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

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

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

| Indicate by check mark whether Appalachian Power Company, Columbus Southern Power Company, Indiana Michigan Power Company, Ohio Power Company, Public Service Company of Oklahoma and Southwestern Electric Power Company have submitted electronically and posted on 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   | 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 atOctober 29, 2010 |
|---------------------------------------|--------|--------|------------------------------------------------------------------------------------------------|
|                                  |   |   |                                                                                           |
| American Electric Power Company, Inc. |   |   | 480,276,270                                                                                    |
|                                  |   |   | ($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)                                                                                |

----

|                                                            |                                                                                                                                                                               | Page   |
|-----------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Glossary of Terms                                               |                                                                                                                                                                               | i      |
|                                                            |                                                                                                                                                                               |   |
| Forward-Looking Information                                     |                                                                                                                                                                               | iv     |
|                                                            |                                                                                                                                                                               |   |
| Part I. FINANCIAL INFORMATION                                   |                                                                                                                                                                               |   |
|                                                            |                                                                                                                                                                               |   |   |
|                                                            | Items 1, 2 and 3 - Financial Statements, Management’s Financial Discussion and Analysis and Quantitative and Qualitative Disclosures About Risk Management Activities:  |   |   |
| American Electric Power Company, Inc. and Subsidiary Companies: |                                                                                                                                                                               |   |
|                                                            | Management’s Financial Discussion and Analysis of Results of Operations                                                                                                      |   | 1 |
|                                                            | Quantitative and Qualitative Disclosures About Risk Management Activities                                                                                                          |   | 20 |
|                                                            | Condensed Consolidated Financial Statements                                                                                                                                        |   | 24 |
|                                                            | Index to Condensed Notes to Condensed Consolidated Financial Statements                                                                                                            |   | 29 |
|                                                            |                                                                                                                                                                               |   |   |
| Appalachian Power Company and Subsidiaries:                     |                                                                                                                                                                               |   |
|                                                            | Management’s Financial Discussion and Analysis                                                                                                                               |   | 85 |
|                                                            | Quantitative and Qualitative Disclosures About Risk Management Activities                                                                                                          |   | 90 |
|                                                            | Condensed Consolidated Financial Statements                                                                                                                                        |   | 91 |
|                                                            | Index to Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries                                                                                              |   | 96 |
|                                                            |                                                                                                                                                                               |   |   |
| Columbus Southern Power Company and Subsidiaries:               |                                                                                                                                                                               |   |
|                                                            | Management’s Narrative Financial Discussion and Analysis                                                                                                                     |   | 98 |
|                                                            | Quantitative and Qualitative Disclosures About Risk Management Activities                                                                                                          |   | 102 |
|                                                            | Condensed Consolidated Financial Statements                                                                                                                                        |   | 103 |
|                                                            | Index to Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries                                                                                              |   | 108 |
|                                                            |                                                                                                                                                                               |   |   |
| Indiana Michigan Power Company and Subsidiaries:                |                                                                                                                                                                               |   |
|                                                            | Management’s Narrative Financial Discussion and Analysis                                                                                                                     |   | 110 |
|                                                            | Quantitative and Qualitative Disclosures About Risk Management Activities                                                                                                          |   | 114 |
|                                                            | Condensed Consolidated Financial Statements                                                                                                                                        |   | 115 |
|                                                            | Index to Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries                                                                                              |   | 120 |
|                                                            |                                                                                                                                                                               |   |   |
| Ohio Power Company Consolidated:                                |                                                                                                                                                                               |   |
|                                                            | Management’s Financial Discussion and Analysis                                                                                                                               |   | 122 |
|                                                            | Quantitative and Qualitative Disclosures About Risk Management Activities                                                                                                          |   | 128 |
|                                                            | Condensed Consolidated Financial Statements                                                                                                                                        |   | 129 |
|                                                            | Index to Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries                                                                                              |   | 134 |
|                                                            |                                                                                                                                                                               |   |   |
| Public Service Company of Oklahoma:                             |                                                                                                                                                                               |   |
|                                                            | Management’s Financial Discussion and Analysis                                                                                                                               |   | 136 |
|                                                            | Quantitative and Qualitative Disclosures About Risk Management Activities                                                                                                          |   | 140 |
|                                                            | Condensed Financial Statements                                                                                                                                                     |   | 141 |
|                                                            | Index to Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries                                                                                              |   | 146 |
|                                                            |                                                                                                                                                                               |   |   |
| Southwestern Electric Power Company Consolidated:               |                                                                                                                                                                               |   |
|                                                            | Management’s Financial Discussion and Analysis                                                                                                                               |   | 148 |
|                                                            | Quantitative and Qualitative Disclosures About Risk Management Activities                                                                                                          |   | 154 |
|                                                            | Condensed Consolidated Financial Statements                                                                                                                                        |   | 155 |
|                                                            | Index to Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries                                                                                              |   | 160 |

----

| Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries   |     | 161                                                         |
|--------------------------------------------------------------------------------|----------|-------------------------------------------------------------|
|                                                                           |     |                                                        |   |
| Combined Management’s Discussion and Analysis of Registrant Subsidiaries |     | 230                                                         |
|                                                                           |     |                                                        |   |
| Controls and Procedures                                                        |     | 239                                                         |
|                                                                           |     |                                                        |   |   |
| Part II.  OTHER INFORMATION                                          |     |                                                        |
|                                                                           |     |                                                        |
|                                                                           | Item 1.  | Legal Proceedings                                           |   | 240 |
|                                                                           | Item 1A. | Risk Factors                                                |   | 240 |
|                                                                           | Item 2.  | Unregistered Sales of Equity Securities and Use of Proceeds |   | 244 |
|                                                                           | Item 5.  | Other Information                                           |   | 244 |
|                                                                           | Item 6.  | Exhibits:                                                   |   | 244 |
|                                                                           |     |                                                        |   |   | Exhibit 12 |   |   |
|                                                                           |     |                                                        |   |   | Exhibit 31(a) |   |   |
|                                                                           |     |                                                        |   |   | Exhibit 31(b) |   |   |
|                                                                           |     |                                                        |   |   | Exhibit 32(a) |   |   |
|                                                                           |     |                                                        |   |   | Exhibit 32(b) |   |   |
|                                                                           |     |                                                        |   |   |   |   |   |
| SIGNATURE                                                                      |     |                                                        | 245 |

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

----

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

| AEGCo                    |   | AEP Generating Company, an AEP electric utility subsidiary.                                                                                                                                                                    |
|--------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| AEP or Parent            |   | American Electric Power Company, Inc.                                                                                                                                                                                          |
| AEP Consolidated         |   | AEP and its majority owned consolidated subsidiaries and consolidated affiliates.                                                                                                                                              |
| AEP Credit               |   | AEP Credit, Inc., a subsidiary of AEP which factors accounts receivable and accrued utility revenues for affiliated electric utility companies.                                                                                |
| AEP East companies       |   | APCo, CSPCo, I&M, KPCo and OPCo.                                                                                                                                                                                           |
| AEP Power Pool           |   | Members are APCo, CSPCo, I&M, KPCo and OPCo.  The Pool shares the generation, cost of generation and resultant wholesale off-system sales of the member companies.                                               |
| AEP System or the System |   | American Electric Power System, an integrated electric utility system, owned and operated by AEP’s electric utility subsidiaries.                                                                                        |
| AEP West companies       |   | PSO, SWEPCo, TCC and TNC.                                                                                                                                                                                                      |
| 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.                                                                                                                                                                                                    |
| CAA                      |   | Clean Air Act.                                                                                                                                                                                                                 |
| CLECO                    |   | Central Louisiana Electric Company, a nonaffiliated utility company.                                                                                                                                                           |
| CO2                      |   | Carbon Dioxide and other greenhouse gases.                                                                                                                                                                                     |
| Cook Plant               |   | Donald C. Cook Nuclear Plant, a two-unit, 2,191 MW nuclear plant owned by I&M.                                                                                                                                             |
| CSPCo                    |   | Columbus Southern Power Company, an AEP electric utility subsidiary.                                                                                                                                                           |
| CTC                      |   | Competition Transition Charge.                                                                                                                                                                                                 |
| CWIP                     |   | Construction Work in Progress.                                                                                                                                                                                                 |
| DCC Fuel                 |   | DCC Fuel LLC and DCC Fuel II LLC, consolidated variable interest entities formedfor the purpose of acquiring, owning and leasing nuclear fuel to I&M.                                                                      |
| DETM                     |   | Duke Energy Trading and Marketing L.L.C., a risk management counterparty.                                                                                                                                                      |
| DHLC                     |   | Dolet Hills Lignite Company, LLC, a wholly-owned lignite mining subsidiary of SWEPCo.                                                                                                                                          |
| E&R                  |   | Environmental compliance and transmission and distribution system reliability.                                                                                                                                                 |
| EIS                      |   | Energy Insurance Services, Inc., a nonaffiliated captive insurance company.                                                                                                                                                    |
| ERCOT                    |   | Electric Reliability Council of Texas.                                                                                                                                                                                         |
| ESP                      |   | Electric Security Plans, filed with the PUCO, pursuant to the Ohio Amendments.                                                                                                                                                 |
| ETT                      |   | Electric Transmission Texas, LLC, an equity interest joint venture between AEP Utilities, Inc. and MidAmerican Energy Holdings Company Texas Transco, LLC formed to own and operate electric transmission facilities in ERCOT. |
| FAC                      |   | Fuel Adjustment Clause.                                                                                                                                                                                                        |
| FASB                     |   | Financial Accounting Standards Board.                                                                                                                                                                                          |
| Federal EPA              |   | United States Environmental Protection Agency.                                                                                                                                                                                 |
| FERC                     |   | Federal Energy Regulatory Commission.                                                                                                                                                                                          |
| FGD                      |   | Flue Gas Desulfurization or Scrubbers.                                                                                                                                                                                         |

----

| Term                      |   | Meaning                                                                                                                                                                                                                                              |
|---------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |   |                                                                                                                                                                                                                                                 |
| FTR                       |   | Financial Transmission Right, a financial instrument that entitles the holder to receive compensation for certain congestion-related transmission charges that arise when the power grid is congested resulting in differences in locational prices. |
| GAAP                      |   | Accounting Principles Generally Accepted in the United States of America.                                                                                                                                                                            |
| I&M                   |   | Indiana Michigan Power Company, an AEP electric utility subsidiary.                                                                                                                                                                                  |
| IGCC                      |   | Integrated Gasification Combined Cycle, technology that turns coal into a cleaner-burning gas.                                                                                                                                                       |
| Interconnection Agreement |   | Agreement, dated July 6, 1951, as amended, by and among APCo, CSPCo, I&M, KPCo and OPCo, defining the sharing of costs and benefits associated with their respective generating plants.                                                          |
| IRS                       |   | Internal Revenue Service.                                                                                                                                                                                                                            |
| IURC                      |   | Indiana Utility Regulatory Commission.                                                                                                                                                                                                               |
| KGPCo                     |   | Kingsport Power Company, an AEP electric utility subsidiary.                                                                                                                                                                                         |
| KPCo                      |   | Kentucky Power Company, an AEP electric utility subsidiary.                                                                                                                                                                                          |
| KPSC                      |   | Kentucky Public Service Commission.                                                                                                                                                                                                                  |
| kV                        |   | Kilovolt.                                                                                                                                                                                                                                            |
| KWH                       |   | Kilowatthour.                                                                                                                                                                                                                                        |
| LPSC                      |   | Louisiana Public Service Commission.                                                                                                                                                                                                                 |
| MISO                      |   | Midwest Independent Transmission System Operator.                                                                                                                                                                                                    |
| MLR                       |   | Member load ratio, the method used to allocate AEP Power Pool transactions to its members.                                                                                                                                                           |
| MMBtu                     |   | Million British Thermal Units.                                                                                                                                                                                                                       |
| MPSC                      |   | Michigan Public Service Commission.                                                                                                                                                                                                                  |
| MTM                       |   | Mark-to-Market.                                                                                                                                                                                                                                      |
| MW                        |   | Megawatt.                                                                                                                                                                                                                                            |
| MWH                       |   | Megawatthour.                                                                                                                                                                                                                                        |
| NEIL                      |   | Nuclear Electric Insurance Limited.                                                                                                                                                                                                                  |
| NOx                       |   | Nitrogen oxide.                                                                                                                                                                                                                                      |
| Nonutility Money Pool     |   | AEP’s Nonutility Money Pool.                                                                                                                                                                                                                   |
| NSR                       |   | New Source Review.                                                                                                                                                                                                                                   |
| OCC                       |   | Corporation Commission of the State of Oklahoma.                                                                                                                                                                                                     |
| OPCo                      |   | Ohio Power Company, an AEP electric utility subsidiary.                                                                                                                                                                                              |
| OPEB                      |   | Other Postretirement Benefit Plans.                                                                                                                                                                                                                  |
| OTC                       |   | Over the counter.                                                                                                                                                                                                                                    |
| OVEC                      |   | Ohio Valley Electric Corporation, which is 43.47% owned by AEP.                                                                                                                                                                                      |
| PJM                       |   | Pennsylvania – New Jersey – Maryland regional transmission organization.                                                                                                                                                                 |
| PM                        |   | Particulate Matter.                                                                                                                                                                                                                                  |
| PSO                       |   | Public Service Company of Oklahoma, an AEP electric utility subsidiary.                                                                                                                                                                              |
| PUCO                      |   | Public Utilities Commission of Ohio.                                                                                                                                                                                                                 |
| PUCT                      |   | Public Utility Commission of Texas.                                                                                                                                                                                                                  |
| Registrant Subsidiaries   |   | AEP subsidiaries which are SEC registrants; APCo, CSPCo, I&M, OPCo, PSO and SWEPCo.                                                                                                                                                              |
| Risk Management Contracts |   | Trading and nontrading derivatives, including those derivatives designated as cash flow and fair value hedges.                                                                                                                                       |
| Rockport Plant            |   | A generating plant, consisting of two 1,300 MW coal-fired generating units near Rockport, Indiana, owned by AEGCo and I&M.                                                                                                                       |
| RTO                       |   | Regional Transmission Organization.                                                                                                                                                                                                                  |
| Sabine                    |   | Sabine Mining Company, a lignite mining company that is a consolidated variable interest entity.                                                                                                                                                     |

----

| Term                                        |   | Meaning                                                                                                                                                                                                                                                                           |
|---------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                        |   |                                                                                                                                                                                                                                                                              |
| SIA                                         |   | System Integration Agreement.                                                                                                                                                                                                                                                     |
| SNF                                         |   | Spent Nuclear Fuel.                                                                                                                                                                                                                                                               |
| SO2                                         |   | Sulfur Dioxide.                                                                                                                                                                                                                                                                   |
| SPP                                         |   | Southwest Power Pool.                                                                                                                                                                                                                                                             |
| Stall Unit                                  |   | J. Lamar Stall Unit at Arsenal Hill Plant.                                                                                                                                                                                                                                        |
| SWEPCo                                      |   | Southwestern Electric Power Company, an AEP electric utility subsidiary.                                                                                                                                                                                                          |
| TCC                                         |   | AEP Texas Central Company, an AEP electric utility subsidiary.                                                                                                                                                                                                                    |
| Texas Restructuring   Legislation |   | Legislation enacted in 1999 to restructure the electric utility industry in Texas.                                                                                                                                                                                                |
| TNC                                         |   | AEP Texas North Company, an AEP electric utility subsidiary.                                                                                                                                                                                                                      |
| 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.                                                                                                                                                                                                                                            |
| 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 line facilities (including our ability to obtain any necessary regulatory approvals and permits) when needed at acceptable prices and terms and to recover those costs (including the costs of projects that are cancelled) through applicable rate cases or competitive rates.                      |
| · | New legislation, litigation and government regulation, including oversight of 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 (including our dispute with Bank of America).                                                                                                                                                                                                                                                                                                                               |
| · | Our ability to constrain operation and maintenance costs.                                                                                                                                                                                                                                                                                                                                            |
| · | Our ability to develop and execute a strategy based on a view regarding prices of electricity, natural gas and other energy-related commodities.                                                                                                                                                                                                                                                     |
| · | Changes in the creditworthiness of the counterparties with whom we have contractual arrangements, including participants in the energy trading market.                                                                                                                                                                                                                                               |
| · | Actions of rating agencies, including changes in the ratings of debt.                                                                                                                                                                                                                                                                                                                                |
| · | Volatility and changes in markets for electricity, natural gas, coal, nuclear fuel and other energy-related commodities.                                                                                                                                                                                                                                                                             |
| · | Changes in utility regulation, including the implementation of ESPs and related regulation in Ohio and the allocation of costs within regional transmission organizations, including PJM and SPP.                                                                                                                                                                                                    |
| · | Accounting pronouncements periodically issued by accounting standard-setting bodies.                                                                                                                                                                                                                                                                                                                 |
| · | The impact of volatility in the capital markets on the value of the investments held by our pension, other postretirement benefit plans and nuclear decommissioning trust and the impact on future funding requirements.                                                                                                                                                                             |
| · | Prices and demand for power that we generate and sell at wholesale.                                                                                                                                                                                                                                                                                                                                  |
| · | Changes in technology, particularly with respect to new, developing or alternative sources of generation.                                                                                                                                                                                                                                                                                            |
| · | Other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes, cyber security threats and other catastrophic events.                                                                                                                                                                                                                   |
| · | Our ability to recover through rates any remaining unrecovered investment in generating units that may be retired before the end of their previously projected useful lives.                                                                                                                                                                                                                         |

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

----

| Kentucky – In June 2010, a settlement was approved by the KPSC to increase annual base rates by $64 million based on a 10.5% return on common equity.  New rates became effective with the first billing cycle of July 2010.                                                                                                                                                                                                                                        |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| Michigan – In October 2010, a settlement was approved by the MPSC to increase annual base rates by $36 million based on a 10.35% return on common equity as well as the approval of certain surcharges.  New rates will become effective with the first billing cycle of December 2010.                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| Oklahoma – In July 2010, PSO filed for an $82 million increase in annual base rates, including $30 million that is currently being recovered through a rider.  The requested increase is based on an 11.5% return on common equity.  Various parties’ net annual rate recommendations ranged from a rate reduction of $18 million to an increase of less than $1 million.  A hearing is scheduled for December 2010.                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| Texas – In April 2010, a settlement was approved by the PUCT to increase SWEPCo’s base rates by approximately $15 million annually, effective May 2010, including a return on equity of 10.33%.  The settlement agreement also allows SWEPCo a $10 million one-year surcharge rider to recover additional vegetation management costs that SWEPCo must spend within two years.                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| Virginia – In July 2010, the Virginia SCC authorized an annual increase in revenues of $62 million based on a 10.53% return on equity.  The order disallowed recovery of $54 million of costs related to the Mountaineer Carbon Capture and Storage Project and allowed the deferral of approximately $25 million of incremental storm expenses incurred in 2009.  As a result, APCo recorded a pretax loss of $29 million in the second quarter of 2010. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| West Virginia – In May 2010, APCo and WPCo filed a request with the WVPSC to increase annual base rates by $156 million to be effective March 2011.  The request is based on an 11.75% return on common equity and includes a request for recovery of and a return on the West Virginia jurisdictional share of the Mountaineer Carbon Capture and Storage Project.  A decision from the WVPSC is expected in March 2011.                                 |

----

----

----

----

----

----

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

|                             | Three Months Ended September 30, |   | Nine Months Ended September 30, |   |
|----------------------------------|----------------------------------|--------|---------------------------------|--------|
|                             | 2010                             |   | 2009                            |   | 2010 |   | 2009 |   |
|                             | (in millions)                    |   |
| Utility Operations               |                             | $      | 541                             |   |   | $ | 448 |   |   | $ | 1,017 |   |   | $ | 1,121 |   |
| AEP River Operations             |                             |   | 14                              |   |   |   | 10 |   |   |   | 16 |   |   |   | 22 |   |
| Generation and Marketing         |                             |   | -                               |   |   |   | 5 |   |   |   | 17 |   |   |   | 33 |   |
| All Other (a)                    |                             |   | 2                               |   |   |   | (17 | ) |   |   | (10 | ) |   |   | (45 | ) |
| Income Before Extraordinary Loss |                             | $      | 557                             |   |   | $ | 446 |   |   | $ | 1,040 |   |   | $ | 1,131 |   |

| (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 completely expire in 2011. |
|   | ·                                                       | Revenue sharing related to the Plaquemine Cogeneration Facility. |

----

|                             |   | Three Months Ended |   |   | Nine Months Ended |   |
|----------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                             |   | September 30,      |   |   | September 30,     |   |
|                             |   | 2010               |   |   | 2009              |   |   | 2010 |   |   | 2009 |   |
|                             |   | (in millions)      |   |
| Revenues                         |   | $                  | 3,907  |   |              | $      | 3,389 |   |   | $ | 10,544 |   |   | $ | 9,712 |   |
| Fuel and Purchased Power         |   |               | 1,427  |   |              |   | 1,145 |   |   |   | 3,784 |   |   |   | 3,337 |   |
| Gross Margin                     |   |               | 2,480  |   |              |   | 2,244 |   |   |   | 6,760 |   |   |   | 6,375 |   |
| Depreciation and Amortization    |   |               | 413    |   |              |   | 412 |   |   |   | 1,205 |   |   |   | 1,173 |   |
| Other Operating Expenses         |   |               | 1,057  |   |              |   | 988 |   |   |   | 3,411 |   |   |   | 2,975 |   |
| Operating Income                 |   |               | 1,010  |   |              |   | 844 |   |   |   | 2,144 |   |   |   | 2,227 |   |
| Other Income, Net                |   |               | 39     |   |              |   | 42 |   |   |   | 124 |   |   |   | 97 |   |
| Interest Expense                 |   |               | 238    |   |              |   | 232 |   |   |   | 710 |   |   |   | 679 |   |
| Income Tax Expense               |   |               | 270    |   |              |   | 206 |   |   |   | 541 |   |   |   | 524 |   |
| Income Before Extraordinary Loss |   | $                  | 541    |   |              | $      | 448 |   |   | $ | 1,017 |   |   | $ | 1,121 |   |

| Summary of KWH Energy Sales for Utility Operations                                     |
|----------------------------------------------------------------------------------------|
| For the Three and Nine Months Ended September 30, 2010 and 2009                        |
|                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                   |   | Three Months Ended |   | Nine Months Ended |
|                                                                                   |   | September 30, |   | September 30, |
| Energy/Delivery Summary                                                                |   | 2010  |   | 2009 |   | 2010  |   | 2009  |
|                                                                                   |   | (in millions of KWH) |
| Retail:                                                                                |   |   |   |   |   |   |   |   |
| Residential                                                                            |   |  17,817  |   |  15,968  |   |  48,250  |   |  44,730  |
| Commercial                                                                             |   |  14,032  |   |  13,569  |   |  38,508  |   |  37,773  |
| Industrial                                                                             |   |  14,460  |   |  13,642  |   |  42,503  |   |  40,563  |
| Miscellaneous                                                                          |   |  832  |   |  798  |   |  2,328  |   |  2,291  |
| Total Retail (a)                                                                       |   |  47,141  |   |  43,977  |   |  131,589  |   |  125,357  |
|                                                                                   |   |   |   |   |   |   |   |   |
| Wholesale                                                                              |   |  10,689  |   |  8,285  |   |  25,846  |   |  22,229  |
|                                                                                   |   |   |   |   |   |   |   |   |
| Total KWHs                                                                             |   |  57,830  |   |  52,262  |   |  157,435  |   |  147,586  |
|                                                                                   |   |   |   |   |   |   |   |   |
| (a) Includes energy delivered to customers served by AEP's Texas Wires Companies. |

----

| Summary of Heating and Cooling Degree Days for Utility Operations |
|-------------------------------------------------------------------|
| For the Three and Nine Months Ended September 30, 2010 and 2009   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   | Three Months Ended |   | Nine Months Ended |
|                                                              |   | September 30, | September 30, |
|                                                              |   | 2010  |   | 2009  |   | 2010  |   | 2009  |
|                                                              |   | (in degree days) |
| Eastern Region                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Actual - Heating (a)                                              |   |  1  |   |   |  6  |   |   |  1,976  |   |   |  1,982  |
| Normal - Heating (b)                                              |   |  7  |   |   |  7  |   |   |  1,918  |   |   |  1,969  |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual - Cooling (c)                                              |   |  859  |   |   |  509  |   |   |  1,294  |   |   |  813  |
| Normal - Cooling (b)                                              |   |  691  |   |   |  703  |   |   |  984  |   |   |  993  |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Western Region                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Actual - Heating (a)                                              |   |  -  |   |   |  -  |   |   |  764  |   |   |  540  |
| Normal - Heating (b)                                              |   |  1  |   |   |  1  |   |   |  596  |   |   |  601  |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual - Cooling (d)                                              |   |  1,471  |   |   |  1,349  |   |   |  2,357  |   |   |  2,309  |
| Normal - Cooling (b)                                              |   |  1,353  |   |   |  1,362  |   |   |  2,168  |   |   |  2,174  |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| (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. |

----

| Third Quarter of 2010 Compared to Third Quarter of 2009          |   |
|------------------------------------------------------------------|--------|
|                                                             |   |   |   |
| Reconciliation of Third Quarter of 2009 to Third Quarter of 2010 |   |
| Income from Utility Operations Before Extraordinary Loss         |   |
| (in millions)                                                    |   |
|                                                             |   |   |   |
| Third Quarter of 2009                                            |   | $ | 448 |   |
|                                                             |   |   |   |   |
| Changes in Gross Margin:                                         |   |   |   |   |
| Retail Margins                                                   |   |   | 246 |   |
| Off-system Sales                                                 |   |   | 42 |   |
| Other Revenues                                                   |   |   | (52 | ) |
| Total Change in Gross Margin                                     |   |   | 236 |   |
|                                                             |   |   |   |   |
| Total Expenses and Other:                                        |   |   |   |   |
| Other Operation and Maintenance                                  |   |   | (52 | ) |
| Depreciation and Amortization                                    |   |   | (1 | ) |
| Taxes Other Than Income Taxes                                    |   |   | (17 | ) |
| Interest and Investment Income                                   |   |   | (4 | ) |
| Carrying Costs Income                                            |   |   | 6 |   |
| Allowance for Equity Funds Used During Construction              |   |   | (6 | ) |
| Interest Expense                                                 |   |   | (6 | ) |
| Equity Earnings of Unconsolidated Subsidiaries                   |   |   | 1 |   |
| Total Expenses and Other                                         |   |   | (79 | ) |
|                                                             |   |   |   |   |
| Income Tax Expense                                               |   |   | (64 | ) |
|                                                             |   |   |   |   |
| Third Quarter of 2010                                            |   | $ | 541 |   |

| · | Retail Margins increased $246 million primarily due to the following: |
|--------|-----------------------------------------------------------------------|
|   | ·                                                                | Successful rate proceedings in our service territories which include: |
|   |                                                                  | · | A $31 million increase in the recovery of E&R costs in Virginia, construction financing costs in West Virginia and costs related to the Transmission Rate Adjustment Clause in Virginia. |
|   |                                                                  | · | A $22 million rate increase in Kentucky. |
|   |                                                                  | · | An $18 million net rate increase for SWEPCo. |
|   |                                                                  | · | A $16 million net rate increase for I&M. |
|   |                                                                  | · | A $15 million rate increase in Oklahoma. |
|   |                                                                  | · | A $13 million increase in the recovery of advanced metering costs in Texas. |
|   |                                                                  | · | A $9 million net rate increase in our other jurisdictions. |
|   |                                                                  | · | For the increases described above, $50 million of these rate increases relate to riders/trackers which have corresponding increases in Other Operation and Maintenance expense line items discussed below. |
|   | ·                                                                | A $131 million increase in weather-related usage primarily due to a 69% increase in cooling degree days in our eastern region. |
|   | ·                                                                | A $19 million increase in fuel margins due to higher fuel and purchased power costs recorded in 2009 related to the Cook Plant Unit 1 (Unit 1) shutdown.  This increase in fuel margins was offset by a corresponding decrease in Other Revenues as discussed below. |
|   | These increases were partially offset by:                             |
|   | ·                                                                | A $24 million net decrease due to a favorable fuel recovery adjustment in Ohio that was recorded in 2009. |
|   | ·                                                                | A $9 million decrease due to the termination of an I&M unit power agreement. |

----

| · | Margins from Off-system Sales increased $42 million primarily due to increased prices and higher physical sales volumes in our eastern region, partially offset by lower trading and marketing margins.                                                                                                                                                                                                                                                                                    |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Other Revenues decreased $52 million primarily due to the Cook Plant accidental outage insurance proceeds of $46 million which ended when Unit 1 returned to service in December 2009.  I&M reduced customer bills by approximately $19 million in the third quarter of 2009 for the cost of replacement power resulting from the Unit 1 outage.  This decrease in insurance proceeds was offset by a corresponding increase in Retail Margins as discussed above. |

| · | Other Operation and Maintenance expenses increased $52 million primarily due to:                                                                                                 |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                           | A $45 million increase in demand side management, energy efficiency, vegetation management programs and other related expenses.  All of these expenses are currently recovered dollar-for-dollar in rate recovery riders/trackers in Gross Margin. |
|   | ·                                                                                                                                                                           | A $7 million increase primarily due to a net increase in employee related expenses. |
| · | Taxes Other Than Income Taxes increased $17 million primarily due to increased revenue taxes as the result of higher than anticipated generation load and higher property taxes. |
| · | Carrying Costs Income increased $6 million primarily due to increased environmental construction deferrals in Virginia and a higher under-recovered fuel balance for OPCo.       |
| · | Allowance for Equity Funds Used During Construction decreased $6 million primarily due to SWEPCo’s completed construction of the Stall Unit in June 2010.                  |
| · | Interest Expense increased $6 million primarily due to an increase in long-term debt.                                                                                            |
| · | Income Tax Expense increased $64 million primarily due to an increase in pretax book income and other book/tax differences which are accounted for on a flow-through basis.      |

----

| Nine Months Ended September 30, 2010 Compared to Nine Months Ended September 30, 2009          |
|------------------------------------------------------------------------------------------------|
|                                                                                           |   |   |   |   |
| Reconciliation of Nine Months Ended September 30, 2009 to Nine Months Ended September 30, 2010 |
| Income from Utility Operations Before Extraordinary Loss                                       |
| (in millions)                                                                                  |
|                                                                                           |   |   |   |   |
| Nine Months Ended September 30, 2009                                                           |   | $ |  1,121  |   |
|                                                                                           |   |   |   |   |
| Changes in Gross Margin:                                                                       |   |   |   |   |
| Retail Margins                                                                                 |   |   |  526  |   |
| Off-system Sales                                                                               |   |   |  43  |   |
| Transmission Revenues                                                                          |   |   |  8  |   |
| Other Revenues                                                                                 |   |   |  (192) |   |
| Total Change in Gross Margin                                                                   |   |   |  385  |   |
|                                                                                           |   |   |   |   |
| Total Expenses and Other:                                                                      |   |   |   |   |
| Other Operation and Maintenance                                                                |   |   |  (396) |   |
| Depreciation and Amortization                                                                  |   |   |  (32) |   |
| Taxes Other Than Income Taxes                                                                  |   |   |  (40) |   |
| Interest and Investment Income                                                                 |   |   |  4  |   |
| Carrying Costs Income                                                                          |   |   |  18  |   |
| Allowance for Equity Funds Used During Construction                                            |   |   |  1  |   |
| Interest Expense                                                                               |   |   |  (31) |   |
| Equity Earnings of Unconsolidated Subsidiaries                                                 |   |   |  4  |   |
| Total Expenses and Other                                                                       |   |   |  (472) |   |
|                                                                                           |   |   |   |   |
| Income Tax Expense                                                                             |   |   |  (17) |   |
|                                                                                           |   |   |   |   |
| Nine Months Ended September 30, 2010                                                           |   | $ |  1,017  |   |

| · | Retail Margins increased $526 million primarily due to the following:                                                                                                                                   |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                  | Successful rate proceedings in our service territories which include: |
|   |                                                                                                                                                                                                    | · | A $106 million increase in the recovery of E&R costs in Virginia, construction financing costs in West Virginia and costs related to the Transmission Rate Adjustment Clause in Virginia. |
|   |                                                                                                                                                                                                    | · | A $38 million increase in the recovery of advanced metering costs in Texas. |
|   |                                                                                                                                                                                                    | · | A $34 million rate increase in Oklahoma. |
|   |                                                                                                                                                                                                    | · | A $31 million net increase in rates for SWEPCo. |
|   |                                                                                                                                                                                                    | · | A $26 million rate increase in Kentucky. |
|   |                                                                                                                                                                                                    | · | A $25 million rate increase in Ohio. |
|   |                                                                                                                                                                                                    | · | A $24 million net rate increase for I&M. |
|   |                                                                                                                                                                                                    | · | A $6 million net increase in rates in our other jurisdictions. |
|   |                                                                                                                                                                                                    | · | For the increases described above, $115 million of these rate increases relate to riders/trackers which have corresponding increases in Other Operation and Maintenance expense line items discussed below. |
|   | ·                                                                                                                                                                                                  | A $202 million increase in weather-related usage primarily due to a 59% increase in cooling degree days in our eastern region and a 41% increase in heating degree days in our western region. |
|   | ·                                                                                                                                                                                                  | A $59 million increase in fuel margins due to higher fuel and purchased power costs recorded in 2009 related to the Unit 1 shutdown.  This increase in fuel margins was offset by a corresponding decrease in Other Revenues as discussed below. |
|   | These increases were partially offset by:                                                                                                                                                               |
|   | ·                                                                                                                                                                                                  | A $27 million decrease due to the termination of an I&M unit power agreement. |
| · | Margins from Off-system Sales increased $43 million primarily due to increased prices and higher physical sales volumes in our eastern region, partially offset by lower trading and marketing margins. |

----

| · | Transmission Revenues increased $8 million primarily due to increased revenues in the ERCOT, PJM and SPP regions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Other Revenues decreased $192 million primarily due to the Cook Plant accidental outage insurance proceeds of $145 million which ended when Unit 1 returned to service in December 2009.  I&M reduced customer bills by approximately $59 million in the first nine months of 2009 for the cost of replacement power resulting from the Unit 1 outage.  This decrease in insurance proceeds was offset by a corresponding increase in Retail Margins as discussed above.  Other Revenues also decreased due to lower gains on sales of emission allowances of $26 million, partially offset by sharing in certain fuel clauses. |

| · | Other Operation and Maintenance expenses increased $396 million primarily due to the following:                                                                                                                                                                                                                                                                             |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                                                                                                                                                      | A $275 million increase due to expenses related to cost reduction initiatives. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                      | A $101 million increase in demand side management, energy efficiency, vegetation management programs and other related expenses.  All of these expenses are currently recovered dollar-for-dollar in rate recovery riders/trackers in Gross Margin. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                      | A $54 million increase due to the write-off of APCo’s Virginia Share of the Mountaineer Carbon Capture and Storage Project as denied for recovery by the Virginia SCC. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                      | A $33 million increase primarily due to a net increase in employee related expenses. |
|   | These increases were partially offset by:                                                                                                                                                                                                                                                                                                                                   |
|   | ·                                                                                                                                                                                                                                                                                                                                                                      | A $47 million decrease in storm related expenses primarily due to the deferral of $29 million of 2009 storm costs in Virginia as allowed by the Virginia SCC. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                      | A $20 million decrease in customer assistance and other customer accounts expense. |
| · | Depreciation and Amortization increased $32 million primarily due to new environmental control improvements placed in service at APCo, CSPCo and OPCo.                                                                                                                                                                                                                      |
| · | Taxes Other Than Income Taxes increased $40 million primarily due to increased revenue taxes as the result of higher than anticipated generation load, higher property and franchise taxes and the employer portion of payroll taxes incurred related to the cost reduction initiatives.                                                                                    |
| · | Carrying Costs Income increased $18 million primarily due to increased environmental construction deferrals in Virginia and a higher under-recovered fuel balance for OPCo.                                                                                                                                                                                                 |
| · | Interest Expense increased $31 million primarily due to an increase in long-term debt and a decrease in the debt component of AFUDC due to lower CWIP balances at APCo, CSPCo and OPCo.                                                                                                                                                                                     |
| · | Income Tax Expense increased $17 million primarily due to the regulatory accounting treatment of state income taxes, other book/tax differences which are accounted for on a flow-through basis and the tax treatment associated with the future reimbursement of Medicare Part D retiree prescription drug benefits, partially offset by a decrease in pretax book income. |

----

----

|                                                  |   | September 30, 2010    |   |   | December 31, 2009 |
|-------------------------------------------------------|--------|-----------------------|--------|--------|-------------------|
|                                                  |   | (dollars in millions) |
| Long-term Debt, including amounts due within one year |   | $                     | 17,281 |   |              |   | 53.2 | % |   | $ | 17,498 |   |   |   | 56.8 | % |
| Short-term Debt                                       |   |                  | 1,466  |   |              |   | 4.5 |   |   |   | 126 |   |   |   | 0.4 |   |
| Total Debt                                            |   |                  | 18,747 |   |              |   | 57.7 |   |   |   | 17,624 |   |   |   | 57.2 |   |
| Preferred Stock of Subsidiaries                       |   |                  | 60     |   |              |   | 0.2 |   |   |   | 61 |   |   |   | 0.2 |   |
| AEP Common Equity                                     |   |                  | 13,656 |   |              |   | 42.1 |   |   |   | 13,140 |   |   |   | 42.6 |   |
|                                                  |   |                  |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Total Debt and Equity Capitalization                  |   | $                     | 32,463 |   |              |   | 100.0 | % |   | $ | 30,825 |   |   |   | 100.0 |  % |

|                      |                             |   | Amount            |              | Maturity   |
|---------------------------|----------------------------------|--------|-------------------|-------------------|------------|
|                      |                             |   | (in millions)     |              |       |
| Commercial Paper Backup:  |                             |   |              |              |       |
|                      | Revolving Credit Facility        |   | $                 |  1,454  |       | April 2012 |
|                      | Revolving Credit Facility        |   |              |  1,500  |       | June 2013 |
| Revolving Credit Facility |                             |   |  478    |              | April 2011 |
| Total                     |                             |   |  3,432  |              |       |
| Cash and Cash Equivalents |                             |   |  1,090  |              |       |
| Total Liquidity Sources   |                             |   |  4,522  |              |       |
| Less:                     | AEP Commercial Paper Outstanding |   |              |  713    |       |   |
|                      | Letters of Credit Issued         |   |              |  602    |       |   |
|                      |                             |   |              |              |       |   |
| Net Available Liquidity   |                             | $      |  3,207  |              |       |

----

----

|                                             | Nine Months Ended |   |
|--------------------------------------------------|-------------------|--------|
|                                             | September 30,     |   |
|                                             | 2010              |   | 2009 |   |
|                                             | (in millions)     |   |
| Cash and Cash Equivalents at Beginning of Period |              | $      | 490 |   |   | $ | 411 |   |
| Net Cash Flows from Operating Activities         |              |   | 1,702 |   |   |   | 1,871 |   |
| Net Cash Flows Used for Investing Activities     |              |   | (1,575 | ) |   |   | (2,097 | ) |
| Net Cash Flows from Financing Activities         |              |   | 473 |   |   |   | 692 |   |
| Net Increase in Cash and Cash Equivalents        |              |   | 600 |   |   |   | 466 |   |
| Cash and Cash Equivalents at End of Period       |              | $      | 1,090 |   |   | $ | 877 |   |

| Operating Activities                     |              |   |   |   |   |   |
|------------------------------------------|-------------------|--------|--------|--------|--------|--------|
|                                     |              |   |   |   |   |   |
|                                     | Nine Months Ended |   |
|                                     | September 30,     |   |
|                                     | 2010              |   | 2009   |   |
|                                     | (in millions)     |   |
| Net Income                               |              | $      | 1,040  |   |   | $      | 1,126 |   |
| Depreciation and Amortization            |              |   | 1,237  |   |   |   | 1,200 |   |
| Other                                    |              |   | (575   | )      |   |   | (455 | ) |
| Net Cash Flows from Operating Activities |              | $      | 1,702  |   |   | $      | 1,871 |   |

----

| Investing Activities                         |              |   |   |   |   |   |
|----------------------------------------------|-------------------|--------|--------|--------|--------|--------|
|                                         |              |   |   |   |   |   |
|                                         | Nine Months Ended |   |
|                                         | September 30,     |   |
|                                         | 2010              |   | 2009   |   |
|                                         | (in millions)     |   |
| Construction Expenditures                    |              | $      | (1,629 | )      |   | $      | (2,123 | ) |
| Acquisitions of Nuclear Fuel                 |              |   | (69    | )      |   |   | (153 | ) |
| Proceeds from Sales of Assets                |              |   | 160    |   |   |   | 258 |   |
| Other                                        |              |   | (37    | )      |   |   | (79 | ) |
| Net Cash Flows Used for Investing Activities |              | $      | (1,575 | )      |   | $      | (2,097 | ) |

| Financing Activities                     |              |   |   |   |   |   |
|------------------------------------------|-------------------|--------|--------|--------|--------|--------|
|                                     |              |   |   |   |   |   |
|                                     | Nine Months Ended |   |
|                                     | September 30,     |   |
|                                     | 2010              |   | 2009   |   |
|                                     | (in millions)     |   |
| Issuance of Common Stock, Net            |              | $      | 65     |   |   | $      | 1,706 |   |
| Issuance/Retirement of Debt, Net         |              |   | 1,087  |   |   |   | (371 | ) |
| Dividends Paid on Common Stock           |              |   | (602   | )      |   |   | (564 | ) |
| Other                                    |              |   | (77    | )      |   |   | (79 | ) |
| Net Cash Flows from Financing Activities |              | $      | 473    |   |   | $      | 692 |   |

----

|                                                 | September 30, |   | December 31, |   |
|------------------------------------------------------|---------------|--------|--------------|--------|
|                                                 | 2010          |   | 2009         |   |
|                                                 | (in millions) |   |
| AEP Credit Accounts Receivable Purchase Commitments  |          | $      | -            |   |   | $ | 631 |   |
| Rockport Plant Unit 2 Future Minimum Lease Payments  |          |   | 1,846        |   |   |   | 1,920 |   |
| 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 *                                       |   |               |  7  |   |          |  -  |   |   |  -  |
| 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) * |   |               | 1        |   |          | -        |   |   | -  |
| Number of Flagrant Violations under 110(b)(2) *           |                                                               |   |  -       |          |   |  -  |          |   |  -  |
| Number of Imminent Danger Orders Issued under 107(a) *    |                                                               |   |  -       |          |   |  -  |          |   |  -  |
| Total Dollar Value of Proposed Assessments                |                                                               | $      |  11,472  |          | $      |  -  |          | $ |  -  |
| Number of Mining-related Fatalities                       |                                                               |   |  -       |          |   |  -  |          |   |  -  |
|                                                      |                                                               |   |               |          |   |          |          |   |   |
| * References to sections under the Mine Act               |                                                               |   |               |          |   |          |          |   |   |

----

----

|                                                                                | MTM Risk Management Contract Net Assets (Liabilities) |
|-------------------------------------------------------------------------------------|-------------------------------------------------------|
|                                                                                | Nine Months Ended September 30, 2010                  |
|                                                                                | (in millions)                                         |
|                                                                                |                                                  |   |   | Generation |   |   |   |   |
|                                                                                |                                                  | Utility | and |   |   |
|                                                                                |                                                  | Operations | Marketing | All Other | Total |
| Total MTM Risk Management Contract Net Assets (Liabilities)                         |                                                  |   |   |   |   |   |   |   |   |   |   |
|                                                                                | at December 31, 2009                             | $ |  134  |   | $ |  147  |   | $ |  (3) |   | $ |  278  |
| (Gain) Loss from Contracts Realized/Settled During the Period and                   |                                                  |   |   |   |   |   |   |   |   |   |   |
|                                                                                | Entered in a Prior Period                             |   |  (62) |   |   |  (13) |   |   |  5  |   |   |  (70) |
| Fair Value of New Contracts at Inception When Entered During the Period (a)    |                                                  |  15  |   |   |  8  |   |   |  -  |   |   |  23  |
| Net Option Premiums Received for Unexercised or Unexpired                           |                                                  |   |   |   |   |   |   |   |   |   |   |
|                                                                                | Option Contracts Entered During the Period            |   |  (1) |   |   |  -  |   |   |  -  |   |   |  (1) |
| Changes in Fair Value Due to Valuation Methodology Changes on Forward Contracts (b) |                                                  |  (2) |   |   |  (2) |   |   |  -  |   |   |  (4) |
| Changes in Fair Value Due to Market Fluctuations During thePeriod (c)     |  11                                         |   |   |  2  |   |   |  -  |   |   |  13  |
| Changes in Fair Value Allocated to Regulated Jurisdictions (d)                 |                                                  |  25  |   |   |  -  |   |   |  -  |   |   |  25  |
| Total MTM Risk Management Contract Net Assets at September 30, 2010            | $                                                     |  120  |   | $ |  142  |   | $ |  2  |   |   |  264  |
|                                                                                |                                                  |   |   |   |   |   |   |   |   |   |   |   |
| Commodity Cash Flow Hedge Contracts                                                 |                                                  |   |   |   |   |   |   |   |   |   |  3  |
| Interest Rate and Foreign Currency Cash Flow Hedge Contracts                        |                                                  |   |   |   |   |   |   |   |   |   |  (6) |
| Fair Value Hedge Contracts                                                          |                                                  |   |   |   |   |   |   |   |   |   |  7  |
| Collateral Deposits                                                                 |                                                  |   |   |   |   |   |   |   |   |   |  208  |
| Total MTM Derivative Contract Net Assets at September 30, 2010                      |                                                  |   |   |   |   |   |   |   |   | $ |  476  |

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

----

|                           |                         |       | Exposure              |            |           |           |           |   | Number of         |            | Net Exposure |
|--------------------------------|------------------------------|------------|-----------------------|-----------------|----------------|----------------|----------------|--------|-------------------|-----------------|--------------|
|                           |                         | Before     |                  |            | Counterparties | of             |
|                           |                         | Credit     | Credit                | Net             | >10% of     | Counterparties |
| Counterparty Credit Quality    | Collateral                   | Collateral | Exposure              | Net Exposure    | >10%        |
|                           |                         |       |                  |            |           |           |           |   |              |            |         |   |   |   |   |   |
|                           |                         |       | (dollars in millions) |
| Investment Grade               |                         | $          |  801        |            | $              |  41  |           | $      |  760    |            |         |  2  |   | $ |  221  |
| Split Rating                   |                         |       |  4          |            |           |  -   |           |   |  4      |            |         |  1  |   |   |  4  |
| Noninvestment Grade            |                         |       |  2          |            |           |  1   |           |   |  1      |            |         |  2  |   |   |  1  |
| No External Ratings:           |                         |       |                  |            |           |           |           |   |              |            |         |   |   |   |   |
|                           | Internal Investment Grade    |       |                  |  210  |           |           |  -   |   |              |  210  |         |   |  2  |   |   |  133  |
|                           | Internal Noninvestment Grade |       |                  |  104  |           |           |  11  |   |              |  93   |         |   |  4  |   |   |  72  |
| Total as of September 30, 2010 |                         | $          |  1,121      |            | $              |  53  |           | $      |  1,068  |            |         |  11  |   | $ |  431  |
|                           |                         |       |                  |            |           |           |           |   |              |            |         |   |   |   |   |   |
| Total as of December 31, 2009  |                         | $          |  846        |            | $              |  58  |           | $      |  788    |            |         |  12  |   | $ |  317  |

