926  |
| PSO     |   |           | 66     |         |   | 658  |
| SWEPCo  |   |           | 2,062  |         |   | 1,027  |

----

----

| All of the investment in and expenses related to the Turk Plant may not be fully recovered. – Affecting AEP and SWEPCo |
|------------------------------------------------------------------------------------------------------------------------------|

| ·   | The validity of the air permit issued by the Arkansas Department of Environmental Quality in connection with the operation of the Turk Plant. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A preliminary injunction issued by the Federal District Court for the Western District of Arkansas, and upheld by the Eighth Circuit Federal Court of Appeals, enjoining SWEPCo from completing work authorized by the permit issued by the U.S. Army Corps of Engineers, the U.S. Department of Interior and the U.S. Fish and Wildlife Service.  The preliminary injunction also raises other alleged violations of various federal and state laws. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Whether SWEPCo is required to obtain APSC approval to construct the Turk Plant without pursuing authority to seek recovery of the originally approved 88 MW portion of Turk Plant costs in Arkansas retail rates. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The validity of PUCT approval of the Texas jurisdictional cost recovery and uncertainty regarding the caps on recovery included in the approval. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Request for rate recovery in Ohio for generation service may not be approved in its entirety. – Affecting AEP, CSPCo and OPCo |
|-------------------------------------------------------------------------------------------------------------------------------------|

| Request for rate recovery in Michigan may not be approved in its entirety.  – Affecting AEP and I&M |
|-------------------------------------------------------------------------------------------------------------------------|

| Courts adjudicating nuisance and other similar claims against us may order us to limit or reduce our CO2 emissions.  (Applies to each registrant) |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Our costs of compliance with existing environmental laws are significant.   (Applies to each registrant.) |
|--------------------------------------------------------------------------------------------------------------------------|

| ·   | Operator error and breakdown or failure of equipment or processes. |
|--------------------|--------------------------------------------------------------------|

| ·   | Operating limitations that may be imposed by environmental or other regulatory requirements. |
|--------------------|----------------------------------------------------------------------------------------------|

| ·   | Labor disputes. |
|--------------------|-----------------|

| ·   | Compliance with mandatory reliability standards, including mandatory cyber security standards. |
|--------------------|------------------------------------------------------------------------------------------------|

| ·   | Information technology failure. |
|--------------------|---------------------------------|

| ·   | Cyber intrusion. |
|--------------------|------------------|

| ·   | Fuel supply interruptions caused by transportation constraints, adverse weather, non-performance by our suppliers and other factors. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Catastrophic events such as fires, earthquakes, explosions, hurricanes, terrorism, floods or other similar occurrences. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|

----

| Customers have recently begun to select alternative electric generation service providers, as allowed by Ohio legislation. – Affecting AEP, CSPCo and OPCo |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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 |   |
|---------------------------|--------|--------------------------------|----------|-----------------------------|--------|-------------|----------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------|--------|
| 04/01/11 – 04/30/11 |   |                           | -   |                        | $      | -      |                                                                             |   |                                                                                                         | -      |   | $ | - |   |
| 05/01/11 – 05/31/11 |   |                           | -   |                        |   | -      |                                                                             |   |                                                                                                         | -      |   |   | - |   |
| 06/01/11 – 06/30/11 |   |                           | 23  | (a)                         |   | 81.80  |                                                                             |   |                                                                                                         | -      |   |   | - |   |

| (a) | OPCo purchased 15 shares of its 4.50% cumulative preferred stock and SWEPCo purchased 8 shares of its 5.00% cumulative preferred stock in privately-negotiated transactions outside of an announced program. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----