----

| Nine Months Ended  |   |   |   |    | Twelve Months Ended |
|--------------------|--------|--------|--------|---------|---------------------|
| September 30, 2010 |   |   |   |    | December 31, 2009   |
| (in millions)      |   |   |   |    | (in millions)       |
| End                |   | High   |   | Average |                | Low |   |   |   |   | End |   | High |   | Average |   | Low |
| $-                 |   | $2     |   | $1      |                | $- |   |   |   |   | $1 |   | $2 |   | $1 |   | $- |

----

| AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES            |   |
|---------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME                               |   |
| For the Three and Nine Months Ended September 30, 2010 and 2009           |   |
| (in millions, except per-share and share amounts)                         |   |
| (Unaudited)                                                               |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                      |   | Three Months Ended |   |   | Nine Months Ended |   |
|                                                                      |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| REVENUES                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Utility Operations                                                        |   | $ | 3,876 |   |   | $ | 3,364 |   |   | $ | 10,468 |   |   | $ | 9,666 |   |
| Other Revenues                                                            |   |   | 188 |   |   |   | 183 |   |   |   | 525 |   |   |   | 541 |   |
| TOTAL REVENUES                                                            |   |   | 4,064 |   |   |   | 3,547 |   |   |   | 10,993 |   |   |   | 10,207 |   |
| EXPENSES                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel and Other Consumables Used for Electric Generation                   |   |   | 1,189 |   |   |   | 931 |   |   |   | 3,098 |   |   |   | 2,624 |   |
| Purchased Electricity for Resale                                          |   |   | 247 |   |   |   | 247 |   |   |   | 712 |   |   |   | 800 |   |
| Other Operation                                                           |   |   | 707 |   |   |   | 642 |   |   |   | 2,374 |   |   |   | 1,890 |   |
| Maintenance                                                               |   |   | 262 |   |   |   | 255 |   |   |   | 776 |   |   |   | 821 |   |
| Depreciation and Amortization                                             |   |   | 424 |   |   |   | 421 |   |   |   | 1,237 |   |   |   | 1,200 |   |
| Taxes Other Than Income Taxes                                             |   |   | 210 |   |   |   | 193 |   |   |   | 619 |   |   |   | 582 |   |
| TOTAL EXPENSES                                                            |   |   | 3,039 |   |   |   | 2,689 |   |   |   | 8,816 |   |   |   | 7,917 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING INCOME                                                          |   |   | 1,025 |   |   |   | 858 |   |   |   | 2,177 |   |   |   | 2,290 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income (Expense):                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest and Investment Income                                            |   |   | 3 |   |   |   | 5 |   |   |   | 24 |   |   |   | 5 |   |
| Carrying Costs Income                                                     |   |   | 18 |   |   |   | 12 |   |   |   | 51 |   |   |   | 33 |   |
| Allowance for Equity Funds Used During Construction                       |   |   | 17 |   |   |   | 23 |   |   |   | 60 |   |   |   | 59 |   |
| Interest Expense                                                          |   |   | (251 | ) |   |   | (248 | ) |   |   | (750 | ) |   |   | (726 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME BEFORE INCOME TAX EXPENSE AND EQUITY EARNINGS                      |   |   | 812 |   |   |   | 650 |   |   |   | 1,562 |   |   |   | 1,661 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income Tax Expense                                                        |   |   | 258 |   |   |   | 208 |   |   |   | 530 |   |   |   | 535 |   |
| Equity Earnings of Unconsolidated Subsidiaries                            |   |   | 3 |   |   |   | 4 |   |   |   | 8 |   |   |   | 5 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME BEFORE EXTRAORDINARY LOSS                                          |   |   | 557 |   |   |   | 446 |   |   |   | 1,040 |   |   |   | 1,131 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EXTRAORDINARY LOSS, NET OF TAX                                            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (5 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME                                                                |   |   | 557 |   |   |   | 446 |   |   |   | 1,040 |   |   |   | 1,126 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less:  Net Income Attributable to Noncontrolling Interests      |   |   | 1 |   |   |   | 2 |   |   |   | 3 |   |   |   | 5 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME ATTRIBUTABLE TO AEP SHAREHOLDERS                               |   |   | 556 |   |   |   | 444 |   |   |   | 1,037 |   |   |   | 1,121 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less: Preferred Stock Dividend Requirements of Subsidiaries               |   |   | 1 |   |   |   | 1 |   |   |   | 2 |   |   |   | 2 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS ATTRIBUTABLE TO AEP COMMON SHAREHOLDERS                          |   | $ | 555 |   |   | $ | 443 |   |   | $ | 1,035 |   |   | $ | 1,119 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| WEIGHTED AVERAGE NUMBER OF BASIC AEP COMMON SHARES OUTSTANDING            |   |   | 479,578,139 |   |   |   | 476,948,143 |   |   |   | 479,023,690 |   |   |   | 452,255,119 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BASIC EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO AEP COMMON SHAREHOLDERS   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income Before Extraordinary Loss                                          |   | $ | 1.16 |   |   | $ | 0.93 |   |   | $ | 2.16 |   |   | $ | 2.48 |   |
| Extraordinary Loss, Net of Tax                                            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (0.01 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL BASIC EARNINGS PER SHARE ATTRIBUTABLE TO AEP COMMON SHAREHOLDERS    |   | $ | 1.16 |   |   | $ | 0.93 |   |   | $ | 2.16 |   |   | $ | 2.47 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| WEIGHTED AVERAGE NUMBER OF DILUTED AEP COMMON SHARES OUTSTANDING          |   |   | 479,750,447 |   |   |   | 477,111,144 |   |   |   | 479,261,415 |   |   |   | 452,495,494 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| DILUTED EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO AEP COMMON SHAREHOLDERS |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income Before Extraordinary Loss                                          |   | $ | 1.16 |   |   | $ | 0.93 |   |   | $ | 2.16 |   |   | $ | 2.48 |   |
| Extraordinary Loss, Net of Tax                                            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (0.01 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO AEP COMMON               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SHAREHOLDERS                                                              |   | $ | 1.16 |   |   | $ | 0.93 |   |   | $ | 2.16 |   |   | $ | 2.47 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH DIVIDENDS PAID PER SHARE                                             |   | $ | 0.42 |   |   | $ | 0.41 |   |   | $ | 1.25 |   |   | $ | 1.23 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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 Nine Months Ended September 30, 2010 and 2009               |
| (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, 2008                              |   |  426  |   | $ |  2,771  |   | $ |  4,527  |   | $ |  3,847  |   | $ |  (452) |   | $ |  17  |   | $ |  10,710  |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of Common Stock                                            |   |  71  |   |   |  464  |   |   |  1,294  |   |   |   |   |   |   |   |   |   |   |   |  1,758  |
| Common Stock Dividends                                              |   |   |   |   |   |   |   |   |   |   |  (559) |   |   |   |   |   |  (5) |   |   |  (564) |
| Preferred Stock Dividend Requirements of                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                | Subsidiaries |   |   |   |   |   |   |   |   |   |   |  (2) |   |   |   |   |   |   |   |   |  (2) |
| Purchase of JMG                                                     |   |   |   |   |   |   |   |  55  |   |   |   |   |   |   |   |   |  (18) |   |   |  37  |
| Other Changes in Equity                                             |   |   |   |   |   |   |   |  (50) |   |   |   |   |   |   |   |   |  1  |   |   |  (49) |
| SUBTOTAL – EQUITY                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  11,890  |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income, Net of                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                | Taxes: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   | Cash Flow Hedges, Net of Tax of $3 |   |   |   |   |   |   |   |   |   |   |   |   |   |  5  |   |   |   |   |   |  5  |
|                                                                |   | Securities Available for Sale, Net of Tax of $5 |   |   |   |   |   |   |   |   |   |   |   |   |   |  10  |   |   |   |   |   |  10  |
|                                                                |   | Amortization of Pension and OPEB Deferred |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   |   | Costs, Net of Tax of $18 |   |   |   |   |   |   |   |   |   |   |   |   |   |  33  |   |   |   |   |   |  33  |
| NET INCOME                                                          |   |   |   |   |   |   |   |   |   |   |  1,121  |   |   |   |   |   |  5  |   |   |  1,126  |
| TOTAL COMPREHENSIVE INCOME                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  1,174  |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – SEPTEMBER 30, 2009                             |   |  497  |   | $ |  3,235  |   | $ |  5,826  |   | $ |  4,407  |   | $ |  (404) |   | $ |  -  |   | $ |  13,064  |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – DECEMBER 31, 2009                              |   |  498  |   | $ |  3,239  |   | $ |  5,824  |   | $ |  4,451  |   | $ |  (374) |   | $ |  -  |   | $ |  13,140  |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of Common Stock                                            |   |  2  |   |   |  13  |   |   |  53  |   |   |   |   |   |   |   |   |   |   |   |  66  |
| Common Stock Dividends                                              |   |   |   |   |   |   |   |   |   |   |  (599) |   |   |   |   |   |  (3) |   |   |  (602) |
| Preferred Stock Dividend Requirements of                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                | Subsidiaries |   |   |   |   |   |   |   |   |   |   |  (2) |   |   |   |   |   |   |   |   |  (2) |
| Other Changes in Equity                                             |   |   |   |   |   |   |   |  4  |   |   |   |   |   |   |   |   |   |   |   |  4  |
| SUBTOTAL – EQUITY                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  12,606  |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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 $5 |   |   |   |   |   |   |   |   |   |   |   |   |   |  (9) |   |   |   |   |   |  (9) |
|                                                                |   | Amortization of Pension and OPEB Deferred |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   |   | Costs, Net of Tax of $9 |   |   |   |   |   |   |   |   |   |   |   |   |   |  17  |   |   |   |   |   |  17  |
| NET INCOME                                                          |   |   |   |   |   |   |   |   |   |   |  1,037  |   |   |   |   |   |  3  |   |   |  1,040  |
| TOTAL COMPREHENSIVE INCOME                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  1,050  |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – SEPTEMBER 30, 2010                             |   |  500  |   | $ |  3,252  |   | $ |  5,881  |   | $ |  4,887  |   | $ |  (364) |   | $ |  -  |   | $ |  13,656  |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Consolidated Financial Statements. |   |   |   |   |   |   |   |   |   |   |   |   |

----

| AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES               |   |
|------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                        |   |
| ASSETS                                                                       |   |
| September 30, 2010 and December 31, 2009                                     |   |
| (in millions)                                                                |   |
| (Unaudited)                                                                  |   |
|                                                                         |   |
|                                                                         |   | 2010 |   |   | 2009 |   |
| CURRENT ASSETS                                                               |   |   |   |   |   |   |
| Cash and Cash Equivalents                                                    |   | $ | 1,090 |   |   | $ | 490 |   |
| Other Temporary Investments                                                  |   |   | 326 |   |   |   | 363 |   |
| Accounts Receivable:                                                         |   |   |   |   |   |   |   |   |
| Customers                                                                    |   |   | 585 |   |   |   | 492 |   |
| Accrued Unbilled Revenues                                                    |   |   | 137 |   |   |   | 503 |   |
| Pledged Accounts Receivable - AEP Credit                                     |   |   | 1,029 |   |   |   | - |   |
| Miscellaneous                                                                |   |   | 108 |   |   |   | 92 |   |
| Allowance for Uncollectible Accounts                                         |   |   | (43 | ) |   |   | (37 | ) |
| Total Accounts Receivable                                                    |   |   | 1,816 |   |   |   | 1,050 |   |
| Fuel                                                                         |   |   | 811 |   |   |   | 1,075 |   |
| Materials and Supplies                                                       |   |   | 598 |   |   |   | 586 |   |
| Risk Management Assets                                                       |   |   | 279 |   |   |   | 260 |   |
| Accrued Tax Benefits                                                         |   |   | 165 |   |   |   | 547 |   |
| Regulatory Asset for Under-Recovered Fuel Costs                              |   |   | 95 |   |   |   | 85 |   |
| Margin Deposits                                                              |   |   | 86 |   |   |   | 89 |   |
| Prepayments and Other Current Assets                                         |   |   | 155 |   |   |   | 211 |   |
| TOTAL CURRENT ASSETS                                                         |   |   | 5,421 |   |   |   | 4,756 |   |
|                                                                         |   |   |   |   |   |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT                                                |   |   |   |   |   |   |   |   |
| Electric:                                                                    |   |   |   |   |   |   |   |   |
| Production                                                                   |   |   | 24,079 |   |   |   | 23,045 |   |
| Transmission                                                                 |   |   | 8,470 |   |   |   | 8,315 |   |
| Distribution                                                                 |   |   | 13,940 |   |   |   | 13,549 |   |
| Other Property, Plant and Equipment (including coal mining and nuclear fuel) |   |   | 3,867 |   |   |   | 3,744 |   |
| Construction Work in Progress                                                |   |   | 2,571 |   |   |   | 3,031 |   |
| Total Property, Plant and Equipment                                          |   |   | 52,927 |   |   |   | 51,684 |   |
| Accumulated Depreciation and Amortization                                    |   |   | 17,929 |   |   |   | 17,340 |   |
| TOTAL PROPERTY, PLANT AND EQUIPMENT - NET                                    |   |   | 34,998 |   |   |   | 34,344 |   |
|                                                                         |   |   |   |   |   |   |   |   |
| OTHER NONCURRENT ASSETS                                                      |   |   |   |   |   |   |   |   |
| Regulatory Assets                                                            |   |   | 4,745 |   |   |   | 4,595 |   |
| Securitized Transition Assets                                                |   |   | 1,788 |   |   |   | 1,896 |   |
| Spent Nuclear Fuel and Decommissioning Trusts                                |   |   | 1,466 |   |   |   | 1,392 |   |
| Goodwill                                                                     |   |   | 76 |   |   |   | 76 |   |
| Long-term Risk Management Assets                                             |   |   | 488 |   |   |   | 343 |   |
| Deferred Charges and Other Noncurrent Assets                                 |   |   | 910 |   |   |   | 946 |   |
| TOTAL OTHER NONCURRENT ASSETS                                                |   |   | 9,473 |   |   |   | 9,248 |   |
|                                                                         |   |   |   |   |   |   |   |   |
| TOTAL ASSETS                                                                 |   | $ | 49,892 |   |   | $ | 48,348 |   |
|                                                                         |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Consolidated Financial Statements.          |   |   |   |   |   |   |   |   |

----

|   | AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES                                          |
|--------|---------------------------------------------------------------------------------------------------------|
|   | CONDENSED CONSOLIDATED BALANCE SHEETS                                                                   |
|   | LIABILITIES AND EQUITY                                                                                  |
|   | September 30, 2010 and December 31, 2009                                                                |
|   | (dollars in millions)                                                                                   |
|   | (Unaudited)                                                                                             |
|   |                                                                                                    |
|   |                                                                                                    |   | 2010  |   | 2009  |
|   | CURRENT LIABILITIES                                                                                     |   |   |
|   | Accounts Payable                                                                                        |   | $ |  884  |   | $ |  1,158  |
|   | Short-term Debt:                                                                                        |   |   |   |   |   |   |
|   |                                                                                                    | General |   |   |   |  716  |   |   |  126  |
|   |                                                                                                    | Securitized Debt for Receivables - AEP Credit |   |   |   |  750  |   |   |  -  |
|   |                                                                                                    |   | Total Short-term Debt |   |   |   |  1,466  |   |   |  126  |
|   | Long-term Debt Due Within One Year                                                                      |   |   |  1,286  |   |   |  1,741  |
|   | Risk Management Liabilities                                                                             |   |   |  124  |   |   |  120  |
|   | Customer Deposits                                                                                       |   |   |  264  |   |   |  256  |
|   | Accrued Taxes                                                                                           |   |   |  470  |   |   |  632  |
|   | Accrued Interest                                                                                        |   |   |  255  |   |   |  287  |
|   | Regulatory Liability for Over-Recovered Fuel Costs                                                      |   |   |  11  |   |   |  76  |
|   | Liability Related to Litigation             |   |   | 447  |   |   | -   |
|   | Other Current Liabilities                                                                               |   |   |  941  |   |   |  931  |
|   | TOTAL CURRENT LIABILITIES                                                                               |   |   |  6,148  |   |   |  5,327  |
|   |                                                                                                    |   |   |   |   |   |   |
|   | NONCURRENT LIABILITIES                                                                                  |   |   |   |   |   |   |
|   | Long-term Debt                                                                                          |   |   |   |   |   |   |
|   |                                                                                                    | (September 30, 2010 amount includes $1,838 related to Transition Funding, DCC Fuel and Sabine) |   |   |  15,995  |   |   |  15,757  |
|   | Long-term Risk Management Liabilities                                                                   |   |   |  167  |   |   |  128  |
|   | Deferred Income Taxes                                                                                   |   |   |  6,928  |   |   |  6,420  |
|   | Regulatory Liabilities and Deferred Investment Tax Credits                                              |   |   |  3,109  |   |   |  2,909  |
|   | Asset Retirement Obligations                                                                            |   |   |  1,296  |   |   |  1,254  |
|   | Employee Benefits and Pension Obligations                                                               |   |   |  1,729  |   |   |  2,189  |
|   | Deferred Credits and Other Noncurrent Liabilities                                                       |   |   |  804  |   |   |  1,163  |
|   | TOTAL NONCURRENT LIABILITIES                                                                            |   |   |  30,028 |   |   |  29,820  |
|   |                                                                                                    |   |   |   |   |   |   |
|   | TOTAL LIABILITIES                                                                                       |   |   |  36,176  |   |   |  35,147  |
|   |                                                                                                    |   |   |   |   |   |   |
|   | Cumulative Preferred Stock Not Subject to Mandatory Redemption                                          |   |   |  60  |   |   |  61  |
|   |                                                                                                    |   |   |   |   |   |   |
|   | Rate Matters (Note 3)                                                                                   |   |   |   |   |   |   |
|   | Commitments and Contingencies (Note 4)                                                                  |   |   |   |   |   |   |
|   |                                                                                                    |   |   |   |   |   |   |
|   | EQUITY                                                                                                  |   |   |   |   |   |   |
|   | Common Stock – Par Value – $6.50 Per Share:                                                 |   |   |   |   |   |   |
|   |                                                                                                    |   |   | 2010  |   | 2009  |   |   |   |   |   |   |   |
|   |                                                                                                    | Shares Authorized | 600,000,000  |   | 600,000,000  |   |   |   |   |   |   |   |
|   |                                                                                                    | Shares Issued | 500,319,686  |   | 498,333,265  |   |   |   |   |   |   |   |
|   | (20,278,858 shares were held in treasury at September 30, 2010 and December 31, 2009)                   |   |   |  3,252  |   |   |  3,239  |
|   | Paid-in Capital                                                                                         |   |   |  5,881  |   |   |  5,824  |
|   | Retained Earnings                                                                                       |   |   |  4,887  |   |   |  4,451  |
|   | Accumulated Other Comprehensive Income (Loss)                                                           |   |   |  (364) |   |   |  (374) |
|   | TOTAL AEP COMMON SHAREHOLDERS’ EQUITY                                                             |   |   |  13,656  |   |   |  13,140  |
|   |                                                                                                    |   |   |   |   |   |   |
|   | Noncontrolling Interests                                                                                |   |   |  -  |   |   |  -  |
|   |                                                                                                    |   |   |   |   |   |   |
|   | TOTAL EQUITY                                                                                            |   |   |  13,656  |   |   |  13,140  |
|   |                                                                                                    |   |   |   |   |   |   |
|   | TOTAL LIABILITIES AND EQUITY                                                                            |   | $ |  49,892  |   | $ |  48,348  |
|   |                                                                                                    |   |   |   |   |   |   |
|   | See Condensed Notes to Condensed Consolidated Financial Statements.                                     |   |   |   |   |   |   |

----

| AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES                   |   |
|----------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                  |   |
| For the Nine Months Ended September 30, 2010 and 2009                            |   |
| (in millions)                                                                    |   |
| (Unaudited)                                                                      |   |
|                                                                             |   |
|                                                                             |   | 2010 |   |   | 2009 |   |
| OPERATING ACTIVITIES                                                             |   |   |   |   |   |   |
| Net Income                                                                       |   | $ | 1,040 |   |   | $ | 1,126 |   |
| Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities: |   |   |   |   |   |   |   |   |
| Depreciation and Amortization                                                    |   |   | 1,237 |   |   |   | 1,200 |   |
| Deferred Income Taxes                                                            |   |   | 404 |   |   |   | 662 |   |
| Extraordinary Loss, Net of Tax                                                   |   |   | - |   |   |   | 5 |   |
| Carrying Costs Income                                                            |   |   | (51 | ) |   |   | (33 | ) |
| Allowance for Equity Funds Used During Construction                              |   |   | (60 | ) |   |   | (59 | ) |
| Mark-to-Market of Risk Management Contracts                                      |   |   | (108 | ) |   |   | (99 | ) |
| Amortization of Nuclear Fuel                                                     |   |   | 113 |   |   |   | 41 |   |
| Property Taxes                                                                   |   |   | 157 |   |   |   | 144 |   |
| Fuel Over/Under-Recovery, Net                                                    |   |   | (233 | ) |   |   | (377 | ) |
| Pension Contributions to Qualified Plan Trust                                    |   |   | (463 | ) |   |   | - |   |
| Change in Other Noncurrent Assets                                                |   |   | (50 | ) |   |   | 13 |   |
| Change in Other Noncurrent Liabilities                                           |   |   | 183 |   |   |   | 164 |   |
| Changes in Certain Components of Working Capital:                                |   |   |   |   |   |   |   |   |
| Accounts Receivable, Net                                                         |   |   | (766 | ) |   |   | 68 |   |
| Fuel, Materials and Supplies                                                     |   |   | 240 |   |   |   | (394 | ) |
| Margin Deposits                                                                  |   |   | 3 |   |   |   | (15 | ) |
| Accounts Payable                                                                 |   |   | (163 | ) |   |   | (29 | ) |
| Customer Deposits                                                                |   |   | 8 |   |   |   | 11 |   |
| Accrued Taxes, Net                                                               |   |   | 223 |   |   |   | (165 | ) |
| Accrued Interest                                                                 |   |   | (32 | ) |   |   | (38 | ) |
| Other Current Assets                                                             |   |   | 35 |   |   |   | (71 | ) |
| Other Current Liabilities                                                        |   |   | (15 | ) |   |   | (283 | ) |
| Net Cash Flows from Operating Activities                                         |   |   | 1,702 |   |   |   | 1,871 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| INVESTING ACTIVITIES                                                             |   |   |   |   |   |   |   |   |
| Construction Expenditures                                                        |   |   | (1,629 | ) |   |   | (2,123 | ) |
| Change in Other Temporary Investments, Net                                       |   |   | 63 |   |   |   | 72 |   |
| Purchases of Investment Securities                                               |   |   | (1,542 | ) |   |   | (573 | ) |
| Sales of Investment Securities                                                   |   |   | 1,477 |   |   |   | 524 |   |
| Acquisitions of Nuclear Fuel                                                     |   |   | (69 | ) |   |   | (153 | ) |
| Acquisitions of Assets                                                           |   |   | (16 | ) |   |   | (70 | ) |
| Proceeds from Sales of Assets                                                    |   |   | 160 |   |   |   | 258 |   |
| Other Investing Activities                                                       |   |   | (19 | ) |   |   | (32 | ) |
| Net Cash Flows Used for Investing Activities                                     |   |   | (1,575 | ) |   |   | (2,097 | ) |
|                                                                             |   |   |   |   |   |   |   |   |
| FINANCING ACTIVITIES                                                             |   |   |   |   |   |   |   |   |
| Issuance of Common Stock, Net                                                    |   |   | 65 |   |   |   | 1,706 |   |
| Issuance of Long-term Debt                                                       |   |   | 1,201 |   |   |   | 1,912 |   |
| Borrowings from Revolving Credit Facilities                                      |   |   | 195 |   |   |   | 90 |   |
| Change in Short-term Debt, Net                                                   |   |   | 1,223 |   |   |   | 347 |   |
| Retirement of Long-term Debt                                                     |   |   | (1,454 | ) |   |   | (659 | ) |
| Repayments to Revolving Credit Facilities                                        |   |   | (78 | ) |   |   | (2,061 | ) |
| Principal Payments for Capital Lease Obligations                                 |   |   | (74 | ) |   |   | (62 | ) |
| Dividends Paid on Common Stock                                                   |   |   | (602 | ) |   |   | (564 | ) |
| Dividends Paid on Cumulative Preferred Stock                                     |   |   | (2 | ) |   |   | (2 | ) |
| Other Financing Activities                                                       |   |   | (1 | ) |   |   | (15 | ) |
| Net Cash Flows from Financing Activities                                         |   |   | 473 |   |   |   | 692 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| Net Increase in Cash and Cash Equivalents                                        |   |   | 600 |   |   |   | 466 |   |
| Cash and Cash Equivalents at Beginning of Period                                 |   |   | 490 |   |   |   | 411 |   |
| Cash and Cash Equivalents at End of Period                                       |   | $ | 1,090 |   |   | $ | 877 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| SUPPLEMENTARY INFORMATION                                                        |   |   |   |   |   |   |   |   |
| Cash Paid for Interest, Net of Capitalized Amounts                               |   | $ | 755 |   |   | $ | 744 |   |
| Net Cash Paid (Received) for Income Taxes                                        |   |   | (243 | ) |   |   | (74 | ) |
| Noncash Acquisitions Under Capital Leases                                        |   |   | 190 |   |   |   | 53 |   |
| Construction Expenditures Included in Accounts Payable at September 30,          |   |   | 229 |   |   |   | 229 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Consolidated Financial Statements.              |   |   |   |   |   |   |   |   |

----

| 1.  | Significant Accounting Matters                       |
|-----|------------------------------------------------------|
| 2.  | New Accounting Pronouncements and Extraordinary Item |
| 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                           |

----

----

----

----

| AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES |   |
|----------------------------------------------------------------|--------|
| VARIABLE INTEREST ENTITIES                                     |   |
| September 30, 2010                                             |   |
| (in millions)                                                  |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   | SWEPCo |   | I&M |   | Protected Cell |   |   |   | Transition |   |
|                                                           |   | Sabine |   | DCC Fuel |   | of EIS |   | AEP Credit |   | Funding |   |
| ASSETS                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Assets                                                 |   |   | $ | 42 |   |   | $ | 92 |   |   | $ | 143 |   |   | $ | 1,004 |   |   | $ | 160 |   |
| Net Property, Plant and Equipment                              |   |   |   | 142 |   |   |   | 118 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Other Noncurrent Assets                                        |   |   |   | 35 |   |   |   | 80 |   |   |   | 1 |   |   |   | 10 |   |   |   | 1,791 |   |
| Total Assets                                                   |   |   | $ | 219 |   |   | $ | 290 |   |   | $ | 144 |   |   | $ | 1,014 |   |   | $ | 1,951 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND EQUITY                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Liabilities                                            |   |   | $ | 26 |   |   | $ | 65 |   |   | $ | 40 |   |   | $ | 961 |   |   | $ | 196 |   |
| Noncurrent Liabilities                                         |   |   |   | 193 |   |   |   | 225 |   |   |   | 90 |   |   |   | 1 |   |   |   | 1,741 |   |
| Equity                                                         |   |   |   | - |   |   |   | - |   |   |   | 14 |   |   |   | 52 |   |   |   | 14 |   |
| Total Liabilities and Equity                                   |   |   | $ | 219 |   |   | $ | 290 |   |   | $ | 144 |   |   | $ | 1,014 |   |   | $ | 1,951 |   |

| AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES |   |
|----------------------------------------------------------------|--------|
| VARIABLE INTEREST ENTITIES                                     |   |
| December 31, 2009                                              |   |
| (in millions)                                                  |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   | SWEPCo |   | SWEPCo |   | I&M |   | Protected Cell |   |
|                                                           |   | Sabine |   | DHLC |   | DCC Fuel |   | of EIS |   |
| ASSETS                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Assets                                                 |   |   | $ | 51 |   |   | $ | 8 |   |   | $ | 47 |   |   | $ | 130 |   |
| Net Property, Plant and Equipment                              |   |   |   | 149 |   |   |   | 44 |   |   |   | 89 |   |   |   | - |   |
| Other Noncurrent Assets                                        |   |   |   | 35 |   |   |   | 11 |   |   |   | 57 |   |   |   | 2 |   |
| Total Assets                                                   |   |   | $ | 235 |   |   | $ | 63 |   |   | $ | 193 |   |   | $ | 132 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND EQUITY                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Liabilities                                            |   |   | $ | 36 |   |   | $ | 17 |   |   | $ | 39 |   |   | $ | 36 |   |
| Noncurrent Liabilities                                         |   |   |   | 199 |   |   |   | 38 |   |   |   | 154 |   |   |   | 74 |   |
| Equity                                                         |   |   |   | - |   |   |   | 8 |   |   |   | - |   |   |   | 22 |   |
| Total Liabilities and Equity                                   |   |   | $ | 235 |   |   | $ | 63 |   |   | $ | 193 |   |   | $ | 132 |   |

|                             | September 30, 2010 |   |
|----------------------------------|--------------------|--------|
|                             | As Reported on     |   |   |   |
|                             | the Consolidated   |   | Maximum |   |
|                             | Balance Sheet      |   | Exposure |   |
|                             | (in millions)      |   |
| Capital Contribution from SWEPCo |               | $      | 7 |   |   | $ | 7 |   |
| Retained Earnings                |               |   | 2 |   |   |   | 2 |   |
| SWEPCo's Guarantee of Debt       |               |   | - |   |   |   | 42 |   |
|                             |               |   |   |   |   |   |   |   |
| Total Investment in DHLC         |               | $      | 9 |   |   | $ | 51 |   |

----

|                          | September 30, 2010 |   | December 31, 2009 |          |
|-------------------------------|--------------------|--------|-------------------|---------------|
|                          | As Reported on     |   |              |          |   | As Reported on |   |   |   |   |
|                          | the Consolidated   |   | Maximum           |          | the Consolidated |   | Maximum |   |
|                          | Balance Sheet      |   | Exposure          |          | Balance Sheet |   | Exposure |   |
|                          |               |   |              | (in millions) |   |   |   |   |
| Capital Contribution from AEP |               | $      | 16                |          |   | $ | 16 |   |   | $ | 13 |   |   | $ | 13 |   |
| Retained Earnings             |               |   | 6                 |          |   |   | 6 |   |   |   | 3 |   |   |   | 3 |   |
|                          |               |   |              |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Investment in PATH-WV   |               | $      | 22                |          |   | $ | 22 |   |   | $ | 16 |   |   | $ | 16 |   |

|                                            |   | Three Months Ended |   | Nine Months Ended |   |
|-------------------------------------------------|--------|--------------------|--------|-------------------|--------|
|                                            |   | September 30,      |   | September 30,     |   |
| Amounts Attributable to AEP Common Shareholders |   | 2010               |   | 2009              |   | 2010 |   | 2009 |   |
|                                            |   | (in millions)      |   |
| Income Before Extraordinary Loss                |   |               | $      | 555               |   |   | $ | 443 |   |   | $ | 1,035 |   |   | $ | 1,124 |   |
| Extraordinary Loss, Net of Tax                  |   |               |   | -                 |   |   |   | - |   |   |   | - |   |   |   | (5 | ) |
| Net Income                                      |   |               | $      | 555               |   |   | $ | 443 |   |   | $ | 1,035 |   |   | $ | 1,119 |   |

----

|                                                  |                    |   | Three Months Ended September 30,     |
|-------------------------------------------------------|-------------------------|--------|--------------------------------------|
|                                                  |                    |   | 2010                            |   | 2009  |
|                                                  |                    |   | (in millions, except per share data) |
|                                                  |                    |   |                                 |   |   | $/share |   |   |   |   | $/share |
| Earnings Applicable to AEP Common Shareholders        |                    | $      |  555                       |   |   |   |   | $ |  443  |   |   |   |
|                                                  |                    |   |                                 |   |   |   |   |   |   |   |   |   |   |
| Weighted Average Number of Basic Shares Outstanding   |                    |   |  479.6                     |   | $ |  1.16  |   |   |  476.9  |   | $ |  0.93  |
| Weighted Average Dilutive Effect of:                  |                    |   |                                 |   |   |   |   |   |   |   |   |   |
|                                                  | Performance Share Units |   |                                 |  -  |   |   |  -  |   |   |  0.1  |   |   |  -  |
|                                                  | Stock Options           |   |                                 |  0.1  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                  | Restricted Stock Units  |   |                                 |  0.1  |   |   |  -  |   |   |  0.1  |   |   |  -  |
| Weighted Average Number of Diluted Shares Outstanding |                    |   |  479.8                     |   | $ |  1.16  |   |   |  477.1  |   | $ |  0.93  |

|   |                                                  |                    |   | Nine Months Ended September 30,      |
|--------|-------------------------------------------------------|-------------------------|--------|--------------------------------------|
|   |                                                  |                    |   | 2010                            |   | 2009  |
|   |                                                  |                    |   | (in millions, except per share data) |
|   |                                                  |                    |   |                                 |   |   | $/share |   |   |   |   | $/share |
|   | Earnings Applicable to AEP Common Shareholders        |                    | $      |  1,035                     |   |   |   |   | $ |  1,119  |   |   |   |
|   |                                                  |                    |   |                                 |   |   |   |   |   |   |   |   |   |   |
|   | Weighted Average Number of Basic Shares Outstanding   |                    |   |  479.0                     |   | $ |  2.16  |   |   |  452.3  |   | $ |  2.47  |
|   | Weighted Average Dilutive Effect of:                  |                    |   |                                 |   |   |   |   |   |   |   |   |   |
|   |                                                  | Performance Share Units |   |                                 |  0.1  |   |   |  -  |   |   |  0.2  |   |   |  -  |
|   |                                                  | Stock Options           |   |                                 |  0.1  |   |   |  -  |   |   |  -  |   |   |  -  |
|   |                                                  | Restricted Stock Units  |   |                                 |  0.1  |   |   |  -  |   |   |  -  |   |   |  -  |
|   | Weighted Average Number of Diluted Shares Outstanding |                    |   |  479.3                     |   | $ |  2.16  |   |   |  452.5  |   | $ |  2.47  |

|   | Supplementary Information                                      |                                                       |                                        |   |               |          |              |           |          |   |            |           |   |
|--------|----------------------------------------------------------------|------------------------------------------------------------|---------------------------------------------|--------|--------------------|---------------|-------------------|----------------|---------------|--------|-----------------|----------------|--------|
|   |                                                           |                                                       |                                        |   |               |          |              |           |          |   |            |           |   |   |   |
|   |                                                           |                                                       |                                        |   | Three Months Ended |          | Nine Months Ended |
|   |                                                           |                                                       |                                        |   | September 30,      | September 30, |
|   | Related Party Transactions                                     |                                                       | 2010                                   |   | 2009          |          | 2010         |           | 2009     |
|   |                                                           |                                                       | (in millions)                               |
|   | AEP Consolidated Revenues – Utility Operations:          |                                                       |                                        |   |               |          |              |           |          |   |            |           |   |
|   |                                                           | Ohio Valley Electric Corporation (43.47% owned)            |                                        | $      |  -       |          | $                 |  -   |          | $      |  (20)      | (a)            | $      |  -  |
|   | AEP Consolidated Revenues – Other Revenues:              |                                                       |                                        |   |               |          |              |           |          |   |            |           |   |
|   |                                                           | Ohio Valley Electric Corporation – Barging and Other |                                        |   |               |          |              |           |          |   |            |           |   |   |
|   |                                                           |                                                       | Transportation Services (43.47% Owned) |   |               |  6  |              |           |  7  |   |            |  22  |   |   |  22  |
|   | AEP Consolidated Expenses – Purchased Energy for Resale: |                                                       |                                        |   |               |          |              |           |          |   |            |           |   |
|   |                                                           | Ohio Valley Electric Corporation (43.47% Owned)            |                                        |   |  66      |          |              |  71  |          |   |  223  | (b)            |   |  213  |

|   | (a) | In January 2010, the AEP Power Pool began purchasing power from OVEC to serve off-system sales through June 2010. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------|

|   | (b) | In January 2010, the AEP Power Pool began purchasing power from OVEC to serve retail sales through June 2010.  The total amount reported includes $10 million related to this agreement. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | The power to direct the activities of the VIE that most significantly impact the VIE’s economic performance. |
|--------------------|--------------------------------------------------------------------------------------------------------------------|

| ·   | The obligation to absorb the losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Regulatory Assets Not Yet Being Recovered |                                                                 |                                                  |   |            |           |         |
|-------------------------------------------|----------------------------------------------------------------------|-------------------------------------------------------|--------|-----------------|----------------|--------------|
|                                      |                                                                 |                                                  |   | September 30,   |           | December 31, |
|                                      |                                                                 |                                                  |   | 2010       |           | 2009    |
|                                      |                                                                 |                                                  |   | (in millions)   |
|                                      | Noncurrent Regulatory Assets (excluding fuel)                        |                                                  |   |            |           |         |   |
|                                      | Regulatory assets not yet being recovered pending future proceedings |                                                  |   |            |           |         |   |
|                                      |                                                                 |  to determine the recovery method and timing:    |   |            |           |         |   |   |
|                                      | Regulatory Assets Currently Earning a Return                         |                                                  |   |            |           |         |   |
|                                      |                                                                 | Customer Choice Deferrals - CSPCo, OPCo               |   | $               |  58  |         | $ |  57  |
|                                      |                                                                 | Storm Related Costs - CSPCo, OPCo, TCC                |   |            |  52  |         |   |  49  |
|                                      |                                                                 | Line Extension Carrying Costs - CSPCo, OPCo           |   |            |  52  |         |   |  43  |
|                                      |                                                                 | Acquisition of Monongahela Power - CSPCo              |   |            |  7   |         |   |  10  |
|                                      | Regulatory Assets Currently Not Earning a Return                     |                                                  |   |            |           |         |   |
|                                      |                                                                 | Mountaineer Carbon Capture and Storage Project - APCo |   |            |  59  |         |   |  111  |
|                                      |                                                                 | Environmental Rate Adjustment Clause - APCo           |   |            |  48  |         |   |  25  |
|                                      |                                                                 | Storm Related Costs - APCo, PSO, KGPCo                |   |            |  44  |         |   |  -  |
|                                      |                                                                 | Deferred Wind Power Costs - APCo                      |   |            |  24  |         |   |  5  |
|                                      |                                                                 | Transmission Rate Adjustment Clause - APCo            |   |            |  21  |         |   |  26  |
|                                      |                                                                 | Special Rate Mechanism for Century Aluminum - APCo    |   |            |  13  |         |   |  12  |
|                                      |                                                                 | Acquisition of Monongahela Power - CSPCo              |   |            |  4   |         |   |  -  |
|                                      |                                                                 | Storm Related Costs - KPCo                            |   |            |  -   | (a)          |   |  24  |
|                                      |                                                                 | Peak Demand Reduction/Energy Efficiency - CSPCo, OPCo |   |            |  -   | (a)          |   |  8  |
|                                      | Total Regulatory Assets Not Yet Being Recovered                      |                                                  | $      |  382  |           | $            |  370  |
|                                      |                                                                 |                                                  |   |            |           |         |   |   |
|                                      | (a)                                                                  | Recovery of regulatory asset was granted during 2010. |   |            |           |         |   |   |

----

----

----

----

----

----

----

| ·   | The Texas District Court judge determined that the PUCT erred by applying an invalid rule to determine the carrying cost rate for the true-up of stranded costs.  The Texas Court of Appeals reversed the District Court’s unfavorable decision.  An October 2010 decision of the Texas Supreme Court addressing the same issue for another utility upholds the Court of Appeals determination. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

----

----

----

----

----

----

----

----

----

----

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

----

----

----

----

|                                  |                             |   | Other Postretirement             |   |
|---------------------------------------|----------------------------------|--------|----------------------------------|--------|
|                                  | Pension Plans                    |   | Benefit Plans                    |   |
|                                  | Three Months Ended September 30, |   | Three Months Ended September 30, |   |
|                                  | 2010                             |   | 2009                             |   | 2010 |   | 2009 |   |
|                                  | (in millions)                    |   |
| Service Cost                          |                             | $      | 28                               |   |   | $ | 26 |   |   | $ | 12 |   |   | $ | 11 |   |
| Interest Cost                         |                             |   | 63                               |   |   |   | 64 |   |   |   | 29 |   |   |   | 27 |   |
| Expected Return on Plan Assets        |                             |   | (78                              | )      |   |   | (80 | ) |   |   | (27 | ) |   |   | (21 | ) |
| Amortization of Transition Obligation |                             |   | -                                |   |   |   | - |   |   |   | 6 |   |   |   | 7 |   |
| Amortization of Net Actuarial Loss    |                             |   | 22                               |   |   |   | 14 |   |   |   | 8 |   |   |   | 11 |   |
| Net Periodic Benefit Cost             |                             | $      | 35                               |   |   | $ | 24 |   |   | $ | 28 |   |   | $ | 35 |   |

|                                  |                            |   | Other Postretirement            |   |
|---------------------------------------|---------------------------------|--------|---------------------------------|--------|
|                                  | Pension Plans                   |   | Benefit Plans                   |   |
|                                  | Nine Months Ended September 30, |   | Nine Months Ended September 30, |   |
|                                  | 2010                            |   | 2009                            |   | 2010 |   | 2009 |   |
|                                  | (in millions)                   |   |
| Service Cost                          |                            | $      | 83                              |   |   | $ | 78 |   |   | $ | 35 |   |   | $ | 32 |   |
| Interest Cost                         |                            |   | 190                             |   |   |   | 191 |   |   |   | 85 |   |   |   | 82 |   |
| Expected Return on Plan Assets        |                            |   | (234                            | )      |   |   | (241 | ) |   |   | (79 | ) |   |   | (61 | ) |
| Amortization of Transition Obligation |                            |   | -                               |   |   |   | - |   |   |   | 20 |   |   |   | 20 |   |
| Amortization of Net Actuarial Loss    |                            |   | 67                              |   |   |   | 44 |   |   |   | 22 |   |   |   | 32 |   |
| Net Periodic Benefit Cost             |                            | $      | 106                             |   |   | $ | 72 |   |   | $ | 83 |   |   | $ | 105 |   |

----

|     ·   | 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 completely expire in 2011. |
|---------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|     ·   | Revenue sharing related to the Plaquemine Cogeneration Facility. |
|---------------------------------------|------------------------------------------------------------------|

----

|                                    |   |                     |              |          |              |      |            | Nonutility Operations |            |           |       |           |          |   |          |          |   |
|-----------------------------------------|--------|--------------------------|-------------------|---------------|-------------------|-----------|-----------------|-----------------------|-----------------|----------------|------------|----------------|---------------|--------|---------------|---------------|--------|
|                                    |   |                     |              |          |              |      |            |                  |            |           | Generation |           |          |   |          |          |   |   |   |   |
|                                    |   |                     | Utility           |          | AEP River         | and       | All Other       | Reconciling           |            |           |
|                                    |   |                     | Operations        |          | Operations        | Marketing | (a)             |  Adjustments     | Consolidated    |
|                                    |   |                     |              | (in millions) |
| Three Months Ended September 30, 2010   |   |                     |              |          |              |      |            |                  |            |           |       |           |          |   |          |          |   |   |   |
| Revenues from:                          |   |                     |              |          |              |      |            |                  |            |           |       |           |          |   |          |          |   |   |   |
|                                    |   | External Customers       |              | $             |  3,876  |      |            | $                     |  147  |           | $          |  41  |          | $      |  -  |          | $      |  -  |   | $ |  4,064  |
|                                    |   | Other Operating Segments |              |          |  31     |      |            |                  |  7    |           |       |  -   |          |   |  3  |          |   |  (41) |   |   |  -  |
| Total Revenues                          |   | $                        |  3,907  |          |              | $         |  154  |                  | $               |  41  |       | $              |  3  |   | $             |  (41)    |   | $ |  4,064  |
|                                    |   |                     |              |          |              |      |            |                  |            |           |       |           |          |   |          |          |   |   |   |   |   |
| Net Income                              |   | $                        |  541    |          |              | $         |  14   |                  | $               |  -   |       | $              |  2  |   | $             |  -  |   | $ |  557  |
|                                    |   |                     |              |          |              |      |            |                  |            |           |       |           |          |   |          |          |   |   |   |   |   |
|                                    |   |                     |              |          |              |      |            | Nonutility Operations |            |           |       |           |          |   |          |          |   |
|                                    |   |                     |              |          |              |      |            |                  |            |           | Generation |           |          |   |          |          |   |   |   |   |
|                                    |   |                     | Utility           |          | AEP River         | and       | All Other       | Reconciling           |            |           |
|                                    |   |                     | Operations        |          | Operations        | Marketing | (a)             |  Adjustments     | Consolidated    |
|                                    |   |                     |              | (in millions) |
| Three Months Ended September 30, 2009   |   |                     |              |          |              |      |            |                  |            |           |       |           |          |   |          |          |   |   |   |
| Revenues from:                          |   |                     |              |          |              |      |            |                  |            |           |       |           |          |   |          |          |   |   |   |
|                                    |   | External Customers       |              | $             |  3,364  | (d)       |            | $                     |  113  |           | $          |  68  |          | $      |  2  |          | $      |  -  |   | $ |  3,547  |
|                                    |   | Other Operating Segments |              |          |  25     | (d)       |            |                  |  4    |           |       |  -   |          |   |  1  |          |   |  (30) |   |   |  -  |
| Total Revenues                          |   | $                        |  3,389  |          |              | $         |  117  |                  | $               |  68  |       | $              |  3  |   | $             |  (30)    |   | $ |  3,547  |
|                                    |   |                     |              |          |              |      |            |                  |            |           |       |           |          |   |          |          |   |   |   |   |   |
| Income (Loss) Before Extraordinary Loss |   | $                        |  448    |          |              | $         |  10   |                  | $               |  5   |       | $              |  (17)    |   | $             |  -  |   | $ |  446  |
| Extraordinary Loss, Net of Tax          |   |                     |  -      |          |              |      |  -    |                  |            |  -   |       |           |  -  |   |          |  -  |   |   |  -  |
| Net Income (Loss)                       |   | $                        |  448    |          |              | $         |  10   |                  | $               |  5   |       | $              |  (17)    |   | $             |  -  |   | $ |  446  |

|                                    |   |                     |               |          |               |      |            | Nonutility Operations |            |            |       |            |           |   |           |          |   |
|-----------------------------------------|--------|--------------------------|--------------------|---------------|--------------------|-----------|-----------------|-----------------------|-----------------|-----------------|------------|-----------------|----------------|--------|----------------|---------------|--------|
|                                    |   |                     |               |          |               |      |            |                  |            |            | Generation |            |           |   |           |          |   |   |   |   |
|                                    |   |                     | Utility            |          | AEP River          | and       | All Other       | Reconciling           |            |            |
|                                    |   |                     | Operations         |          | Operations         | Marketing | (a)             |  Adjustments     | Consolidated    |
|                                    |   |                     |               | (in millions) |
| Nine Months Ended September 30, 2010    |   |                     |               |          |               |      |            |                  |            |            |       |            |           |   |           |          |   |   |   |
| Revenues from:                          |   |                     |               |          |               |      |            |                  |            |            |       |            |           |   |           |          |   |   |   |
|                                    |   | External Customers       |               | $             |  10,468  |      |            | $                     |  395  |            | $          |  130  |           | $      |  -   |          | $      |  -  |   | $ |  10,993  |
|                                    |   | Other Operating Segments |               |          |  76      |      |            |                  |  17   |            |       |  -    |           |   |  10  |          |   |  (103) |   |   |  -  |
| Total Revenues                          |   | $                        |  10,544  |          |               | $         |  412  |                  | $               |  130  |       | $               |  10  |   | $              |  (103)   |   | $ |  10,993  |
|                                    |   |                     |               |          |               |      |            |                  |            |            |       |            |           |   |           |          |   |   |   |   |   |
| Net Income (Loss)                       |   | $                        |  1,017   |          |               | $         |  16   |                  | $               |  17   |       | $               |  (10)     |   | $              |  -  |   | $ |  1,040  |
|                                    |   |                     |               |          |               |      |            |                  |            |            |       |            |           |   |           |          |   |   |   |   |   |
|                                    |   |                     |               |          |               |      |            | Nonutility Operations |            |            |       |            |           |   |           |          |   |
|                                    |   |                     |               |          |               |      |            |                  |            |            | Generation |            |           |   |           |          |   |   |   |   |
|                                    |   |                     | Utility            |          | AEP River          | and       | All Other       | Reconciling           |            |            |
|                                    |   |                     | Operations         |          | Operations         | Marketing | (a)             |  Adjustments     | Consolidated    |
|                                    |   |                     |               | (in millions) |
| Nine Months Ended September 30, 2009    |   |                     |               |          |               |      |            |                  |            |            |       |            |           |   |           |          |   |   |   |
| Revenues from:                          |   |                     |               |          |               |      |            |                  |            |            |       |            |           |   |           |          |   |   |   |
|                                    |   | External Customers       |               | $             |  9,666   | (d)       |            | $                     |  341  |            | $          |  213  |           | $      |  (13)     |          | $      |  -  |   | $ |  10,207  |
|                                    |   | Other Operating Segments |               |          |  46      | (d)       |            |                  |  13   |            |       |  6    |           |   |  28  |          |   |  (93) |   |   |  -  |
| Total Revenues                          |   | $                        |  9,712   |          |               | $         |  354  |                  | $               |  219  |       | $               |  15  |   | $              |  (93)    |   | $ |  10,207  |
|                                    |   |                     |               |          |               |      |            |                  |            |            |       |            |           |   |           |          |   |   |   |   |   |
| Income (Loss) Before Extraordinary Loss |   | $                        |  1,121   |          |               | $         |  22   |                  | $               |  33   |       | $               |  (45)     |   | $              |  -  |   | $ |  1,131  |
| Extraordinary Loss, Net of Tax          |   |                     |  (5)          |          |               |      |  -    |                  |            |  -    |       |            |  -   |   |           |  -  |   |   |  (5) |
| Net Income (Loss)                       |   | $                        |  1,116   |          |               | $         |  22   |                  | $               |  33   |       | $               |  (45)     |   | $              |  -  |   | $ |  1,126  |

----

|                                      |          |   |       | Nonutility Operations |                  |   |       |   |        |   |   |         |   |   |        |
|-------------------------------------------|---------------|--------|------------|-----------------------|-----------------------|--------|------------|--------|-------------|--------|--------|--------------|--------|--------|-------------|
|                                      |          |   |       |                  |                  |   | Generation |   |        |   |   | Reconciling  |   |   |        |   |   |
|                                      | Utility       |   | AEP River  |                  | and                   |   | All Other  |   | Adjustments |   |   |         |   |   |
|                                      | Operations    |   | Operations |                  | Marketing             |   | (a)        |   | (b)         |   |   | Consolidated |   |
|                                      | (in millions) |   |
| September 30, 2010                        |          |   |       |                  |                  |   |       |   |        |   |   |         |   |   |        |   |   |   |   |
| Total Property, Plant and Equipment       |          | $      | 52,041     |                  |                  | $      | 542        |   |        | $      | 584    |         |   | $      | 10          |   |   | $ | (250 | ) |   |   | $ | 52,927 |   |
| Accumulated Depreciation and Amortization |          |   | 17,667     |                  |                  |   | 105        |   |        |   | 191    |         |   |   | 9           |   |   |   | (43 | ) |   |   |   | 17,929 |   |
| Total Property, Plant and Equipment - Net |          | $      | 34,374     |                  |                  | $      | 437        |   |        | $      | 393    |         |   | $      | 1           |   |   | $ | (207 | ) |   |   | $ | 34,998 |   |
|                                      |          |   |       |                  |                  |   |       |   |        |   |   |         |   |   |        |   |   |   |   |   |   |   |   |   |   |
| Total Assets                              |          | $      | 47,964     |                  |                  | $      | 603        |   |        | $      | 898    |         |   | $      | 15,621      |   |   | $ | (15,194 | ) | (c) |   | $ | 49,892 |   |
|                                      |          |   |       |                  |                  |   |       |   |        |   |   |         |   |   |        |   |   |   |   |   |   |   |   |   |   |
|                                      |          |   |       |                  | Nonutility Operations |   |       |   |        |   |   |         |   |   |        |   |   |   |   |
|                                      |          |   |       |                  |                  |   |       |   | Generation  |   |   |         |   |   | Reconciling |   |   |   |   |   |   |
|                                      | Utility       |   | AEP River  |                  | and                   |   | All Other  |   | Adjustments |   |   |         |   |   |        |
|                                      | Operations    |   | Operations |                  | Marketing             |   | (a)        |   | (b)         |   |   | Consolidated |   |
|                                      | (in millions) |   |
| December 31, 2009                         |          |   |       |                  |                  |   |       |   |        |   |   |         |   |   |        |   |   |   |   |   |   |   |   |   |   |
| Total Property, Plant and Equipment       |          | $      | 50,905     |                  |                  | $      | 436        |   |        | $      | 571    |         |   | $      | 10          |   |   | $ | (238 | ) |   |   | $ | 51,684 |   |
| Accumulated Depreciation and Amortization |          |   | 17,110     |                  |                  |   | 88         |   |        |   | 168    |         |   |   | 8           |   |   |   | (34 | ) |   |   |   | 17,340 |   |
| Total Property, Plant and Equipment - Net |          | $      | 33,795     |                  |                  | $      | 348        |   |        | $      | 403    |         |   | $      | 2           |   |   | $ | (204 | ) |   |   | $ | 34,344 |   |
|                                      |          |   |       |                  |                  |   |       |   |        |   |   |         |   |   |        |   |   |   |   |   |   |   |   |   |   |
| Total Assets                              |          | $      | 46,930     |                  |                  | $      | 495        |   |        | $      | 779    |         |   | $      | 15,094      |   |   | $ | (14,950 | ) | (c) |   | $ | 48,348 |   |

| (a) | All Other includes: |
|-----|---------------------|

| ·   | Parent's guarantee revenue received from affiliates, investment income, interest income and interest expense, and other nonallocated costs. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Forward natural gas contracts that were not sold with our natural gas pipeline and storage operations in 2004 and 2005.  These contracts are financial derivatives which settle and completely expire in 2011. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Revenue sharing related to the Plaquemine Cogeneration Facility. |
|--------------------|------------------------------------------------------------------|

| (b) | Includes eliminations due to an intercompany capital lease. |
|-----|-------------------------------------------------------------|

| (c) | Reconciling Adjustments for Total Assets primarily include the elimination of intercompany advances to affiliates and intercompany accounts receivable along with the elimination of AEP's investments in subsidiary companies. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | PSO and SWEPCo transferred certain existing ERCOT energy marketing contracts to AEP Energy Partners, Inc. (AEPEP) (Generation and Marketing segment) and entered into intercompany financial and physical purchase and sales agreements with AEPEP.  As a result, we reported third-party net purchases or sales activity for these energy marketing contracts as Revenues from External Customers for the Utility Operations segment.  This was offset by the Utility Operations segment's related net sales (purchases) for these contracts with AEPEP in Revenues from Other Operating Segments of $(113) thousand and $(6) million for the three and nine months ended September 30, 2009, respectively.  The Generation and Marketing segment also reported these purchase or sales contracts with Utility Operations as Revenues from Other Operating Segments.  These affiliated contracts between PSO and SWEPCo with AEPEP ended in December 2009. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Notional Volume of Derivative Instruments |
|-------------------------------------------|
|                                      |   |   |   |   |   |   |   |
|                                      | Volume |   |   |
|                                      |   | September 30, |   |   | December 31, |   | Unit of |
|                                      |   | 2010 |   |   | 2009 |   | Measure |
|                                      | (in millions) |   |   |
| Commodity:                                |   |   |   |   |   |   |   |
| Power                                     |   |   | 789 |   |   |   | 589 |   | MWHs |
| Coal                                      |   |   | 71 |   |   |   | 60 |   | Tons |
| Natural Gas                               |   |   | 110 |   |   |   | 127 |   | MMBtus |
| Heating Oil and Gasoline                  |   |   | 7 |   |   |   | 6 |   | Gallons |
| Interest Rate                             |   | $ | 180 |   |   | $ | 216 |   | USD |
|                                      |   |   |   |   |   |   |   |   |   |
| Interest Rate and Foreign Currency        |   | $ | 664 |   |   | $ | 83 |   | USD |

----

----

| Fair Value of Derivative Instruments                               |   |
|--------------------------------------------------------------------|--------|
| September 30, 2010                                                 |   |
|                                                               |   |
|                                                               |   | Risk Management |   |   |   |   |   |   |   |   |   |
|                                                               |   | Contracts |   | Hedging Contracts |   |   |   |   |   |
|                                                               |   |   |   |   |   | Interest Rate |   |   |   |   |   |
|                                                               |   |   |   |   |   | and Foreign |   | Other |   |   |   |
| Balance Sheet Location                                             |   | Commodity (a) |   | Commodity (a) |   | Currency (a)(c) |   | (a) (b) |   | Total |   |
|                                                               |   | (in millions) |   |
| Current Risk Management Assets                                     |   |   | $ | 1,229 |   |   | $ | 16 |   |   | $ | 4 |   |   | $ | (970 | ) |   | $ | 279 |   |
| Long-term Risk Management Assets                                   |   |   |   | 835 |   |   |   | 10 |   |   |   | 3 |   |   |   | (360 | ) |   |   | 488 |   |
| Total Assets                                                       |   |   |   | 2,064 |   |   |   | 26 |   |   |   | 7 |   |   |   | (1,330 | ) |   |   | 767 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities                                |   |   |   | 1,167 |   |   |   | 19 |   |   |   | 3 |   |   |   | (1,065 | ) |   |   | 124 |   |
| Long-term Risk Management Liabilities                              |   |   |   | 687 |   |   |   | 4 |   |   |   | 3 |   |   |   | (527 | ) |   |   | 167 |   |
| Total Liabilities                                                  |   |   |   | 1,854 |   |   |   | 23 |   |   |   | 6 |   |   |   | (1,592 | ) |   |   | 291 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net Assets   (Liabilities) |   |   | $ | 210 |   |   | $ | 3 |   |   | $ | 1 |   |   | $ | 262 |   |   | $ | 476 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair Value of Derivative Instruments                               |   |
| December 31, 2009                                                  |   |
|                                                               |   |
|                                                               |   | Risk Management |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   | Contracts |   | Hedging Contracts |   |   |   |   |   |   |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |   |   |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |   | and Foreign |   | Other |   |   |   |   |   |
| Balance Sheet Location                                             |   | Commodity (a) |   | Commodity (a) |   | Currency (a) |   | (a) (b) |   | Total |   |
|                                                               |   | (in millions) |   |
| Current Risk Management Assets                                     |   |   | $ | 1,078 |   |   | $ | 13 |   |   | $ | - |   |   | $ | (831 | ) |   | $ | 260 |   |
| Long-term Risk Management Assets                                   |   |   |   | 614 |   |   |   | - |   |   |   | - |   |   |   | (271 | ) |   |   | 343 |   |
| Total Assets                                                       |   |   |   | 1,692 |   |   |   | 13 |   |   |   | - |   |   |   | (1,102 | ) |   |   | 603 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities                                |   |   |   | 997 |   |   |   | 17 |   |   |   | 3 |   |   |   | (897 | ) |   |   | 120 |   |
| Long-term Risk Management Liabilities                              |   |   |   | 442 |   |   |   | - |   |   |   | 2 |   |   |   | (316 | ) |   |   | 128 |   |
| Total Liabilities                                                  |   |   |   | 1,439 |   |   |   | 17 |   |   |   | 5 |   |   |   | (1,213 | ) |   |   | 248 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net Assets   (Liabilities) |   |   | $ | 253 |   |   | $ | (4 | ) |   | $ | (5 | ) |   | $ | 111 |   |   | $ | 355 |   |

|   | (a) | Derivative instruments within these categories are reported gross.  These instruments are subject to master netting agreements and are presented on the Condensed Consolidated Balance Sheet on a net basis in accordance with the accounting guidance for "Derivatives and Hedging." |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | (c) | At September 30, 2010, Risk Management Assets included $7 million related to fair value hedging strategies while the remainder related to cash flow hedging strategies.  At December 31, 2009, we only employed cash flow hedging strategies. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Amount of Gain (Loss) Recognized on                    |
|--------------------------------------------------------|
| Risk Management Contracts                              |
| For the Three Months Ended September 30, 2010 and 2009 |
|                                                   |   |   |   |   |
| Location of Gain (Loss)                                |   | 2010  |   | 2009  |
|                                                   |   | (in millions) |
| Utility Operations Revenue                             |   | $ |  24  |   | $ |  25  |
| Other Revenue                                          |   |   |  (4) |   |   |  1  |
| Regulatory Assets (a)                                  |   |   |  (6) |   |   |  (7) |
| Regulatory Liabilities (a)                             |   |   |  7  |   |   |  24  |
| Total Gain (Loss) on Risk Management Contracts         |   | $ |  21  |   | $ |  43  |
|                                                   |   |   |   |   |   |   |
| Amount of Gain (Loss) Recognized on                    |
| Risk Management Contracts                              |
| For the Nine Months Ended September 30, 2010 and 2009  |
|                                                   |   |   |   |   |
| Location of Gain (Loss)                                |   | 2010  |   | 2009  |
|                                                   |   | (in millions) |
| Utility Operations Revenue                             |   | $ |  69  |   | $ |  124  |
| Other Revenue                                          |   |   |  5  |   |   |  19  |
| Regulatory Assets (a)                                  |   |   |  (9) |   |   |  (17) |
| Regulatory Liabilities (a)                             |   |   |  34  |   |   |  33  |
| Total Gain (Loss) on Risk Management Contracts         |   | $ |  99  |   | $ |  159  |

----

----

| Total Accumulated Other Comprehensive Income (Loss) Activity for Cash Flow Hedges |          |
|-----------------------------------------------------------------------------------|---------------|
| For the Three Months Ended September 30, 2010                                     |          |
|                                                                              |          |   |   | Interest Rate |   |   |   |   |
|                                                                              |          |   |   | and Foreign |   |   |   |   |
|                                                                              | Commodity     |   | Currency |   | Total |   |
|                                                                              | (in millions) |   |
| Balance in AOCI as of June 30, 2010                                               |          | $ | 2 |   |   | $ | (15 | ) |   | $ | (13 | ) |
| Changes in Fair Value Recognized in AOCI                                          |          |   | (2 | ) |   |   | (1 | ) |   |   | (3 | ) |
| Amount of (Gain) or Loss Reclassified from AOCI                                   |          |   |   |   |   |   |   |   |   |   |   |   |
| to Income Statement/within Balance Sheet:                                         |          |   |   |   |   |   |   |   |   |   |   |   |
| Utility Operations Revenue                                                        |          |   | 1 |   |   |   | - |   |   |   | 1 |   |
| 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 September 30, 2010                                          |          | $ | 2 |   |   | $ | (15 | ) |   | $ | (13 | ) |
|                                                                              |          |   |   |   |   |   |   |   |   |   |   |   |
| Total Accumulated Other Comprehensive Income (Loss) Activity for Cash Flow Hedges |          |
| For the Three Months Ended September 30, 2009                                     |          |
|                                                                              |          |   |   |   | Interest Rate |   |   |   |   |   |
|                                                                              |          |   |   |   | and Foreign |   |   |   |   |   |
|                                                                              | Commodity     |   | Currency |   | Total |   |
|                                                                              | (in millions) |   |
| Balance in AOCI as of June 30, 2009                                               |          | $ | 6 |   |   | $ | (11 | ) |   | $ | (5 | ) |
| Changes in Fair Value Recognized in AOCI                                          |          |   | (6 | ) |   |   | (4 | ) |   |   | (10 | ) |
| Amount of (Gain) or Loss Reclassified from AOCI                                   |          |   |   |   |   |   |   |   |   |   |   |   |
| to Income Statement/within Balance Sheet:                                         |          |   |   |   |   |   |   |   |   |   |   |   |
| Utility Operations Revenue                                                        |          |   | (7 | ) |   |   | - |   |   |   | (7 | ) |
| Other Revenue                                                                     |          |   | (5 | ) |   |   | - |   |   |   | (5 | ) |
| Purchased Electricity for Resale                                                  |          |   | 10 |   |   |   | - |   |   |   | 10 |   |
| Interest Expense                                                                  |          |   | - |   |   |   | 1 |   |   |   | 1 |   |
| Regulatory Assets (a)                                                             |          |   | 2 |   |   |   | - |   |   |   | 2 |   |
| Regulatory Liabilities (a)                                                        |          |   | (3 | ) |   |   | - |   |   |   | (3 | ) |
| Balance in AOCI as of September 30, 2009                                          |          | $ | (3 | ) |   | $ | (14 | ) |   | $ | (17 | ) |

----

| Total Accumulated Other Comprehensive Income (Loss) Activity for Cash Flow Hedges |          |
|-----------------------------------------------------------------------------------|---------------|
| For the Nine Months Ended September 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                                          |          |   | 2 |   |   |   | (5 | ) |   |   | (3 | ) |
| Amount of (Gain) or Loss Reclassified from AOCI                                   |          |   |   |   |   |   |   |   |   |   |   |   |
| to Income Statement/within Balance Sheet:                                         |          |   |   |   |   |   |   |   |   |   |   |   |
| Utility Operations Revenue                                                        |          |   | 1 |   |   |   | - |   |   |   | 1 |   |
| Other Revenue                                                                     |          |   | (4 | ) |   |   | - |   |   |   | (4 | ) |
| Purchased Electricity for Resale                                                  |          |   | 3 |   |   |   | - |   |   |   | 3 |   |
| Interest Expense                                                                  |          |   | - |   |   |   | 3 |   |   |   | 3 |   |
| Regulatory Assets (a)                                                             |          |   | 2 |   |   |   | - |   |   |   | 2 |   |
| Regulatory Liabilities (a)                                                        |          |   | - |   |   |   | - |   |   |   | - |   |
| Balance in AOCI as of September 30, 2010                                          |          | $ | 2 |   |   | $ | (15 | ) |   | $ | (13 | ) |
|                                                                              |          |   |   |   |   |   |   |   |   |   |   |   |
| Total Accumulated Other Comprehensive Income (Loss) Activity for Cash Flow Hedges |          |
| For the Nine Months Ended September 30, 2009                                      |          |
|                                                                              |          |   |   |   | Interest Rate |   |   |   |   |   |
|                                                                              |          |   |   |   | and Foreign |   |   |   |   |   |
|                                                                              | Commodity     |   | Currency |   | Total |   |
|                                                                              | (in millions) |   |
| Balance in AOCI as of December 31, 2008                                           |          | $ | 7 |   |   | $ | (29 | ) |   | $ | (22 | ) |
| Changes in Fair Value Recognized in AOCI                                          |          |   | (9 | ) |   |   | 11 |   |   |   | 2 |   |
| Amount of (Gain) or Loss Reclassified from AOCI                                   |          |   |   |   |   |   |   |   |   |   |   |   |
| to Income Statement/within Balance Sheet:                                         |          |   |   |   |   |   |   |   |   |   |   |   |
| Utility Operations Revenue                                                        |          |   | (13 | ) |   |   | - |   |   |   | (13 | ) |
| Other Revenue                                                                     |          |   | (11 | ) |   |   | - |   |   |   | (11 | ) |
| Purchased Electricity for Resale                                                  |          |   | 24 |   |   |   | - |   |   |   | 24 |   |
| Interest Expense                                                                  |          |   | - |   |   |   | 4 |   |   |   | 4 |   |
| Regulatory Assets (a)                                                             |          |   | 5 |   |   |   | - |   |   |   | 5 |   |
| Regulatory Liabilities (a)                                                        |          |   | (6 | ) |   |   | - |   |   |   | (6 | ) |
| Balance in AOCI as of September 30, 2009                                          |          | $ | (3 | ) |   | $ | (14 | ) |   | $ | (17 | ) |

----

| Impact of Cash Flow Hedges on our Condensed Consolidated Balance Sheet |          |
|------------------------------------------------------------------------|---------------|
| September 30, 2010                                                     |          |
|                                                                   |          |   |   |   |   |   |
|                                                                   |          |   | Interest Rate |   |   |   |
|                                                                   |          |   | and Foreign |   |   |   |
|                                                                   | Commodity     |   | Currency |   | Total |   |
|                                                                   | (in millions) |   |
| Hedging Assets (a)                                                     | $             | 16 |   | $ | - |   | $ | 16 |   |
| Hedging Liabilities (a)                                                |          | (13 | ) |   | (6 | ) |   | (19 | ) |
| AOCI Gain (Loss) Net of Tax                                            |          | 2 |   |   | (15 | ) |   | (13 | ) |
|                                                                   |          |   |   |   |   |   |   |   |   |
| Portion Expected to be Reclassified to Net                             |          |   |   |   |   |   |   |   |   |
| Income During the Next Twelve Months                                   |          | (1 | ) |   | (4 | ) |   | (5 | ) |
|                                                                   |          |   |   |   |   |   |   |   |   |
| Impact of Cash Flow Hedges on our Condensed Consolidated Balance Sheet |          |
| December 31, 2009                                                      |          |
|                                                                   |          |   |   |   |   |   |   |   |   |
|                                                                   |          |   |   | Interest Rate |   |   |   |   |
|                                                                   |          |   |   | and Foreign |   |   |   |   |
|                                                                   | Commodity     |   | Currency |   | Total |   |
|                                                                   | (in millions) |   |
| Hedging Assets (a)                                                     | $             | 8 |   | $ | - |   | $ | 8 |   |
| Hedging Liabilities (a)                                                |          | (12 | ) |   | (5 | ) |   | (17 | ) |
| AOCI Gain (Loss) Net of Tax                                            |          | (2 | ) |   | (13 | ) |   | (15 | ) |
|                                                                   |          |   |   |   |   |   |   |   |   |
| Portion Expected to be Reclassified to Net                             |          |   |   |   |   |   |   |   |   |
| Income During the Next Twelve Months                                   |          | (2 | ) |   | (4 | ) |   | (6 | ) |

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

----

|                                                                   | September 30, |   | December 31, |   |
|------------------------------------------------------------------------|---------------|--------|--------------|--------|
|                                                                   | 2010          |   | 2009         |   |
|                                                                   | (in millions) |   |
| Liabilities for Derivative Contracts with Credit Downgrade Triggers    |          | $      | 23           |   |   | $ | 10 |   |
| Amount of Collateral AEP Subsidiaries Would Have Been Required to Post |          |   | 55           |   |   |   | 34 |   |
| Amount Attributable to RTO and ISO Activities                          |          |   | 54           |   |   |   | 29 |   |

|                                                                                              | September 30, |   | December 31, |   |
|---------------------------------------------------------------------------------------------------|---------------|--------|--------------|--------|
|                                                                                              | 2010          |   | 2009         |   |
|                                                                                              | (in millions) |   |
| Liabilities for Contracts with Cross Default Provisions Prior to Contractual Netting Arrangements |          | $      | 568          |   |   | $ | 567 |   |
| Amount of Cash Collateral Posted                                                                  |          |   | 146          |   |   |   | 15 |   |
| Additional Settlement Liability if Cross Default Provision is Triggered                           |          |   | 241          |   |   |   | 199 |   |

----

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

----

|   |           |   | September 30, 2010 |               | December 31, 2009 |
|--------|----------------|--------|--------------------|--------------------|-------------------|
|   |           |   | Book Value         |               | Fair Value        |   | Book Value |   | Fair Value |
|   |           |   | (in millions)      |
|   | Long-term Debt |   | $                  |  17,281  |              | $ |  19,641  |   | $ |  17,498  |   | $ |  18,479  |

|   |                              |                                                         |   |            | September 30, 2010 |   |
|--------|-----------------------------------|--------------------------------------------------------------|--------|-----------------|--------------------|--------|
|   |                              |                                                         |   |            |               |   | Gross |   | Gross |   | Estimated |   |
|   |                              |                                                         |   |            |               |   |  Unrealized |   | Unrealized |   |  Fair |
|   | Other Temporary Investments       |                                                         | Cost   |            | Gains              |   | Losses |   | Value |
|   |                              |                                                         |   |            | (in millions)      |   |
|   | Restricted Cash (a)               |                                                         | $      |  160  |               | $      |  -  |   | $ |  -  |   | $ |  160  |   |
|   | Fixed Income Securities:          |                                                         |   |            |               |   |   |   |   |   |   |   |   |   |
|   |                              | Mutual Funds                                                 |   |            |  69      |   |   |  1  |   |   |  -  |   |   |  70  |   |
|   |                              | Variable Rate Demand Notes                                   |   |            |  73      |   |   |  -  |   |   |  -  |   |   |  73  |   |
|   | Equity Securities - Mutual Funds  |                                                         |   |  18   |               |   |  5  |   |   |  -  |   |   |  23  |   |
|   | Total Other Temporary Investments |                                                         | $      |  320  |               | $      |  6  |   | $ |  -  |   | $ |  326  |   |
|   |                              |                                                         |   |            |               |   |   |   |   |   |   |   |   |   |   |   |
|   |                              |                                                         |   |            | December 31, 2009  |   |
|   |                              |                                                         |   |            |               |   | Gross |   | Gross |   | Estimated |   |
|   |                              |                                                         |   |            |               |   |  Unrealized |   | Unrealized |   |  Fair |   |
|   | Other Temporary Investments       |                                                         | Cost   |            | Gains              |   | Losses |   | Value |   |
|   |                              |                                                         |   |            | (in millions)      |   |
|   | Restricted Cash (a)               |                                                         | $      |  223  |               | $      |  -  |   | $ |  -  |   | $ |  223  |   |
|   | Fixed Income Securities:          |                                                         |   |            |               |   |   |   |   |   |   |   |   |   |
|   |                              | Mutual Funds                                                 |   |            |  57      |   |   |  -  |   |   |  -  |   |   |  57  |   |
|   |                              | Variable Rate Demand Notes                                   |   |            |  45      |   |   |  -  |   |   |  -  |   |   |  45  |   |
|   | Equity Securities:                |                                                         |   |            |               |   |   |   |   |   |   |   |   |   |
|   |                              | Domestic                                                     |   |            |  1       |   |   |  15  |   |   |  -  |   |   |  16  |   |
|   |                              | Mutual Funds                                                 |   |            |  18      |   |   |  4  |   |   |  -  |   |   |  22  |   |
|   | Total Other Temporary Investments |                                                         | $      |  344  |               | $      |  19  |   | $ |  -  |   | $ |  363  |   |
|   |                              |                                                         |   |            |               |   |   |   |   |   |   |   |   |   |   |   |
|   | (a)                               | Primarily represents amounts held for the repayment of debt. |

----

|                                      | Three Months Ended September 30, |   | Nine Months Ended September 30, |   |
|-------------------------------------------|----------------------------------|--------|---------------------------------|--------|
|                                      | 2010                             |   | 2009                            |   | 2010 |   | 2009 |   |
|                                      | (in millions)                    |   |
| Proceeds From Investment Sales            |                             | $      | 133                             |   |   | $ | - |   |   | $ | 390 |   |   | $ | - |   |
| Purchases of Investments                  |                             |   | 192                             |   |   |   | 1 |   |   |   | 413 |   |   |   | 2 |   |
| Gross Realized Gains on Investment Sales  |                             |   | -                               |   |   |   | - |   |   |   | 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. |
|--------------------|-------------------------------------------------------------------------------------|

| ·   | Target asset allocation is 50% fixed income and 50% equity securities. |
|--------------------|------------------------------------------------------------------------|

----

|   |                         |                                         |   | September 30, 2010 |              | December 31, 2009 |
|--------|------------------------------|----------------------------------------------|--------|--------------------|-------------------|-------------------|
|   |                         |                                         |   | Estimated          |              | Gross             |   | Other-Than- |   | Estimated |   | Gross |   | Other-Than- |
|   |                         |                                         | Fair   | Unrealized         | Temporary         | Fair              | Unrealized | Temporary |
|   |                         |                                         | Value  | Gains              | Impairments       | Value             | Gains | Impairments |
|   |                         |                                         |   | (in millions)      |
|   | Cash and Cash Equivalents    |                                         | $      |  30      |              | $                 |  -  |   | $ |  -  |   | $ |  14  |   | $ |  -  |   | $ |  -  |
|   | Fixed Income Securities:     |                                         |   |               |              |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |                         | United States Government                     |   |               |  489    |              |   |  41  |   |   |  (1) |   |   |  401  |   |   |  13  |   |   |  (4) |
|   |                         | Corporate Debt                               |   |               |  65     |              |   |  5  |   |   |  (2) |   |   |  57  |   |   |  5  |   |   |  (2) |
|   |                         | State and Local Government                   |   |               |  308    |              |   |  (7) |   |   |  -  |   |   |  369  |   |   |  8  |   |   |  1  |
|   |                         |   Subtotal Fixed Income Securities |   |  862     |              |              |  39  |   |   |  (3) |   |   |  827  |   |   |  26  |   |   |  (5) |
|   | Equity Securities - Domestic |                                         |   |  574     |              |              |  124  |   |   |  (123) |   |   |  551  |   |   |  234  |   |   |  (119) |
|   | Spent Nuclear Fuel and       |                                         |   |               |              |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |                         | Decommissioning Trusts                  |   | $                  |  1,466  |              | $ |  163  |   | $ |  (126) |   | $ |  1,392  |   | $ |  260  |   | $ |  (124) |

|   |                                      | Three Months Ended September 30, |            | Nine Months Ended September 30, |
|--------|-------------------------------------------|----------------------------------|-----------------|---------------------------------|
|   |                                      | 2010                        |            | 2009                       |   | 2010  |   | 2009  |
|   |                                      | (in millions)                    |
|   | Proceeds From Investment Sales            | $                                |  495  |                            | $ |  113  |   | $ |  1,087  |   | $ |  524  |
|   | Purchases of Investments                  |                             |  512  |                            |   |  129  |   |   |  1,129  |   |   |  571  |
|   | Gross Realized Gains on Investment Sales  |                             |  1    |                            |   |  1  |   |   |  7  |   |   |  10  |
|   | Gross Realized Losses on Investment Sales |                             |  -    |                            |   |  -  |   |   |  -  |   |   |  1  |

|                     | Fair Value    |   |
|--------------------------|---------------|--------|
|                     | of Debt       |   |
|                     | Securities    |   |
|                     | (in millions) |   |
| Within 1 year            |          | $      | 13 |   |
| 1 year – 5 years   |          |   | 346 |   |
| 5 years – 10 years |          |   | 267 |   |
| After 10 years           |          |   | 236 |   |
| Total                    |          | $      | 862 |   |

----

| Assets and Liabilities Measured at Fair Value on a Recurring Basis |   |
|--------------------------------------------------------------------|--------|
| September 30, 2010                                                 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Other |   |   | Total |   |
| Assets:                                                            |   | (in millions) |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents (a)                                      |   | $ | 922 |   |   | $ | - |   |   | $ | - |   |   | $ | 168 |   |   | $ | 1,090 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Temporary Investments                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Restricted Cash (a)                                                |   |   | 122 |   |   |   | - |   |   |   | - |   |   |   | 38 |   |   |   | 160 |   |
| Fixed Income Securities:                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mutual Funds                                                       |   |   | 70 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 70 |   |
| Variable Rate Demand Notes                                         |   |   | - |   |   |   | 73 |   |   |   | - |   |   |   | - |   |   |   | 73 |   |
| Equity Securities - Mutual Funds (b)                               |   |   | 23 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 23 |   |
| Total Other Temporary Investments                                  |   |   | 215 |   |   |   | 73 |   |   |   | - |   |   |   | 38 |   |   |   | 326 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (c) (f)                        |   |   | 30 |   |   |   | 1,876 |   |   |   | 149 |   |   |   | (1,365 | ) |   |   | 690 |   |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodity Hedges (c)                                               |   |   | 14 |   |   |   | 12 |   |   |   | - |   |   |   | (10 | ) |   |   | 16 |   |
| Fair Value Hedges                                                  |   |   | - |   |   |   | 7 |   |   |   | - |   |   |   | - |   |   |   | 7 |   |
| Dedesignated Risk Management Contracts (d)                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 54 |   |   |   | 54 |   |
| Total Risk Management Assets                                       |   |   | 44 |   |   |   | 1,895 |   |   |   | 149 |   |   |   | (1,321 | ) |   |   | 767 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Spent Nuclear Fuel and Decommissioning Trusts                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents (e)                                      |   |   | - |   |   |   | 21 |   |   |   | - |   |   |   | 9 |   |   |   | 30 |   |
| Fixed Income Securities:                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| United States Government                                           |   |   | - |   |   |   | 489 |   |   |   | - |   |   |   | - |   |   |   | 489 |   |
| Corporate Debt                                                     |   |   | - |   |   |   | 65 |   |   |   | - |   |   |   | - |   |   |   | 65 |   |
| State and Local Government                                         |   |   | - |   |   |   | 308 |   |   |   | - |   |   |   | - |   |   |   | 308 |   |
| Subtotal Fixed Income Securities                                   |   |   | - |   |   |   | 862 |   |   |   | - |   |   |   | - |   |   |   | 862 |   |
| Equity Securities - Domestic (b)                                   |   |   | 574 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 574 |   |
| Total Spent Nuclear Fuel and Decommissioning Trusts                |   |   | 574 |   |   |   | 883 |   |   |   | - |   |   |   | 9 |   |   |   | 1,466 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                                                       |   | $ | 1,755 |   |   | $ | 2,851 |   |   | $ | 149 |   |   | $ | (1,106 | ) |   | $ | 3,649 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (c) (f)                        |   | $ | 34 |   |   | $ | 1,773 |   |   | $ | 38 |   |   | $ | (1,573 | ) |   | $ | 272 |   |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodity Hedges (c)                                               |   |   | 3 |   |   |   | 20 |   |   |   | - |   |   |   | (10 | ) |   |   | 13 |   |
| Interest Rate/Foreign Currency Hedges                              |   |   | - |   |   |   | 6 |   |   |   | - |   |   |   | - |   |   |   | 6 |   |
| Total Risk Management Liabilities                                  |   | $ | 37 |   |   | $ | 1,799 |   |   | $ | 38 |   |   | $ | (1,583 | ) |   | $ | 291 |   |

----

| Assets and Liabilities Measured at Fair Value on a Recurring Basis |   |
|--------------------------------------------------------------------|--------|
| December 31, 2009                                                  |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Other |   |   | Total |   |
| Assets:                                                            |   | (in millions) |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents (a)                                      |   | $ | 427 |   |   | $ | - |   |   | $ | - |   |   | $ | 63 |   |   | $ | 490 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Temporary Investments                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Restricted Cash (a)                                                |   |   | 198 |   |   |   | - |   |   |   | - |   |   |   | 25 |   |   |   | 223 |   |
| Fixed Income Securities:                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mutual Funds                                                       |   |   | 57 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 57 |   |
| Variable Rate Demand Notes                                         |   |   | - |   |   |   | 45 |   |   |   | - |   |   |   | - |   |   |   | 45 |   |
| Equity Securities (b):                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                                                           |   |   | 16 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 16 |   |
| Mutual Funds                                                       |   |   | 22 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 22 |   |
| Total Other Temporary Investments                                  |   |   | 293 |   |   |   | 45 |   |   |   | - |   |   |   | 25 |   |   |   | 363 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (c) (g)                        |   |   | 8 |   |   |   | 1,609 |   |   |   | 72 |   |   |   | (1,119 | ) |   |   | 570 |   |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodity Hedges (c)                                               |   |   | 1 |   |   |   | 11 |   |   |   | - |   |   |   | (4 | ) |   |   | 8 |   |
| Dedesignated Risk Management Contracts (d)                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 25 |   |   |   | 25 |   |
| Total Risk Management Assets                                       |   |   | 9 |   |   |   | 1,620 |   |   |   | 72 |   |   |   | (1,098 | ) |   |   | 603 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Spent Nuclear Fuel and Decommissioning Trusts                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents (e)                                      |   |   | - |   |   |   | 3 |   |   |   | - |   |   |   | 11 |   |   |   | 14 |   |
| Fixed Income Securities:                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| United States Government                                           |   |   | - |   |   |   | 401 |   |   |   | - |   |   |   | - |   |   |   | 401 |   |
| Corporate Debt                                                     |   |   | - |   |   |   | 57 |   |   |   | - |   |   |   | - |   |   |   | 57 |   |
| State and Local Government                                         |   |   | - |   |   |   | 369 |   |   |   | - |   |   |   | - |   |   |   | 369 |   |
| Subtotal Fixed Income Securities                                   |   |   | - |   |   |   | 827 |   |   |   | - |   |   |   | - |   |   |   | 827 |   |
| Equity Securities - Domestic (b)                                   |   |   | 551 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 551 |   |
| Total Spent Nuclear Fuel and Decommissioning Trusts                |   |   | 551 |   |   |   | 830 |   |   |   | - |   |   |   | 11 |   |   |   | 1,392 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                                                       |   | $ | 1,280 |   |   | $ | 2,495 |   |   | $ | 72 |   |   | $ | (999 | ) |   | $ | 2,848 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (c) (g)                        |   | $ | 11 |   |   | $ | 1,415 |   |   | $ | 10 |   |   | $ | (1,205 | ) |   | $ | 231 |   |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodity Hedges (c)                                               |   |   | - |   |   |   | 16 |   |   |   | - |   |   |   | (4 | ) |   |   | 12 |   |
| Interest Rate/Foreign Currency Hedges                              |   |   | - |   |   |   | 5 |   |   |   | - |   |   |   | - |   |   |   | 5 |   |
| Total Risk Management Liabilities                                  |   | $ | 11 |   |   | $ | 1,436 |   |   | $ | 10 |   |   | $ | (1,209 | ) |   | $ | 248 |   |

|   | (a) | Amounts in ''Other'' column primarily represent cash deposits in bank accounts with financial institutions or with third parties.  Level 1 amounts primarily represent investments in money market funds. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Amounts represent 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 September 30, 2010 maturity of the net fair value of risk management contracts prior to cash collateral, assets/(liabilities), is as follows:  Level 1 matures $0 million in 2010, $0 million in periods 2011-2013 and ($4) million in periods 2014-2018;  Level 2 matures $17 million in 2010, $58 million in periods 2011-2013, $9 million in periods 2014-2015 and $19 million in periods 2016-2028;  Level 3 matures $6 million in 2010, $44 million in periods 2011-2013, $26 million in periods 2014-2015 and $35 million in periods 2016-2028.  Risk management commodity contracts are substantially comprised of power contracts. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | (g) | The December 31, 2009 maturity of the net fair value of risk management contracts prior to cash collateral, assets/(liabilities), is as follows:  Level 1 matures ($1) million in 2010, ($1) million in periods 2011-2013 and ($1) million in periods 2014-2015;  Level 2 matures $65 million in 2010, $84 million in periods 2011-2013, $22 million in periods 2014-2015 and $23 million in periods 2016-2028;  Level 3 matures $17 million in 2010, $16 million in periods 2011-2013, $8 million in periods 2014-2015 and $21 million in periods 2016-2028. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                               |   | Net Risk      |   |
|------------------------------------------------------------------------------------|--------|---------------|--------|
|                                                                               |   | Management    |   |
|                                                                               |   | Assets        |   |
| Three Months Ended September 30, 2010                                              |   | (Liabilities) |   |
|                                                                               |   | (in millions) |   |
| Balance as of June 30, 2010                                                        |   |          | $      | 100 |   |
| 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)                            |   |          |   | 23 |   |
| Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income |   |          |   | - |   |
| Purchases, Issuances and Settlements (c)                                           |   |          |   | - |   |
| Transfers into Level 3 (d) (h)                                                     |   |          |   | 5 |   |
| Transfers out of Level 3 (e) (h)                                                   |   |          |   | (22 | ) |
| Changes in Fair Value Allocated to Regulated Jurisdictions (g)                     |   |          |   | 9 |   |
| Balance as of September 30, 2010                                                   |   |          | $      | 111 |   |

|                                                                               |   | Net Risk      |   |
|------------------------------------------------------------------------------------|--------|---------------|--------|
|                                                                               |   | Management    |   |
|                                                                               |   | Assets        |   |
| Nine Months Ended September 30, 2010                                               |   | (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)                            |   |          |   | 60 |   |
| Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income |   |          |   | - |   |
| Purchases, Issuances and Settlements (c)                                           |   |          |   | (18 | ) |
| Transfers into Level 3 (d) (h)                                                     |   |          |   | 14 |   |
| Transfers out of Level 3 (e) (h)                                                   |   |          |   | (26 | ) |
| Changes in Fair Value Allocated to Regulated Jurisdictions (g)                     |   |          |   | 15 |   |
| Balance as of September 30, 2010                                                   |   |          | $      | 111 |   |

----

|                                                                               |   | Net Risk      |   |
|------------------------------------------------------------------------------------|--------|---------------|--------|
|                                                                               |   | Management    |   |
|                                                                               |   | Assets        |   |
| Three Months Ended September 30, 2009                                              |   | (Liabilities) |   |
|                                                                               |   | (in millions) |   |
| Balance as of June 30, 2009                                                        |   |          | $      | 67 |   |
| Realized (Gain) Loss Included in Net Income (or Changes in Net Assets) (a)         |   |          |   | (8 | ) |
| 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                                               |   |          |   | - |   |
| Transfers in and/or out of Level 3 (f)                                             |   |          |   | 7 |   |
| Changes in Fair Value Allocated to Regulated Jurisdictions (g)                     |   |          |   | 28 |   |
| Balance as of September 30, 2009                                                   |   |          | $      | 104 |   |

|                                                                               |   | Net Risk      |   |
|------------------------------------------------------------------------------------|--------|---------------|--------|
|                                                                               |   | Management    |   |
|                                                                               |   | Assets        |   |
| Nine Months Ended September 30, 2009                                               |   | (Liabilities) |   |
|                                                                               |   | (in millions) |   |
| Balance as of December 31, 2008                                                    |   |          | $      | 49 |   |
| Realized (Gain) Loss Included in Net Income (or Changes in Net Assets) (a)         |   |          |   | (21 | ) |
| Unrealized Gain (Loss) Included in Net Income (or Changes in Net Assets)      |   |          |   |   |   |
| Relating to Assets Still Held at the Reporting Date (a)                            |   |          |   | 51 |   |
| Realized and Unrealized Gains (Losses) Included in Other Comprehensive Income |   |          |   | - |   |
| Purchases, Issuances and Settlements                                               |   |          |   | - |   |
| Transfers in and/or out of Level 3 (f)                                             |   |          |   | (26 | ) |
| Changes in Fair Value Allocated to Regulated Jurisdictions (g)                     |   |          |   | 51 |   |
| Balance as of September 30, 2009                                                   |   |          | $      | 104 |   |

|   | (a) | Included in revenues on our Condensed Consolidated Statements of Income. |
|--------|-----|--------------------------------------------------------------------------|

|   | (b) | Represents the change in fair value between the beginning of the reporting period and the settlement of the risk management commodity contract. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Represents the settlement of risk management commodity contracts for the reporting period. |
|--------|-----|--------------------------------------------------------------------------------------------|

|   | (d) | Represents existing assets or liabilities that were previously categorized as Level 2. |
|--------|-----|----------------------------------------------------------------------------------------|

|   | (e) | Represents existing assets or liabilities that were previously categorized as Level 3. |
|--------|-----|----------------------------------------------------------------------------------------|

|   | (f) | Represents existing assets or liabilities that were either previously categorized as a higher level for which the inputs to the model became unobservable or assets and liabilities that were previously classified as Level 3 for which the lowest significant input became observable during the period. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (g) | Relates to the net gains (losses) of those contracts that are not reflected on our Condensed Consolidated Statements of Income.  These net gains (losses) are recorded as regulatory liabilities/assets. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

| Long-term Debt                    |   |               |   |   |              |   |
|-----------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                              |   |               |   |   |              |   |
| Type of Debt                      |   | September 30, 2010 |   |   | December 31, 2009 |   |
|                              |   | (in millions)      |   |
| Senior Unsecured Notes            |   | $                  | 12,176 |   |              | $      | 12,416 |   |
| Pollution Control Bonds           |   |               | 2,263  |   |              |   | 2,159 |   |
| Notes Payable                     |   |               | 368    |   |              |   | 326 |   |
| Securitization Bonds              |   |               | 1,847  |   |              |   | 1,995 |   |
| Junior Subordinated Debentures    |   |               | 315    |   |              |   | 315 |   |
| Spent Nuclear Fuel Obligation (a) |   |               | 265    |   |              |   | 265 |   |
| Other Long-term Debt              |   |               | 90     |   |              |   | 88 |   |
| Unamortized Discount (net)        |   |               | (43    | )      |              |   | (66 | ) |
| Total Long-term Debt Outstanding  |   |               | 17,281 |   |              |   | 17,498 |   |
| Less Portion Due Within One Year  |   |               | 1,286  |   |              |   | 1,741 |   |
| Long-term Portion                 |   | $                  | 15,995 |   |              | $      | 15,757 |   |

| (a) | Pursuant to the Nuclear Waste Policy Act of 1982, I&M (a nuclear licensee) has an obligation to the United States Department of Energy for spent nuclear fuel disposal.  The obligation includes a one-time fee for nuclear fuel consumed prior to April 7, 1983.  Trust fund assets related to this obligation of $307 million and $306 million at September 30, 2010 and December 31, 2009, respectively, 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 |
|   |                                                                                             |                                                                                                                |                    |   | (in millions) |              | (%)    |   |        |
|   | Issuances:                                                                                       |                                                                                                                |                    |   |          |              |   |   |        |     |       |
|   | APCo                                                                                             |                                                                                                                | Senior Unsecured Notes  |   | $             |  300    |   |   | 3.40   |     | 2015  |
|   | APCo                                                                                             |                                                                                                                | Pollution Control Bonds |   |          |  18     |   |   | 4.625  |     | 2021  |
|   | APCo                                                                                             |                                                                                                                | Pollution Control Bonds |   |          |  50     |   |   | 5.375  |     | 2038  |
|   | CSPCo                                                                                            |                                                                                                                | Floating Rate Notes     |   |          |  150    |   |   | Variable    |     | 2012  |
|   | I&M                                                                                          |                                                                                                                | Notes Payable           |   |          |  84     |   |   | 4.00   |     | 2014  |
|   | OPCo                                                                                             |                                                                                                                | Pollution Control Bonds |   |          |  86     |   |   | 3.125  |     | 2015  |
|   | OPCo                                                                                             |                                                                                                                | Pollution Control Bonds |   |          |  79     |   |   | 3.25   |     | 2014  |
|   | OPCo                                                                                             |                                                                                                                | Pollution Control Bonds |   |          |  39     |   |   | 2.875  |     | 2014  |
|   | SWEPCo                                                                                           |                                                                                                                | Senior Unsecured Notes  |   |          |  350    |   |   | 6.20   |     | 2040  |
|   | SWEPCo                                                                                           |                                                                                                                | Pollution Control Bonds |   |          |  54     |   |   | 3.25   |     | 2015  |
|   | PSO                                                                                              |                                                                                                                | Notes Payable           |   |          |  2      |   |   | 3.00   |     | 2025  |
|   | Total Issuances                                                                                  |                                                                                                                |                    |   | $             |  1,212  | (a)    |   |        |     |       |
|   |                                                                                             |                                                                                                                |                    |   |          |              |   |   |        |     |       |   |
|   | The above borrowing arrangements do not contain guarantees, collateral or dividend restrictions. |
|   |                                                                                             |                                                                                                                |                    |   |          |              |   |   |        |     |       |   |
|   | (a)                                                                                              | Amount indicated on the statement of cash flows of $1,201 million is net of issuance costs and premium or discount. |

|   |                  |                |                    |   |                | Principal       |              |   | Interest    |     |       |
|--------|-----------------------|---------------------|-------------------------|--------|---------------------|-----------------|-------------------|--------|-------------|----------|------------|
|   | Company               |                | Type of Debt            |   | Amount Paid         |            |              | Rate   |        | Due Date |
|   |                  |                |                    |   |  (in millions) |            | (%)               |   |        |
|   | Retirements and       |                |                    |   |                |            |              |   |        |     |       |
|   |                  | Principal Payments: |                    |   |                |            |              |   |        |     |       |   |
|   | AEP                   |                | Senior Unsecured Notes  |   | $                   |  490  |              |   | 5.375  |     | 2010  |
|   | APCo                  |                | Senior Unsecured Notes  |   |                |  150  |              |   | 4.40   |     | 2010  |
|   | APCo                  |                | Pollution Control Bonds |   |                |  50   |              |   | 7.125  |     | 2010  |
|   | I&M               |                | Notes Payable           |   |                |  19   |              |   | 5.44   |     | 2013  |
|   | OPCo                  |                | Senior Unsecured Notes  |   |                |  400  |              |   | Variable    |     | 2010  |
|   | OPCo                  |                | Pollution Control Bonds |   |                |  79   |              |   | 7.125  |     | 2010  |
|   | OPCo                  |                | Pollution Control Bonds |   |                |  20   |              |   | 5.625  |     | 2022  |
|   | OPCo                  |                | Pollution Control Bonds |   |                |  20   |              |   | 5.625  |     | 2023  |
|   | SWEPCo                |                | Pollution Control Bonds |   |                |  54   |              |   | Variable    |     | 2019  |
|   |                  |                |                    |   |                |            |              |   |        |     |       |   |
|   | Non-Registrant:       |                |                    |   |                |            |              |   |        |     |       |
|   | AEP Subsidiaries      |                | Notes Payable           |   |                |  12   |              |   | Variable    |     | 2017  |
|   | AEP Subsidiaries      |                | Notes Payable           |   |                |  5    |              |   | Variable    |     | 2011  |
|   | AEP Subsidiaries      |                | Notes Payable           |   |                |  1    |              |   | 8.03   |     | 2026  |
|   | AEGCo                 |                | Senior Unsecured Notes  |   |                |  7    |              |   | 6.33   |     | 2037  |
|   | TCC                   |                | Securitization Bonds    |   |                |  32   |              |   | 5.56   |     | 2010  |
|   | TCC                   |                | Securitization Bonds    |   |                |  54   |              |   | 4.98   |     | 2010  |
|   | TCC                   |                | Securitization Bonds    |   |                |  24   |              |   | 5.96   |     | 2013  |
|   | TCC                   |                | Securitization Bonds    |   |                |  37   |              |   | 4.98   |     | 2013  |
|   | Total Retirements and |                |                    |   |                |            |              |   |        |     |       |
|   |                  | Principal Payments  |                    |   |                | $               |  1,454  |   |        |     |       |   |

----

| Short-term Debt                                 |                                             |   |          |               |   |              |   |          |   |            |   |             |
|-------------------------------------------------|--------------------------------------------------|--------|---------------|--------------------|--------|-------------------|--------|---------------|--------|-----------------|--------|------------------|
|                                            |                                             |   |          |               |   |              |   |          |   |            |   |             |   |   |
| Our outstanding short-term debt was as follows: |                                             |   |          |               |   |              |   |          |   |            |   |
|                                            |                                             |   |          | September 30, 2010 |   | December 31, 2009 |
|                                            |                                             |   |          | Outstanding        |   | Interest          |   | Outstanding   |   | Interest        |
|                                            | Type of Debt                                     | Amount | Rate (a)      |               | Amount | Rate (a)          |
|                                            |                                             |   | (in millions) |               |   |              |   | (in millions) |   |            |   |
|                                            | Securitized Debt for Receivables (b)             |   | $             |  750     |   |  0.36   | %      |          | $      |  -    |   |  -     | % |
|                                            | Commercial Paper                                 |   |          |  713     |   |  0.46   | %      |          |   |  119  |   |  0.26  | % |
|                                            | Line of Credit – Sabine Mining Company (c) |   |          |  3       |   |  2.20   | %      |          |   |  7    |   |  2.06  | % |
|                                            | Total Short-term Debt                            |   | $             |  1,466   |   |              |   |          | $      |  126  |   |             |   |

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

|   | (b) | Amount of securitized debt for receivables as accounted for under the ''Transfers and Servicing'' accounting guidance.  See ''ASU 2009-16 'Transfers and Servicing' '' section of Note 2. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Sabine Mining Company is a consolidated variable interest entity.  This line of credit does not reduce available liquidity under AEP's credit facilities. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |                                          |                |                  | Three Months Ended |             | Nine Months Ended |              |
|--------|-----------------------------------------------|---------------------|-----------------------|--------------------|------------------|-------------------|-------------------|
|   |                                          |                |                  | September 30,      |             | September 30,     |              |
|   |                                          |                |                  | 2010          |             | 2009         |              | 2010  |   | 2009  |   |
|   |                                          |                | (dollars in millions) |               |
|   | Proceeds from Sale of Accounts Receivable     |                | $                     | N/A                |             | $                 |  1,814  |   | $ | N/A |   | $ |  5,314  |   |
|   | Loss on Sale of Accounts Receivable           |                |                  | N/A                |             |              |  -      |   |   | N/A |   |   |  2  |   |
|   | Average Variable Discount Rate on Sale of     |                |                  |               |             |              |              |   |   |   |   |   |   |   |
|   |                                          | Accounts Receivable |                  |               | N/A              |              |              |  0.38  | % |   | N/A |   |   |  0.68  | % |
|   | Effective Interest Rates on Securitization of |                |                  |               |             |              |              |   |   |   |   |   |   |   |
|   |                                          | Accounts Receivable |                  |               |  0.41  | %                 |              | N/A |   |   |  0.32  | % |   | N/A |   |
|   | Net Uncollectible Accounts Receivable         |                |                  |               |             |              |              |   |   |   |   |   |   |   |
|   |                                          | Written Off         |                  |               |  9     |              |              |  9  |   |   |  16  |   |   |  23  |   |

----

|                                                                                             |   | September 30, |   |   | December 31, |   |
|--------------------------------------------------------------------------------------------------|--------|---------------|--------|--------|--------------|--------|
|                                                                                             |   | 2010          |   |   | 2009         |   |
|                                                                                             |   | (in millions) |   |
| Accounts Receivable Retained Interest and Pledged as Collateral Less Uncollectible Accounts |   | $             | 1,002  |   |         | $      | 160 |   |
| Deferred Revenue from Servicing Accounts Receivable                                              |   |          | N/A    |   |         |   | 1 |   |
| Retained Interest if 10% Adverse Change in Uncollectible Accounts                                |   |          | N/A    |   |         |   | 158 |   |
| Retained Interest if 20% Adverse Change in Uncollectible Accounts                                |   |          | N/A    |   |         |   | 156 |   |
| Total Principal Outstanding                                                                      |   |          | 750    |   |         |   | 656 |   |
| Derecognized Accounts Receivable                                                                 |   |          | N/A    |   |         |   | 631 |   |
| Delinquent Securitized Accounts Receivable                                                       |   |          | 49     |   |         |   | 29 |   |
| Bad Debt Reserves Related to Securitization/Sale of Accounts Receivable                          |   |          | 27     |   |         |   | 20 |   |
| Unbilled Receivables Related to Securitization/Sale of Accounts Receivable                       |   |          | 301    |   |         |   | 376 |   |
|                                                                                             |   |          |   |   |         |   |   |   |
| N/A = Not Applicable                                                                             |   |          |   |   |         |   |   |   |

|                                    |   | Total         |   |
|-----------------------------------------|--------|---------------|--------|
|                                    |   | (in millions) |   |
| Incurred                                |   | $             | 293    |   |
| Settled                                 |   |          | 265    |   |
| Adjustments                             |   |          | (3     | ) |
| Remaining Balance at September 30, 2010 |   | $             | 25     |   |

----

----

| APPALACHIAN POWER COMPANY AND SUBSIDIARIES                       |   |
|------------------------------------------------------------------|--------|
| MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS             |   |
|                                                             |   |   |   |
| RESULTS OF OPERATIONS                                            |   |   |   |
|                                                             |   |   |   |
| Third Quarter of 2010 Compared to Third Quarter of 2009          |   |
|                                                             |   |   |   |
| Reconciliation of Third Quarter of 2009 to Third Quarter of 2010 |   |
| Net Income                                                       |   |
| (in millions)                                                    |   |
|                                                             |   |   |   |
| Third Quarter of 2009                                            |   | $ | 27 |   |
|                                                             |   |   |   |   |
| Changes in Gross Margin:                                         |   |   |   |   |
| Retail Margins                                                   |   |   | 44 |   |
| Off-system Sales                                                 |   |   | 3 |   |
| Other Revenues                                                   |   |   | (1 | ) |
| Total Change in Gross Margin                                     |   |   | 46 |   |
|                                                             |   |   |   |   |
| Total Expenses and Other:                                        |   |   |   |   |
| Other Operation and Maintenance                                  |   |   | (9 | ) |
| Depreciation and Amortization                                    |   |   | (7 | ) |
| Taxes Other Than Income Taxes                                    |   |   | (2 | ) |
| Carrying Costs Income                                            |   |   | 1 |   |
| Other Income                                                     |   |   | (2 | ) |
| Total Expenses and Other                                         |   |   | (19 | ) |
|                                                             |   |   |   |   |
| Income Tax Expense                                               |   |   | (4 | ) |
|                                                             |   |   |   |   |
| Third Quarter of 2010                                            |   | $ | 50 |   |

|   | · | Retail Margins increased $44 million primarily due to the following: |
|--------|--------|----------------------------------------------------------------------|
|   |   | ·                                                               | A $31 million increase in rate relief primarily due to an increase in the recovery of E&R costs in Virginia, construction financing costs in West Virginia and costs related to the Transmission Rate Adjustment Clause in Virginia.  This increase in retail margins had corresponding increases of $15 million related to riders/trackers recognized in other expense items discussed below. |
|   |   | ·                                                               | A $16 million increase in residential usage primarily due to a 47% increase in cooling degree days. |
|   |   | These increases were partially offset by:                            |
|   |   | ·                                                               | A $5 million decrease in industrial sales primarily due to the decreased load for APCo’s largest customer, Century Aluminum. |

|   | · | Other Operation and Maintenance expenses increased $9 million primarily due to the reduction of under-recovery of transmission costs resulting from the implementation of the Transmission Rate Adjustment Clause in Virginia in December 2009.                              |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | · | Depreciation and Amortization expenses increased $7 million primarily due to a greater depreciation base resulting from environmental upgrades at the Amos Plant and the amortization of carrying charges which are being collected through the Virginia E&R surcharges. |
|   | · | Income Tax Expense increased $4 million primarily due to an increase in pretax book income, partially  offset by the regulatory accounting treatment of state income taxes and other book/tax differences which are accounted for on a flow-through basis.         |

----

| Nine Months Ended September 30, 2010 Compared to Nine Months Ended September 30, 2009          |
|------------------------------------------------------------------------------------------------|
|                                                                                           |   |   |   |   |
| Reconciliation of Nine Months Ended September 30, 2009 to Nine Months Ended September 30, 2010 |
| Net Income                                                                                     |
| (in millions)                                                                                  |
|                                                                                           |   |   |   |   |
| Nine Months Ended September 30, 2009                                                           |   | $ |  131  |   |
|                                                                                           |   |   |   |   |
| Changes in Gross Margin:                                                                       |   |   |   |   |
| Retail Margins                                                                                 |   |   |  100  |   |
| Off-system Sales                                                                               |   |   |  5  |   |
| Other Revenues                                                                                 |   |   |  (3) |   |
| Total Change in Gross Margin                                                                   |   |   |  102  |   |
|                                                                                           |   |   |   |   |
| Total Expenses and Other:                                                                      |   |   |   |   |
| Other Operation and Maintenance                                                                |   |   |  (113) |   |
| Depreciation and Amortization                                                                  |   |   |  (23) |   |
| Taxes Other Than Income Taxes                                                                  |   |   |  (10) |   |
| Carrying Costs Income                                                                          |   |   |  7  |   |
| Other Income                                                                                   |   |   |  (4) |   |
| Interest Expense                                                                               |   |   |  (3) |   |
| Total Expenses and Other                                                                       |   |   |  (146) |   |
|                                                                                           |   |   |   |   |
| Income Tax Expense                                                                             |   |   |  14  |   |
|                                                                                           |   |   |   |   |
| Nine Months Ended September 30, 2010                                                           |   | $ |  101  |   |

|   | · | Retail Margins increased $100 million primarily due to the following:                                                                                                            |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | ·                                                                                                                                                                           | A $106 million increase in rate relief primarily due to the impact of the Virginia interim rate increase implemented in December 2009 and increases in the recoveries of E&R costs in Virginia, costs related to the Transmission Rate Adjustment Clause in Virginia and construction financing costs in West Virginia.  This increase in retail margins had corresponding increases of $48 million related to riders/trackers recognized in other expense items discussed below. |
|   |   | ·                                                                                                                                                                           | A $33 million increase in residential usage primarily due to a 45% increase in cooling degree days. |
|   |   | These increases were partially offset by:                                                                                                                                        |
|   |   | ·                                                                                                                                                                           | A $19 million decrease in industrial sales primarily due to the decreased load for APCo’s largest customer, Century Aluminum. |
|   |   | ·                                                                                                                                                                           | An $18 million decrease due to higher capacity settlement expenses under the Interconnection Agreement net of recovery in West Virginia and environmental deferrals in Virginia. |
|   | · | Margins from Off-system Sales increased $5 million primarily due to increased prices and higher physical sales volumes, partially offset by lower trading and marketing margins. |

----

|   | · | Other Operation and Maintenance expenses increased $113 million primarily due to the following:                                                                                                                                                                               |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | ·                                                                                                                                                                                                                                                                        | A $54 million increase due to the write-off of APCo’s Virginia share of the Mountaineer Carbon Capture and Storage Project which was denied for recovery by the Virginia SCC. |   |
|   |   | ·                                                                                                                                                                                                                                                                        | A $51 million increase due to expenses related to the cost reduction initiatives. |   |
|   |   | ·                                                                                                                                                                                                                                                                        | A $19 million increase primarily due to the reduction of under-recovery of transmission costs resulting from the implementation of the Transmission Rate Adjustment Clause in Virginia in December 2009. |   |
|   |   | These increases were partially offset by:                                                                                                                                                                                                                                     |
|   |   | ·                                                                                                                                                                                                                                                                        | A $25 million decrease due to the deferral of 2009 storm costs as allowed by the Virginia SCC in the second quarter of 2010. |   |
|   | · | Depreciation and Amortization expenses increased $23 million primarily due to a greater depreciation base resulting from environmental upgrades at the Amos Plant and the amortization of carrying charges which are being collected through the Virginia E&R surcharges. |
|   | · | Taxes Other Than Income Taxes increased $10 million primarily due to recording a West Virginia franchise tax audit settlement and additional employer payroll taxes incurred related to the cost reduction initiatives.                                                       |
|   | · | Carrying Costs Income increased $7 million primarily due to increased environmental deferrals in Virginia.                                                                                                                                                                    |
|   | · | Income Tax Expense decreased $14 million primarily due to a decrease in pretax book income, partially offset by other book/tax differences which are accounted for on a flow-through basis.                                                                                   |

|                                                 |   | 2010           |     |   | 2009   |   |
|------------------------------------------------------|--------|----------------|----------|--------|--------|--------|
|                                                 |   | (in thousands) |     |
| Cash and Cash Equivalents at Beginning of Period     |   | $              | 2,006    |   |   | $      | 1,996 |   |
| Net Cash Flows from (Used for) Operating Activities  |   |           | 567,464  |   |   |   | (53,712 | ) |
| Net Cash Flows Used for Investing Activities         |   |           | (363,246 | )      |   |   | (406,707 | ) |
| Net Cash Flows from (Used for) Financing Activities  |   |           | (204,023 | )      |   |   | 460,237 |   |
| Net Increase (Decrease) in Cash and Cash Equivalents |   |           | 195      |   |   |   | (182 | ) |
| Cash and Cash Equivalents at End of Period           |   | $              | 2,201    |   |   | $      | 1,814 |   |

----

----

| Issuances |                    |   |           |                |     |        |   |       |
|-----------|-------------------------|--------|----------------|---------------------|----------|-------------|--------|------------|
|      |                    |   | Principal      |                | Interest |        | Due    |
|      | Type of Debt            |   | Amount         |                | Rate     |        | Date   |
|      |                    |   | (in thousands) |                | (%)      |        |   |
|      | Pollution Control Bonds |   | $              |  17,500   |     | 4.625  |   | 2021  |
|      | Pollution Control Bonds |   |           |  50,000   |     | 5.375  |   | 2038  |
|      | Senior Unsecured Notes  |   |           |  300,000  |     | 3.40   |   | 2015  |

| Retirements and Principal Payments |                             |   |           |                |     |         |   |
|------------------------------------|----------------------------------|--------|----------------|---------------------|----------|--------------|--------|
|                               |                             |   | Principal      |                | Interest |         | Due    |
|                               | Type of Debt                     |   | Amount Paid    |                | Rate     |         | Date   |
|                               |                             |   | (in thousands) |                | (%)      |         |   |
|                               | Notes Payable – Affiliated |   | $              |  100,000  |     | 4.708   |   | 2010  |
|                               | Senior Unsecured Notes           |   |           |  150,000  |     | 4.40    |   | 2010  |
|                               | Pollution Control Bonds          |   |           |  50,000   |     | 7.125   |   | 2010  |
|                               | Land Note                        |   |           |  14       |     | 13.718  |   | 2026  |

----

----

| APPALACHIAN POWER COMPANY AND SUBSIDIARIES                                                              |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME                                                             |   |
| For the Three and Nine Months Ended September 30, 2010 and 2009                                         |   |
| (in thousands)                                                                                          |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   |
|                                                                                                    |   | Three Months Ended |   |   | Nine Months Ended |   |
|                                                                                                    |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| REVENUES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Electric Generation, Transmission and Distribution                                                      |   | $ | 754,940 |   |   | $ | 629,566 |   |   | $ | 2,234,070 |   |   | $ | 1,929,552 |   |
| Sales to AEP Affiliates                                                                                 |   |   | 83,675 |   |   |   | 63,645 |   |   |   | 229,811 |   |   |   | 181,914 |   |
| Other Revenues                                                                                          |   |   | 2,007 |   |   |   | 2,462 |   |   |   | 6,638 |   |   |   | 6,348 |   |
| TOTAL REVENUES                                                                                          |   |   | 840,622 |   |   |   | 695,673 |   |   |   | 2,470,519 |   |   |   | 2,117,814 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel and Other Consumables Used for Electric Generation                                                 |   |   | 190,538 |   |   |   | 140,321 |   |   |   | 540,794 |   |   |   | 402,893 |   |
| Purchased Electricity for Resale                                                                        |   |   | 60,751 |   |   |   | 54,087 |   |   |   | 181,370 |   |   |   | 189,534 |   |
| Purchased Electricity from AEP Affiliates                                                               |   |   | 243,772 |   |   |   | 202,043 |   |   |   | 690,881 |   |   |   | 570,231 |   |
| Other Operation                                                                                         |   |   | 77,138 |   |   |   | 68,402 |   |   |   | 338,085 |   |   |   | 197,441 |   |
| Maintenance                                                                                             |   |   | 53,276 |   |   |   | 53,164 |   |   |   | 130,446 |   |   |   | 158,552 |   |
| Depreciation and Amortization                                                                           |   |   | 76,737 |   |   |   | 69,701 |   |   |   | 227,327 |   |   |   | 203,844 |   |
| Taxes Other Than Income Taxes                                                                           |   |   | 26,350 |   |   |   | 24,257 |   |   |   | 82,585 |   |   |   | 72,156 |   |
| TOTAL EXPENSES                                                                                          |   |   | 728,562 |   |   |   | 611,975 |   |   |   | 2,191,488 |   |   |   | 1,794,651 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING INCOME                                                                                        |   |   | 112,060 |   |   |   | 83,698 |   |   |   | 279,031 |   |   |   | 323,163 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income (Expense):                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Income                                                                                         |   |   | 210 |   |   |   | 301 |   |   |   | 1,163 |   |   |   | 1,078 |   |
| Carrying Costs Income                                                                                   |   |   | 7,565 |   |   |   | 6,467 |   |   |   | 23,627 |   |   |   | 16,341 |   |
| Allowance for Equity Funds Used During Construction                                                     |   |   | 436 |   |   |   | 1,897 |   |   |   | 1,727 |   |   |   | 5,734 |   |
| Interest Expense                                                                                        |   |   | (52,734 | ) |   |   | (51,982 | ) |   |   | (156,292 | ) |   |   | (153,144 | ) |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME BEFORE INCOME TAX EXPENSE                                                                        |   |   | 67,537 |   |   |   | 40,381 |   |   |   | 149,256 |   |   |   | 193,172 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income Tax Expense                                                                                      |   |   | 17,466 |   |   |   | 13,011 |   |   |   | 48,522 |   |   |   | 62,225 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME                                                                                              |   |   | 50,071 |   |   |   | 27,370 |   |   |   | 100,734 |   |   |   | 130,947 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred Stock Dividend Requirements Including Capital                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock Expense                                                                                      |   |   | 225 |   |   |   | 225 |   |   |   | 675 |   |   |   | 675 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS ATTRIBUTABLE TO COMMON                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| STOCK                                                                                                   |   | $ | 49,846 |   |   | $ | 27,145 |   |   | $ | 100,059 |   |   | $ | 130,272 |   |
|                                                                                                    |   |
| The common stock of APCo is wholly-owned by AEP.                                                        |   |
|                                                                                                    |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

| APPALACHIAN POWER COMPANY AND SUBSIDIARIES                                                              |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON SHAREHOLDER'S                                    |   |
| EQUITY AND COMPREHENSIVE INCOME (LOSS)                                                                  |   |
| For the Nine Months Ended September 30, 2010 and 2009                                                   |   |
| (in thousands)                                                                                          |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   | Other |   |   |   |   |
|                                                                                                    |   | Common |   |   | Paid-in |   |   | Retained |   |   | Comprehensive |   |   |   |   |
|                                                                                                    |   | Stock |   |   | Capital |   |   | Earnings |   |   | Income (Loss) |   |   | Total |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EQUITY – DECEMBER 31, 2008                                                                        |   | $ | 260,458 |   |   | $ | 1,225,292 |   |   | $ | 951,066 |   |   | $ | (60,225 | ) |   | $ | 2,376,591 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital Contribution from Parent                                                                        |   |   |   |   |   |   | 250,000 |   |   |   |   |   |   |   |   |   |   |   | 250,000 |   |
| Common Stock Dividends                                                                                  |   |   |   |   |   |   |   |   |   |   | (20,000 | ) |   |   |   |   |   |   | (20,000 | ) |
| Preferred Stock Dividends                                                                               |   |   |   |   |   |   |   |   |   |   | (599 | ) |   |   |   |   |   |   | (599 | ) |
| Capital Stock Expense                                                                                   |   |   |   |   |   |   | 76 |   |   |   | (76 | ) |   |   |   |   |   |   | - |   |
| SUBTOTAL – COMMON                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SHAREHOLDER'S EQUITY                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,605,992 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income (Loss), Net of                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxes:                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash Flow Hedges, Net of Tax of $545                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (1,013 | ) |   |   | (1,013 | ) |
| Amortization of Pension and OPEB Deferred                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Costs, Net of Tax of $1,982                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 3,680 |   |   |   | 3,680 |   |
| NET INCOME                                                                                              |   |   |   |   |   |   |   |   |   |   | 130,947 |   |   |   |   |   |   |   | 130,947 |   |
| TOTAL COMPREHENSIVE INCOME                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 133,614 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EQUITY – SEPTEMBER 30, 2009                                                                       |   | $ | 260,458 |   |   | $ | 1,475,368 |   |   | $ | 1,061,338 |   |   | $ | (57,558 | ) |   | $ | 2,739,606 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EQUITY – DECEMBER 31, 2009                                                                        |   | $ | 260,458 |   |   | $ | 1,475,393 |   |   | $ | 1,085,980 |   |   | $ | (50,254 | ) |   | $ | 2,771,577 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock Dividends                                                                                  |   |   |   |   |   |   |   |   |   |   | (88,000 | ) |   |   |   |   |   |   | (88,000 | ) |
| Preferred Stock Dividends                                                                               |   |   |   |   |   |   |   |   |   |   | (599 | ) |   |   |   |   |   |   | (599 | ) |
| Capital Stock Expense                                                                                   |   |   |   |   |   |   | 78 |   |   |   | (76 | ) |   |   |   |   |   |   | 2 |   |
| SUBTOTAL – COMMON                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SHAREHOLDER'S EQUITY                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,682,980 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income (Loss), Net of                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxes:                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash Flow Hedges, Net of Tax of $1,953                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (3,627 | ) |   |   | (3,627 | ) |
| Amortization of Pension and OPEB Deferred                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Costs, Net of Tax of $1,685                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 3,129 |   |   |   | 3,129 |   |
| NET INCOME                                                                                              |   |   |   |   |   |   |   |   |   |   | 100,734 |   |   |   |   |   |   |   | 100,734 |   |
| TOTAL COMPREHENSIVE INCOME                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 100,236 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EQUITY – SEPTEMBER 30, 2010                                                                       |   | $ | 260,458 |   |   | $ | 1,475,471 |   |   | $ | 1,098,039 |   |   | $ | (50,752 | ) |   | $ | 2,783,216 |   |
|                                                                                                    |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

| APPALACHIAN POWER COMPANY AND SUBSIDIARIES                                                              |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                   |   |
| ASSETS                                                                                                  |   |
| September 30, 2010 and December 31, 2009                                                                |   |
| (in thousands)                                                                                          |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   | 2010 |   |   | 2009 |   |
| CURRENT ASSETS                                                                                          |   |   |   |   |   |   |
| Cash and Cash Equivalents                                                                               |   | $ | 2,201 |   |   | $ | 2,006 |   |
| Accounts Receivable:                                                                                    |   |   |   |   |   |   |   |   |
| Customers                                                                                               |   |   | 140,479 |   |   |   | 150,285 |   |
| Affiliated Companies                                                                                    |   |   | 66,742 |   |   |   | 135,686 |   |
| Accrued Unbilled Revenues                                                                               |   |   | 57,588 |   |   |   | 68,971 |   |
| Miscellaneous                                                                                           |   |   | 4,204 |   |   |   | 6,690 |   |
| Allowance for Uncollectible Accounts                                                                    |   |   | (6,576 | ) |   |   | (5,408 | ) |
| Total Accounts Receivable                                                                               |   |   | 262,437 |   |   |   | 356,224 |   |
| Fuel                                                                                                    |   |   | 210,998 |   |   |   | 343,261 |   |
| Materials and Supplies                                                                                  |   |   | 88,082 |   |   |   | 88,575 |   |
| Risk Management Assets                                                                                  |   |   | 61,199 |   |   |   | 67,956 |   |
| Accrued Tax Benefits                                                                                    |   |   | 52,903 |   |   |   | 180,708 |   |
| Regulatory Asset for Under-Recovered Fuel Costs                                                         |   |   | 16,224 |   |   |   | 78,685 |   |
| Prepayments and Other Current Assets                                                                    |   |   | 40,266 |   |   |   | 36,293 |   |
| TOTAL CURRENT ASSETS                                                                                    |   |   | 734,310 |   |   |   | 1,153,708 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT                                                                           |   |   |   |   |   |   |   |   |
| Electric:                                                                                               |   |   |   |   |   |   |   |   |
| Production                                                                                              |   |   | 4,657,079 |   |   |   | 4,284,361 |   |
| Transmission                                                                                            |   |   | 1,841,919 |   |   |   | 1,813,777 |   |
| Distribution                                                                                            |   |   | 2,713,019 |   |   |   | 2,642,479 |   |
| Other Property, Plant and Equipment                                                                     |   |   | 366,450 |   |   |   | 329,497 |   |
| Construction Work in Progress                                                                           |   |   | 491,080 |   |   |   | 730,099 |   |
| Total Property, Plant and Equipment                                                                     |   |   | 10,069,547 |   |   |   | 9,800,213 |   |
| Accumulated Depreciation and Amortization                                                               |   |   | 2,847,620 |   |   |   | 2,751,443 |   |
| TOTAL PROPERTY, PLANT AND EQUIPMENT – NET                                                         |   |   | 7,221,927 |   |   |   | 7,048,770 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| OTHER NONCURRENT ASSETS                                                                                 |   |   |   |   |   |   |   |   |
| Regulatory Assets                                                                                       |   |   | 1,465,997 |   |   |   | 1,433,791 |   |
| Long-term Risk Management Assets                                                                        |   |   | 51,866 |   |   |   | 47,141 |   |
| Deferred Charges and Other Noncurrent Assets                                                            |   |   | 109,374 |   |   |   | 113,003 |   |
| TOTAL OTHER NONCURRENT ASSETS                                                                           |   |   | 1,627,237 |   |   |   | 1,593,935 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| TOTAL ASSETS                                                                                            |   | $ | 9,583,474 |   |   | $ | 9,796,413 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

| APPALACHIAN POWER COMPANY AND SUBSIDIARIES                                                              |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                    |   |
| September 30, 2010 and December 31, 2009                                                                |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   | 2010 |   |   | 2009 |   |
|                                                                                                    |   | (in thousands) |   |
| CURRENT LIABILITIES                                                                                     |   |   |   |   |   |   |
| Advances from Affiliates                                                                                |   | $ | 55,113 |   |   | $ | 229,546 |   |
| Accounts Payable:                                                                                       |   |   |   |   |   |   |   |   |
| General                                                                                                 |   |   | 168,749 |   |   |   | 291,240 |   |
| Affiliated Companies                                                                                    |   |   | 111,005 |   |   |   | 157,640 |   |
| Long-term Debt Due Within One Year – Nonaffiliated                                                |   |   | 250,021 |   |   |   | 200,019 |   |
| Long-term Debt Due Within One Year – Affiliated                                                   |   |   | - |   |   |   | 100,000 |   |
| Risk Management Liabilities                                                                             |   |   | 28,193 |   |   |   | 25,792 |   |
| Customer Deposits                                                                                       |   |   | 57,460 |   |   |   | 57,578 |   |
| Deferred Income Taxes                                                                                   |   |   | 48,976 |   |   |   | 68,706 |   |
| Accrued Taxes                                                                                           |   |   | 45,146 |   |   |   | 65,241 |   |
| Accrued Interest                                                                                        |   |   | 71,090 |   |   |   | 58,962 |   |
| Other Current Liabilities                                                                               |   |   | 84,262 |   |   |   | 95,292 |   |
| TOTAL CURRENT LIABILITIES                                                                               |   |   | 920,015 |   |   |   | 1,350,016 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| NONCURRENT LIABILITIES                                                                                  |   |   |   |   |   |   |   |   |
| Long-term Debt – Nonaffiliated                                                                    |   |   | 3,310,938 |   |   |   | 3,177,287 |   |
| Long-term Risk Management Liabilities                                                                   |   |   | 16,329 |   |   |   | 20,364 |   |
| Deferred Income Taxes                                                                                   |   |   | 1,529,082 |   |   |   | 1,439,884 |   |
| Regulatory Liabilities and Deferred Investment Tax Credits                                              |   |   | 547,810 |   |   |   | 526,546 |   |
| Employee Benefits and Pension Obligations                                                               |   |   | 279,060 |   |   |   | 312,873 |   |
| Deferred Credits and Other Noncurrent Liabilities                                                       |   |   | 179,277 |   |   |   | 180,114 |   |
| TOTAL NONCURRENT LIABILITIES                                                                            |   |   | 5,862,496 |   |   |   | 5,657,068 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES                                                                                       |   |   | 6,782,511 |   |   |   | 7,007,084 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| Cumulative Preferred Stock Not Subject to Mandatory Redemption                                          |   |   | 17,747 |   |   |   | 17,752 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| Rate Matters (Note 3)                                                                                   |   |   |   |   |   |   |   |   |
| Commitments and Contingencies (Note 4)                                                                  |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| COMMON SHAREHOLDER’S EQUITY                                                                       |   |   |   |   |   |   |   |   |
| Common Stock – No Par Value:                                                                      |   |   |   |   |   |   |   |   |
| Authorized – 30,000,000 Shares                                                                    |   |   |   |   |   |   |   |   |
| Outstanding  – 13,499,500 Shares                                                        |   |   | 260,458 |   |   |   | 260,458 |   |
| Paid-in Capital                                                                                         |   |   | 1,475,471 |   |   |   | 1,475,393 |   |
| Retained Earnings                                                                                       |   |   | 1,098,039 |   |   |   | 1,085,980 |   |
| Accumulated Other Comprehensive Income (Loss)                                                           |   |   | (50,752 | ) |   |   | (50,254 | ) |
| TOTAL COMMON SHAREHOLDER’S EQUITY                                                                 |   |   | 2,783,216 |   |   |   | 2,771,577 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY                                                        |   | $ | 9,583,474 |   |   | $ | 9,796,413 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

| APPALACHIAN POWER COMPANY AND SUBSIDIARIES                                                              |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                         |   |
| For the Nine Months Ended September 30, 2010 and 2009                                                   |   |
| (in thousands)                                                                                          |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   | 2010 |   |   | 2009 |   |
| OPERATING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Net Income                                                                                              |   | $ | 100,734 |   |   | $ | 130,947 |   |
| Adjustments to Reconcile Net Income to Net Cash Flows from (Used for)                                   |   |   |   |   |   |   |   |   |
| Operating Activities:                                                                                   |   |   |   |   |   |   |   |   |
| Depreciation and Amortization                                                                           |   |   | 227,327 |   |   |   | 203,844 |   |
| Deferred Income Taxes                                                                                   |   |   | 52,798 |   |   |   | 229,246 |   |
| Carrying Costs Income                                                                                   |   |   | (23,627 | ) |   |   | (16,341 | ) |
| Allowance for Equity Funds Used During Construction                                                     |   |   | (1,727 | ) |   |   | (5,734 | ) |
| Mark-to-Market of Risk Management Contracts                                                             |   |   | (2,573 | ) |   |   | (31,415 | ) |
| Pension Contributions to Qualified Plan Trust                                                           |   |   | (31,952 | ) |   |   | - |   |
| Property Taxes                                                                                          |   |   | 19,660 |   |   |   | 18,617 |   |
| Fuel Over/Under-Recovery, Net                                                                           |   |   | (17,136 | ) |   |   | (181,241 | ) |
| Change in Other Noncurrent Assets                                                                       |   |   | 29,275 |   |   |   | (57,087 | ) |
| Change in Other Noncurrent Liabilities                                                                  |   |   | 4,558 |   |   |   | 22,595 |   |
| Changes in Certain Components of Working Capital:                                                       |   |   |   |   |   |   |   |   |
| Accounts Receivable, Net                                                                                |   |   | 93,787 |   |   |   | 51,667 |   |
| Fuel, Materials and Supplies                                                                            |   |   | 132,801 |   |   |   | (159,904 | ) |
| Accounts Payable                                                                                        |   |   | (113,912 | ) |   |   | (131,914 | ) |
| Accrued Taxes, Net                                                                                      |   |   | 107,404 |   |   |   | (95,962 | ) |
| Other Current Assets                                                                                    |   |   | (4,416 | ) |   |   | (14,172 | ) |
| Other Current Liabilities                                                                               |   |   | (5,537 | ) |   |   | (16,858 | ) |
| Net Cash Flows from (Used for) Operating Activities                                                     |   |   | 567,464 |   |   |   | (53,712 | ) |
|                                                                                                    |   |   |   |   |   |   |   |   |
| INVESTING ACTIVITIES                                                                                    |   |   |   |   |   |   |   |   |
| Construction Expenditures                                                                               |   |   | (362,792 | ) |   |   | (420,075 | ) |
| Change in Other Cash Deposits                                                                           |   |   | 1,970 |   |   |   | 235 |   |
| Acquisitions of Assets                                                                                  |   |   | (9,595 | ) |   |   | (1,024 | ) |
| Proceeds from Sales of Assets                                                                           |   |   | 7,171 |   |   |   | 14,157 |   |
| Net Cash Flows Used for Investing Activities                                                            |   |   | (363,246 | ) |   |   | (406,707 | ) |
|                                                                                                    |   |   |   |   |   |   |   |   |
| FINANCING ACTIVITIES                                                                                    |   |   |   |   |   |   |   |   |
| Capital Contribution from Parent                                                                        |   |   | - |   |   |   | 250,000 |   |
| Issuance of Long-term Debt – Nonaffiliated                                                        |   |   | 363,736 |   |   |   | 345,658 |   |
| Change in Advances from Affiliates, Net                                                                 |   |   | (174,433 | ) |   |   | 36,900 |   |
| Retirement of Long-term Debt – Nonaffiliated                                                      |   |   | (200,014 | ) |   |   | (150,012 | ) |
| Retirement of Long-term Debt – Affiliated                                                         |   |   | (100,000 | ) |   |   | - |   |
| Retirement of Cumulative Preferred Stock                                                                |   |   | (4 | ) |   |   | - |   |
| Principal Payments for Capital Lease Obligations                                                        |   |   | (5,350 | ) |   |   | (2,582 | ) |
| Dividends Paid on Common Stock                                                                          |   |   | (88,000 | ) |   |   | (20,000 | ) |
| Dividends Paid on Cumulative Preferred Stock                                                            |   |   | (599 | ) |   |   | (599 | ) |
| Other Financing Activities                                                                              |   |   | 641 |   |   |   | 872 |   |
| Net Cash Flows from (Used for) Financing Activities                                                     |   |   | (204,023 | ) |   |   | 460,237 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| Net Increase (Decrease) in Cash and Cash Equivalents                                                    |   |   | 195 |   |   |   | (182 | ) |
| Cash and Cash Equivalents at Beginning of Period                                                        |   |   | 2,006 |   |   |   | 1,996 |   |
| Cash and Cash Equivalents at End of Period                                                              |   | $ | 2,201 |   |   | $ | 1,814 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| SUPPLEMENTARY INFORMATION                                                                               |   |   |   |   |   |   |   |   |
| Cash Paid for Interest, Net of Capitalized Amounts                                                      |   | $ | 140,391 |   |   | $ | 148,745 |   |
| Net Cash Paid (Received) for Income Taxes                                                               |   |   | (140,113 | ) |   |   | (14,679 | ) |
| Noncash Acquisitions Under Capital Leases                                                               |   |   | 22,623 |   |   |   | 884 |   |
| Construction Expenditures Included in Accounts Payable at September 30,                                 |   |   | 52,863 |   |   |   | 56,989 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

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

----

----

| COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES                 |   |
|------------------------------------------------------------------|--------|
| MANAGEMENT’S NARRATIVE FINANCIAL DISCUSSION AND ANALYSIS   |   |
|                                                             |   |   |   |
| RESULTS OF OPERATIONS                                            |   |   |   |
|                                                             |   |   |   |
| Third Quarter of 2010 Compared to Third Quarter of 2009          |   |
|                                                             |   |   |   |
| Reconciliation of Third Quarter of 2009 to Third Quarter of 2010 |   |
| Net Income                                                       |   |
| (in millions)                                                    |   |
|                                                             |   |   |   |
| Third Quarter of 2009                                            |   | $ | 98 |   |
|                                                             |   |   |   |   |
| Changes in Gross Margin:                                         |   |   |   |   |
| Retail Margins                                                   |   |   | 30 |   |
| Off-system Sales                                                 |   |   | 14 |   |
| Other Revenues                                                   |   |   | 1 |   |
| Total Change in Gross Margin                                     |   |   | 45 |   |
|                                                             |   |   |   |   |
| Total Expenses and Other:                                        |   |   |   |   |
| Other Operation and Maintenance                                  |   |   | (17 | ) |
| Depreciation and Amortization                                    |   |   | (2 | ) |
| Taxes Other Than Income Taxes                                    |   |   | (7 | ) |
| Interest Expense                                                 |   |   | 1 |   |
| Total Expenses and Other                                         |   |   | (25 | ) |
|                                                             |   |   |   |   |
| Income Tax Expense                                               |   |   | (11 | ) |
|                                                             |   |   |   |   |
| Third Quarter of 2010                                            |   | $ | 107 |   |

| · | Retail Margins increased $30 million due to:                                                                                                                                      |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                            | A $32 million increase in residential and commercial revenue from weather-related usage primarily due to a 66% increase in cooling degree days. |
|   | ·                                                                                                                                                                            | A $13 million increase in revenue due to the implementation of PUCO approved rider rates in June 2010 related to the Ohio Energy Efficiency & Demand Response Program Rider.  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 $5 million decrease in capacity settlements under the Interconnection Agreement. |
|   | ·                                                                                                                                                                            | A $4 million decrease as a result of the expiration of the City of Westerville contract as a dedicated customer for CSPCo at the end of 2009.  A new contract was entered into with Westerville on January 1, 2010 which is included as an Off-system Sale and margins are shared by the members of the AEP Power Pool. |
| · | Margins from Off-system Sales increased $14 million primarily due to increased prices and higher physical sales volumes, partially offset by lower trading and marketing margins. |

----

| · | Other Operation and Maintenance expenses increased $17 million primarily due to:                                                                                         |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                   | A $13 million increase in expenses due to the implementation of PUCO approved Ohio Energy Efficiency & Demand Response Program.  This increase in operation and maintenance expense was offset by a corresponding increase in Retail Margins as discussed above. |
|   | ·                                                                                                                                                                   | A $3 million increase in recoverable customer account expenses due to increased Universal Service Fund surcharge rates for customers who qualify for payment assistance. |
| · | Depreciation and Amortization increased $2 million primarily due to projects at the Conesville Plant that were completed and placed in service in November 2009.         |
| · | Taxes Other Than Income Taxes increased $7 million primarily due to a $5 million increase in property taxes.                                                             |
| · | Income Tax Expense increased $11 million primarily due to an increase in pretax book income and other book/tax differences which are accounted for a flow-through basis. |

----

| Nine Months Ended September 30, 2010 Compared to Nine Months Ended September 30, 2009          |
|------------------------------------------------------------------------------------------------|
|                                                                                           |   |   |   |   |
| Reconciliation of Nine Months Ended September 30, 2009 to Nine Months Ended September 30, 2010 |
| Net Income                                                                                     |
| (in millions)                                                                                  |
|                                                                                           |   |   |   |   |
| Nine Months Ended September 30, 2009                                                           |   | $ |  231  |   |
|                                                                                           |   |   |   |   |
| Changes in Gross Margin:                                                                       |   |   |   |   |
| Retail Margins                                                                                 |   |   |  18  |   |
| Off-system Sales                                                                               |   |   |  15  |   |
| Total Change in Gross Margin                                                                   |   |   |  33  |   |
|                                                                                           |   |   |   |   |
| Total Expenses and Other:                                                                      |   |   |   |   |
| Other Operation and Maintenance                                                                |   |   |  (42) |   |
| Depreciation and Amortization                                                                  |   |   |  (8) |   |
| Taxes Other Than Income Taxes                                                                  |   |   |  (10) |   |
| Total Expenses and Other                                                                       |   |   |  (60) |   |
|                                                                                           |   |   |   |   |
| Income Tax Expense                                                                             |   |   |  7  |   |
|                                                                                           |   |   |   |   |
| Nine Months Ended September 30, 2010                                                           |   | $ |  211  |   |

|   · | Retail Margins increased $18 million due to:                                                                                                                                      |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|               | ·                                                                                                                                                                            | A $41 million increase in residential and commercial revenue from weather-related usage primarily due to a 53% increase in cooling degree days. |
|               | ·                                                                                                                                                                            | A $16 million increase in revenue due to the implementation of PUCO approved rider rates in June 2010 related to the Ohio Energy Efficiency & Demand Response Program Rider.  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 $16 million decrease in capacity settlements under the Interconnection Agreement. |
|               | ·                                                                                                                                                                            | A $14 million decrease as a result of the elimination of Restructuring Transition Charge (RTC) revenues with the implementation of CSPCo’s ESP. |
|               | ·                                                                                                                                                                            | A $12 million decrease as a result of the expiration of the City of Westerville contract as a dedicated customer for CSPCo at the end of 2009.  A new contract was entered into with Westerville on January 1, 2010 which is included as an Off-system Sale and margins are shared by the members of the AEP Power Pool. |
| ·             | Margins from Off-system Sales increased $15 million primarily due to increased prices and higher physical sales volumes, partially offset by lower trading and marketing margins. |

----

|   · | Other Operation and Maintenance expenses increased $42 million primarily due to:                                                                                                          |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|               | ·                                                                                                                                                                                    | A $31 million increase due to expenses incurred related to the cost reduction initiatives. |   |
|               | ·                                                                                                                                                                                    | A $16 million increase in expenses due to the implementation of PUCO approved Ohio Energy Efficiency & Demand Response Program.  This increase in operation and maintenance expense was offset by a corresponding increase in Retail Margins as discussed above. |   |
|               | ·                                                                                                                                                                                    | A $10 million increase in recoverable customer account expenses due to increased Universal Service Fund surcharge rates for customers who qualify for payment assistance. |   |
|               | These increases were partially offset by:                                                                                                                                                 |   |
|               | ·                                                                                                                                                                                    | A $7 million decrease related to a 2009 obligation to contribute to the “Partnership with Ohio” fund for low income, at-risk customers ordered by the PUCO’s March 2009 approval of CSPCo’s ESP. |   |
|               | ·                                                                                                                                                                                    | A $6 million decrease in boiler plant maintenance expenses primarily related to work performed at the Conesville and Zimmer plants. |   |
|   · | Depreciation and Amortization increased $8 million primarily due to projects at the Conesville Plant that were completed and placed in service in November 2009.                          |
|   · | Taxes Other Than Income Taxes increased $10 million primarily due to an $8 million increase in property taxes.                                                                            |
|   · | Income Tax Expense decreased $7 million primarily due to a decrease in pretax book income partially offset by other book/tax differences which are accounted for on a flow-through basis. |

----

----

| COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES                                                        |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME                                                             |   |
| For the Three and Nine Months Ended September 30, 2010 and 2009                                         |   |
| (in thousands)                                                                                          |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   | Three Months Ended |   |   | Nine Months Ended |   |
|                                                                                                    |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| REVENUES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Electric Generation, Transmission and Distribution                                                      |   | $ | 616,823 |   |   | $ | 533,306 |   |   | $ | 1,621,112 |   |   | $ | 1,482,421 |   |
| Sales to AEP Affiliates                                                                                 |   |   | 30,765 |   |   |   | 22,143 |   |   |   | 66,687 |   |   |   | 51,514 |   |
| Other Revenues                                                                                          |   |   | 806 |   |   |   | 694 |   |   |   | 2,138 |   |   |   | 1,820 |   |
| TOTAL REVENUES                                                                                          |   |   | 648,394 |   |   |   | 556,143 |   |   |   | 1,689,937 |   |   |   | 1,535,755 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel and Other Consumables Used for Electric Generation                                                 |   |   | 99,883 |   |   |   | 88,523 |   |   |   | 319,614 |   |   |   | 222,943 |   |
| Purchased Electricity for Resale                                                                        |   |   | 28,116 |   |   |   | 21,750 |   |   |   | 67,899 |   |   |   | 74,010 |   |
| Purchased Electricity from AEP Affiliates                                                               |   |   | 134,467 |   |   |   | 105,120 |   |   |   | 324,553 |   |   |   | 294,280 |   |
| Other Operation                                                                                         |   |   | 86,360 |   |   |   | 68,971 |   |   |   | 266,915 |   |   |   | 210,614 |   |
| Maintenance                                                                                             |   |   | 23,196 |   |   |   | 23,926 |   |   |   | 72,593 |   |   |   | 86,558 |   |
| Depreciation and Amortization                                                                           |   |   | 38,644 |   |   |   | 36,292 |   |   |   | 113,733 |   |   |   | 105,863 |   |
| Taxes Other Than Income Taxes                                                                           |   |   | 50,884 |   |   |   | 44,149 |   |   |   | 142,235 |   |   |   | 132,576 |   |
| TOTAL EXPENSES                                                                                          |   |   | 461,550 |   |   |   | 388,731 |   |   |   | 1,307,542 |   |   |   | 1,126,844 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING INCOME                                                                                        |   |   | 186,844 |   |   |   | 167,412 |   |   |   | 382,395 |   |   |   | 408,911 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income (Expense):                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Income                                                                                         |   |   | 385 |   |   |   | 144 |   |   |   | 694 |   |   |   | 618 |   |
| Carrying Costs Income                                                                                   |   |   | 2,028 |   |   |   | 1,984 |   |   |   | 6,212 |   |   |   | 5,394 |   |
| Allowance for Equity Funds Used During Construction                                                     |   |   | 267 |   |   |   | 914 |   |   |   | 1,502 |   |   |   | 2,799 |   |
| Interest Expense                                                                                        |   |   | (21,382 | ) |   |   | (22,487 | ) |   |   | (64,257 | ) |   |   | (64,356 | ) |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME BEFORE INCOME TAX EXPENSE                                                                        |   |   | 168,142 |   |   |   | 147,967 |   |   |   | 326,546 |   |   |   | 353,366 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income Tax Expense                                                                                      |   |   | 61,085 |   |   |   | 50,374 |   |   |   | 115,723 |   |   |   | 122,737 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME                                                                                              |   |   | 107,057 |   |   |   | 97,593 |   |   |   | 210,823 |   |   |   | 230,629 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital Stock Expense                                                                                   |   |   | 39 |   |   |   | 39 |   |   |   | 118 |   |   |   | 118 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS ATTRIBUTABLE TO COMMON STOCK                                                                   |   | $ | 107,018 |   |   | $ | 97,554 |   |   | $ | 210,705 |   |   | $ | 230,511 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The common stock of CSPCo is wholly-owned by AEP.                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

| COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES                                                        |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON SHAREHOLDER'S                                    |   |
| EQUITY AND COMPREHENSIVE INCOME (LOSS)                                                                  |   |
| For the Nine Months Ended September 30, 2010 and 2009                                                   |   |
| (in thousands)                                                                                          |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   | Other |   |   |   |   |
|                                                                                                    |   | Common |   |   | Paid-in |   |   | Retained |   |   | Comprehensive |   |   |   |   |
|                                                                                                    |   | Stock |   |   | Capital |   |   | Earnings |   |   | Income (Loss) |   |   | Total |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EQUITY – DECEMBER 31, 2008                                                                        |   | $ | 41,026 |   |   | $ | 580,506 |   |   | $ | 674,758 |   |   | $ | (51,025 | ) |   | $ | 1,245,265 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock Dividends                                                                                  |   |   |   |   |   |   |   |   |   |   | (150,000 | ) |   |   |   |   |   |   | (150,000 | ) |
| Capital Stock Expense                                                                                   |   |   |   |   |   |   | 118 |   |   |   | (118 | ) |   |   |   |   |   |   | - |   |
| Noncash Dividend of Property to Parent                                                                  |   |   |   |   |   |   |   |   |   |   | (8,123 | ) |   |   |   |   |   |   | (8,123 | ) |
| SUBTOTAL – COMMON                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SHAREHOLDER'S EQUITY                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,087,142 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income (Loss), Net of                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxes:                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash Flow Hedges, Net of Tax of $699                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (1,299 | ) |   |   | (1,299 | ) |
| Amortization of Pension and OPEB Deferred                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Costs, Net of Tax of $894                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,661 |   |   |   | 1,661 |   |
| NET INCOME                                                                                              |   |   |   |   |   |   |   |   |   |   | 230,629 |   |   |   |   |   |   |   | 230,629 |   |
| TOTAL COMPREHENSIVE INCOME                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 230,991 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EQUITY – SEPTEMBER 30, 2009                                                                       |   | $ | 41,026 |   |   | $ | 580,624 |   |   | $ | 747,146 |   |   | $ | (50,663 | ) |   | $ | 1,318,133 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EQUITY – DECEMBER 31, 2009                                                                        |   | $ | 41,026 |   |   | $ | 580,663 |   |   | $ | 788,139 |   |   | $ | (49,993 | ) |   | $ | 1,359,835 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock Dividends                                                                                  |   |   |   |   |   |   |   |   |   |   | (77,500 | ) |   |   |   |   |   |   | (77,500 | ) |
| Capital Stock Expense                                                                                   |   |   |   |   |   |   | 118 |   |   |   | (118 | ) |   |   |   |   |   |   | - |   |
| SUBTOTAL – COMMON                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SHAREHOLDER'S EQUITY                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,282,335 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income (Loss), Net of                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxes:                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash Flow Hedges, Net of Tax of $462                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (857 | ) |   |   | (857 | ) |
| Amortization of Pension and OPEB Deferred                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Costs, Net of Tax of $1,000                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,857 |   |   |   | 1,857 |   |
| NET INCOME                                                                                              |   |   |   |   |   |   |   |   |   |   | 210,823 |   |   |   |   |   |   |   | 210,823 |   |
| TOTAL COMPREHENSIVE INCOME                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 211,823 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EQUITY – SEPTEMBER 30, 2010                                                                       |   | $ | 41,026 |   |   | $ | 580,781 |   |   | $ | 921,344 |   |   | $ | (48,993 | ) |   | $ | 1,494,158 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

| COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES                                                        |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                   |   |
| ASSETS                                                                                                  |   |
| September 30, 2010 and December 31, 2009                                                                |   |
| (in thousands)                                                                                          |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   | 2010 |   |   | 2009 |   |
| CURRENT ASSETS                                                                                          |   |   |   |   |   |   |
| Cash and Cash Equivalents                                                                               |   | $ | 1,679 |   |   | $ | 1,096 |   |
| Other Cash Deposits                                                                                     |   |   | 2,260 |   |   |   | 16,150 |   |
| Advances to Affiliates                                                                                  |   |   | 182,225 |   |   |   | - |   |
| Accounts Receivable:                                                                                    |   |   |   |   |   |   |   |   |
| Customers                                                                                               |   |   | 29,835 |   |   |   | 37,158 |   |
| Affiliated Companies                                                                                    |   |   | 23,231 |   |   |   | 28,555 |   |
| Accrued Unbilled Revenues                                                                               |   |   | 12,139 |   |   |   | 11,845 |   |
| Miscellaneous                                                                                           |   |   | 3,856 |   |   |   | 4,164 |   |
| Allowance for Uncollectible Accounts                                                                    |   |   | (1,984 | ) |   |   | (3,481 | ) |
| Total Accounts Receivable                                                                               |   |   | 67,077 |   |   |   | 78,241 |   |
| Fuel                                                                                                    |   |   | 65,636 |   |   |   | 74,158 |   |
| Materials and Supplies                                                                                  |   |   | 42,051 |   |   |   | 39,652 |   |
| Emission Allowances                                                                                     |   |   | 22,518 |   |   |   | 26,587 |   |
| Risk Management Assets                                                                                  |   |   | 35,166 |   |   |   | 34,343 |   |
| Accrued Tax Benefits                                                                                    |   |   | 645 |   |   |   | 29,273 |   |
| Margin Deposits                                                                                         |   |   | 14,823 |   |   |   | 14,874 |   |
| Prepayments and Other Current Assets                                                                    |   |   | 25,676 |   |   |   | 6,349 |   |
| TOTAL CURRENT ASSETS                                                                                    |   |   | 459,756 |   |   |   | 320,723 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT                                                                           |   |   |   |   |   |   |   |   |
| Electric:                                                                                               |   |   |   |   |   |   |   |   |
| Production                                                                                              |   |   | 2,650,674 |   |   |   | 2,641,860 |   |
| Transmission                                                                                            |   |   | 656,293 |   |   |   | 623,680 |   |
| Distribution                                                                                            |   |   | 1,770,707 |   |   |   | 1,745,559 |   |
| Other Property, Plant and Equipment                                                                     |   |   | 205,726 |   |   |   | 189,315 |   |
| Construction Work in Progress                                                                           |   |   | 176,437 |   |   |   | 155,081 |   |
| Total Property, Plant and Equipment                                                                     |   |   | 5,459,837 |   |   |   | 5,355,495 |   |
| Accumulated Depreciation and Amortization                                                               |   |   | 1,915,830 |   |   |   | 1,838,840 |   |
| TOTAL PROPERTY, PLANT AND EQUIPMENT – NET                                                         |   |   | 3,544,007 |   |   |   | 3,516,655 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| OTHER NONCURRENT ASSETS                                                                                 |   |   |   |   |   |   |   |   |
| Regulatory Assets                                                                                       |   |   | 306,113 |   |   |   | 341,029 |   |
| Long-term Risk Management Assets                                                                        |   |   | 29,882 |   |   |   | 23,882 |   |
| Deferred Charges and Other Noncurrent Assets                                                            |   |   | 74,472 |   |   |   | 147,217 |   |
| TOTAL OTHER NONCURRENT ASSETS                                                                           |   |   | 410,467 |   |   |   | 512,128 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| TOTAL ASSETS                                                                                            |   | $ | 4,414,230 |   |   | $ | 4,349,506 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

| COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES                                                        |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                   |   |
| LIABILITIES AND SHAREHOLDER'S EQUITY                                                                    |   |
| September 30, 2010 and December 31, 2009                                                                |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   | 2010 |   |   | 2009 |   |
|                                                                                                    |   | (in thousands) |   |
| CURRENT LIABILITIES                                                                                     |   |   |   |   |   |   |
| Advances from Affiliates                                                                                |   | $ | - |   |   | $ | 24,202 |   |
| Accounts Payable:                                                                                       |   |   |   |   |   |   |   |   |
| General                                                                                                 |   |   | 83,817 |   |   |   | 95,872 |   |
| Affiliated Companies                                                                                    |   |   | 54,380 |   |   |   | 81,338 |   |
| Long-term Debt Due Within One Year – Nonaffiliated                                                |   |   | 150,000 |   |   |   | 150,000 |   |
| Long-term Debt Due Within One Year – Affiliated                                                   |   |   | - |   |   |   | 100,000 |   |
| Risk Management Liabilities                                                                             |   |   | 15,500 |   |   |   | 13,052 |   |
| Customer Deposits                                                                                       |   |   | 28,741 |   |   |   | 27,911 |   |
| Accrued Taxes                                                                                           |   |   | 120,472 |   |   |   | 199,001 |   |
| Accrued Interest                                                                                        |   |   | 27,283 |   |   |   | 24,669 |   |
| Other Current Liabilities                                                                               |   |   | 74,563 |   |   |   | 67,053 |   |
| TOTAL CURRENT LIABILITIES                                                                               |   |   | 554,756 |   |   |   | 783,098 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| NONCURRENT LIABILITIES                                                                                  |   |   |   |   |   |   |   |   |
| Long-term Debt – Nonaffiliated                                                                    |   |   | 1,438,753 |   |   |   | 1,286,393 |   |
| Long-term Risk Management Liabilities                                                                   |   |   | 9,389 |   |   |   | 10,313 |   |
| Deferred Income Taxes                                                                                   |   |   | 556,710 |   |   |   | 535,265 |   |
| Regulatory Liabilities and Deferred Investment Tax Credits                                              |   |   | 164,978 |   |   |   | 174,671 |   |
| Employee Benefits and Pension Obligations                                                               |   |   | 125,982 |   |   |   | 133,968 |   |
| Deferred Credits and Other Noncurrent Liabilities                                                       |   |   | 69,504 |   |   |   | 65,963 |   |
| TOTAL NONCURRENT LIABILITIES                                                                            |   |   | 2,365,316 |   |   |   | 2,206,573 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES                                                                                       |   |   | 2,920,072 |   |   |   | 2,989,671 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| Rate Matters (Note 3)                                                                                   |   |   |   |   |   |   |   |   |
| Commitments and Contingencies (Note 4)                                                                  |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| COMMON SHAREHOLDER’S EQUITY                                                                       |   |   |   |   |   |   |   |   |
| Common Stock – No Par Value:                                                                      |   |   |   |   |   |   |   |   |
| Authorized – 24,000,000 Shares                                                                    |   |   |   |   |   |   |   |   |
| Outstanding  – 16,410,426 Shares                                                        |   |   | 41,026 |   |   |   | 41,026 |   |
| Paid-in Capital                                                                                         |   |   | 580,781 |   |   |   | 580,663 |   |
| Retained Earnings                                                                                       |   |   | 921,344 |   |   |   | 788,139 |   |
| Accumulated Other Comprehensive Income (Loss)                                                           |   |   | (48,993 | ) |   |   | (49,993 | ) |
| TOTAL COMMON SHAREHOLDER’S EQUITY                                                                 |   |   | 1,494,158 |   |   |   | 1,359,835 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY                                                              |   | $ | 4,414,230 |   |   | $ | 4,349,506 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

| COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES                                                        |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                         |   |
| For the Nine Months Ended September 30, 2010 and 2009                                                   |   |
| (in thousands)                                                                                          |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   | 2010 |   |   | 2009 |   |
| OPERATING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Net Income                                                                                              |   | $ | 210,823 |   |   | $ | 230,629 |   |
| Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:                        |   |   |   |   |   |   |   |   |
| Depreciation and Amortization                                                                           |   |   | 113,733 |   |   |   | 105,863 |   |
| Deferred Income Taxes                                                                                   |   |   | 30,333 |   |   |   | 97,279 |   |
| Carrying Costs Income                                                                                   |   |   | (6,212 | ) |   |   | (5,394 | ) |
| Allowance for Equity Funds Used During Construction                                                     |   |   | (1,502 | ) |   |   | (2,799 | ) |
| Mark-to-Market of Risk Management Contracts                                                             |   |   | (6,397 | ) |   |   | (14,832 | ) |
| Property Taxes                                                                                          |   |   | 71,795 |   |   |   | 67,012 |   |
| Fuel Over/Under-Recovery, Net                                                                           |   |   | 22,912 |   |   |   | (36,401 | ) |
| Change in Other Noncurrent Assets                                                                       |   |   | (5,506 | ) |   |   | (18,365 | ) |
| Change in Other Noncurrent Liabilities                                                                  |   |   | (14,413 | ) |   |   | 22,644 |   |
| Changes in Certain Components of Working Capital:                                                       |   |   |   |   |   |   |   |   |
| Accounts Receivable, Net                                                                                |   |   | 11,164 |   |   |   | 62,244 |   |
| Fuel, Materials and Supplies                                                                            |   |   | 6,419 |   |   |   | (28,817 | ) |
| Accounts Payable                                                                                        |   |   | (20,468 | ) |   |   | (56,723 | ) |
| Customer Deposits                                                                                       |   |   | 830 |   |   |   | (2,078 | ) |
| Accrued Taxes, Net                                                                                      |   |   | (49,443 | ) |   |   | (102,827 | ) |
| Other Current Assets                                                                                    |   |   | 6,110 |   |   |   | 8,017 |   |
| Other Current Liabilities                                                                               |   |   | (1,049 | ) |   |   | (5,914 | ) |
| Net Cash Flows from Operating Activities                                                                |   |   | 369,129 |   |   |   | 319,538 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| INVESTING ACTIVITIES                                                                                    |   |   |   |   |   |   |   |   |
| Construction Expenditures                                                                               |   |   | (148,441 | ) |   |   | (216,737 | ) |
| Change in Other Cash Deposits                                                                           |   |   | 13,890 |   |   |   | 12,223 |   |
| Change in Advances to Affiliates, Net                                                                   |   |   | (182,225 | ) |   |   | - |   |
| Acquisitions of Assets                                                                                  |   |   | (586 | ) |   |   | (227 | ) |
| Proceeds from Sales of Assets                                                                           |   |   | 4,278 |   |   |   | 721 |   |
| Net Cash Flows Used for Investing Activities                                                            |   |   | (313,084 | ) |   |   | (204,020 | ) |
|                                                                                                    |   |   |   |   |   |   |   |   |
| FINANCING ACTIVITIES                                                                                    |   |   |   |   |   |   |   |   |
| Issuance of Long-term Debt - Nonaffiliated                                                              |   |   | 149,443 |   |   |   | 91,204 |   |
| Change in Advances from Affiliates, Net                                                                 |   |   | (24,202 | ) |   |   | (54,770 | ) |
| Retirement of Long-term Debt - Affiliated                                                               |   |   | (100,000 | ) |   |   | - |   |
| Principal Payments for Capital Lease Obligations                                                        |   |   | (3,322 | ) |   |   | (2,017 | ) |
| Dividends Paid on Common Stock                                                                          |   |   | (77,500 | ) |   |   | (150,000 | ) |
| Other Financing Activities                                                                              |   |   | 119 |   |   |   | 206 |   |
| Net Cash Flows Used for Financing Activities                                                            |   |   | (55,462 | ) |   |   | (115,377 | ) |
|                                                                                                    |   |   |   |   |   |   |   |   |
| Net Increase in Cash and Cash Equivalents                                                               |   |   | 583 |   |   |   | 141 |   |
| Cash and Cash Equivalents at Beginning of Period                                                        |   |   | 1,096 |   |   |   | 1,063 |   |
| Cash and Cash Equivalents at End of Period                                                              |   | $ | 1,679 |   |   | $ | 1,204 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| SUPPLEMENTARY INFORMATION                                                                               |   |   |   |   |   |   |   |   |
| Cash Paid for Interest, Net of Capitalized Amounts                                                      |   | $ | 59,840 |   |   | $ | 71,032 |   |
| Net Cash Paid for Income Taxes                                                                          |   |   | 51,120 |   |   |   | 10,997 |   |
| Noncash Acquisitions Under Capital Leases                                                               |   |   | 9,521 |   |   |   | 784 |   |
| Construction Expenditures Included in Accounts Payable at September 30,                                 |   |   | 12,561 |   |   |   | 26,688 |   |
| Noncash Dividend of Property to Parent                                                                  |   |   | - |   |   |   | 8,123 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

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

----

----

| INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES                  |   |
|------------------------------------------------------------------|--------|
| MANAGEMENT’S NARRATIVE FINANCIAL DISCUSSION AND ANALYSIS   |   |
|                                                             |   |   |   |
| RESULTS OF OPERATIONS                                            |   |   |   |
|                                                             |   |   |   |
| Third Quarter of 2010 Compared to Third Quarter of 2009          |   |
|                                                             |   |   |   |
| Reconciliation of Third Quarter of 2009 to Third Quarter of 2010 |   |
| Net Income                                                       |   |
| (in millions)                                                    |   |
|                                                             |   |   |   |
| Third Quarter of 2009                                            |   | $ | 55 |   |
|                                                             |   |   |   |   |
| Changes in Gross Margin:                                         |   |   |   |   |
| Retail Margins                                                   |   |   | 62 |   |
| FERC Municipals and Cooperatives                                 |   |   | (5 | ) |
| Off-system Sales                                                 |   |   | 6 |   |
| Other Revenues                                                   |   |   | (40 | ) |
| Total Change in Gross Margin                                     |   |   | 23 |   |
|                                                             |   |   |   |   |
| Total Expenses and Other:                                        |   |   |   |   |
| Other Operation and Maintenance                                  |   |   | (6 | ) |
| Taxes Other Than Income Taxes                                    |   |   | (2 | ) |
| Other Income                                                     |   |   | (1 | ) |
| Interest Expense                                                 |   |   | (2 | ) |
| Total Expenses and Other                                         |   |   | (11 | ) |
|                                                             |   |   |   |   |
| Income Tax Expense                                               |   |   | (5 | ) |
|                                                             |   |   |   |   |
| Third Quarter of 2010                                            |   | $ | 62 |   |

|   | · | Retail Margins increased $62 million primarily due to the following:                                                                                                             |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | ·                                                                                                                                                                           | A $30 million increase in fuel margins primarily due to a $19 million increase in higher fuel and purchased power costs recorded in 2009 related to the Cook Plant Unit 1 (Unit 1) shutdown.  This increase in fuel margins was offset by a corresponding decrease in Other Revenues as discussed below. |
|   |   | ·                                                                                                                                                                           | A $25 million increase in weather-related usage for residential and commercial customers primarily due to a 130% increase in cooling degree days and increased demand. |
|   |   | ·                                                                                                                                                                           | A $13 million increase in rate relief primarily due to the impact of the Michigan interim rate increase implemented in August 2010 and Indiana rate riders. |
|   |   | These increases were partially offset by:                                                                                                                                        |
|   |   | ·                                                                                                                                                                           | An $8 million increase in PJM costs. |
|   | · | FERC Municipals and Cooperatives margins decreased $5 million primarily due to a unit power sales agreement ending in December 2009.                                             |
|   | · | Margins from Off-system Sales increased $6 million primarily due to increased prices and higher physical sales volumes, partially offset by lower trading and marketing margins. |
|   | · | Other Revenues decreased $40 million primarily due to the following:                                                                                                             |
|   |   | ·                                                                                                                                                                           | A $46 million decrease in the Cook Plant accidental outage insurance proceeds which ended when Unit 1 returned to service in December 2009.  I&M reduced customer bills by approximately $19 million in the third quarter of 2009 for the cost of replacement power resulting from the Unit 1 outage.  This decrease in insurance proceeds was offset by a corresponding increase in Retail Margins as discussed above. |
|   |   | This decrease was partially offset by:                                                                                                                                           |
|   |   | ·                                                                                                                                                                           | A $5 million increase in River Transportation Division (RTD) revenues from barging activities.  The increase in RTD revenue was partially offset by a corresponding increase in Other Operation and Maintenance expenses from barging activities as discussed below. |

----

|   |   |                                                                                                                                                                                                                                                                                                |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | · | Other Operation and Maintenance expenses increased $6 million primarily due to a $5 million increase in RTD expenses from barging activities.  The increase in RTD expense was partially offset by a corresponding increase in Other Revenues from barging activities as discussed above. |   |
|   | · | Income Tax Expense increased $5 million primarily due to an increase in pretax book income.                                                                                                                                                                                                         |   |

----

| Nine Months Ended September 30, 2010 Compared to Nine Months Ended September 30, 2009          |
|------------------------------------------------------------------------------------------------|
|                                                                                           |   |   |   |   |
| Reconciliation of Nine Months Ended September 30, 2009 to Nine Months Ended September 30, 2010 |
| Net Income                                                                                     |
| (in millions)                                                                                  |
|                                                                                           |   |   |   |   |
| Nine Months Ended September 30, 2009                                                           |   | $ |  184  |   |
|                                                                                           |   |   |   |   |
| Changes in Gross Margin:                                                                       |   |   |   |   |
| Retail Margins                                                                                 |   |   |  142  |   |
| FERC Municipals And Cooperatives                                                               |   |   |  (22) |   |
| Off-system Sales                                                                               |   |   |  9  |   |
| Transmission Revenues                                                                          |   |   |  2  |   |
| Other Revenues                                                                                 |   |   |  (134) |   |
| Total Change in Gross Margin                                                                   |   |   |  (3) |   |
|                                                                                           |   |   |   |   |
| Total Expenses and Other:                                                                      |   |   |   |   |
| Other Operation and Maintenance                                                                |   |   |  (75) |   |
| Depreciation and Amortization                                                                  |   |   |  (2) |   |
| Taxes Other Than Income Taxes                                                                  |   |   |  (3) |   |
| Other Income                                                                                   |   |   |  2  |   |
| Interest Expense                                                                               |   |   |  (5) |   |
| Total Expenses and Other                                                                       |   |   |  (83) |   |
|                                                                                           |   |   |   |   |
| Income Tax Expense                                                                             |   |   |  24  |   |
|                                                                                           |   |   |   |   |
| Nine Months Ended September 30, 2010                                                           |   | $ |  122  |   |

|   | · | Retail Margins increased $142 million primarily due to the following:                                                                                                            |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | ·                                                                                                                                                                           | A $70 million increase in fuel margins primarily due to a $59 million increase in higher fuel and purchased power costs recorded in 2009 related to the Unit 1 shutdown.  This increase in fuel margins was offset by a corresponding decrease in Other Revenues as discussed below. |
|   |   | ·                                                                                                                                                                           | A $42 million increase in weather-related usage and increased price for residential and commercial customers primarily due to a 101% increase in cooling degree days. |
|   |   | ·                                                                                                                                                                           | A $25 million increase in rate relief primarily due to the impact of the Michigan interim rate increase implemented in August 2010 and the approval of the Indiana base rate filing effective March 2009. |
|   |   | ·                                                                                                                                                                           | A $23 million increase in industrial sale margins due to higher usage reflecting an improvement in demand. |
|   |   | These increases were partially offset by:                                                                                                                                        |
|   |   | ·                                                                                                                                                                           | A $13 million increase in PJM costs. |
|   | · | FERC Municipals and Cooperatives margins decreased $22 million primarily due to a unit power sales agreement ending in December 2009.                                            |
|   | · | Margins from Off-system Sales increased $9 million primarily due to increased prices and higher physical sales volumes, partially offset by lower trading and marketing margins. |
|   | · | Other Revenues decreased $134 million primarily due to the following:                                                                                                            |
|   |   | ·                                                                                                                                                                           | A $145 million decrease in the Cook Plant accidental outage insurance proceeds which ended when Unit 1 returned to service in December 2009.  I&M reduced customer bills by approximately $59 million in the first nine months of 2009 for the cost of replacement power resulting from the Unit 1 outage.  This decrease in insurance proceeds was offset by a corresponding increase in Retail Margins as discussed above. |
|   |   | This decrease was partially offset by:                                                                                                                                           |
|   |   | ·                                                                                                                                                                           | A $10 million increase in River Transportation Division (RTD) revenues from barging activities.  The increase in RTD revenue was offset by a corresponding increase in Other Operation and Maintenance expenses from barging activities as discussed below. |

----

|   | · | Other Operation and Maintenance expenses increased $75 million primarily due to the following:                                                                            |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | ·                                                                                                                                                                    | A $41 million increase due to expenses related to the cost reduction initiatives. |
|   |   | ·                                                                                                                                                                    | An $11 million increase in RTD expenses from barging activities.  The increase in RTD expense was partially offset by a corresponding increase in Other Revenues from barging activities as discussed above. |
|   |   | ·                                                                                                                                                                    | A $10 million increase in transmission expense primarily due to lower credits under the Transmission Agreement. |
|   |   | ·                                                                                                                                                                    | A $5 million increase in administrative and general expenses primarily due to an increase in benefit and insurance costs. |
|   |   | ·                                                                                                                                                                    | A $4 million increase in distribution expenses associated with storm restoration expenses from June 2010 storms. |
|   | · | Taxes Other Than Income Taxes increased $3 million primarily due to expenses related to the cost reduction initiatives.                                                   |
|   | · | Interest Expense increased $5 million related to the nuclear fuel financing.                                                                                              |
|   | · | Income Tax Expense decreased $24 million primarily due to a decrease in pretax book income partially offset by the regulatory accounting treatment of state income taxes. |

----

----

| INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES                                                         |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME                                                             |   |
| For the Three and Nine Months Ended September 30, 2010 and 2009                                         |   |
| (in thousands)                                                                                          |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   | Three Months Ended |   |   | Nine Months Ended |   |
|                                                                                                    |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| REVENUES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Electric Generation, Transmission and Distribution                                                      |   | $ | 480,779 |   |   | $ | 435,399 |   |   | $ | 1,327,505 |   |   | $ | 1,257,673 |   |
| Sales to AEP Affiliates                                                                                 |   |   | 93,984 |   |   |   | 43,796 |   |   |   | 245,674 |   |   |   | 161,167 |   |
| Other Revenues - Affiliated                                                                             |   |   | 27,796 |   |   |   | 24,958 |   |   |   | 86,447 |   |   |   | 80,890 |   |
| Other Revenues - Nonaffiliated                                                                          |   |   | 5,691 |   |   |   | 48,114 |   |   |   | 11,595 |   |   |   | 149,997 |   |
| TOTAL REVENUES                                                                                          |   |   | 608,250 |   |   |   | 552,267 |   |   |   | 1,671,221 |   |   |   | 1,649,727 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel and Other Consumables Used for Electric Generation                                                 |   |   | 134,721 |   |   |   | 105,287 |   |   |   | 356,160 |   |   |   | 316,449 |   |
| Purchased Electricity for Resale                                                                        |   |   | 27,904 |   |   |   | 28,203 |   |   |   | 89,115 |   |   |   | 97,417 |   |
| Purchased Electricity from AEP Affiliates                                                               |   |   | 96,405 |   |   |   | 93,093 |   |   |   | 247,151 |   |   |   | 253,964 |   |
| Other Operation                                                                                         |   |   | 132,200 |   |   |   | 121,737 |   |   |   | 425,859 |   |   |   | 346,421 |   |
| Maintenance                                                                                             |   |   | 46,180 |   |   |   | 50,650 |   |   |   | 144,257 |   |   |   | 148,412 |   |
| Depreciation and Amortization                                                                           |   |   | 34,130 |   |   |   | 34,032 |   |   |   | 101,932 |   |   |   | 100,406 |   |
| Taxes Other Than Income Taxes                                                                           |   |   | 20,806 |   |   |   | 19,122 |   |   |   | 60,833 |   |   |   | 58,071 |   |
| TOTAL EXPENSES                                                                                          |   |   | 492,346 |   |   |   | 452,124 |   |   |   | 1,425,307 |   |   |   | 1,321,140 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING INCOME                                                                                        |   |   | 115,904 |   |   |   | 100,143 |   |   |   | 245,914 |   |   |   | 328,587 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income (Expense):                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Income                                                                                         |   |   | 1,079 |   |   |   | 1,532 |   |   |   | 2,598 |   |   |   | 5,049 |   |
| Allowance for Equity Funds Used During Construction                                                     |   |   | 2,943 |   |   |   | 3,492 |   |   |   | 11,945 |   |   |   | 7,830 |   |
| Interest Expense                                                                                        |   |   | (28,046 | ) |   |   | (25,668 | ) |   |   | (80,557 | ) |   |   | (75,372 | ) |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME BEFORE INCOME TAX EXPENSE                                                                        |   |   | 91,880 |   |   |   | 79,499 |   |   |   | 179,900 |   |   |   | 266,094 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income Tax Expense                                                                                      |   |   | 29,580 |   |   |   | 24,640 |   |   |   | 57,940 |   |   |   | 81,774 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME                                                                                              |   |   | 62,300 |   |   |   | 54,859 |   |   |   | 121,960 |   |   |   | 184,320 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred Stock Dividend Requirements                                                                   |   |   | 85 |   |   |   | 85 |   |   |   | 255 |   |   |   | 255 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS ATTRIBUTABLE TO COMMON STOCK                                                                   |   | $ | 62,215 |   |   | $ | 54,774 |   |   | $ | 121,705 |   |   | $ | 184,065 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The common stock of I&M is wholly-owned by AEP.                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

| INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES                                                         |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON SHAREHOLDER'S                                    |   |
| EQUITY AND COMPREHENSIVE INCOME (LOSS)                                                                  |   |
| For the Nine Months Ended September 30, 2010 and 2009                                                   |   |
| (in thousands)                                                                                          |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   | Other |   |   |   |   |
|                                                                                                    |   | Common |   |   | Paid-in |   |   | Retained |   |   | Comprehensive |   |   |   |   |
|                                                                                                    |   | Stock |   |   | Capital |   |   | Earnings |   |   | Income (Loss) |   |   | Total |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EQUITY – DECEMBER 31, 2008                                                                        |   | $ | 56,584 |   |   | $ | 861,291 |   |   | $ | 538,637 |   |   | $ | (21,694 | ) |   | $ | 1,434,818 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital Contribution from Parent                                                                        |   |   |   |   |   |   | 120,000 |   |   |   |   |   |   |   |   |   |   |   | 120,000 |   |
| Common Stock Dividends                                                                                  |   |   |   |   |   |   |   |   |   |   | (73,500 | ) |   |   |   |   |   |   | (73,500 | ) |
| Preferred Stock Dividends                                                                               |   |   |   |   |   |   |   |   |   |   | (255 | ) |   |   |   |   |   |   | (255 | ) |
| Gain on Reacquired Preferred Stock                                                                      |   |   |   |   |   |   | 1 |   |   |   |   |   |   |   |   |   |   |   | 1 |   |
| SUBTOTAL – COMMON                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SHAREHOLDER'S EQUITY                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,481,064 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income (Loss), Net of                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxes:                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash Flow Hedges, Net of Tax of $265                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (492 | ) |   |   | (492 | ) |
| Amortization of Pension and OPEB Deferred                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Costs, Net of Tax of $334                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 620 |   |   |   | 620 |   |
| NET INCOME                                                                                              |   |   |   |   |   |   |   |   |   |   | 184,320 |   |   |   |   |   |   |   | 184,320 |   |
| TOTAL COMPREHENSIVE INCOME                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 184,448 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EQUITY – SEPTEMBER 30, 2009                                                                       |   | $ | 56,584 |   |   | $ | 981,292 |   |   | $ | 649,202 |   |   | $ | (21,566 | ) |   | $ | 1,665,512 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EQUITY – DECEMBER 31, 2009                                                                        |   | $ | 56,584 |   |   | $ | 981,292 |   |   | $ | 656,608 |   |   | $ | (21,701 | ) |   | $ | 1,672,783 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock Dividends                                                                                  |   |   |   |   |   |   |   |   |   |   | (78,250 | ) |   |   |   |   |   |   | (78,250 | ) |
| Preferred Stock Dividends                                                                               |   |   |   |   |   |   |   |   |   |   | (255 | ) |   |   |   |   |   |   | (255 | ) |
| SUBTOTAL – COMMON                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SHAREHOLDER'S EQUITY                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,594,278 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income (Loss), Net of                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxes:                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash Flow Hedges, Net of Tax of $77                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (144 | ) |   |   | (144 | ) |
| Amortization of Pension and OPEB Deferred                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Costs, Net of Tax of $352                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 655 |   |   |   | 655 |   |
| NET INCOME                                                                                              |   |   |   |   |   |   |   |   |   |   | 121,960 |   |   |   |   |   |   |   | 121,960 |   |
| TOTAL COMPREHENSIVE INCOME                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 122,471 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EQUITY – SEPTEMBER 30, 2010                                                                       |   | $ | 56,584 |   |   | $ | 981,292 |   |   | $ | 700,063 |   |   | $ | (21,190 | ) |   | $ | 1,716,749 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

| INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES                                                         |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                   |   |
| ASSETS                                                                                                  |   |
| September 30, 2010 and December 31, 2009                                                                |   |
| (in thousands)                                                                                          |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   | 2010 |   |   | 2009 |   |
| CURRENT ASSETS                                                                                          |   |   |   |   |   |   |
| Cash and Cash Equivalents                                                                               |   | $ | 789 |   |   | $ | 779 |   |
| Advances to Affiliates                                                                                  |   |   | 192,779 |   |   |   | 114,012 |   |
| Accounts Receivable:                                                                                    |   |   |   |   |   |   |   |   |
| Customers                                                                                               |   |   | 63,520 |   |   |   | 71,120 |   |
| Affiliated Companies                                                                                    |   |   | 84,372 |   |   |   | 83,248 |   |
| Accrued Unbilled Revenues                                                                               |   |   | 7,357 |   |   |   | 8,762 |   |
| Miscellaneous                                                                                           |   |   | 11,545 |   |   |   | 8,638 |   |
| Allowance for Uncollectible Accounts                                                                    |   |   | (2,105 | ) |   |   | (2,265 | ) |
| Total Accounts Receivable                                                                               |   |   | 164,689 |   |   |   | 169,503 |   |
| Fuel                                                                                                    |   |   | 95,096 |   |   |   | 79,554 |   |
| Materials and Supplies                                                                                  |   |   | 160,921 |   |   |   | 164,439 |   |
| Risk Management Assets                                                                                  |   |   | 39,717 |   |   |   | 34,438 |   |
| Accrued Tax Benefits                                                                                    |   |   | 59,764 |   |   |   | 144,473 |   |
| Deferred Cook Plant Fire Costs                                                                          |   |   | 52,507 |   |   |   | 134,322 |   |
| Prepayments and Other Current Assets                                                                    |   |   | 24,940 |   |   |   | 29,395 |   |
| TOTAL CURRENT ASSETS                                                                                    |   |   | 791,202 |   |   |   | 870,915 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT                                                                           |   |   |   |   |   |   |   |   |
| Electric:                                                                                               |   |   |   |   |   |   |   |   |
| Production                                                                                              |   |   | 3,713,372 |   |   |   | 3,634,215 |   |
| Transmission                                                                                            |   |   | 1,172,639 |   |   |   | 1,154,026 |   |
| Distribution                                                                                            |   |   | 1,398,319 |   |   |   | 1,360,553 |   |
| Other Property, Plant and Equipment (including nuclear fuel and coal mining)                            |   |   | 761,286 |   |   |   | 755,132 |   |
| Construction Work in Progress                                                                           |   |   | 306,628 |   |   |   | 278,278 |   |
| Total Property, Plant and Equipment                                                                     |   |   | 7,352,244 |   |   |   | 7,182,204 |   |
| Accumulated Depreciation, Depletion and Amortization                                                    |   |   | 3,125,414 |   |   |   | 3,073,695 |   |
| TOTAL PROPERTY, PLANT AND EQUIPMENT – NET                                                         |   |   | 4,226,830 |   |   |   | 4,108,509 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| OTHER NONCURRENT ASSETS                                                                                 |   |   |   |   |   |   |   |   |
| Regulatory Assets                                                                                       |   |   | 507,358 |   |   |   | 496,464 |   |
| Spent Nuclear Fuel and Decommissioning Trusts                                                           |   |   | 1,465,699 |   |   |   | 1,391,919 |   |
| Long-term Risk Management Assets                                                                        |   |   | 41,500 |   |   |   | 29,134 |   |
| Deferred Charges and Other Noncurrent Assets                                                            |   |   | 68,998 |   |   |   | 82,047 |   |
| TOTAL OTHER NONCURRENT ASSETS                                                                           |   |   | 2,083,555 |   |   |   | 1,999,564 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| TOTAL ASSETS                                                                                            |   | $ | 7,101,587 |   |   | $ | 6,978,988 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

| INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES                                                         |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                    |   |
| September 30, 2010 and December 31, 2009                                                                |   |
| (dollars in thousands)                                                                                  |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
| CURRENT LIABILITIES                                                                                     |   | 2010 |   |   | 2009 |   |
| Accounts Payable:                                                                                       |   |   |   |   |   |   |
| General                                                                                                 |   | $ | 103,098 |   |   | $ | 171,192 |   |
| Affiliated Companies                                                                                    |   |   | 64,027 |   |   |   | 61,315 |   |
| Long-term Debt Due Within One Year - Nonaffiliated                                                      |   |   |   |   |   |   |   |   |
| (September 30, 2010 amount includes $61,435 related to DCC Fuel)                                        |   |   | 211,435 |   |   |   | 37,544 |   |
| Long-term Debt Due Within One Year – Affiliated                                                   |   |   | - |   |   |   | 25,000 |   |
| Risk Management Liabilities                                                                             |   |   | 16,055 |   |   |   | 13,436 |   |
| Customer Deposits                                                                                       |   |   | 28,615 |   |   |   | 27,711 |   |
| Accrued Taxes                                                                                           |   |   | 42,622 |   |   |   | 56,814 |   |
| Accrued Interest                                                                                        |   |   | 23,451 |   |   |   | 27,633 |   |
| Obligations Under Capital Leases                                                                        |   |   | 14,306 |   |   |   | 25,065 |   |
| Other Current Liabilities                                                                               |   |   | 163,013 |   |   |   | 126,800 |   |
| TOTAL CURRENT LIABILITIES                                                                               |   |   | 666,622 |   |   |   | 572,510 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| NONCURRENT LIABILITIES                                                                                  |   |   |   |   |   |   |   |   |
| Long-term Debt – Nonaffiliated                                                                    |   |   | 1,907,476 |   |   |   | 2,015,362 |   |
| Long-term Risk Management Liabilities                                                                   |   |   | 9,713 |   |   |   | 10,386 |   |
| Deferred Income Taxes                                                                                   |   |   | 752,172 |   |   |   | 696,163 |   |
| Regulatory Liabilities and Deferred Investment Tax Credits                                              |   |   | 818,084 |   |   |   | 756,845 |   |
| Asset Retirement Obligations                                                                            |   |   | 935,586 |   |   |   | 894,746 |   |
| Deferred Credits and Other Noncurrent Liabilities                                                       |   |   | 287,109 |   |   |   | 352,116 |   |
| TOTAL NONCURRENT LIABILITIES                                                                            |   |   | 4,710,140 |   |   |   | 4,725,618 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES                                                                                       |   |   | 5,376,762 |   |   |   | 5,298,128 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| Cumulative Preferred Stock Not Subject to Mandatory Redemption                                          |   |   | 8,076 |   |   |   | 8,077 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| Rate Matters (Note 3)                                                                                   |   |   |   |   |   |   |   |   |
| Commitments and Contingencies (Note 4)                                                                  |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| COMMON SHAREHOLDER’S EQUITY                                                                       |   |   |   |   |   |   |   |   |
| Common Stock – No Par Value:                                                                      |   |   |   |   |   |   |   |   |
| Authorized – 2,500,000 Shares                                                                     |   |   |   |   |   |   |   |   |
| Outstanding  – 1,400,000 Shares                                                         |   |   | 56,584 |   |   |   | 56,584 |   |
| Paid-in Capital                                                                                         |   |   | 981,292 |   |   |   | 981,292 |   |
| Retained Earnings                                                                                       |   |   | 700,063 |   |   |   | 656,608 |   |
| Accumulated Other Comprehensive Income (Loss)                                                           |   |   | (21,190 | ) |   |   | (21,701 | ) |
| TOTAL COMMON SHAREHOLDER’S EQUITY                                                                 |   |   | 1,716,749 |   |   |   | 1,672,783 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY                                                        |   | $ | 7,101,587 |   |   | $ | 6,978,988 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

| INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES                                                         |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                         |   |
| For the Nine Months Ended September 30, 2010 and 2009                                                   |   |
| (in thousands)                                                                                          |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   | 2010 |   |   | 2009 |   |
| OPERATING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Net Income                                                                                              |   | $ | 121,960 |   |   | $ | 184,320 |   |
| Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:                        |   |   |   |   |   |   |   |   |
| Depreciation and Amortization                                                                           |   |   | 101,932 |   |   |   | 100,406 |   |
| Deferred Income Taxes                                                                                   |   |   | 40,125 |   |   |   | 133,959 |   |
| Deferral of Incremental Nuclear Refueling Outage Expenses, Net                                          |   |   | (12,323 | ) |   |   | (4,563 | ) |
| Allowance for Equity Funds Used During Construction                                                     |   |   | (11,945 | ) |   |   | (7,830 | ) |
| Mark-to-Market of Risk Management Contracts                                                             |   |   | (16,887 | ) |   |   | (14,580 | ) |
| Amortization of Nuclear Fuel                                                                            |   |   | 113,031 |   |   |   | 41,198 |   |
| Pension Contributions to Qualified Plan Trust                                                           |   |   | (66,711 | ) |   |   | - |   |
| Fuel Over/Under Recovery, Net                                                                           |   |   | (280 | ) |   |   | 20,588 |   |
| Change in Other Noncurrent Assets                                                                       |   |   | 20,044 |   |   |   | 285 |   |
| Change in Other Noncurrent Liabilities                                                                  |   |   | 63,409 |   |   |   | 50,932 |   |
| Changes in Certain Components of Working Capital:                                                       |   |   |   |   |   |   |   |   |
| Accounts Receivable, Net                                                                                |   |   | 4,814 |   |   |   | (2,322 | ) |
| Fuel, Materials and Supplies                                                                            |   |   | (12,021 | ) |   |   | (1,591 | ) |
| Accounts Payable                                                                                        |   |   | (10,928 | ) |   |   | (48,044 | ) |
| Accrued Taxes, Net                                                                                      |   |   | 72,156 |   |   |   | (15,005 | ) |
| Received (Deferred) Cook Plant Fire Costs                                                               |   |   | 63,247 |   |   |   | (69,921 | ) |
| Other Current Assets                                                                                    |   |   | 408 |   |   |   | (7,208 | ) |
| Other Current Liabilities                                                                               |   |   | 14,671 |   |   |   | (18,278 | ) |
| Net Cash Flows from Operating Activities                                                                |   |   | 484,702 |   |   |   | 342,346 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| INVESTING ACTIVITIES                                                                                    |   |   |   |   |   |   |   |   |
| Construction Expenditures                                                                               |   |   | (224,488 | ) |   |   | (242,256 | ) |
| Change in Advances to Affiliates, Net                                                                   |   |   | (78,767 | ) |   |   | (160,749 | ) |
| Purchases of Investment Securities                                                                      |   |   | (1,128,747 | ) |   |   | (571,167 | ) |
| Sales of Investment Securities                                                                          |   |   | 1,087,484 |   |   |   | 523,927 |   |
| Acquisitions of Nuclear Fuel                                                                            |   |   | (69,459 | ) |   |   | (153,172 | ) |
| Other Investing Activities                                                                              |   |   | (6,213 | ) |   |   | 18,990 |   |
| Net Cash Flows Used for Investing Activities                                                            |   |   | (420,190 | ) |   |   | (584,427 | ) |
|                                                                                                    |   |   |   |   |   |   |   |   |
| FINANCING ACTIVITIES                                                                                    |   |   |   |   |   |   |   |   |
| Capital Contribution from Parent                                                                        |   |   | - |   |   |   | 120,000 |   |
| Issuance of Long-term Debt - Nonaffiliated                                                              |   |   | 84,564 |   |   |   | 670,060 |   |
| Issuance of Long-term Debt - Affiliated                                                                 |   |   | - |   |   |   | 25,000 |   |
| Change in Advances from Affiliates, Net                                                                 |   |   | - |   |   |   | (476,036 | ) |
| Retirement of Long-term Debt - Nonaffiliated                                                            |   |   | (19,208 | ) |   |   | - |   |
| Retirement of Long-term Debt - Affiliated                                                               |   |   | (25,000 | ) |   |   | - |   |
| Retirement of Cumulative Preferred Stock                                                                |   |   | (1 | ) |   |   | (2 | ) |
| Principal Payments for Capital Lease Obligations                                                        |   |   | (26,785 | ) |   |   | (23,640 | ) |
| Dividends Paid on Common Stock                                                                          |   |   | (78,250 | ) |   |   | (73,500 | ) |
| Dividends Paid on Cumulative Preferred Stock                                                            |   |   | (255 | ) |   |   | (255 | ) |
| Other Financing Activities                                                                              |   |   | 433 |   |   |   | 569 |   |
| Net Cash Flows from (Used for) Financing Activities                                                     |   |   | (64,502 | ) |   |   | 242,196 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| Net Increase in Cash and Cash Equivalents                                                               |   |   | 10 |   |   |   | 115 |   |
| Cash and Cash Equivalents at Beginning of Period                                                        |   |   | 779 |   |   |   | 728 |   |
| Cash and Cash Equivalents at End of Period                                                              |   | $ | 789 |   |   | $ | 843 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| SUPPLEMENTARY INFORMATION                                                                               |   |   |   |   |   |   |   |   |
| Cash Paid for Interest, Net of Capitalized Amounts                                                      |   | $ | 81,576 |   |   | $ | 81,833 |   |
| Net Cash Paid (Received) for Income Taxes                                                               |   |   | (66,680 | ) |   |   | (21,414 | ) |
| Noncash Acquisitions Under Capital Leases                                                               |   |   | 9,708 |   |   |   | 2,344 |   |
| Construction Expenditures Included in Accounts Payable at September 30,                                 |   |   | 19,690 |   |   |   | 42,576 |   |
| Acquisition of Nuclear Fuel Included in Current Liabilities at September 30,                            |   |   | 20,332 |   |   |   | 2 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

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

----

----

| OHIO POWER COMPANY CONSOLIDATED                                  |   |
|------------------------------------------------------------------|--------|
| MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS             |   |
|                                                             |   |   |   |
| RESULTS OF OPERATIONS                                            |   |   |   |
|                                                             |   |   |   |
| Third Quarter of 2010 Compared to Third Quarter of 2009          |   |
|                                                             |   |   |   |
| Reconciliation of Third Quarter of 2009 to Third Quarter of 2010 |   |
| Net Income                                                       |   |
| (in millions)                                                    |   |
|                                                             |   |   |   |
| Third Quarter of 2009                                            |   | $ | 97 |   |
|                                                             |   |   |   |   |
| Changes in Gross Margin:                                         |   |   |   |   |
| Retail Margins                                                   |   |   | 8 |   |
| Off-system Sales                                                 |   |   | 19 |   |
| Transmission Revenues                                            |   |   | 1 |   |
| Other Revenues                                                   |   |   | (1 | ) |
| Total Change in Gross Margin                                     |   |   | 27 |   |
|                                                             |   |   |   |   |
| Total Expenses and Other:                                        |   |   |   |   |
| Other Operation and Maintenance                                  |   |   | (17 | ) |
| Depreciation and Amortization                                    |   |   | (2 | ) |
| Taxes Other Than Income Taxes                                    |   |   | (4 | ) |
| Carrying Costs Income                                            |   |   | 3 |   |
| Interest Expense                                                 |   |   | 2 |   |
| Total Expenses and Other                                         |   |   | (18 | ) |
|                                                             |   |   |   |   |
| Income Tax Expense                                               |   |   | (5 | ) |
|                                                             |   |   |   |   |
| Third Quarter of 2010                                            |   | $ | 101 |   |

|   | · | Retail Margins increased $8 million primarily due to the following:                                                      |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------|
|   |   | ·                                                                                                                   | A $31 million increase in retail sales as a result of an increase in weather-related usage of residential and commercial customers primarily due to a 98% increase in cooling degree days and increased usage of industrial customers resulting from an improvement in demand. |
|   |   | ·                                                                                                                   | A $14 million increase in revenue due to the implementation of PUCO approved rider rates in June 2010 related to the Ohio Energy Efficiency & Demand Response Program Rider.  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 $30 million decrease in fuel recovery primarily due to favorable adjustments recorded in September 2009 related to deferred fuel. |
|   |   | ·                                                                                                                   | A $6 million decrease as a result of the timing of approval and implementation of rates set by the Ohio ESP from April through December 2009. |
|   | · | Margins from Off-system Sales increased $19 million primarily due to increased prices and higher physical sales volumes. |

----

|   | · | Other Operation and Maintenance expenses increased $17 million primarily due to a $14 million increase in expenses due to the implementation of PUCO approved Ohio Energy Efficiency & Demand Response Program.  This increase in operation and maintenance expense was offset by a corresponding increase in Retail Margins as discussed above. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | · | Income Tax Expense increased $5 million primarily due to an increase in pretax book income and the regulatory accounting treatment of state income taxes.                                                                                                                                                                                                      |

----

| Nine Months Ended September 30, 2010 Compared to Nine Months Ended September 30, 2009          |
|------------------------------------------------------------------------------------------------|
|                                                                                           |   |   |   |   |
| Reconciliation of Nine Months Ended September 30, 2009 to Nine Months Ended September 30, 2010 |
| Net Income                                                                                     |
| (in millions)                                                                                  |
|                                                                                           |   |   |   |   |
| Nine Months Ended September 30, 2009                                                           |   | $ |  233  |   |
|                                                                                           |   |   |   |   |
| Changes in Gross Margin:                                                                       |   |   |   |   |
| Retail Margins                                                                                 |   |   |  76  |   |
| Off-system Sales                                                                               |   |   |  18  |   |
| Transmission Revenues                                                                          |   |   |  (1) |   |
| Other Revenues                                                                                 |   |   |  (20) |   |
| Total Change in Gross Margin                                                                   |   |   |  73  |   |
|                                                                                           |   |   |   |   |
| Total Expenses and Other:                                                                      |   |   |   |   |
| Other Operation and Maintenance                                                                |   |   |  (58) |   |
| Depreciation and Amortization                                                                  |   |   |  (8) |   |
| Taxes Other Than Income Taxes                                                                  |   |   |  (11) |   |
| Carrying Costs Income                                                                          |   |   |  10  |   |
| Other Income                                                                                   |   |   |  1  |   |
| Interest Expense                                                                               |   |   |  (4) |   |
| Total Expenses and Other                                                                       |   |   |  (70) |   |
|                                                                                           |   |   |   |   |
| Income Tax Expense                                                                             |   |   |  (6) |   |
|                                                                                           |   |   |   |   |
| Nine Months Ended September 30, 2010                                                           |   | $ |  230  |   |

|   | · | Retail Margins increased $76 million primarily due to the following:                                                                                                              |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | ·                                                                                                                                                                            | A $44 million increase in capacity settlements under the Interconnection Agreement. |
|   |   | ·                                                                                                                                                                            | A $29 million increase in retail sales primarily a result of an increase in weather-related usage of residential customers primarily due to an 82% increase in cooling degree days  and increased usage of industrial customers resulting from an improvement in demand. |
|   |   | ·                                                                                                                                                                            | A $19 million increase in demand charges from WPCo effective January 2010. |
|   |   | ·                                                                                                                                                                            | An $18 million increase in revenue due to the implementation of PUCO approved rider rates in June 2010 related to the Ohio Energy Efficiency & Demand Response Program Rider.  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 $10 million decrease in fuel recovery related to coal pile survey adjustments recorded in 2009 for the 2008 consumption portion.  The 2008 portion was excluded from the deferred fuel calculation.  The PUCO’s March 2009 approval of OPCo’s ESP allowed for the recovery of fuel and related costs beginning January 1, 2009. |
|   |   | ·                                                                                                                                                                            | A $7 million decrease related to increased consumable and allowance expenses. |
|   | · | Margins from Off-system Sales increased $18 million primarily due to increased prices and higher physical sales volumes, partially offset by lower trading and marketing margins. |
|   | · | Other Revenues decreased $20 million primarily due to reduced gains on sales of emission allowances which are partially offset by sharing in the fuel clause.                     |

----

|   | · | Other Operation and Maintenance expenses increased $58 million primarily due to:                                                                                                                                                                                                                     |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | ·                                                                                                                                                                                                                                                                                               | A $53 million increase due to expenses related to the cost reduction initiatives. |
|   |   | ·                                                                                                                                                                                                                                                                                               | An $18 million increase in expenses due to the implementation of PUCO approved Ohio Energy Efficiency & Demand Response Program.  This increase in operation and maintenance expense was offset by a corresponding increase in Retail Margins as discussed above. |
|   |   | ·                                                                                                                                                                                                                                                                                               | An $8 million increase in recoverable customer account expenses due to increased Universal Service Fund surcharge rates for customers who qualify for payment assistance. |
|   |   | These increases were partially offset by:                                                                                                                                                                                                                                                            |
|   |   | ·                                                                                                                                                                                                                                                                                               | A $7 million decrease related to a 2009 obligation to contribute to the “Partnership with Ohio” fund for low income, at-risk customers ordered by the PUCO’s March 2009 approval of OPCo’s ESP. |
|   | · | Depreciation and Amortization increased $8 million primarily due to:                                                                                                                                                                                                                                 |
|   |   | ·                                                                                                                                                                                                                                                                                               | A $12 million increase from higher depreciable property balances as a result of environmental improvements placed in service and various other property additions. |
|   |   | This increase was partially offset by:                                                                                                                                                                                                                                                               |
|   |   | ·                                                                                                                                                                                                                                                                                               | A $4 million decrease due to the completion of the amortization of software and leasehold improvements in the fourth quarter of 2009. |
|   | · | Taxes Other Than Income Taxes increased $11 million primarily due to a $6 million increase in real and property taxes, a $3 million increase in state excise taxes as well as a $2 million increase due to the employer portion of payroll taxes incurred related to the cost reduction initiatives. |
|   | · | Carrying Costs Income increased $10 million primarily due to higher Ohio ESP FAC carrying charges in 2010 related to an increase in the deferred fuel regulatory asset balance.                                                                                                                      |
|   | · | Income Tax Expense increased $6 million primarily due to an increase in pretax book income and the tax treatment associated with the future reimbursement of Medicare Part D retiree prescription drug benefits.                                                                                     |

|                                                |   | 2010           |     |   | 2009   |   |
|-----------------------------------------------------|--------|----------------|----------|--------|--------|--------|
|                                                |   | (in thousands) |     |
| Cash and Cash Equivalents at Beginning of Period    |   | $              | 1,984    |   |   | $      | 12,679 |   |
| Net Cash Flows from Operating Activities            |   |           | 627,472  |   |   |   | 136,802 |   |
| Net Cash Flows Used for Investing Activities        |   |           | (54,651  | )      |   |   | (674,647 | ) |
| Net Cash Flows from (Used for) Financing Activities |   |           | (573,451 | )      |   |   | 528,116 |   |
| Net Decrease in Cash and Cash Equivalents           |   |           | (630     | )      |   |   | (9,729 | ) |
| Cash and Cash Equivalents at End of Period          |   | $              | 1,354    |   |   | $      | 2,950 |   |

----

----

| Issuances |                    |   |           |               |     |        |   |       |
|-----------|-------------------------|--------|----------------|--------------------|----------|-------------|--------|------------|
|      |                    |   | Principal      |               | Interest |        | Due    |
|      | Type of Debt            |   | Amount         |               | Rate     |        | Date   |
|      |                    |   | (in thousands) |               | (%)      |        |   |
|      | Pollution Control Bonds |   | $              |  86,000  |     | 3.125  |   | 2015  |
|      | Pollution Control Bonds |   |           |  79,450  |     | 3.25   |   | 2014  |
|      | Pollution Control Bonds |   |           |  39,130  |     | 2.875  |   | 2014  |

| Retirements |                    |   |           |                |     |        |   |
|-------------|-------------------------|--------|----------------|---------------------|----------|-------------|--------|
|        |                    |   | Principal      |                | Interest |        | Due    |
|        | Type of Debt            |   | Amount Paid    |                | Rate     |        | Date   |
|        |                    |   | (in thousands) |                | (%)      |        |   |
|        | Senior Unsecured Notes  |   | $              |  400,000  |     | Variable    |   | 2010  |
|        | Pollution Control Bonds |   |           |  79,450   |     | 7.125  |   | 2010  |
|        | Pollution Control Bonds |   |           |  19,565   |     | 5.625  |   | 2022  |
|        | Pollution Control Bonds |   |           |  19,565   |     | 5.625  |   | 2023  |

----

----

| OHIO POWER COMPANY CONSOLIDATED                                                                         |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME                                                             |   |
| For the Three and Nine Months Ended September 30, 2010 and 2009                                         |   |
| (in thousands)                                                                                          |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   | Three Months Ended |   |   | Nine Months Ended |   |
|                                                                                                    |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| REVENUES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Electric Generation, Transmission and Distribution                                                      |   | $ | 583,084 |   |   | $ | 481,049 |   |   | $ | 1,617,206 |   |   | $ | 1,463,200 |   |
| Sales to AEP Affiliates                                                                                 |   |   | 263,236 |   |   |   | 276,947 |   |   |   | 792,565 |   |   |   | 714,639 |   |
| Other Revenues - Affiliated                                                                             |   |   | 5,065 |   |   |   | 5,646 |   |   |   | 16,794 |   |   |   | 19,415 |   |
| Other Revenues - Nonaffiliated                                                                          |   |   | 4,474 |   |   |   | 2,329 |   |   |   | 12,531 |   |   |   | 9,445 |   |
| TOTAL REVENUES                                                                                          |   |   | 855,859 |   |   |   | 765,971 |   |   |   | 2,439,096 |   |   |   | 2,206,699 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel and Other Consumables Used for Electric Generation                                                 |   |   | 284,857 |   |   |   | 238,574 |   |   |   | 836,048 |   |   |   | 681,523 |   |
| Purchased Electricity for Resale                                                                        |   |   | 42,840 |   |   |   | 42,160 |   |   |   | 120,476 |   |   |   | 138,398 |   |
| Purchased Electricity from AEP Affiliates                                                               |   |   | 36,004 |   |   |   | 19,782 |   |   |   | 79,778 |   |   |   | 56,989 |   |
| Other Operation                                                                                         |   |   | 106,314 |   |   |   | 91,162 |   |   |   | 341,887 |   |   |   | 287,009 |   |
| Maintenance                                                                                             |   |   | 52,448 |   |   |   | 50,703 |   |   |   | 172,151 |   |   |   | 168,893 |   |
| Depreciation and Amortization                                                                           |   |   | 91,072 |   |   |   | 89,169 |   |   |   | 270,294 |   |   |   | 262,576 |   |
| Taxes Other Than Income Taxes                                                                           |   |   | 52,261 |   |   |   | 48,300 |   |   |   | 157,433 |   |   |   | 146,274 |   |
| TOTAL EXPENSES                                                                                          |   |   | 665,796 |   |   |   | 579,850 |   |   |   | 1,978,067 |   |   |   | 1,741,662 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING INCOME                                                                                        |   |   | 190,063 |   |   |   | 186,121 |   |   |   | 461,029 |   |   |   | 465,037 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income (Expense):                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Income                                                                                         |   |   | 583 |   |   |   | 242 |   |   |   | 1,322 |   |   |   | 1,002 |   |
| Carrying Costs Income                                                                                   |   |   | 6,324 |   |   |   | 3,143 |   |   |   | 16,879 |   |   |   | 7,152 |   |
| Allowance for Equity Funds Used During Construction                                                     |   |   | 947 |   |   |   | 1,081 |   |   |   | 2,964 |   |   |   | 1,849 |   |
| Interest Expense                                                                                        |   |   | (39,013 | ) |   |   | (40,614 | ) |   |   | (118,065 | ) |   |   | (114,536 | ) |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME BEFORE INCOME TAX EXPENSE                                                                        |   |   | 158,904 |   |   |   | 149,973 |   |   |   | 364,129 |   |   |   | 360,504 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income Tax Expense                                                                                      |   |   | 58,039 |   |   |   | 53,398 |   |   |   | 133,813 |   |   |   | 127,408 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME                                                                                              |   |   | 100,865 |   |   |   | 96,575 |   |   |   | 230,316 |   |   |   | 233,096 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less: Net Income Attributable to Noncontrolling Interest                                                |   |   | - |   |   |   | 1,026 |   |   |   | - |   |   |   | 2,042 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME ATTRIBUTABLE TO OPCo                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SHAREHOLDERS                                                                                            |   |   | 100,865 |   |   |   | 95,549 |   |   |   | 230,316 |   |   |   | 231,054 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less: Preferred Stock Dividend Requirements                                                             |   |   | 183 |   |   |   | 183 |   |   |   | 549 |   |   |   | 549 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS ATTRIBUTABLE TO OPCo COMMON                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SHAREHOLDER                                                                                             |   | $ | 100,682 |   |   | $ | 95,366 |   |   | $ | 229,767 |   |   | $ | 230,505 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The common stock of OPCo is wholly-owned by AEP.                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

| OHIO POWER COMPANY CONSOLIDATED                                                                         |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN                                                         |
| EQUITY AND COMPREHENSIVE INCOME (LOSS)                                                                  |
| For the Nine Months Ended September 30, 2010 and 2009                                                   |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | OPCo Common Shareholder |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   | Other |   |   |   |   |   |
|                                                                                                    |   | Common |   | Paid-in |   | Retained |   | Comprehensive |   | Noncontrolling |   |   |
|                                                                                                    |   | Stock |   | Capital |   | Earnings |   | Income (Loss) |   | Interest |   | Total |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – DECEMBER 31, 2008                                                                  |   | $ |  321,201  |   | $ |  536,640  |   | $ |  1,697,962  |   | $ |  (133,858) |   | $ |  16,799  |   | $ |  2,438,744  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital Contribution from Parent                                                                        |   |   |   |   |   |  550,000  |   |   |   |   |   |   |   |   |   |   |   |  550,000  |
| Common Stock Dividends - Affiliated                                                                     |   |   |   |   |   |   |   |   |  (50,000) |   |   |   |   |   |   |   |   |  (50,000) |
| Common Stock Dividends - Nonaffiliated                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  (2,042) |   |   |  (2,042) |
| Preferred Stock Dividends                                                                               |   |   |   |   |   |   |   |   |  (549) |   |   |   |   |   |   |   |   |  (549) |
| Purchase of JMG                                                                                         |   |   |   |   |   |  54,431  |   |   |   |   |   |   |   |   |  (17,910) |   |   |  36,521  |
| Other Changes in Equity                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  1,111  |   |   |  1,111  |
| SUBTOTAL – EQUITY                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  2,973,785  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income, Net of Taxes:                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | Cash Flow Hedges, Net of Tax of $4,946 |   |   |   |   |   |   |   |   |   |   |   |  9,185  |   |   |   |   |   |  9,185  |
|                                                                                                    |   | Amortization of Pension and OPEB Deferred |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   | Costs, Net of Tax of $2,566 |   |   |   |   |   |   |   |   |   |   |   |  4,765  |   |   |   |   |   |  4,765  |
| NET INCOME                                                                                              |   |   |   |   |   |   |   |   |  231,054  |   |   |   |   |   |  2,042  |   |   |  233,096  |
| TOTAL COMPREHENSIVE INCOME                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  247,046  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – SEPTEMBER 30, 2009                                                                 |   | $ |  321,201  |   | $ |  1,141,071  |   | $ |  1,878,467  |   | $ |  (119,908) |   | $ |  -  |   | $ |  3,220,831  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | EQUITY – DECEMBER 31, 2009 |   | $ |  321,201  |   | $ |  1,123,149  |   | $ |  1,908,803  |   | $ |  (118,458) |   | $ |  -  |   | $ |  3,234,695  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock Dividends                                                                                  |   |   |   |   |   |   |   |   |  (246,575) |   |   |   |   |   |   |   |   |  (246,575) |
| Preferred Stock Dividends                                                                               |   |   |   |   |   |   |   |   |  (549) |   |   |   |   |   |   |   |   |  (549) |
| SUBTOTAL – COMMON SHAREHOLDER'S                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | EQUITY |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  2,987,571  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income (Loss), Net of                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    | Taxes: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | Cash Flow Hedges, Net of Tax of $1,158 |   |   |   |   |   |   |   |   |   |   |   |  (2,150) |   |   |   |   |   |  (2,150) |
|                                                                                                    |   | Amortization of Pension and OPEB Deferred |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   | Costs, Net of Tax of $2,846 |   |   |   |   |   |   |   |   |   |   |   |  5,285  |   |   |   |   |   |  5,285  |
| NET INCOME                                                                                              |   |   |   |   |   |   |   |   |  230,316  |   |   |   |   |   |   |   |   |  230,316  |
| TOTAL COMPREHENSIVE INCOME                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  233,451  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | EQUITY –  SEPTEMBER 30, 2010 |   | $ |  321,201  |   | $ |  1,123,149  |   | $ |  1,891,995  |   | $ |  (115,323) |   | $ |  -  |   | $ |  3,221,022  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |

----

| OHIO POWER COMPANY CONSOLIDATED                                                                         |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                   |   |
| ASSETS                                                                                                  |   |
| September 30, 2010 and December 31, 2009                                                                |   |
| (in thousands)                                                                                          |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   | 2010 |   |   | 2009 |   |
| CURRENT ASSETS                                                                                          |   |   |   |   |   |   |
| Cash and Cash Equivalents                                                                               |   | $ | 1,354 |   |   | $ | 1,984 |   |
| Advances to Affiliates                                                                                  |   |   | 290,714 |   |   |   | 438,352 |   |
| Accounts Receivable:                                                                                    |   |   |   |   |   |   |   |   |
| Customers                                                                                               |   |   | 57,695 |   |   |   | 60,711 |   |
| Affiliated Companies                                                                                    |   |   | 144,481 |   |   |   | 200,579 |   |
| Accrued Unbilled Revenues                                                                               |   |   | 18,116 |   |   |   | 15,021 |   |
| Miscellaneous                                                                                           |   |   | 2,006 |   |   |   | 2,701 |   |
| Allowance for Uncollectible Accounts                                                                    |   |   | (2,703 | ) |   |   | (2,665 | ) |
| Total Accounts Receivable                                                                               |   |   | 219,595 |   |   |   | 276,347 |   |
| Fuel                                                                                                    |   |   | 256,594 |   |   |   | 336,866 |   |
| Materials and Supplies                                                                                  |   |   | 121,154 |   |   |   | 115,486 |   |
| Risk Management Assets                                                                                  |   |   | 44,849 |   |   |   | 50,048 |   |
| Accrued Tax Benefits                                                                                    |   |   | 33,414 |   |   |   | 143,473 |   |
| Prepayments and Other Current Assets                                                                    |   |   | 31,545 |   |   |   | 26,301 |   |
| TOTAL CURRENT ASSETS                                                                                    |   |   | 999,219 |   |   |   | 1,388,857 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT                                                                           |   |   |   |   |   |   |   |   |
| Electric:                                                                                               |   |   |   |   |   |   |   |   |
| Production                                                                                              |   |   | 6,837,111 |   |   |   | 6,731,469 |   |
| Transmission                                                                                            |   |   | 1,219,276 |   |   |   | 1,166,557 |   |
| Distribution                                                                                            |   |   | 1,610,866 |   |   |   | 1,567,871 |   |
| Other Property, Plant and Equipment                                                                     |   |   | 379,362 |   |   |   | 348,718 |   |
| Construction Work in Progress                                                                           |   |   | 149,300 |   |   |   | 198,843 |   |
| Total Property, Plant and Equipment                                                                     |   |   | 10,195,915 |   |   |   | 10,013,458 |   |
| Accumulated Depreciation and Amortization                                                               |   |   | 3,548,026 |   |   |   | 3,318,896 |   |
| TOTAL PROPERTY, PLANT AND EQUIPMENT – NET                                                         |   |   | 6,647,889 |   |   |   | 6,694,562 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| OTHER NONCURRENT ASSETS                                                                                 |   |   |   |   |   |   |   |   |
| Regulatory Assets                                                                                       |   |   | 886,214 |   |   |   | 742,905 |   |
| Long-term Risk Management Assets                                                                        |   |   | 36,823 |   |   |   | 28,003 |   |
| Deferred Charges and Other Noncurrent Assets                                                            |   |   | 114,312 |   |   |   | 184,812 |   |
| TOTAL OTHER NONCURRENT ASSETS                                                                           |   |   | 1,037,349 |   |   |   | 955,720 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| TOTAL ASSETS                                                                                            |   | $ | 8,684,457 |   |   | $ | 9,039,139 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |

----

|                                                                                                    |   |           |      |   |   |   |
|---------------------------------------------------------------------------------------------------------|--------|----------------|-----------|--------|--------|--------|
| OHIO POWER COMPANY CONSOLIDATED                                                                         |   |
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                    |   |
| September 30, 2010 and December 31, 2009                                                                |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   | 2010           |      |   | 2009   |   |
|                                                                                                    |   | (in thousands) |      |
| CURRENT LIABILITIES                                                                                     |   |           |      |   |   |   |
| Accounts Payable:                                                                                       |   |           |      |   |   |   |
| General                                                                                                 |   | $              | 147,690   |   |   | $      | 182,848 |   |
| Affiliated Companies                                                                                    |   |           | 65,550    |   |   |   | 92,766 |   |
| Long-term Debt Due Within One Year – Nonaffiliated                                                |   |           | 200,000   |   |   |   | 679,450 |   |
| Risk Management Liabilities                                                                             |   |           | 22,293    |   |   |   | 24,391 |   |
| Customer Deposits                                                                                       |   |           | 28,110    |   |   |   | 22,409 |   |
| Accrued Taxes                                                                                           |   |           | 130,219   |   |   |   | 203,335 |   |
| Accrued Interest                                                                                        |   |           | 46,335    |   |   |   | 46,431 |   |
| Other Current Liabilities                                                                               |   |           | 106,736   |   |   |   | 104,889 |   |
| TOTAL CURRENT LIABILITIES                                                                               |   |           | 746,933   |   |   |   | 1,356,519 |   |
|                                                                                                    |   |           |      |   |   |   |   |   |
| NONCURRENT LIABILITIES                                                                                  |   |           |      |   |   |   |   |   |
| Long-term Debt – Nonaffiliated                                                                    |   |           | 2,529,386 |   |   |   | 2,363,055 |   |
| Long-term Debt – Affiliated                                                                       |   |           | 200,000   |   |   |   | 200,000 |   |
| Long-term Risk Management Liabilities                                                                   |   |           | 11,978    |   |   |   | 12,510 |   |
| Deferred Income Taxes                                                                                   |   |           | 1,437,077 |   |   |   | 1,302,939 |   |
| Regulatory Liabilities and Deferred Investment Tax Credits                                              |   |           | 128,278   |   |   |   | 128,187 |   |
| Employee Benefits and Pension Obligations                                                               |   |           | 212,393   |   |   |   | 269,485 |   |
| Deferred Credits and Other Noncurrent Liabilities                                                       |   |           | 180,763   |   |   |   | 155,122 |   |
| TOTAL NONCURRENT LIABILITIES                                                                            |   |           | 4,699,875 |   |   |   | 4,431,298 |   |
|                                                                                                    |   |           |      |   |   |   |   |   |
| TOTAL LIABILITIES                                                                                       |   |           | 5,446,808 |   |   |   | 5,787,817 |   |
|                                                                                                    |   |           |      |   |   |   |   |   |
| Cumulative Preferred Stock Not Subject to Mandatory Redemption                                          |   |           | 16,627    |   |   |   | 16,627 |   |
|                                                                                                    |   |           |      |   |   |   |   |   |
| Rate Matters (Note 3)                                                                                   |   |           |      |   |   |   |   |   |
| Commitments and Contingencies (Note 4)                                                                  |   |           |      |   |   |   |   |   |
|                                                                                                    |   |           |      |   |   |   |   |   |
| COMMON SHAREHOLDER’S EQUITY                                                                       |   |           |      |   |   |   |   |   |
| Common Stock – No Par Value:                                                                      |   |           |      |   |   |   |   |   |
| Authorized – 40,000,000 Shares                                                                    |   |           |      |   |   |   |   |   |
| Outstanding  – 27,952,473 Shares                                                        |   |           | 321,201   |   |   |   | 321,201 |   |
| Paid-in Capital                                                                                         |   |           | 1,123,149 |   |   |   | 1,123,149 |   |
| Retained Earnings                                                                                       |   |           | 1,891,995 |   |   |   | 1,908,803 |   |
| Accumulated Other Comprehensive Income (Loss)                                                           |   |           | (115,323  | )      |   |   | (118,458 | ) |
| TOTAL COMMON SHAREHOLDER’S EQUITY                                                                 |   |           | 3,221,022 |   |   |   | 3,234,695 |   |
|                                                                                                    |   |           |      |   |   |   |   |   |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                              |   | $              | 8,684,457 |   |   | $      | 9,039,139 |   |
|                                                                                                    |   |           |      |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

| OHIO POWER COMPANY CONSOLIDATED                                                                         |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                         |   |
| For the Nine Months Ended September 30, 2010 and 2009                                                   |   |
| (in thousands)                                                                                          |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   | 2010 |   |   | 2009 |   |
| OPERATING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Net Income                                                                                              |   | $ | 230,316 |   |   | $ | 233,096 |   |
| Adjustments to Reconcile Net Income to Net Cash Flows from                                              |   |   |   |   |   |   |   |   |
| Operating Activities:                                                                                   |   |   |   |   |   |   |   |   |
| Depreciation and Amortization                                                                           |   |   | 270,294 |   |   |   | 262,576 |   |
| Deferred Income Taxes                                                                                   |   |   | 126,128 |   |   |   | 213,458 |   |
| Carrying Costs Income                                                                                   |   |   | (16,879 | ) |   |   | (7,152 | ) |
| Allowance for Equity Funds Used During Construction                                                     |   |   | (2,964 | ) |   |   | (1,849 | ) |
| Mark-to-Market of Risk Management Contracts                                                             |   |   | (7,726 | ) |   |   | (15,226 | ) |
| Pension Contributions to Qualified Plan Trust                                                           |   |   | (47,174 | ) |   |   | - |   |
| Property Taxes                                                                                          |   |   | 72,392 |   |   |   | 66,976 |   |
| Fuel Over/Under-Recovery, Net                                                                           |   |   | (115,926 | ) |   |   | (242,392 | ) |
| Change in Other Noncurrent Assets                                                                       |   |   | (4,136 | ) |   |   | 12,690 |   |
| Change in Other Noncurrent Liabilities                                                                  |   |   | 1,009 |   |   |   | 40,709 |   |
| Changes in Certain Components of Working Capital:                                                       |   |   |   |   |   |   |   |   |
| Accounts Receivable, Net                                                                                |   |   | 56,752 |   |   |   | 15,155 |   |
| Fuel, Materials and Supplies                                                                            |   |   | 74,604 |   |   |   | (180,514 | ) |
| Accounts Payable                                                                                        |   |   | (45,601 | ) |   |   | (138,828 | ) |
| Accrued Taxes, Net                                                                                      |   |   | 36,534 |   |   |   | (103,965 | ) |
| Other Current Assets                                                                                    |   |   | (5,170 | ) |   |   | (4,164 | ) |
| Other Current Liabilities                                                                               |   |   | 5,019 |   |   |   | (13,768 | ) |
| Net Cash Flows from Operating Activities                                                                |   |   | 627,472 |   |   |   | 136,802 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| INVESTING ACTIVITIES                                                                                    |   |   |   |   |   |   |   |   |
| Construction Expenditures                                                                               |   |   | (207,663 | ) |   |   | (342,633 | ) |
| Change in Advances to Affiliates, Net                                                                   |   |   | 147,638 |   |   |   | (367,743 | ) |
| Acquisitions of Assets                                                                                  |   |   | (4,876 | ) |   |   | (1,053 | ) |
| Proceeds from Sales of Assets                                                                           |   |   | 10,406 |   |   |   | 31,253 |   |
| Other Investing Activities                                                                              |   |   | (156 | ) |   |   | 5,529 |   |
| Net Cash Flows Used for Investing Activities                                                            |   |   | (54,651 | ) |   |   | (674,647 | ) |
|                                                                                                    |   |   |   |   |   |   |   |   |
| FINANCING ACTIVITIES                                                                                    |   |   |   |   |   |   |   |   |
| Capital Contribution from Parent                                                                        |   |   | - |   |   |   | 550,000 |   |
| Issuance of Long-term Debt – Nonaffiliated                                                        |   |   | 202,382 |   |   |   | 494,078 |   |
| Change in Advances from Affiliates, Net                                                                 |   |   | - |   |   |   | (133,887 | ) |
| Retirement of Long-term Debt – Nonaffiliated                                                      |   |   | (518,580 | ) |   |   | (295,500 | ) |
| Retirement of Cumulative Preferred Stock                                                                |   |   | - |   |   |   | (1 | ) |
| Principal Payments for Capital Lease Obligations                                                        |   |   | (5,886 | ) |   |   | (3,435 | ) |
| Dividends Paid on Common Stock – Nonaffiliated                                                    |   |   | - |   |   |   | (2,042 | ) |
| Dividends Paid on Common Stock – Affiliated                                                       |   |   | (246,575 | ) |   |   | (50,000 | ) |
| Dividends Paid on Cumulative Preferred Stock                                                            |   |   | (549 | ) |   |   | (549 | ) |
| Acquisition of JMG Noncontrolling Interest                                                              |   |   | - |   |   |   | (28,221 | ) |
| Other Financing Activities                                                                              |   |   | (4,243 | ) |   |   | (2,327 | ) |
| Net Cash Flows from (Used for) Financing Activities                                                     |   |   | (573,451 | ) |   |   | 528,116 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| Net Decrease in Cash and Cash Equivalents                                                               |   |   | (630 | ) |   |   | (9,729 | ) |
| Cash and Cash Equivalents at Beginning of Period                                                        |   |   | 1,984 |   |   |   | 12,679 |   |
| Cash and Cash Equivalents at End of Period                                                              |   | $ | 1,354 |   |   | $ | 2,950 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| SUPPLEMENTARY INFORMATION                                                                               |   |   |   |   |   |   |   |   |
| Cash Paid for Interest, Net of Capitalized Amounts                                                      |   | $ | 116,140 |   |   | $ | 119,763 |   |
| Net Cash Paid (Received) for Income Taxes                                                               |   |   | (110,627 | ) |   |   | (23,241 | ) |
| Noncash Acquisitions Under Capital Leases                                                               |   |   | 23,645 |   |   |   | 2,022 |   |
| Construction Expenditures Included in Accounts Payable at September 30,                                 |   |   | 13,156 |   |   |   | 15,527 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

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

----

----

| PUBLIC SERVICE COMPANY OF OKLAHOMA                               |   |
|------------------------------------------------------------------|--------|
| MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS             |   |
|                                                             |   |   |   |
| RESULTS OF OPERATIONS                                            |   |   |   |
|                                                             |   |   |   |
| Third Quarter of 2010 Compared to Third Quarter of 2009          |   |
|                                                             |   |   |   |
| Reconciliation of Third Quarter of 2009 to Third Quarter of 2010 |   |
| Net Income                                                       |   |
| (in millions)                                                    |   |
|                                                             |   |   |   |
| Third Quarter of 2009                                            |   | $ | 44 |   |
|                                                             |   |   |   |   |
| Changes in Gross Margin:                                         |   |   |   |   |
| Retail Margins (a)                                               |   |   | 29 |   |
| Transmission Revenues                                            |   |   | (2 | ) |
| Total Change in Gross Margin                                     |   |   | 27 |   |
|                                                             |   |   |   |   |
| Total Expenses and Other:                                        |   |   |   |   |
| Other Operation and Maintenance                                  |   |   | (4 | ) |
| Depreciation and Amortization                                    |   |   | 1 |   |
| Taxes Other Than Income Taxes                                    |   |   | (1 | ) |
| Other Income                                                     |   |   | (1 | ) |
| Interest Expense                                                 |   |   | (2 | ) |
| Total Expenses and Other                                         |   |   | (7 | ) |
|                                                             |   |   |   |   |
| Income Tax Expense                                               |   |   | (9 | ) |
|                                                             |   |   | . |   |
| Third Quarter of 2010                                            |   | $ | 55 |   |
|                                                             |   |   |   |   |
| (a)Includes firm wholesale sales to municipals and cooperatives. |   |

|   | · | Retail Margins increased $29 million primarily due to the following: |
|--------|--------|----------------------------------------------------------------------|
|   |   | ·                                                               | A $19 million increase in weather-related usage primarily due to a 34% increase in cooling degree days. |
|   |   | ·                                                               | A $15 million increase primarily resulting from rate increases, including revenue increases from rate riders.  This increase in retail margins had corresponding increases of $4 million related to riders/trackers recognized in other expense items. |

|   | · | Other Operation and Maintenance expenses increased $4 million primarily due to planned generation plant maintenance. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|
|   | · | Income Tax Expense increased $9 million primarily due to an increase in pretax book income.                          |

----

| Nine Months Ended September 30, 2010 Compared to Nine Months Ended September 30, 2009          |
|------------------------------------------------------------------------------------------------|
|                                                                                           |   |   |   |   |
| Reconciliation of Nine Months Ended September 30, 2009 to Nine Months Ended September 30, 2010 |
| Net Income                                                                                     |
| (in millions)                                                                                  |
|                                                                                           |   |   |   |   |
| Nine Months Ended September 30, 2009                                                           |   | $ |  74  |   |
|                                                                                           |   |   |   |   |
| Changes in Gross Margin:                                                                       |   |   |   |   |
| Retail Margins (a)                                                                             |   |   |  52  |   |
| Transmission Revenues                                                                          |   |   |  1  |   |
| Other Revenues                                                                                 |   |   |  (1) |   |
| Total Change in Gross Margin                                                                   |   |   |  52  |   |
|                                                                                           |   |   |   |   |
| Total Expenses and Other:                                                                      |   |   |   |   |
| Other Operation and Maintenance                                                                |   |   |  (43) |   |
| Depreciation and Amortization                                                                  |   |   |  3  |   |
| Other Income                                                                                   |   |   |  (3) |   |
| Interest Expense                                                                               |   |   |  (5) |   |
| Total Expenses and Other                                                                       |   |   |  (48) |   |
|                                                                                           |   |   |   |   |
| Income Tax Expense                                                                             |   |   |  (3) |   |
|                                                                                           |   |   |   |   |
| Nine Months Ended September 30, 2010                                                           |   | $ |  75  |   |
|                                                                                           |   |   |   |   |
| (a)Includes firm wholesale sales to municipals and cooperatives.                               |

|   | · | Retail Margins increased $52 million primarily due to the following: |
|--------|--------|----------------------------------------------------------------------|
|   |   | ·                                                               | A $34 million increase primarily resulting from rate increases, including revenue increases from rate riders.  This increase in retail margins had corresponding increases of $10 million related to riders/trackers recognized in other expense items. |
|   |   | ·                                                               | A $28 million increase in weather-related usage primarily due to a 27% increase in heating degree days and a 26% increase in cooling degree days. |

|   | · | Other Operation and Maintenance expenses increased $43 million primarily due to the following:                       |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|
|   |   | ·                                                                                                               | A $23 million increase primarily due to expenses related to the cost reduction initiatives. |
|   |   | ·                                                                                                               | An $8 million increase in plant maintenance expense resulting primarily from the 2009 deferral of generation maintenance expenses as a result of PSO’s base rate case. |
|   |   | ·                                                                                                               | A $7 million increase in employee-related expenses. |
|   | · | Interest Expense increased $5 million primarily due to an increase in long-term borrowings in the last half of 2009. |

----

|                                                 |   | 2010           |    |   | 2009   |   |
|------------------------------------------------------|--------|----------------|---------|--------|--------|--------|
|                                                 |   | (in thousands) |    |
| Cash and Cash Equivalents at Beginning of Period     |   | $              | 796     |   |   | $      | 1,345 |   |
| Net Cash Flows from Operating Activities             |   |           | 107,685 |   |   |   | 232,759 |   |
| Net Cash Flows Used for Investing Activities         |   |           | (90,344 | )      |   |   | (142,945 | ) |
| Net Cash Flows Used For Financing Activities         |   |           | (16,550 | )      |   |   | (89,852 | ) |
| Net Increase (Decrease) in Cash and Cash Equivalents |   |           | 791     |   |   |   | (38 | ) |
| Cash and Cash Equivalents at End of Period           |   | $              | 1,587   |   |   | $      | 1,307 |   |

----

| Issuances |          |   |           |              |     |       |   |       |
|-----------|---------------|--------|----------------|-------------------|----------|------------|--------|------------|
|      |          |   | Principal      |              | Interest |       | Due    |
|      | Type of Debt  |   | Amount         |              | Rate     |       | Date   |
|      |          |   | (in thousands) |              | (%)      |       |   |
|      | Notes Payable |   | $              |  1,750  |     | 3.00  |   | 2025  |

| Retirements |   |   |   |   |   |   |   |   |
|-------------|--------|--------|--------|--------|--------|--------|--------|--------|
|        |   |   |   |   |   |   |   |   |
| None        |   |   |   |   |   |   |   |   |

----

----

| PUBLIC SERVICE COMPANY OF OKLAHOMA                                                                      |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED STATEMENTS OF INCOME                                                                          |   |
| For the Three and Nine Months Ended September 30, 2010 and 2009                                         |   |
| (in thousands)                                                                                          |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | Three Months Ended |   |   | Nine Months Ended |   |
|                                                                                                    |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| REVENUES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Electric Generation, Transmission and Distribution                                                      |   | $ | 420,877 |   |   | $ | 311,274 |   |   | $ | 971,822 |   |   | $ | 853,808 |   |
| Sales to AEP Affiliates                                                                                 |   |   | 4,665 |   |   |   | 6,668 |   |   |   | 17,816 |   |   |   | 34,181 |   |
| Other Revenues                                                                                          |   |   | 1,027 |   |   |   | 613 |   |   |   | 2,372 |   |   |   | 2,994 |   |
| TOTAL REVENUES                                                                                          |   |   | 426,569 |   |   |   | 318,555 |   |   |   | 992,010 |   |   |   | 890,983 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel and Other Consumables Used for Electric Generation                                                 |   |   | 140,367 |   |   |   | 79,610 |   |   |   | 269,954 |   |   |   | 261,762 |   |
| Purchased Electricity for Resale                                                                        |   |   | 50,691 |   |   |   | 42,090 |   |   |   | 149,226 |   |   |   | 132,623 |   |
| Purchased Electricity from AEP Affiliates                                                               |   |   | 17,458 |   |   |   | 5,424 |   |   |   | 38,921 |   |   |   | 14,755 |   |
| Other Operation                                                                                         |   |   | 50,575 |   |   |   | 48,145 |   |   |   | 171,074 |   |   |   | 134,211 |   |
| Maintenance                                                                                             |   |   | 25,867 |   |   |   | 24,601 |   |   |   | 83,844 |   |   |   | 77,996 |   |
| Depreciation and Amortization                                                                           |   |   | 26,703 |   |   |   | 27,799 |   |   |   | 80,911 |   |   |   | 84,278 |   |
| Taxes Other Than Income Taxes                                                                           |   |   | 10,254 |   |   |   | 9,534 |   |   |   | 31,539 |   |   |   | 31,243 |   |
| TOTAL EXPENSES                                                                                          |   |   | 321,915 |   |   |   | 237,203 |   |   |   | 825,469 |   |   |   | 736,868 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING INCOME                                                                                        |   |   | 104,654 |   |   |   | 81,352 |   |   |   | 166,541 |   |   |   | 154,115 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income (Expense):                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Income                                                                                         |   |   | 27 |   |   |   | 342 |   |   |   | 302 |   |   |   | 1,570 |   |
| Carrying Costs Income                                                                                   |   |   | 763 |   |   |   | 986 |   |   |   | 2,449 |   |   |   | 3,716 |   |
| Allowance for Equity Funds Used During Construction                                                     |   |   | 21 |   |   |   | 483 |   |   |   | 387 |   |   |   | 1,224 |   |
| Interest Expense                                                                                        |   |   | (15,759 | ) |   |   | (13,884 | ) |   |   | (48,887 | ) |   |   | (43,852 | ) |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME BEFORE INCOME TAX EXPENSE                                                                        |   |   | 89,706 |   |   |   | 69,279 |   |   |   | 120,792 |   |   |   | 116,773 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income Tax Expense                                                                                      |   |   | 34,274 |   |   |   | 25,702 |   |   |   | 45,732 |   |   |   | 43,036 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME                                                                                              |   |   | 55,432 |   |   |   | 43,577 |   |   |   | 75,060 |   |   |   | 73,737 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred Stock Dividend Requirements                                                                   |   |   | 48 |   |   |   | 53 |   |   |   | 151 |   |   |   | 159 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS ATTRIBUTABLE TO COMMON STOCK                                                                   |   | $ | 55,384 |   |   | $ | 43,524 |   |   | $ | 74,909 |   |   | $ | 73,578 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The common stock of PSO is wholly-owned by AEP.                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

| PUBLIC SERVICE COMPANY OF OKLAHOMA                                                                     |   |
|--------------------------------------------------------------------------------------------------------|--------|
| CONDENSED STATEMENTS OF CHANGES IN COMMON SHAREHOLDER'S                                                |   |
| EQUITY AND COMPREHENSIVE INCOME (LOSS)                                                                 |   |
| For the Nine Months Ended September 30, 2010 and 2009                                                  |   |
| (in thousands)                                                                                         |   |
| (Unaudited)                                                                                            |   |
|                                                                                                   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   | Other |   |   |   |   |
|                                                                                                   |   | Common |   |   | Paid-in |   |   | Retained |   |   | Comprehensive |   |   |   |   |
|                                                                                                   |   | Stock |   |   | Capital |   |   | Earnings |   |   | Income (Loss) |   |   | Total |   |
| TOTAL COMMON SHAREHOLDER'S                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EQUITY – DECEMBER 31, 2008                                                                       |   | $ | 157,230 |   |   | $ | 340,016 |   |   | $ | 251,704 |   |   | $ | (704 | ) |   | $ | 748,246 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital Contribution from Parent                                                                       |   |   |   |   |   |   | 20,000 |   |   |   |   |   |   |   |   |   |   |   | 20,000 |   |
| Common Stock Dividends                                                                                 |   |   |   |   |   |   |   |   |   |   | (21,750 | ) |   |   |   |   |   |   | (21,750 | ) |
| Preferred Stock Dividends                                                                              |   |   |   |   |   |   |   |   |   |   | (159 | ) |   |   |   |   |   |   | (159 | ) |
| Gain on Reacquired Preferred Stock                                                                     |   |   |   |   |   |   | 1 |   |   |   |   |   |   |   |   |   |   |   | 1 |   |
| Other Changes in Common Shareholder's                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity                                                                                                 |   |   |   |   |   |   | 4,214 |   |   |   | (4,214 | ) |   |   |   |   |   |   | - |   |
| SUBTOTAL – COMMON                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SHAREHOLDER'S EQUITY                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 746,338 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Loss, Net of Taxes:                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash Flow Hedges, Net of Tax of $78                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (145 | ) |   |   | (145 | ) |
| NET INCOME                                                                                             |   |   |   |   |   |   |   |   |   |   | 73,737 |   |   |   |   |   |   |   | 73,737 |   |
| TOTAL COMPREHENSIVE INCOME                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 73,592 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EQUITY – SEPTEMBER 30, 2009                                                                      |   | $ | 157,230 |   |   | $ | 364,231 |   |   | $ | 299,318 |   |   | $ | (849 | ) |   | $ | 819,930 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EQUITY – DECEMBER 31, 2009                                                                       |   | $ | 157,230 |   |   | $ | 364,231 |   |   | $ | 290,880 |   |   | $ | (599 | ) |   | $ | 811,742 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock Dividends                                                                                 |   |   |   |   |   |   |   |   |   |   | (38,026 | ) |   |   |   |   |   |   | (38,026 | ) |
| Preferred Stock Dividends                                                                              |   |   |   |   |   |   |   |   |   |   | (151 | ) |   |   |   |   |   |   | (151 | ) |
| Gain on Reacquired Preferred Stock                                                                     |   |   |   |   |   |   | 76 |   |   |   |   |   |   |   |   |   |   |   | 76 |   |
| SUBTOTAL – COMMON                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SHAREHOLDER'S EQUITY                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 773,641 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income, Net of Taxes:                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash Flow Hedges, Net of Tax of $97                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 181 |   |   |   | 181 |   |
| NET INCOME                                                                                             |   |   |   |   |   |   |   |   |   |   | 75,060 |   |   |   |   |   |   |   | 75,060 |   |
| TOTAL COMPREHENSIVE INCOME                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 75,241 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER'S                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EQUITY – SEPTEMBER 30, 2010                                                                      |   | $ | 157,230 |   |   | $ | 364,307 |   |   | $ | 327,763 |   |   | $ | (418 | ) |   | $ | 848,882 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page161. |   |

----

| PUBLIC SERVICE COMPANY OF OKLAHOMA                                                                      |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED BALANCE SHEETS                                                                                |
| ASSETS                                                                                                  |
| September 30, 2010 and December 31, 2009                                                                |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | 2010  |   | 2009  |
| CURRENT ASSETS                                                                                          |   |   |   |   |   |   |
| Cash and Cash Equivalents                                                                               |   | $ |  1,587  |   | $ |  796  |
| Advances to Affiliates                                                                                  |   |   |  -  |   |   |  62,695  |
| Accounts Receivable:                                                                                    |   |   |   |   |   |   |
|                                                                                                    | Customers |   |   |  31,750  |   |   |  38,239  |
|                                                                                                    | Affiliated Companies |   |   |  66,928  |   |   |  59,096  |
|                                                                                                    | Miscellaneous |   |   |  5,900  |   |   |  7,242  |
|                                                                                                    | Allowance for Uncollectible Accounts |   |   |  (143) |   |   |  (304) |
|                                                                                                    |   | Total Accounts Receivable |   |   |  104,435  |   |   |  104,273  |
| Fuel                                                                                                    |   |   |  16,646  |   |   |  20,892  |
| Materials and Supplies                                                                                  |   |   |  46,970  |   |   |  44,914  |
| Risk Management Assets                                                                                  |   |   |  3,000  |   |   |  2,376  |
| Deferred Income Tax Benefits                                                                            |   |   |  5,658  |   |   |  26,335  |
| Accrued Tax Benefits                                                                                    |   |   |  7,059  |   |   |  15,291  |
| Regulatory Asset for Under-Recovered Fuel Costs                                                         |   |   |  56,570  |   |   |  -  |
| Prepayments and Other Current Assets                                                                    |   |   |  9,560  |   |   |  9,139  |
| TOTAL CURRENT ASSETS                                                                                    |   |   |  251,485  |   |   |  286,711  |
|                                                                                                    |   |   |   |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT                                                                           |   |   |   |   |   |   |
| Electric:                                                                                               |   |   |   |   |   |   |
|                                                                                                    | Production |   |   |  1,321,952  |   |   |  1,300,069  |
|                                                                                                    | Transmission |   |   |  658,623  |   |   |  617,291  |
|                                                                                                    | Distribution |   |   |  1,670,406  |   |   |  1,596,355  |
| Other Property, Plant and Equipment                                                                     |   |   |  247,581  |   |   |  228,705  |
| Construction Work in Progress                                                                           |   |   |  43,893  |   |   |  67,138  |
| Total Property, Plant and Equipment                                                                     |   |   |  3,942,455  |   |   |  3,809,558  |
| Accumulated Depreciation and Amortization                                                               |   |   |  1,253,107  |   |   |  1,220,177  |
| TOTAL PROPERTY, PLANT AND EQUIPMENT – NET                                                         |   |   |  2,689,348  |   |   |  2,589,381  |
|                                                                                                    |   |   |   |   |   |   |
| OTHER NONCURRENT ASSETS                                                                                 |   |   |   |   |   |   |
| Regulatory Assets                                                                                       |   |   |  263,269  |   |   |  279,185  |
| Long-term Risk Management Assets                                                                        |   |   |  501  |   |   |  50  |
| Deferred Charges and Other Noncurrent Assets                                                            |   |   |  23,110  |   |   |  13,880  |
| TOTAL OTHER NONCURRENT ASSETS                                                                           |   |   |  286,880  |   |   |  293,115  |
|                                                                                                    |   |   |   |   |   |   |
| TOTAL ASSETS                                                                                            |   | $ |  3,227,713  |   | $ |  3,169,207  |
|                                                                                                    |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |

----

| PUBLIC SERVICE COMPANY OF OKLAHOMA                                                                      |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED BALANCE SHEETS                                                                                |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                    |   |
| September 30, 2010 and December 31, 2009                                                                |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |   |   |   |   |   |
|                                                                                                    |   | 2010 |   |   | 2009 |   |
|                                                                                                    |   | (in thousands) |   |
| CURRENT LIABILITIES                                                                                     |   |   |   |   |   |   |
| Advances from Affiliates                                                                                |   | $ | 23,024 |   |   | $ | - |   |
| Accounts Payable:                                                                                       |   |   |   |   |   |   |   |   |
| General                                                                                                 |   |   | 68,411 |   |   |   | 76,895 |   |
| Affiliated Companies                                                                                    |   |   | 79,357 |   |   |   | 71,099 |   |
| Long-term Debt Due Within One Year – Nonaffiliated                                                |   |   | 75,350 |   |   |   | - |   |
| Risk Management Liabilities                                                                             |   |   | 308 |   |   |   | 2,579 |   |
| Customer Deposits                                                                                       |   |   | 40,740 |   |   |   | 42,002 |   |
| Accrued Taxes                                                                                           |   |   | 49,468 |   |   |   | 19,471 |   |
| Regulatory Liability for Over-Recovered Fuel Costs                                                      |   |   | - |   |   |   | 51,087 |   |
| Other Current Liabilities                                                                               |   |   | 54,587 |   |   |   | 60,905 |   |
| TOTAL CURRENT LIABILITIES                                                                               |   |   | 391,245 |   |   |   | 324,038 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| NONCURRENT LIABILITIES                                                                                  |   |   |   |   |   |   |   |   |
| Long-term Debt – Nonaffiliated                                                                    |   |   | 895,293 |   |   |   | 968,121 |   |
| Long-term Risk Management Liabilities                                                                   |   |   | 119 |   |   |   | 144 |   |
| Deferred Income Taxes                                                                                   |   |   | 618,378 |   |   |   | 588,768 |   |
| Regulatory Liabilities and Deferred Investment Tax Credits                                              |   |   | 327,234 |   |   |   | 326,931 |   |
| Employee Benefits and Pension Obligations                                                               |   |   | 97,893 |   |   |   | 107,748 |   |
| Deferred Credits and Other Noncurrent Liabilities                                                       |   |   | 43,787 |   |   |   | 36,457 |   |
| TOTAL NONCURRENT LIABILITIES                                                                            |   |   | 1,982,704 |   |   |   | 2,028,169 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES                                                                                       |   |   | 2,373,949 |   |   |   | 2,352,207 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| Cumulative Preferred Stock Not Subject to Mandatory Redemption                                          |   |   | 4,882 |   |   |   | 5,258 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| Rate Matters (Note 3)                                                                                   |   |   |   |   |   |   |   |   |
| Commitments and Contingencies (Note 4)                                                                  |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| COMMON SHAREHOLDER’S EQUITY                                                                       |   |   |   |   |   |   |   |   |
| Common Stock – Par Value – $15 Per Share:                                                   |   |   |   |   |   |   |   |   |
| Authorized – 11,000,000 Shares                                                                    |   |   |   |   |   |   |   |   |
| Issued – 10,482,000 Shares                                                                        |   |   |   |   |   |   |   |   |
| Outstanding – 9,013,000 Shares                                                                    |   |   | 157,230 |   |   |   | 157,230 |   |
| Paid-in Capital                                                                                         |   |   | 364,307 |   |   |   | 364,231 |   |
| Retained Earnings                                                                                       |   |   | 327,763 |   |   |   | 290,880 |   |
| Accumulated Other Comprehensive Income (Loss)                                                           |   |   | (418 | ) |   |   | (599 | ) |
| TOTAL COMMON SHAREHOLDER’S EQUITY                                                                 |   |   | 848,882 |   |   |   | 811,742 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY                                                        |   | $ | 3,227,713 |   |   | $ | 3,169,207 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

| PUBLIC SERVICE COMPANY OF OKLAHOMA                                                                      |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED STATEMENTS OF CASH FLOWS                                                                      |
| For the Nine Months Ended September 30, 2010 and 2009                                                   |
| (in thousands)                                                                                          |
| (Unaudited)                                                                                             |
|                                                                                                    |
|                                                                                                    |   | 2010  |   | 2009  |
| OPERATING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Net Income                                                                                              |   | $ |  75,060  |   | $ |  73,737  |
| Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:                        |   |   |   |   |   |   |
|                                                                                                    |   | Depreciation and Amortization |   |   |  80,911  |   |   |  84,278  |
|                                                                                                    |   | Deferred Income Taxes |   |   |  43,631  |   |   |  13,103  |
|                                                                                                    |   | Carrying Costs Income |   |   |  (2,449) |   |   |  (3,716) |
|                                                                                                    |   | Allowance for Equity Funds Used During Construction |   |   |  (387) |   |   |  (1,224) |
|                                                                                                    |   | Mark-to-Market of Risk Management Contracts |   |   |  (3,248) |   |   |  2,185  |
|                                                                                                    |   | Property Taxes |   |   |  (9,198) |   |   |  (8,993) |
|                                                                                                    |   | Fuel Over/Under-Recovery, Net |   |   |  (107,657) |   |   |  (14,566) |
|                                                                                                    |   | Change in Other Noncurrent Assets |   |   |  (11,319) |   |   |  8,040  |
|                                                                                                    |   | Change in Other Noncurrent Liabilities |   |   |  6,110  |   |   |  (2,768) |
|                                                                                                    |   | Changes in Certain Components of Working Capital: |   |   |   |   |   |   |
|                                                                                                    |   |   | Accounts Receivable, Net |   |   |  (162) |   |   |  86,010  |
|                                                                                                    |   |   | Fuel, Materials and Supplies |   |   |  2,190  |   |   |  4,199  |
|                                                                                                    |   |   | Accounts Payable |   |   |  6,421  |   |   |  (38,023) |
|                                                                                                    |   |   | Accrued Taxes, Net |   |   |  38,830  |   |   |  46,119  |
|                                                                                                    |   |   | Other Current Assets |   |   |  (494) |   |   |  (3,822) |
|                                                                                                    |   |   | Other Current Liabilities |   |   |  (10,554) |   |   |  (11,800) |
| Net Cash Flows from Operating Activities                                                                |   |   |  107,685  |   |   |  232,759  |
|                                                                                                    |   |   |   |   |   |   |
| INVESTING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Construction Expenditures                                                                               |   |   |  (152,589) |   |   |  (134,756) |
| Change in Advances to Affiliates, Net                                                                   |   |   |  62,695  |   |   |  (8,450) |
| Other Investing Activities                                                                              |   |   |  (450) |   |   |  261  |
| Net Cash Flows Used for Investing Activities                                                            |   |   |  (90,344) |   |   |  (142,945) |
|                                                                                                    |   |   |   |   |   |   |
| FINANCING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Capital Contribution from Parent                                                                        |   |   |  -  |   |   |  20,000  |
| Issuance of Long-term Debt – Nonaffiliated                                                        |   |   |  1,740  |   |   |  33,248  |
| Change in Advances from Affiliates, Net                                                                 |   |   |  23,024  |   |   |  (70,308) |
| Retirement of Long-term Debt – Nonaffiliated                                                      |   |   |  -  |   |   |  (50,000) |
| Retirement of Cumulative Preferred Stock                                                                |   |   |  (300) |   |   |  (2) |
| Principal Payments for Capital Lease Obligations                                                        |   |   |  (3,025) |   |   |  (1,128) |
| Dividends Paid on Common Stock                                                                          |   |   |  (38,026) |   |   |  (21,750) |
| Dividends Paid on Cumulative Preferred Stock                                                            |   |   |  (151) |   |   |  (159) |
| Other Financing Activities                                                                              |   |   |  188  |   |   |  247  |
| Net Cash Flows Used For Financing Activities                                                            |   |   |  (16,550) |   |   |  (89,852) |
|                                                                                                    |   |   |   |   |   |   |
| Net Increase (Decrease) in Cash and Cash Equivalents                                                    |   |   |  791  |   |   |  (38) |
| Cash and Cash Equivalents at Beginning of Period                                                        |   |   |  796  |   |   |  1,345  |
| Cash and Cash Equivalents at End of Period                                                              |   | $ |  1,587  |   | $ |  1,307  |
|                                                                                                    |   |   |   |   |   |   |
| SUPPLEMENTARY INFORMATION                                                                               |   |   |   |   |   |   |
| Cash Paid for Interest, Net of Capitalized Amounts                                                      |   | $ |  37,915  |   | $ |  55,152  |
| Net Cash Paid (Received) for Income Taxes                                                               |   |   |  (18,520) |   |   |  4,423  |
| Noncash Acquisitions Under Capital Leases                                                               |   |   |  13,572  |   |   |  2,802  |
| Construction Expenditures Included in Accounts Payable at September 30,                                 |   |   |  5,254  |   |   |  7,315  |
|                                                                                                    |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |

----

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

----

----

| SOUTHWESTERN ELECTRIC POWER COMPANY CONSOLIDATED                 |   |
|------------------------------------------------------------------|--------|
| MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS             |   |
|                                                             |   |   |   |
| RESULTS OF OPERATIONS                                            |   |   |   |
|                                                             |   |   |   |
| Third Quarter of 2010 Compared to Third Quarter of 2009          |   |
|                                                             |   |   |   |
| Reconciliation of Third Quarter of 2009 to Third Quarter of 2010 |   |
| Income Before Extraordinary Loss                                 |   |
| (in millions)                                                    |   |
|                                                             |   |   |   |
| Third Quarter of 2009                                            |   | $ | 65 |   |
|                                                             |   |   |   |   |
| Changes in Gross Margin:                                         |   |   |   |   |
| Retail Margins (a)                                               |   |   | 49 |   |
| Transmission Revenues                                            |   |   | (1 | ) |
| Other Revenues                                                   |   |   | (11 | ) |
| Total Change in Gross Margin                                     |   |   | 37 |   |
|                                                             |   |   |   |   |
| Total Expenses and Other:                                        |   |   |   |   |
| Other Operation and Maintenance                                  |   |   | 5 |   |
| Depreciation and Amortization                                    |   |   | 5 |   |
| Taxes Other Than Income Taxes                                    |   |   | (1 | ) |
| Other Income                                                     |   |   | (5 | ) |
| Interest Expense                                                 |   |   | (7 | ) |
| Equity Earnings of Unconsolidated Subsidiaries                   |   |   | 1 |   |
| Total Expenses and Other                                         |   |   | (2 | ) |
|                                                             |   |   |   |   |
| Income Tax Expense                                               |   |   | (18 | ) |
|                                                             |   |   |   |   |
| Third Quarter of 2010                                            |   | $ | 82 |   |
|                                                             |   |   |   |   |
| (a)Includes firm wholesale sales to municipals and cooperatives. |   |

|   | · | Retail Margins increased $49 million primarily due to:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | An $18 million increase in base rates in Arkansas and Texas. |
|   |   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | A $16 million increase in weather-related usage primarily due to a 35% increase in cooling degree days. |
|   |   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | A $6 million increase in fuel recovery primarily due to lower capacity costs and increased wholesale fuel recovery. |
|   |   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | A $5 million increase in industrial sales due to higher demand. |
|   | · | Other Revenues decreased $11 million resulting from the deconsolidation of SWEPCo’s mining subsidiary, DHLC.  Prior to the deconsolidation, SWEPCo recorded revenues from coal deliveries from DHLC to CLECO.  SWEPCo prospectively adopted the “Consolidation” accounting guidance effective January 1, 2010 and began accounting for DHLC under the equity method of accounting.  The decreased revenue from coal deliveries was partially offset by a corresponding decrease in Other Operation and Maintenance expenses from mining operations as discussed below. |

----

|   | · | Other Operation and Maintenance expenses decreased $5 million primarily due to:                                                                                                                                                                                          |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | ·                                                                                                                                                                                                                                                                   | An $11 million decrease in expenses for coal deliveries from SWEPCo’s mining subsidiary, DHLC.  The decreased expenses for coal deliveries were offset by a corresponding decrease in revenues from mining operations as discussed above. |
|   |   | This decrease was partially offset by:                                                                                                                                                                                                                                   |
|   |   | ·                                                                                                                                                                                                                                                                   | A $7 million increase in distribution maintenance resulting primarily from storm-related amortization expense. |
|   | · | Depreciation and Amortization expenses decreased $5 million primarily due to lower Arkansas and Texas depreciation resulting from the Arkansas and Texas base rate orders and the deconsolidation of DHLC, partially offset by plant additions including the Stall Unit. |
|   | · | Other Income decreased $5 million primarily due to a decrease in the equity component of AFUDC as a result of the completion of the Stall Unit construction project in June 2010.                                                                                        |
|   | · | Interest Expense increased $7 million primarily due to increased long-term debt outstanding.                                                                                                                                                                             |
|   | · | Income Tax Expense increased $18 million primarily due to an increase in pretax book income and other book/tax differences accounted for on a flow-through basis.                                                                                                        |

----

| Nine Months Ended September 30, 2010 Compared to Nine Months Ended September 30, 2009          |
|------------------------------------------------------------------------------------------------|
|                                                                                           |   |   |   |   |
| Reconciliation of Nine Months Ended September 30, 2009 to Nine Months Ended September 30, 2010 |
| Income Before Extraordinary Loss                                                               |
| (in millions)                                                                                  |
|                                                                                           |   |   |   |   |
| Nine Months Ended September 30, 2009                                                           |   | $ |  113  |   |
|                                                                                           |   |   |   |   |
| Changes in Gross Margin:                                                                       |   |   |   |   |
| Retail Margins (a)                                                                             |   |   |  91  |   |
| Off-system Sales                                                                               |   |   |  1  |   |
| Transmission Revenues                                                                          |   |   |  1  |   |
| Other Revenues                                                                                 |   |   |  (29) |   |
| Total Change in Gross Margin                                                                   |   |   |  64  |   |
|                                                                                           |   |   |   |   |
| Total Expenses and Other:                                                                      |   |   |   |   |
| Other Operation and Maintenance                                                                |   |   |  (17) |   |
| Depreciation and Amortization                                                                  |   |   |  14  |   |
| Taxes Other Than Income Taxes                                                                  |   |   |  (2) |   |
| Other Income                                                                                   |   |   |  3  |   |
| Interest Expense                                                                               |   |   |  (12) |   |
| Equity Earnings of Unconsolidated Subsidiaries                                                 |   |   |  2  |   |
| Total Expenses and Other                                                                       |   |   |  (12) |   |
|                                                                                           |   |   |   |   |
| Income Tax Expense                                                                             |   |   |  (26) |   |
|                                                                                           |   |   |   |   |
| Nine Months Ended September 30, 2010                                                           |   | $ |  139  |   |
|                                                                                           |   |   |   |   |
| (a) Includes firm wholesale sales to municipals and cooperatives.                              |

|   | · | Retail Margins increased $91 million primarily due to:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | A $32 million increase in weather-related usage primarily due to a 42% increase in heating degree days and a 30% increase in cooling degree days. |
|   |   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | A $31 million increase in base rates in Arkansas and Texas. |
|   |   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | An $11 million increase in fuel recovery primarily due to lower capacity costs and increased wholesale fuel recovery. |
|   |   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | An $11 million increase in industrial sales due to higher demand. |
|   | · | Other Revenues decreased $29 million resulting from the deconsolidation of SWEPCo’s mining subsidiary, DHLC.  Prior to the deconsolidation, SWEPCo recorded revenues from coal deliveries from DHLC to CLECO.  SWEPCo prospectively adopted the “Consolidation” accounting guidance effective January 1, 2010 and began accounting for DHLC under the equity method of accounting.  The decreased revenue from coal deliveries was partially offset by a corresponding decrease in Other Operation and Maintenance expenses from mining operations as discussed below. |

----

|   | · | Other Operation and Maintenance expenses increased $17 million primarily due to:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | A $28 million increase due to expenses related to the cost reduction initiatives. |
|   |   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | A $5 million increase in other generation operation expenses primarily related to Stall Unit testing for commercial operation.  The Stall Unit was placed in service in June 2010. |
|   |   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | A $4 million increase in employee-related expenses. |
|   |   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | A $2 million gain on sale of property during the first quarter of 2009 related to the sale of percentage ownership of Turk Plant to nonaffiliated companies who exercised their participation options. |
|   |   | These increases were partially offset by:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | A $24 million decrease in expenses for coal deliveries from SWEPCo’s mining subsidiary, DHLC.  The decreased expenses for coal deliveries were partially offset by a corresponding decrease in revenues from mining operations as discussed above. |
|   | · | Depreciation and Amortization expenses decreased $14 million primarily due to lower Arkansas and Texas depreciation resulting from the Arkansas and Texas base rate orders and the deconsolidation of DHLC, partially offset by plant additions including the Stall Unit.                                                                                                                                                                                                                                                                                                                            |
|   | · | Other Income increased $3 million primarily due to an increase in the equity component of AFUDC as a result of construction at the Turk Plant and Stall Unit and the reapplication of “Regulated Operations” accounting guidance for the generation portion of Texas’ retail jurisdiction effective the second quarter of 2009.  This increase was partially offset by decreases in approved return on common equity, the completion of the Stall Unit construction project in June 2010 and the discontinuance of AFUDC in Arkansas related to Turk Plant construction. |
|   | · | Interest Expense increased $12 million primarily due to increased long-term debt outstanding.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | · | Income Tax Expense increased $26 million primarily due to an increase in pretax book income and other book/tax differences accounted for on a flow-through basis.                                                                                                                                                                                                                                                                                                                                                                                                                                    |

|                                             |   | 2010           |     |   | 2009   |   |
|--------------------------------------------------|--------|----------------|----------|--------|--------|--------|
|                                             |   | (in thousands) |     |
| Cash and Cash Equivalents at Beginning of Period |   | $              | 1,661    |   |   | $      | 1,910 |   |
| Net Cash Flows from Operating Activities         |   |           | 168,196  |   |   |   | 335,922 |   |
| Net Cash Flows Used for Investing Activities     |   |           | (449,053 | )      |   |   | (472,183 | ) |
| Net Cash Flows from Financing Activities         |   |           | 281,078  |   |   |   | 136,440 |   |
| Net Increase in Cash and Cash Equivalents        |   |           | 221      |   |   |   | 179 |   |
| Cash and Cash Equivalents at End of Period       |   | $              | 1,882    |   |   | $      | 2,089 |   |

----

----

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

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

----

----

| SOUTHWESTERN ELECTRIC POWER COMPANY CONSOLIDATED                                                        |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME                                                             |   |
| For the Three and Nine Months Ended September 30, 2010 and 2009                                         |   |
| (in thousands)                                                                                          |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   | Three Months Ended |   |   | Nine Months Ended |   |
|                                                                                                    |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| REVENUES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Electric Generation, Transmission and Distribution                                                      |   | $ | 459,013 |   |   | $ | 392,616 |   |   | $ | 1,139,748 |   |   | $ | 1,021,991 |   |
| Sales to AEP Affiliates                                                                                 |   |   | 21,356 |   |   |   | 9,420 |   |   |   | 43,920 |   |   |   | 23,470 |   |
| Lignite Revenues – Nonaffiliated                                                                  |   |   | - |   |   |   | 12,334 |   |   |   | - |   |   |   | 30,572 |   |
| Other Revenues                                                                                          |   |   | 613 |   |   |   | 604 |   |   |   | 1,585 |   |   |   | 1,525 |   |
| TOTAL REVENUES                                                                                          |   |   | 480,982 |   |   |   | 414,974 |   |   |   | 1,185,253 |   |   |   | 1,077,558 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel and Other Consumables Used for Electric Generation                                                 |   |   | 194,340 |   |   |   | 161,879 |   |   |   | 452,279 |   |   |   | 405,329 |   |
| Purchased Electricity for Resale                                                                        |   |   | 29,794 |   |   |   | 30,413 |   |   |   | 94,521 |   |   |   | 85,149 |   |
| Purchased Electricity from AEP Affiliates                                                               |   |   | 4,191 |   |   |   | 6,865 |   |   |   | 18,154 |   |   |   | 30,395 |   |
| Other Operation                                                                                         |   |   | 52,839 |   |   |   | 64,686 |   |   |   | 193,357 |   |   |   | 178,456 |   |
| Maintenance                                                                                             |   |   | 23,979 |   |   |   | 17,267 |   |   |   | 69,531 |   |   |   | 67,283 |   |
| Depreciation and Amortization                                                                           |   |   | 31,828 |   |   |   | 36,714 |   |   |   | 94,939 |   |   |   | 109,065 |   |
| Taxes Other Than Income Taxes                                                                           |   |   | 15,583 |   |   |   | 14,127 |   |   |   | 47,058 |   |   |   | 44,995 |   |
| TOTAL EXPENSES                                                                                          |   |   | 352,554 |   |   |   | 331,951 |   |   |   | 969,839 |   |   |   | 920,672 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING INCOME                                                                                        |   |   | 128,428 |   |   |   | 83,023 |   |   |   | 215,414 |   |   |   | 156,886 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income (Expense):                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Income                                                                                         |   |   | 186 |   |   |   | 388 |   |   |   | 434 |   |   |   | 1,205 |   |
| Allowance for Equity Funds Used During Construction                                                     |   |   | 8,651 |   |   |   | 12,932 |   |   |   | 36,630 |   |   |   | 31,706 |   |
| Interest Expense                                                                                        |   |   | (23,459 | ) |   |   | (16,605 | ) |   |   | (63,478 | ) |   |   | (51,894 | ) |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME BEFORE INCOME TAX EXPENSE AND                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EQUITY EARNINGS                                                                                         |   |   | 113,806 |   |   |   | 79,738 |   |   |   | 189,000 |   |   |   | 137,903 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income Tax Expense                                                                                      |   |   | 32,870 |   |   |   | 14,680 |   |   |   | 51,733 |   |   |   | 25,367 |   |
| Equity Earnings of Unconsolidated Subsidiaries                                                          |   |   | 749 |   |   |   | - |   |   |   | 2,206 |   |   |   | - |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME BEFORE EXTRAORDINARY LOSS                                                                        |   |   | 81,685 |   |   |   | 65,058 |   |   |   | 139,473 |   |   |   | 112,536 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EXTRAORDINARY LOSS, NET OF TAX                                                                          |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (5,325 | ) |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME                                                                                              |   |   | 81,685 |   |   |   | 65,058 |   |   |   | 139,473 |   |   |   | 107,211 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less: Net Income Attributable to Noncontrolling Interest                                                |   |   | 774 |   |   |   | 1,022 |   |   |   | 3,198 |   |   |   | 2,971 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME ATTRIBUTABLE TO SWEPCo                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SHAREHOLDERS                                                                                            |   |   | 80,911 |   |   |   | 64,036 |   |   |   | 136,275 |   |   |   | 104,240 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less: Preferred Stock Dividend Requirements                                                             |   |   | 58 |   |   |   | 58 |   |   |   | 172 |   |   |   | 172 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS ATTRIBUTABLE TO SWEPCo COMMON                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SHAREHOLDER                                                                                             |   | $ | 80,853 |   |   | $ | 63,978 |   |   | $ | 136,103 |   |   | $ | 104,068 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The common stock of SWEPCo is wholly-owned by AEP.                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

| SOUTHWESTERN ELECTRIC POWER COMPANY CONSOLIDATED                                                        |
|---------------------------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN                                                         |
| EQUITY AND COMPREHENSIVE INCOME (LOSS)                                                                  |
| For the Nine Months Ended September 30, 2010 and 2009                                                   |
| (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, 2008                                                                  |   | $ |  135,660  |   | $ |  530,003  |   | $ |  615,110  |   | $ |  (32,120) |   | $ |  276  |   | $ |  1,248,929  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital Contribution from Parent                                                                        |   |   |   |   |   |  142,500  |   |   |   |   |   |   |   |   |   |   |   |  142,500  |
| Common Stock Dividends – Nonaffiliated                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  (2,886) |   |   |  (2,886) |
| Preferred Stock Dividends                                                                               |   |   |   |   |   |   |   |   |  (172) |   |   |   |   |   |   |   |   |  (172) |
| Other Changes in Equity                                                                                 |   |   |   |   |   |  2,476  |   |   |  (2,476) |   |   |   |   |   |   |   |   |  -  |
| SUBTOTAL – EQUITY                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  1,388,371  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income, Net of Taxes:                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | Cash Flow Hedges, Net of Tax of $421 |   |   |   |   |   |   |   |   |   |   |   |  782  |   |   |   |   |   |  782  |
|                                                                                                    |   | Amortization of Pension and OPEB Deferred |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   | Costs, Net of Tax of $8,919 |   |   |   |   |   |   |   |   |   |   |   |  16,563  |   |   |   |   |   |  16,563  |
| NET INCOME                                                                                              |   |   |   |   |   |   |   |   |  104,240  |   |   |   |   |   |  2,971  |   |   |  107,211  |
| TOTAL COMPREHENSIVE INCOME                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  124,556  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – SEPTEMBER 30, 2009                                                                 |   | $ |  135,660  |   | $ |  674,979  |   | $ |  716,702  |   | $ |  (14,775) |   | $ |  361  |   | $ |  1,512,927  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – DECEMBER 31, 2009                                                                  |   | $ |  135,660  |   | $ |  674,979  |   | $ |  726,478  |   | $ |  (12,991) |   | $ |  31  |   | $ |  1,524,157  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock Dividends – Nonaffiliated                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  (2,966) |   |   |  (2,966) |
| Preferred Stock Dividends                                                                               |   |   |   |   |   |   |   |   |  (172) |   |   |   |   |   |   |   |   |  (172) |
| SUBTOTAL – EQUITY                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  1,521,019  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income, Net of Taxes:                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   | Cash Flow Hedges, Net of Tax of $248 |   |   |   |   |   |   |   |   |   |   |   |  461  |   |   |   |   |   |  461  |
|                                                                                                    |   | Amortization of Pension and OPEB Deferred |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   | Costs, Net of Tax of $379 |   |   |   |   |   |   |   |   |   |   |   |  703  |   |   |   |   |   |  703  |
| NET INCOME                                                                                              |   |   |   |   |   |   |   |   |  136,275  |   |   |   |   |   |  3,198  |   |   |  139,473  |
| TOTAL COMPREHENSIVE INCOME                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  140,637  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – SEPTEMBER 30, 2010                                                                 |   | $ |  135,660  |   | $ |  674,979  |   | $ |  862,581  |   | $ |  (11,827) |   | $ |  263  |   | $ |  1,661,656  |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |

----

| SOUTHWESTERN ELECTRIC POWER COMPANY CONSOLIDATED                                                        |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                   |   |
| ASSETS                                                                                                  |   |
| September 30, 2010 and December 31, 2009                                                                |   |
| (in thousands)                                                                                          |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   | 2010 |   |   | 2009 |   |
| CURRENT ASSETS                                                                                          |   |   |   |   |   |   |
| Cash and Cash Equivalents                                                                               |   | $ | 1,882 |   |   | $ | 1,661 |   |
| Advances to Affiliates                                                                                  |   |   | 213,689 |   |   |   | 34,883 |   |
| Accounts Receivable:                                                                                    |   |   |   |   |   |   |   |   |
| Customers                                                                                               |   |   | 23,833 |   |   |   | 46,657 |   |
| Affiliated Companies                                                                                    |   |   | 42,393 |   |   |   | 19,542 |   |
| Miscellaneous                                                                                           |   |   | 23,753 |   |   |   | 9,952 |   |
| Allowance for Uncollectible Accounts                                                                    |   |   | (454 | ) |   |   | (64 | ) |
| Total Accounts Receivable                                                                               |   |   | 89,525 |   |   |   | 76,087 |   |
| Fuel                                                                                                    |   |   |   |   |   |   |   |   |
| (September 30, 2010 amount includes $31,649 related to Sabine)                                          |   |   | 86,154 |   |   |   | 121,453 |   |
| Materials and Supplies                                                                                  |   |   | 48,770 |   |   |   | 54,484 |   |
| Risk Management Assets                                                                                  |   |   | 2,017 |   |   |   | 3,049 |   |
| Deferred Income Tax Benefits                                                                            |   |   | 14,470 |   |   |   | 13,820 |   |
| Accrued Tax Benefits                                                                                    |   |   | 2,859 |   |   |   | 16,164 |   |
| Regulatory Asset for Under-Recovered Fuel Costs                                                         |   |   | 7,622 |   |   |   | 1,639 |   |
| Prepayments and Other Current Assets                                                                    |   |   | 20,388 |   |   |   | 20,503 |   |
| TOTAL CURRENT ASSETS                                                                                    |   |   | 487,376 |   |   |   | 343,743 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT                                                                           |   |   |   |   |   |   |   |   |
| Electric:                                                                                               |   |   |   |   |   |   |   |   |
| Production                                                                                              |   |   | 2,267,397 |   |   |   | 1,837,318 |   |
| Transmission                                                                                            |   |   | 906,837 |   |   |   | 870,069 |   |
| Distribution                                                                                            |   |   | 1,476,596 |   |   |   | 1,447,559 |   |
| Other Property, Plant and Equipment                                                                     |   |   |   |   |   |   |   |   |
| (September 30, 2010 amount includes $224,987 related to Sabine)                                         |   |   | 640,697 |   |   |   | 733,310 |   |
| Construction Work in Progress                                                                           |   |   | 1,003,889 |   |   |   | 1,176,639 |   |
| Total Property, Plant and Equipment                                                                     |   |   | 6,295,416 |   |   |   | 6,064,895 |   |
| Accumulated Depreciation and Amortization                                                               |   |   |   |   |   |   |   |   |
| (September 30, 2010 amount includes $89,703 related to Sabine)                                          |   |   | 2,080,258 |   |   |   | 2,086,333 |   |
| TOTAL PROPERTY, PLANT AND EQUIPMENT – NET                                                         |   |   | 4,215,158 |   |   |   | 3,978,562 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| OTHER NONCURRENT ASSETS                                                                                 |   |   |   |   |   |   |   |   |
| Regulatory Assets                                                                                       |   |   | 295,590 |   |   |   | 268,165 |   |
| Long-term Risk Management Assets                                                                        |   |   | 419 |   |   |   | 84 |   |
| Deferred Charges and Other Noncurrent Assets                                                            |   |   | 80,591 |   |   |   | 49,479 |   |
| TOTAL OTHER NONCURRENT ASSETS                                                                           |   |   | 376,600 |   |   |   | 317,728 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| TOTAL ASSETS                                                                                            |   | $ | 5,079,134 |   |   | $ | 4,640,033 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |
|                                                                                                    |   |   |   |   |   |   |   |   |

----

|                                                                                                    |   |           |      |   |   |   |
|---------------------------------------------------------------------------------------------------------|--------|----------------|-----------|--------|--------|--------|
| SOUTHWESTERN ELECTRIC POWER COMPANY CONSOLIDATED                                                        |   |
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                   |   |
| LIABILITIES AND EQUITY                                                                                  |   |
| September 30, 2010 and December 31, 2009                                                                |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   | 2010           |      |   | 2009   |   |
|                                                                                                    |   | (in thousands) |      |
| CURRENT LIABILITIES                                                                                     |   |           |      |   |   |   |
| Accounts Payable:                                                                                       |   |           |      |   |   |   |
| General                                                                                                 |   | $              | 168,300   |   |   | $      | 160,870 |   |
| Affiliated Companies                                                                                    |   |           | 45,767    |   |   |   | 59,818 |   |
| Short-term Debt – Nonaffiliated                                                                   |   |           | 3,170     |   |   |   | 6,890 |   |
| Long-term Debt Due Within One Year – Nonaffiliated                                                |   |           | 41,135    |   |   |   | 4,406 |   |
| Long-term Debt Due Within One Year – Affiliated                                                   |   |           | -         |   |   |   | 50,000 |   |
| Risk Management Liabilities                                                                             |   |           | 523       |   |   |   | 844 |   |
| Customer Deposits                                                                                       |   |           | 43,467    |   |   |   | 41,269 |   |
| Accrued Taxes                                                                                           |   |           | 58,319    |   |   |   | 24,720 |   |
| Accrued Interest                                                                                        |   |           | 18,088    |   |   |   | 33,179 |   |
| Obligations Under Capital Leases                                                                        |   |           | 12,679    |   |   |   | 14,617 |   |
| Regulatory Liability for Over-Recovered Fuel Costs                                                      |   |           | 5,377     |   |   |   | 13,762 |   |
| Provision for SIA Refund                                                                                |   |           | 20,766    |   |   |   | 19,307 |   |
| Other Current Liabilities                                                                               |   |           | 45,115    |   |   |   | 71,781 |   |
| TOTAL CURRENT LIABILITIES                                                                               |   |           | 462,706   |   |   |   | 501,463 |   |
|                                                                                                    |   |           |      |   |   |   |   |   |
| NONCURRENT LIABILITIES                                                                                  |   |           |      |   |   |   |   |   |
| Long-term Debt – Nonaffiliated                                                                    |   |           | 1,728,322 |   |   |   | 1,419,747 |   |
| Long-term Risk Management Liabilities                                                                   |   |           | 272       |   |   |   | 221 |   |
| Deferred Income Taxes                                                                                   |   |           | 514,576   |   |   |   | 485,936 |   |
| Regulatory Liabilities and Deferred Investment Tax Credits                                              |   |           | 385,825   |   |   |   | 333,935 |   |
| Asset Retirement Obligations                                                                            |   |           | 49,720    |   |   |   | 60,562 |   |
| Employee Benefits and Pension Obligations                                                               |   |           | 98,684    |   |   |   | 125,956 |   |
| Obligations Under Capital Leases                                                                        |   |           | 114,017   |   |   |   | 134,044 |   |
| Deferred Credits and Other Noncurrent Liabilities                                                       |   |           | 58,659    |   |   |   | 49,315 |   |
| TOTAL NONCURRENT LIABILITIES                                                                            |   |           | 2,950,075 |   |   |   | 2,609,716 |   |
|                                                                                                    |   |           |      |   |   |   |   |   |
| TOTAL LIABILITIES                                                                                       |   |           | 3,412,781 |   |   |   | 3,111,179 |   |
|                                                                                                    |   |           |      |   |   |   |   |   |
| Cumulative Preferred Stock Not Subject to Mandatory Redemption                                          |   |           | 4,697     |   |   |   | 4,697 |   |
|                                                                                                    |   |           |      |   |   |   |   |   |
| Rate Matters (Note 3)                                                                                   |   |           |      |   |   |   |   |   |
| Commitments and Contingencies (Note 4)                                                                  |   |           |      |   |   |   |   |   |
|                                                                                                    |   |           |      |   |   |   |   |   |
| EQUITY                                                                                                  |   |           |      |   |   |   |   |   |
| Common Stock – Par Value – $18 Per Share:                                                   |   |           |      |   |   |   |   |   |
| Authorized –  7,600,000 Shares                                                          |   |           |      |   |   |   |   |   |
| Outstanding  – 7,536,640 Shares                                                         |   |           | 135,660   |   |   |   | 135,660 |   |
| Paid-in Capital                                                                                         |   |           | 674,979   |   |   |   | 674,979 |   |
| Retained Earnings                                                                                       |   |           | 862,581   |   |   |   | 726,478 |   |
| Accumulated Other Comprehensive Income (Loss)                                                           |   |           | (11,827   | )      |   |   | (12,991 | ) |
| TOTAL COMMON SHAREHOLDER’S EQUITY                                                                 |   |           | 1,661,393 |   |   |   | 1,524,126 |   |
|                                                                                                    |   |           |      |   |   |   |   |   |
| Noncontrolling Interest                                                                                 |   |           | 263       |   |   |   | 31 |   |
|                                                                                                    |   |           |      |   |   |   |   |   |
| TOTAL EQUITY                                                                                            |   |           | 1,661,656 |   |   |   | 1,524,157 |   |
|                                                                                                    |   |           |      |   |   |   |   |   |
| TOTAL LIABILITIES AND EQUITY                                                                            |   | $              | 5,079,134 |   |   | $      | 4,640,033 |   |
|                                                                                                    |   |           |      |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

| SOUTHWESTERN ELECTRIC POWER COMPANY CONSOLIDATED                                                        |   |
|---------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                         |   |
| For the Nine Months Ended September 30, 2010 and 2009                                                   |   |
| (in thousands)                                                                                          |   |
| (Unaudited)                                                                                             |   |
|                                                                                                    |   |
|                                                                                                    |   | 2010 |   |   | 2009 |   |
| OPERATING ACTIVITIES                                                                                    |   |   |   |   |   |   |
| Net Income                                                                                              |   | $ | 139,473 |   |   | $ | 107,211 |   |
| Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:                        |   |   |   |   |   |   |   |   |
| Depreciation and Amortization                                                                           |   |   | 94,939 |   |   |   | 109,065 |   |
| Deferred Income Taxes                                                                                   |   |   | 1,227 |   |   |   | (20,571 | ) |
| Extraordinary Loss, Net of Tax                                                                          |   |   | - |   |   |   | 5,325 |   |
| Allowance for Equity Funds Used During Construction                                                     |   |   | (36,630 | ) |   |   | (31,706 | ) |
| Mark-to-Market of Risk Management Contracts                                                             |   |   | 230 |   |   |   | 510 |   |
| Pension Contributions to Qualified Plan Trust                                                           |   |   | (26,684 | ) |   |   | - |   |
| Fuel Over/Under-Recovery, Net                                                                           |   |   | (14,371 | ) |   |   | 61,880 |   |
| Change in Other Noncurrent Assets                                                                       |   |   | (16,101 | ) |   |   | 13,498 |   |
| Change in Other Noncurrent Liabilities                                                                  |   |   | 41,231 |   |   |   | 4,539 |   |
| Changes in Certain Components of Working Capital:                                                       |   |   |   |   |   |   |   |   |
| Accounts Receivable, Net                                                                                |   |   | (23,562 | ) |   |   | 81,322 |   |
| Fuel, Materials and Supplies                                                                            |   |   | 27,811 |   |   |   | 4,396 |   |
| Accounts Payable                                                                                        |   |   | (35,890 | ) |   |   | 24,584 |   |
| Accrued Taxes, Net                                                                                      |   |   | 49,249 |   |   |   | 50,027 |   |
| Accrued Interest                                                                                        |   |   | (15,085 | ) |   |   | (19,816 | ) |
| Other Current Assets                                                                                    |   |   | (1,864 | ) |   |   | (1,017 | ) |
| Other Current Liabilities                                                                               |   |   | (15,777 | ) |   |   | (53,325 | ) |
| Net Cash Flows from Operating Activities                                                                |   |   | 168,196 |   |   |   | 335,922 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| INVESTING ACTIVITIES                                                                                    |   |   |   |   |   |   |   |   |
| Construction Expenditures                                                                               |   |   | (288,043 | ) |   |   | (470,379 | ) |
| Change in Advances to Affiliates, Net                                                                   |   |   | (161,873 | ) |   |   | (106,662 | ) |
| Proceeds from Sales of Assets                                                                           |   |   | 1,337 |   |   |   | 105,500 |   |
| Other Investing Activities                                                                              |   |   | (474 | ) |   |   | (642 | ) |
| Net Cash Flows Used for Investing Activities                                                            |   |   | (449,053 | ) |   |   | (472,183 | ) |
|                                                                                                    |   |   |   |   |   |   |   |   |
| FINANCING ACTIVITIES                                                                                    |   |   |   |   |   |   |   |   |
| Capital Contribution from Parent                                                                        |   |   | - |   |   |   | 142,500 |   |
| Issuance of Long-term Debt – Nonaffiliated                                                        |   |   | 399,394 |   |   |   | - |   |
| Borrowings from Revolving Credit Facilities                                                             |   |   | 74,449 |   |   |   | 90,478 |   |
| Change in Advances from Affiliates, Net                                                                 |   |   | - |   |   |   | (2,526 | ) |
| Retirement of Long-term Debt – Nonaffiliated                                                      |   |   | (53,500 | ) |   |   | (3,304 | ) |
| Retirement of Long-term Debt – Affiliated                                                         |   |   | (50,000 | ) |   |   | - |   |
| Repayments to Revolving Credit Facilities                                                               |   |   | (78,170 | ) |   |   | (92,377 | ) |
| Proceeds from Sale/Leaseback                                                                            |   |   | - |   |   |   | 12,222 |   |
| Principal Payments for Capital Lease Obligations                                                        |   |   | (8,873 | ) |   |   | (7,853 | ) |
| Dividends Paid on Common Stock – Nonaffiliated                                                    |   |   | (2,966 | ) |   |   | (2,971 | ) |
| Dividends Paid on Cumulative Preferred Stock                                                            |   |   | (172 | ) |   |   | (172 | ) |
| Other Financing Activities                                                                              |   |   | 916 |   |   |   | 443 |   |
| Net Cash Flows from Financing Activities                                                                |   |   | 281,078 |   |   |   | 136,440 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| Net Increase in Cash and Cash Equivalents                                                               |   |   | 221 |   |   |   | 179 |   |
| Cash and Cash Equivalents at Beginning of Period                                                        |   |   | 1,661 |   |   |   | 1,910 |   |
| Cash and Cash Equivalents at End of Period                                                              |   | $ | 1,882 |   |   | $ | 2,089 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| SUPPLEMENTARY INFORMATION                                                                               |   |   |   |   |   |   |   |   |
| Cash Paid for Interest, Net of Capitalized Amounts                                                      |   | $ | 72,270 |   |   | $ | 82,033 |   |
| Net Cash Paid (Received) for Income Taxes                                                               |   |   | 25,575 |   |   |   | (6,196 | ) |
| Noncash Acquisitions Under Capital Leases                                                               |   |   | 653 |   |   |   | 26,175 |   |
| Construction Expenditures Included in Accounts Payable at September 30,                                 |   |   | 101,017 |   |   |   | 60,219 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| See Condensed Notes to Condensed Financial Statements of Registrant Subsidiaries beginning on page 161. |   |

----

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

----

| The condensed notes to condensed financial statements that follow are a combined presentation for the Registrant Subsidiaries.  The following list indicates the registrants to which the footnotes apply: |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                 |   |   |
| 1.                                                                                                                                                                                                                   | Significant Accounting Matters | APCo, CSPCo, I&M, OPCo, PSO, SWEPCo |
| 2.                                                                                                                                                                                                                   | New Accounting Pronouncements and Extraordinary Item | APCo, CSPCo, I&M, OPCo, PSO, SWEPCo |
| 3.                                                                                                                                                                                                                   | Rate Matters | APCo, CSPCo, I&M, OPCo, PSO, SWEPCo |
| 4.                                                                                                                                                                                                                   | Commitments, Guarantees and Contingencies | APCo, CSPCo, I&M, OPCo, PSO, SWEPCo |
| 5.                                                                                                                                                                                                                   | Acquisition | 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                       |
| September 30, 2010                               |
| (in millions)                                    |
|                                             |   | Sabine |   |
| ASSETS                                           |   |   |   |   |
| Current Assets                                   |   | $ |  42  |   |
| Net Property, Plant and Equipment                |   |   |  142  |   |
| Other Noncurrent Assets                          |   |   |  35  |   |
| Total Assets                                     |   | $ |  219  |   |
|                                             |   |   |   |   |
| LIABILITIES AND EQUITY                           |   |   |   |   |
| Current Liabilities                              |   | $ |  26  |   |
| Noncurrent Liabilities                           |   |   |  193  |   |
| Equity                                           |   |   |  -  |   |
| Total Liabilities and Equity                     |   | $ |  219  |   |

| SOUTHWESTERN ELECTRIC POWER COMPANY CONSOLIDATED |   |
|--------------------------------------------------|--------|
| VARIABLE INTEREST ENTITIES                       |   |
| December 31, 2009                                |   |
| (in millions)                                    |   |
|                                             |   | Sabine |   |   | DHLC |   |
| ASSETS                                           |   |   |   |   |   |   |
| Current Assets                                   |   | $ | 51 |   |   | $ | 8 |   |
| Net Property, Plant and Equipment                |   |   | 149 |   |   |   | 44 |   |
| Other Noncurrent Assets                          |   |   | 35 |   |   |   | 11 |   |
| Total Assets                                     |   | $ | 235 |   |   | $ | 63 |   |
|                                             |   |   |   |   |   |   |   |   |
| LIABILITIES AND EQUITY                           |   |   |   |   |   |   |   |   |
| Current Liabilities                              |   | $ | 36 |   |   | $ | 17 |   |
| Noncurrent Liabilities                           |   |   | 199 |   |   |   | 38 |   |
| Equity                                           |   |   | - |   |   |   | 8 |   |
| Total Liabilities and Equity                     |   | $ | 235 |   |   | $ | 63 |   |

|                             | September 30, 2010 |   |
|----------------------------------|--------------------|--------|
|                             | As Reported on     |   |   |   |   |
|                             | the Consolidated   |   | Maximum |   |
|                             | Balance Sheet      |   | Exposure |   |
|                             | (in millions)      |   |
| Capital Contribution from SWEPCo |               | $      | 7 |   |   | $ | 7 |   |
| Retained Earnings                |               |   | 2 |   |   |   | 2 |   |
| SWEPCo's Guarantee of Debt       |               |   | - |   |   |   | 42 |   |
|                             |               |   |   |   |   |   |   |   |
| Total Investment in DHLC         |               | $      | 9 |   |   | $ | 51 |   |

----

| INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES |
|-------------------------------------------------|
| VARIABLE INTEREST ENTITIES                      |
| September 30, 2010                              |
| (in millions)                                   |
|                                            |   | DCC Fuel |   |
| ASSETS                                          |   |   |   |   |
| Current Assets                                  |   | $ |  92  |   |
| Net Property, Plant and Equipment               |   |   |  118  |   |
| Other Noncurrent Assets                         |   |   |  80  |   |
| Total Assets                                    |   | $ |  290  |   |
|                                            |   |   |   |   |
| LIABILITIES AND EQUITY                          |   |   |   |   |
| Current Liabilities                             |   | $ |  65  |   |
| Noncurrent Liabilities                          |   |   |  225  |   |
| Equity                                          |   |   |  -  |   |
| Total Liabilities and Equity                    |   | $ |  290  |   |

| INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES |
|-------------------------------------------------|
| VARIABLE INTEREST ENTITIES                      |
| December 31, 2009                               |
| (in millions)                                   |
|                                            |   | DCC Fuel |   |
| ASSETS                                          |   |   |   |   |
| Current Assets                                  |   | $ |  47  |   |
| Net Property, Plant and Equipment               |   |   |  89  |   |
| Other Noncurrent Assets                         |   |   |  57  |   |
| Total Assets                                    |   | $ |  193  |   |
|                                            |   |   |   |   |
| LIABILITIES AND EQUITY                          |   |   |   |   |
| Current Liabilities                             |   | $ |  39  |   |
| Noncurrent Liabilities                          |   |   |  154  |   |
| Equity                                          |   |   |  -  |   |
| Total Liabilities and Equity                    |   | $ |  193  |   |

----

|    |   | Three Months Ended September 30, |   |   | Nine Months Ended September 30, |   |
|---------|--------|----------------------------------|--------|--------|---------------------------------|--------|
| Company |   | 2010                             |   |   | 2009                            |   |   | 2010 |   |   | 2009 |   |
|    |   | (in millions)                    |   |
| APCo    |   | $                                | 51     |   |                            | $      | 50 |   |   | $ | 177 |   |   | $ | 146 |   |
| CSPCo   |   |                             | 30     |   |                            |   | 31 |   |   |   | 104 |   |   |   | 91 |   |
| I&M |   |                             | 31     |   |                            |   | 32 |   |   |   | 106 |   |   |   | 93 |   |
| OPCo    |   |                             | 41     |   |                            |   | 43 |   |   |   | 153 |   |   |   | 130 |   |
| PSO     |   |                             | 23     |   |                            |   | 21 |   |   |   | 78 |   |   |   | 64 |   |
| SWEPCo  |   |                             | 31     |   |                            |   | 35 |   |   |   | 110 |   |   |   | 94 |   |

|    |   | September 30, 2010 |   | December 31, 2009 |   |
|---------|--------|--------------------|--------|-------------------|--------|
|    |   | As Reported in the |   | Maximum           |   | As Reported in the |   | Maximum |   |
| Company |   | Balance Sheet      |   | Exposure          |   | Balance Sheet |   | Exposure |   |
|    |   | (in millions)      |   |
| APCo    |   |               | $      | 18                |   |   | $ | 18 |   |   | $ | 23 |   |   | $ | 23 |   |
| CSPCo   |   |               |   | 10                |   |   |   | 10 |   |   |   | 13 |   |   |   | 13 |   |
| I&M |   |               |   | 11                |   |   |   | 11 |   |   |   | 13 |   |   |   | 13 |   |
| OPCo    |   |               |   | 14                |   |   |   | 14 |   |   |   | 18 |   |   |   | 18 |   |
| PSO     |   |               |   | 6                 |   |   |   | 6 |   |   |   | 9 |   |   |   | 9 |   |
| SWEPCo  |   |               |   | 11                |   |   |   | 11 |   |   |   | 14 |   |   |   | 14 |   |

|    |   | Three Months Ended September 30, |   | Nine Months Ended September 30, |   |
|---------|--------|----------------------------------|--------|---------------------------------|--------|
| Company |   | 2010                             |   | 2009                            |   | 2010 |   | 2009 |   |
|    |   | (in millions)                    |   |
| CSPCo   |   |                             | $      | 44                              |   |   | $ | 28 |   |   | $ | 81 |   |   | $ | 60 |   |
| I&M |   |                             |   | 64                              |   |   |   | 59 |   |   |   | 168 |   |   |   | 183 |   |

|    |   | September 30, 2010 |   | December 31, 2009 |   |
|---------|--------|--------------------|--------|-------------------|--------|
|    |   | As Reported in     |   |              |   |   | As Reported in |   |   |   |   |
|    |   | the Consolidated   |   | Maximum           |   | the Consolidated |   | Maximum |   |
| Company |   | Balance Sheet      |   | Exposure          |   | Balance Sheet |   | Exposure |   |
|    |   | (in millions)      |   |
| CSPCo   |   |               | $      | 9                 |   |   | $ | 9 |   |   | $ | 6 |   |   | $ | 6 |   |
| I&M |   |               |   | 28                |   |   |   | 28 |   |   |   | 23 |   |   |   | 23 |   |

----

|    |   | Nine Months Ended September 30, 2010 |   |
|---------|--------|--------------------------------------|--------|
|    |   | Reported in                          |   | Reported in |   |
| Company |   | Revenues                             |   | Expenses |   |
|    |   | (in thousands)                       |   |
| APCo    |   |                                 | $      | 6,631 |   |   | $ | 3,635 |   |
| CSPCo   |   |                                 |   | 3,689 |   |   |   | 1,963 |   |
| I&M |   |                                 |   | 3,721 |   |   |   | 1,980 |   |
| OPCo    |   |                                 |   | 4,248 |   |   |   | 2,268 |   |

| Total Depreciation Expense Variance |
|-------------------------------------|
| Three Months Ended                  |   |   | Nine Months Ended |
| September 30, 2010/2009             |   |   | September 30, 2010/2009 |
| (in thousands)                      |
| $                                   | 9,285 |   |   | $ | 19,718 |

----

----

| Regulatory Assets Not Yet Being Recovered |                                                                                                                                      |                                           |           |                |               |         |                |                |   |               |               |   |
|-------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------|----------------|---------------------|--------------------|--------------|---------------------|---------------------|--------|--------------------|--------------------|--------|
|                                      |                                                                                                                                      |                                           |           | APCo                |               | I&M      |
|                                      |                                                                                                                                      |                                           |           | September 30,       |               | December 31, |                | September 30,       |   | December 31,       |
|                                      |                                                                                                                                      |                                           |           | 2010           |               | 2009    |                | 2010           |   | 2009          |
|                                      | Noncurrent Regulatory Assets (excluding fuel)                                                                                             |                                           | (in thousands) |                | (in thousands)     |
|                                      | Regulatory assets not yet being recovered pending                                                                                         |                                           |           |                |               |         |                |                |   |               |               |   |   |
|                                      |                                                                                                                                      | future proceedings to determine the recovery   |           |                |               |         |                |                |   |               |               |   |   |   |
|                                      |                                                                                                                                      | method and timing:                             |           |                |               |         |                |                |   |               |               |   |   |   |
|                                      | Regulatory Assets Currently Earning a Return                                                                                              |                                           |           |                |               |         |                |                |   |               |               |   |   |
|                                      |                                                                                                                                      | Customer Choice Implementation Costs           |           | $                   |  -       |         | $                   |  -        |   | $                  |  6,650   | (a)    | $ |  6,311  |
|                                      | Regulatory Assets Currently Not Earning a Return                                                                                          |                                           |           |                |               |         |                |                |   |               |               |   |   |
|                                      |                                                                                                                                      | Mountaineer Carbon Capture and Storage Project |           |                |  59,144  |         |                |  110,665  |   |               |  -       |   |   |  -  |
|                                      |                                                                                                                                      | Virginia Environmental Rate Adjustment Clause  |           |                |  48,141  |         |                |  25,311   |   |               |  -       |   |   |  -  |
|                                      |                                                                                                                                      | Storm Related Costs                            |           |                |  25,225  |         |                |  -        |   |               |  -       |   |   |  -  |
|                                      |                                                                                                                                      | Deferred Wind Power Costs                      |           |                |  23,794  |         |                |  5,372    |   |               |  -       |   |   |  -  |
|                                      |                                                                                                                                      | Virginia Transmission Rate Adjustment Clause   |           |                |  21,088  |         |                |  26,184   |   |               |  -       |   |   |  -  |
|                                      |                                                                                                                                      | Special Rate Mechanism for Century Aluminum    |           |                |  12,578  |         |                |  12,422   |   |               |  -       |   |   |  -  |
|                                      |                                                                                                                                      | Deferred PJM Fees                              |           |                |  -       |         |                |  -        |   |               |  7,200   |   |   |  6,254  |
|                                      | Total Regulatory Assets Not Yet Being Recovered                                                                                           |                                           | $              |  189,970  |               | $            |  179,954  |                | $      |  13,850  |               | $      |  12,565  |
|                                      |                                                                                                                                      |                                           |           |                |               |         |                |                |   |               |               |   |   |   |
|                                      |                                                                                                                                      |                                           |           | CSPCo               |               | OPCo         |
|                                      |                                                                                                                                      |                                           |           | September 30,       |               | December 31, |                | September 30,       |   | December 31,       |
|                                      |                                                                                                                                      |                                           |           | 2010           |               | 2009    |                | 2010           |   | 2009          |
|                                      | Noncurrent Regulatory Assets (excluding fuel)                                                                                             |                                           | (in thousands) |                | (in thousands)     |
|                                      | Regulatory assets not yet being recovered pending                                                                                         |                                           |           |                |               |         |                |                |   |               |               |   |   |
|                                      |                                                                                                                                      | future proceedings to determine the recovery   |           |                |               |         |                |                |   |               |               |   |   |   |
|                                      |                                                                                                                                      | method and timing:                             |           |                |               |         |                |                |   |               |               |   |   |   |
|                                      | Regulatory Assets Currently Earning a Return                                                                                              |                                           |           |                |               |         |                |                |   |               |               |   |   |
|                                      |                                                                                                                                      | Line Extension Carrying Costs                  |           | $                   |  31,915  |         | $                   |  26,590   |   | $                  |  19,993  |   | $ |  16,278  |
|                                      |                                                                                                                                      | Customer Choice Deferrals                      |           |                |  29,457  |         |                |  28,781   |   |               |  28,906  |   |   |  28,330  |
|                                      |                                                                                                                                      | Storm Related Costs                            |           |                |  18,878  |         |                |  17,014   |   |               |  10,881  |   |   |  9,794  |
|                                      |                                                                                                                                      | Acquisition of Monongahela Power               |           |                |  7,483   |         |                |  10,282   |   |               |  -       |   |   |  -  |
|                                      |                                                                                                                                      | Economic Development Rider                     |           |                |  3,014   |         |                |  -        |   |               |  3,014   |   |   |  -  |
|                                      | Regulatory Assets Currently Not Earning a Return                                                                                          |                                           |           |                |               |         |                |                |   |               |               |   |   |
|                                      |                                                                                                                                      | Acquisition of Monongahela Power               |           |                |  4,052   |         |                |  -        |   |               |  -       |   |   |  -  |
|                                      |                                                                                                                                      | Peak Demand Reduction/Energy Efficiency        |           |                |  -       | (b)          |                |  4,071    |   |               |  -       | (b)    |   |  4,007  |
|                                      | Total Regulatory Assets Not Yet Being Recovered                                                                                           |                                           | $              |  94,799   |               | $            |  86,738   |                | $      |  62,794  |               | $      |  58,409  |
|                                      |                                                                                                                                      |                                           |           |                |               |         |                |                |   |               |               |   |   |   |
|                                      |                                                                                                                                      |                                           |           | PSO                 |               | SWEPCo       |
|                                      |                                                                                                                                      |                                           |           | September 30,       |               | December 31, |                | September 30,       |   | December 31,       |
|                                      |                                                                                                                                      |                                           |           | 2010           |               | 2009    |                | 2010           |   | 2009          |
|                                      | Noncurrent Regulatory Assets (excluding fuel)                                                                                             |                                           | (in thousands) |                | (in thousands)     |
|                                      | Regulatory assets not yet being recovered pending                                                                                         |                                           |           |                |               |         |                |                |   |               |               |   |   |
|                                      |                                                                                                                                      | future proceedings to determine the recovery   |           |                |               |         |                |                |   |               |               |   |   |   |
|                                      |                                                                                                                                      | method and timing:                             |           |                |               |         |                |                |   |               |               |   |   |   |
|                                      | Regulatory Assets Currently Not Earning a Return                                                                                          |                                           |           |                |               |         |                |                |   |               |               |   |   |
|                                      |                                                                                                                                      | Storm Related Costs                            |           | $                   |  17,256  |         | $                   |  -        |   | $                  |  -       |   | $ |  -  |
|                                      |                                                                                                                                      | Asset Retirement Obligation                    |           |                |  -       |         |                |  -        |   |               |  588     |   |   |  471  |
|                                      | Total Regulatory Assets Not Yet Being Recovered                                                                                           |                                           | $              |  17,256   |               | $            |  -        |                | $      |  588     |               | $      |  471  |
|                                      |                                                                                                                                      |                                           |           |                |               |         |                |                |   |               |               |   |   |   |
|                                      | (a)  In October 2010, the Michigan base rate settlement agreement was approved which granted recovery of this regulatory asset. |
|                                      | (b)  Recovery of regulatory asset was granted during 2010.                                                                      |

----

----

----

----

----

----

----

----

----

----

----

| 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 |   | September 30, 2010 |   |
|---------|--------|--------------------|--------|
|    |   | (in millions)      |   |
| APCo    |   | $                  | 10.7   |   |
| CSPCo   |   |               | 5.9    |   |
| I&M |   |               | 6.3    |   |
| OPCo    |   |               | 8.1    |   |

----

| Company |   | Potential Refund Payments |   |   | Potential Payments Received |   |
|---------|--------|---------------------------|--------|--------|-----------------------------|--------|
|    |   | (in millions)             |   |
| APCo    |   | $                         | 6.4    |   |                        | $      | 3.8 |   |
| CSPCo   |   |                      | 3.5    |   |                        |   | 2.1 |   |
| I&M |   |                      | 3.7    |   |                        |   | 2.2 |   |
| OPCo    |   |                      | 4.8    |   |                        |   | 2.9 |   |

----

----

|                            |   |           |                |     |                        |           | Borrower |
|---------------------------------|--------|----------------|---------------------|----------|-----------------------------|----------------|----------|
| Company                         |   | Amount         |                | Maturity |                        | Sublimit       |
|                            |   | (in thousands) |                |     |                        | (in thousands) |
| $1.5 billion letters of credit: |   |           |                |     |                        |           |     |   |
| I&M                         |   | $              |  300      |     | March 2011                  |           |     | N/A |
| SWEPCo                          |   |           |  4,448    |     | December 2010               |           |     | N/A |
|                            |   |           |                |     |                        |           |     |   |
| $478 million letter of credit:  |   |           |                |     |                        |           |     |   |
| APCo                            |   | $              |  232,292  |     | November 2010 to April 2011 |           | $        |  300,000  |
| I&M                         |   |           |  77,886   |     | April 2011                  |           |     |  230,000  |
| OPCo                            |   |           |  166,899  |     | April 2011                  |           |     |  400,000  |

----

|    |   | Maximum        |   |
|---------|--------|----------------|--------|
|    |   | Potential      |   |
| Company |   | Loss           |   |
|    |   | (in thousands) |   |
| APCo    |   |           | $      | 294 |   |
| CSPCo   |   |           |   | 70 |   |
| I&M |   |           |   | 181 |   |
| OPCo    |   |           |   | 411 |   |
| PSO     |   |           |   | 323 |   |
| SWEPCo  |   |           |   | 231 |   |

----

----

----

| 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 September 30, |              | Three Months Ended September 30, |
|                                  | 2010                        |              | 2009                        |   | 2010  |   | 2009  |
|                                  | (in thousands)                   |
| Service Cost                          | $                                |  3,227  |                             | $ |  3,172  |   | $ |  1,431  |   | $ |  1,285  |
| Interest Cost                         |                             |  8,489  |                             |   |  8,512  |   |   |  5,075  |   |   |  4,928  |
| Expected Return on Plan Assets        |                             |  (10,952)    |                             |   |  (11,222) |   |   |  (4,407) |   |   |  (3,383) |
| Amortization of Transition Obligation |                             |  -      |                             |   |  -  |   |   |  1,311  |   |   |  1,311  |
| Amortization of Prior Service Cost    |                             |  229    |                             |   |  230  |   |   |  -  |   |   |  -  |
| Amortization of Net Actuarial Loss    |                             |  2,961  |                             |   |  1,922  |   |   |  1,352  |   |   |  1,917  |
| Net Periodic Benefit Cost             | $                                |  3,954  |                             | $ |  2,614  |   | $ |  4,762  |   | $ |  6,058  |

|                                  |                            |         | Other Postretirement            |
|---------------------------------------|---------------------------------|--------------|---------------------------------|
|                                  | Pension Plans                   |         | Benefit Plans                   |
|                                  | Nine Months Ended September 30, |         | Nine Months Ended September 30, |
|                                  | 2010                            |         | 2009                            |   | 2010 |   | 2009 |
|                                  | (in thousands)                  |
| Service Cost                          | $                               | 9,681   |                            | $ | 9,517  |   | $ | 4,291  |   | $ | 3,857  |
| Interest Cost                         |                            | 25,467  |                            |   | 25,537  |   |   | 15,225  |   |   | 14,783  |
| Expected Return on Plan Assets        |                            | (32,854)     |                            |   | (33,664) |   |   | (13,220) |   |   | (10,149) |
| Amortization of Transition Obligation |                            | -       |                            |   | -  |   |   | 3,933  |   |   | 3,933  |
| Amortization of Prior Service Cost    |                            | 687     |                            |   | 688  |   |   | -  |   |   | -  |
| Amortization of Net Actuarial Loss    |                            | 8,882   |                            |   | 5,766  |   |   | 4,057  |   |   | 5,749  |
| Net Periodic Benefit Cost             | $                               | 11,863  |                            | $ | 7,844  |   | $ | 14,286  |   | $ | 18,173  |

| CSPCo                                 |                             |        | Other Postretirement             |
|---------------------------------------|----------------------------------|-------------|----------------------------------|
|                                  | Pension Plans                    |        | Benefit Plans                    |
|                                  | Three Months Ended September 30, |        | Three Months Ended September 30, |
|                                  | 2010                             |        | 2009                             |   | 2010 |   | 2009 |
|                                  | (in thousands)                   |
| Service Cost                          | $                                | 1,469  |                             | $ | 1,376  |   | $ | 690  |   | $ | 618  |
| Interest Cost                         |                             | 4,789       |                             |   | 4,882  |   |   | 2,178  |   |   | 2,124  |
| Expected Return on Plan Assets        |                             | (6,589)     |                             |   | (6,820) |   |   | (1,979) |   |   | (1,532) |
| Amortization of Transition Obligation |                             | -      |                             |   | -  |   |   | 608  |   |   | 607  |
| Amortization of Prior Service Cost    |                             | 141    |                             |   | 141  |   |   | -  |   |   | -  |
| Amortization of Net Actuarial Loss    |                             | 1,677  |                             |   | 1,108  |   |   | 565  |   |   | 821  |
| Net Periodic Benefit Cost             | $                                | 1,487  |                             | $ | 687  |   | $ | 2,062  |   | $ | 2,638  |

|                                  |                            |         | Other Postretirement            |
|---------------------------------------|---------------------------------|--------------|---------------------------------|
|                                  | Pension Plans                   |         | Benefit Plans                   |
|                                  | Nine Months Ended September 30, |         | Nine Months Ended September 30, |
|                                  | 2010                            |         | 2009                            |   | 2010 |   | 2009 |
|                                  | (in thousands)                  |
| Service Cost                          | $                               | 4,405   |                            | $ | 4,128  |   | $ | 2,070  |   | $ | 1,853  |
| Interest Cost                         |                            | 14,367  |                            |   | 14,647  |   |   | 6,535  |   |   | 6,370  |
| Expected Return on Plan Assets        |                            | (19,767)     |                            |   | (20,458) |   |   | (5,937) |   |   | (4,595) |
| Amortization of Transition Obligation |                            | -       |                            |   | -  |   |   | 1,824  |   |   | 1,823  |
| Amortization of Prior Service Cost    |                            | 423     |                            |   | 423  |   |   | -  |   |   | -  |
| Amortization of Net Actuarial Loss    |                            | 5,031   |                            |   | 3,323  |   |   | 1,695  |   |   | 2,464  |
| Net Periodic Benefit Cost             | $                               | 4,459   |                            | $ | 2,063  |   | $ | 6,187  |   | $ | 7,915  |

----

| I&M                               |                             |        | Other Postretirement             |
|---------------------------------------|----------------------------------|-------------|----------------------------------|
|                                  | Pension Plans                    |        | Benefit Plans                    |
|                                  | Three Months Ended September 30, |        | Three Months Ended September 30, |
|                                  | 2010                             |        | 2009                             |   | 2010 |   | 2009 |
|                                  | (in thousands)                   |
| Service Cost                          | $                                | 3,821  |                             | $ | 3,501  |   | $ | 1,688  |   | $ | 1,498  |
| Interest Cost                         |                             | 7,271  |                             |   | 7,130  |   |   | 3,541  |   |   | 3,419  |
| Expected Return on Plan Assets        |                             | (8,759)     |                             |   | (8,934) |   |   | (3,350) |   |   | (2,565) |
| Amortization of Transition Obligation |                             | -      |                             |   | -  |   |   | 704  |   |   | 703  |
| Amortization of Prior Service Cost    |                             | 186    |                             |   | 186  |   |   | -  |   |   | -  |
| Amortization of Net Actuarial Loss    |                             | 2,516  |                             |   | 1,601  |   |   | 881  |   |   | 1,304  |
| Net Periodic Benefit Cost             | $                                | 5,035  |                             | $ | 3,484  |   | $ | 3,464  |   | $ | 4,359  |

|                                  |                            |         | Other Postretirement            |
|---------------------------------------|---------------------------------|--------------|---------------------------------|
|                                  | Pension Plans                   |         | Benefit Plans                   |
|                                  | Nine Months Ended September 30, |         | Nine Months Ended September 30, |
|                                  | 2010                            |         | 2009                            |   | 2010 |   | 2009 |
|                                  | (in thousands)                  |
| Service Cost                          | $                               | 11,463  |                            | $ | 10,502  |   | $ | 5,063  |   | $ | 4,493  |
| Interest Cost                         |                            | 21,814  |                            |   | 21,390  |   |   | 10,623  |   |   | 10,256  |
| Expected Return on Plan Assets        |                            | (26,279)     |                            |   | (26,800) |   |   | (10,048) |   |   | (7,694) |
| Amortization of Transition Obligation |                            | -       |                            |   | -  |   |   | 2,111  |   |   | 2,110  |
| Amortization of Prior Service Cost    |                            | 558     |                            |   | 558  |   |   | -  |   |   | -  |
| Amortization of Net Actuarial Loss    |                            | 7,548   |                            |   | 4,804  |   |   | 2,644  |   |   | 3,910  |
| Net Periodic Benefit Cost             | $                               | 15,104  |                            | $ | 10,454  |   | $ | 10,393  |   | $ | 13,075  |

| OPCo                                  |                             |        | Other Postretirement             |
|---------------------------------------|----------------------------------|-------------|----------------------------------|
|                                  | Pension Plans                    |        | Benefit Plans                    |
|                                  | Three Months Ended September 30, |        | Three Months Ended September 30, |
|                                  | 2010                             |        | 2009                             |   | 2010 |   | 2009 |
|                                  | (in thousands)                   |
| Service Cost                          | $                                | 2,845  |                             | $ | 2,759  |   | $ | 1,356  |   | $ | 1,219  |
| Interest Cost                         |                             | 8,186  |                             |   | 8,275  |   |   | 4,446  |   |   | 4,331  |
| Expected Return on Plan Assets        |                             | (10,680)    |                             |   | (11,070) |   |   | (4,043) |   |   | (3,140) |
| Amortization of Transition Obligation |                             | -      |                             |   | -  |   |   | 1,052  |   |   | 1,053  |
| Amortization of Prior Service Cost    |                             | 227    |                             |   | 228  |   |   | -  |   |   | -  |
| Amortization of Net Actuarial Loss    |                             | 2,861  |                             |   | 1,875  |   |   | 1,154  |   |   | 1,676  |
| Net Periodic Benefit Cost             | $                                | 3,439  |                        | $ | 2,067  |   | $ | 3,965  |   | $ | 5,139  |

|                                  |                            |         | Other Postretirement            |
|---------------------------------------|---------------------------------|--------------|---------------------------------|
|                                  | Pension Plans                   |         | Benefit Plans                   |
|                                  | Nine Months Ended September 30, |         | Nine Months Ended September 30, |
|                                  | 2010                            |         | 2009                            |   | 2010 |   | 2009 |
|                                  | (in thousands)                  |
| Service Cost                          | $                               | 8,536   |                            | $ | 8,276  |   | $ | 4,069  |   | $ | 3,658  |
| Interest Cost                         |                            | 24,558  |                            |   | 24,825  |   |   | 13,339  |   |   | 12,994  |
| Expected Return on Plan Assets        |                            | (32,040)     |                            |   | (33,208) |   |   | (12,132) |   |   | (9,420) |
| Amortization of Transition Obligation |                            | -       |                            |   | -  |   |   | 3,158  |   |   | 3,158  |
| Amortization of Prior Service Cost    |                            | 681     |                            |   | 683  |   |   | -  |   |   | -  |
| Amortization of Net Actuarial Loss    |                            | 8,582   |                            |   | 5,625  |   |   | 3,462  |   |   | 5,028  |
| Net Periodic Benefit Cost             | $                               | 10,317  |                            | $ | 6,201  |   | $ | 11,896  |   | $ | 15,418  |

----

| PSO                                   |                             |        | Other Postretirement             |
|---------------------------------------|----------------------------------|-------------|----------------------------------|
|                                  | Pension Plans                    |        | Benefit Plans                    |
|                                  | Three Months Ended September 30, |        | Three Months Ended September 30, |
|                                  | 2010                             |        | 2009                             |   | 2010 |   | 2009 |
|                                  | (in thousands)                   |
| Service Cost                          | $                                | 1,513  |                             | $ | 1,436  |   | $ | 704  |   | $ | 631  |
| Interest Cost                         |                             | 3,722  |                             |   | 3,842  |   |   | 1,590  |   |   | 1,538  |
| Expected Return on Plan Assets        |                             | (4,934)     |                             |   | (5,109) |   |   | (1,528) |   |   | (1,174) |
| Amortization of Transition Obligation |                             | -      |                        |   | -  |   |   | 701  |   |   | 701  |
| Amortization of Prior Service Credit  |                             | (238)       |                             |   | (270) |   |   | -  |   |   | -  |
| Amortization of Net Actuarial Loss    |                             | 1,297  |                             |   | 871  |   |   | 394  |   |   | 587  |
| Net Periodic Benefit Cost             | $                                | 1,360  |                             | $ | 770  |   | $ | 1,861  |   | $ | 2,283  |

|                                  |                            |         | Other Postretirement            |
|---------------------------------------|---------------------------------|--------------|---------------------------------|
|                                  | Pension Plans                   |         | Benefit Plans                   |
|                                  | Nine Months Ended September 30, |         | Nine Months Ended September 30, |
|                                  | 2010                            |         | 2009                            |   | 2010 |   | 2009 |
|                                  | (in thousands)                  |
| Service Cost                          | $                               | 4,539   |                            | $ | 4,308  |   | $ | 2,111  |   | $ | 1,892  |
| Interest Cost                         |                            | 11,166  |                            |   | 11,526  |   |   | 4,770  |   |   | 4,615  |
| Expected Return on Plan Assets        |                            | (14,804)     |                            |   | (15,328) |   |   | (4,583) |   |   | (3,522) |
| Amortization of Transition Obligation |                            | -       |                            |   | -  |   |   | 2,104  |    |   | 2,104  |
| Amortization of Prior Service Credit  |                            | (713)        |                            |   | (811) |   |   | -  |   |   | -  |
| Amortization of Net Actuarial Loss    |                            | 3,891   |                            |   | 2,615  |   |   | 1,180  |   |   | 1,761  |
| Net Periodic Benefit Cost             | $                               | 4,079   |                            | $ | 2,310  |   | $ | 5,582  |   | $ | 6,850  |

| SWEPCo                                |                             |        | Other Postretirement             |
|---------------------------------------|----------------------------------|-------------|----------------------------------|
|                                  | Pension Plans                    |        | Benefit Plans                    |
|                                  | Three Months Ended September 30, |        | Three Months Ended September 30, |
|                                  | 2010                             |        | 2009                             |   | 2010 |   | 2009 |
|                                  | (in thousands)                   |
| Service Cost                          | $                                | 1,761  |                             | $ | 1,689  |   | $ | 777  |   | $ | 704  |
| Interest Cost                         |                             | 3,773  |                             |   | 3,889  |   |   | 1,735  |   |   | 1,684  |
| Expected Return on Plan Assets        |                             | (4,871)     |                             |   | (5,020) |   |   | (1,661) |   |   | (1,280) |
| Amortization of Transition Obligation |                             | -      |                             |   | -  |   |   | 615  |   |   | 615  |
| Amortization of Prior Service Credit  |                             | (199)       |                             |   | (229) |   |   | -  |   |   | -  |
| Amortization of Net Actuarial Loss    |                             | 1,310  |                             |   | 879  |   |   | 427  |   |   | 640  |
| Net Periodic Benefit Cost             | $                                | 1,774  |                             | $ | 1,208  |   | $ | 1,893  |   | $ | 2,363  |

|                                  |                            |         | Other Postretirement            |
|---------------------------------------|---------------------------------|--------------|---------------------------------|
|                                  | Pension Plans                   |         | Benefit Plans                   |
|                                  | Nine Months Ended September 30, |         | Nine Months Ended September 30, |
|                                  | 2010                            |         | 2009                            |   | 2010 |   | 2009 |
|                                  | (in thousands)                  |
| Service Cost                          | $                               | 5,284   |                            | $ | 5,067  |   | $ | 2,331  |   | $ | 2,113  |
| Interest Cost                         |                            | 11,320  |                            |   | 11,668  |   |   | 5,205  |   |   | 5,052  |
| Expected Return on Plan Assets        |                            | (14,616)     |                            |   | (15,062) |   |   | (4,984) |   |   | (3,840) |
| Amortization of Transition Obligation |                            | -       |                            |   | -  |   |   | 1,845  |   |   | 1,845  |
| Amortization of Prior Service Credit  |                            | (597)        |                            |   | (687) |   |   | -  |   |   | -  |
| Amortization of Net Actuarial Loss    |                            | 3,931   |                            |   | 2,637  |   |   | 1,283  |   |   | 1,920  |
| Net Periodic Benefit Cost             | $                               | 5,322   |                            | $ | 3,623  |   | $ | 5,680  |   | $ | 7,090  |

----

|    |   | Paid as of September 30, |   | Remainder Expected to be Paid in 2010 |
|---------|--------|--------------------------|--------|---------------------------------------|
|    |   |                     |   |                                  | Other Postretirement |   |   |   |   | Other Postretirement |
| Company |   | Pension Plans            |   | Benefit Plans                         |   | Pension Plans |   | Benefit Plans |
|    |   | (in thousands)           |
| APCo    |   |                     | $      | 31,979                                |   |   | $ | 15,579 |   |   | $ | 4,627 |   |   | $ | 3,067 |
| CSPCo   |   |                     |   | 5,361                                 |   |   |   | 6,683 |   |   |   | 1,565 |   |   |   | 1,787 |
| I&M |   |                     |   | 66,733                                |   |   |   | 11,541 |   |   |   | 4,754 |   |   |   | 3,549 |
| OPCo    |   |                     |   | 47,222                                |   |   |   | 13,661 |   |   |   | 4,286 |   |   |   | 3,068 |
| PSO     |   |                     |   | 11,147                                |   |   |   | 6,133 |   |   |   | 1,663 |   |   |   | 2,013 |
| SWEPCo  |   |                     |   | 26,739                                |   |   |   | 6,267 |   |   |   | 2,294 |   |   |   | 2,049 |

----

| Notional Volume of Derivative Instruments |
|-------------------------------------------|
| September 30, 2010                        |
| (in thousands)                            |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Primary Risk                              |   | Unit of |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exposure                                  |   | Measure |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
| Commodity:                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                      | Power |   | MWHs |   |   |  237,981  |   |   |  137,187  |   |   |  144,273  |   |   |  167,450  |   |   |  33  |   |   |  57  |
|                                      | Coal |   | Tons |   |   |  15,365  |   |   |  8,163  |   |   |  6,099  |   |   |  25,606  |   |   |  4,490  |   |   |  8,581  |
|                                      | Natural Gas |   | MMBtus |   |   |  5,483  |   |   |  3,161  |   |   |  3,297  |   |   |  3,858  |   |   |  81  |   |   |  97  |
|                                      | Heating Oil and |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                      |   | Gasoline |   | Gallons |   |   |  1,361  |   |   |  598  |   |   |  671  |   |   |  1,005  |   |   |  796  |   |   |  733  |
|                                      | Interest Rate |   | USD |   | $ |  11,130  |   | $ |  6,394  |   | $ |  6,592  |   | $ |  8,293  |   | $ |  652  |   | $ |  899  |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Rate and                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                      | Foreign Currency |   | USD |   | $ |  200,000  |   | $ |  -  |   | $ |  -  |   | $ |  -  |   | $ |  -  |   | $ |  1,319  |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Notional Volume of Derivative Instruments |
| December 31, 2009                         |
| (in thousands)                            |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Primary Risk                              |   | Unit of |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exposure                                  |   | Measure |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
| Commodity:                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                      | Power |   | MWHs |   |   |  191,121  |   |   |  96,828  |   |   |  99,265  |   |   |  112,745  |   |   |  10  |   |   |  12  |
|                                      | Coal |   | Tons |   |   |  11,347  |   |   |  5,615  |   |   |  5,150  |   |   |  23,631  |   |   |  5,936  |   |   |  6,790  |
|                                      | Natural Gas |   | MMBtus |   |   |  17,867  |   |   |  9,051  |   |   |  9,129  |   |   |  10,539  |   |   |  -  |   |   |  -  |
|                                      | Heating Oil and |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                      |   | Gasoline |   | Gallons |   |   |  1,164  |   |   |  474  |   |   |  552  |   |   |  838  |   |   |  668  |   |   |  628  |
|                                      | Interest Rate |   | USD |   | $ |  21,054  |   | $ |  10,658  |   | $ |  10,716  |   | $ |  13,487  |   | $ |  1,137  |   | $ |  1,457  |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Rate and                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                      | Foreign Currency |   | USD |   | $ |  -  |   | $ |  -  |   | $ |  -  |   | $ |  -  |   | $ |  -  |   | $ |  3,798  |

----

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

|    |   |   | September 30, 2010 |        | December 31, 2009 |
|---------|--------|--------|--------------------|-------------|-------------------|
|    |   |   | Cash Collateral    |        | Cash Collateral   |   | Cash Collateral |   | Cash Collateral |
|    |   |   | Received           |        | Paid              |   | Received |   | Paid |
|    |   |   | Netted Against     |        | Netted Against    |   | Netted Against |   | Netted Against |
|    |   |   | Risk Management    |        | Risk Management   |   | Risk Management |   | Risk Management |
| Company |   | Assets |               | Liabilities |              | Assets |   | Liabilities |
|    |   |   | (in thousands)     |
| APCo    |   | $      |  6,306   |        | $                 |  46,860  |   | $ |  3,789  |   | $ |  31,806  |
| CSPCo   |   |   |  3,636   |        |              |  27,007  |   |   |  1,920  |   |   |  16,108  |
| I&M |   |   |  3,792   |        |              |  28,150  |   |   |  1,936  |   |   |  16,222  |
| OPCo    |   |   |  4,438   |        |              |  33,098  |   |   |  2,235  |   |   |  19,512  |
| PSO     |   |   |  -       |        |              |  55  |   |   |  -  |   |   |  194  |
| SWEPCo  |   |   |  -       |        |              |  88  |   |   |  -  |   |   |  305  |

----

| Fair Value of Derivative Instruments  |
|---------------------------------------|
| September 30, 2010                    |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| APCo                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   |   | Management |   |   |   |   |   |   |   |   |
|                                  |   |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   | Commodity |   | Commodity |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | (a) |   | (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 358,539  |   | $ | 1,548  |   | $ | -  |   | $ | (298,888) |   | $ | 61,199  |
| Long-term Risk Management Assets      |   |   | 164,200  |   |   | 14  |   |   | -  |   |   | (112,348) |   |   | 51,866  |
| Total Assets                          |   |   | 522,739  |   |   | 1,562  |   |   | -  |   |   | (411,236) |   |   | 113,065  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 344,792  |   |   | 4,657  |   |   | 1,216  |   |   | (322,472) |   |   | 28,193  |
| Long-term Risk Management Liabilities |   |   | 149,635  |   |   | 202  |   |   | -  |   |   | (133,508) |   |   | 16,329  |
| Total Liabilities                     |   |   | 494,427  |   |   | 4,859  |   |   | 1,216  |   |   | (455,980) |   |   | 44,522  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | 28,312  |   | $ | (3,297) |   | $ | (1,216) |   | $ | 44,744  |   | $ | 68,543  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair Value of Derivative Instruments  |
| December 31, 2009                     |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| APCo                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   |   | Management |   |   |   |   |   |   |   |   |
|                                  |   |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   | Commodity |   | Commodity |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | (a) |   | (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 332,764  |   | $ | 3,621  |   | $ | -  |   | $ | (268,429) |   | $ | 67,956  |
| Long-term Risk Management Assets      |   |   | 132,044  |   |   | -  |   |   | -  |   |   | (84,903) |   |   | 47,141  |
| Total Assets                          |   |   | 464,808  |   |   | 3,621  |   |   | -  |   |   | (353,332) |   |   | 115,097  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 309,639  |   |   | 5,084  |   |   | -  |   |   | (288,931) |   |   | 25,792  |
| Long-term Risk Management Liabilities |   |   | 118,702  |   |   | 80  |   |   | -  |   |   | (98,418) |   |   | 20,364  |
| Total Liabilities                     |   |   | 428,341  |   |   | 5,164  |   |   | -  |   |   | (387,349) |   |   | 46,156  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | 36,467  |   | $ | (1,543) |   | $ | -  |   | $ | 34,017  |   | $ | 68,941  |

----

| Fair Value of Derivative Instruments  |
|---------------------------------------|
| September 30, 2010                    |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CSPCo                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   |   | Management |   |   |   |   |   |   |   |   |
|                                  |   |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   | Commodity |   | Commodity |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | (a) |   | (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 205,558  |   | $ | 878  |   | $ | -  |   | $ | (171,270) |   | $ | 35,166  |
| Long-term Risk Management Assets      |   |   | 94,390  |   |   | 6  |   |   | -  |   |   | (64,514) |   |   | 29,882  |
| Total Assets                          |   |   | 299,948  |   |   | 884  |   |   | -  |   |   | (235,784) |   |   | 65,048  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 197,685  |   |   | 2,676  |   |   | -  |   |   | (184,861) |   |   | 15,500  |
| Long-term Risk Management Liabilities |   |   | 85,983  |   |   | 116  |   |   | -  |   |   | (76,710) |   |   | 9,389  |
| Total Liabilities                     |   |   | 283,668  |   |   | 2,792  |   |   | -  |   |   | (261,571) |   |   | 24,889  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | 16,280  |   | $ | (1,908) |   | $ | -  |   | $ | 25,787  |   | $ | 40,159  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair Value of Derivative Instruments  |
| December 31, 2009                     |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CSPCo                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   |   | Management |   |   |   |   |   |   |   |   |
|                                  |   |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   | Commodity |   | Commodity |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | (a) |   | (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 168,137  |   | $ | 1,805  |   | $ | -  |   | $ | (135,599) |   | $ | 34,343  |
| Long-term Risk Management Assets      |   |   | 66,816  |   |   | -  |   |   | -  |   |   | (42,934) |   |   | 23,882  |
| Total Assets                          |   |   | 234,953  |   |   | 1,805  |   |   | -  |   |   | (178,533) |   |   | 58,225  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 156,463  |   |   | 2,574  |   |   | -  |   |   | (145,985) |   |   | 13,052  |
| Long-term Risk Management Liabilities |   |   | 60,048  |   |   | 41  |   |   | -  |   |   | (49,776) |   |   | 10,313  |
| Total Liabilities                     |   |   | 216,511  |   |   | 2,615  |   |   | -  |   |   | (195,761) |   |   | 23,365  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | 18,442  |   | $ | (810) |   | $ | -  |   | $ | 17,228  |   | $ | 34,860  |

----

| Fair Value of Derivative Instruments  |
|---------------------------------------|
| September 30, 2010                    |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| I&M                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   |   | Management |   |   |   |   |   |   |   |   |
|                                  |   |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   | Commodity |   | Commodity |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | (a) |   | (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 213,839  |   | $ | 921  |   | $ | -  |   | $ | (175,043) |   | $ | 39,717  |
| Long-term Risk Management Assets      |   |   | 107,923  |   |   | 7  |   |   | -  |   |   | (66,430) |   |   | 41,500  |
| Total Assets                          |   |   | 321,762  |   |   | 928  |   |   | -  |   |   | (241,473) |   |   | 81,217  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 202,473  |   |   | 2,793  |   |   | -  |   |   | (189,211) |   |   | 16,055  |
| Long-term Risk Management Liabilities |   |   | 88,732  |   |   | 121  |   |   | -  |   |   | (79,140) |   |   | 9,713  |
| Total Liabilities                     |   |   | 291,205  |   |   | 2,914  |   |   | -  |   |   | (268,351) |   |   | 25,768  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | 30,557  |   | $ | (1,986) |   | $ | -  |   | $ | 26,878  |   | $ | 55,449  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair Value of Derivative Instruments  |
| December 31, 2009                     |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| I&M                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   |   | Management |   |   |   |   |   |   |   |   |
|                                  |   |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   | Commodity |   | Commodity |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | (a) |   | (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 167,847  |   | $ | 1,839  |   | $ | -  |   | $ | (135,248) |   | $ | 34,438  |
| Long-term Risk Management Assets      |   |   | 72,127  |   |   | -  |   |   | -  |   |   | (42,993) |   |   | 29,134  |
| Total Assets                          |   |   | 239,974  |   |   | 1,839  |   |   | -  |   |   | (178,241) |   |   | 63,572  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 156,561  |   |   | 2,596  |   |   | -  |   |   | (145,721) |   |   | 13,436  |
| Long-term Risk Management Liabilities |   |   | 60,217  |   |   | 41  |   |   | -  |   |   | (49,872) |   |   | 10,386  |
| Total Liabilities                     |   |   | 216,778  |   |   | 2,637  |   |   | -  |   |   | (195,593) |   |   | 23,822  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | 23,196  |   | $ | (798) |   | $ | -  |   | $ | 17,352  |   | $ | 39,750  |

----

| Fair Value of Derivative Instruments  |
|---------------------------------------|
| September 30, 2010                    |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPCo                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   |   | Management |   |   |   |   |   |   |   |   |
|                                  |   |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   | Commodity |   | Commodity |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | (a) |   | (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 275,750  |   | $ | 1,092  |   | $ | -  |   | $ | (231,993) |   | $ | 44,849  |
| Long-term Risk Management Assets      |   |   | 121,042  |   |   | 9  |   |   | -  |   |   | (84,228) |   |   | 36,823  |
| Total Assets                          |   |   | 396,792  |   |   | 1,101  |   |   | -  |   |   | (316,221) |   |   | 81,672  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 267,657  |   |   | 3,278  |   |   | -  |   |   | (248,642) |   |   | 22,293  |
| Long-term Risk Management Liabilities |   |   | 111,022  |   |   | 143  |   |   | -  |   |   | (99,187) |   |   | 11,978  |
| Total Liabilities                     |   |   | 378,679  |   |   | 3,421  |   |   | -  |   |   | (347,829) |   |   | 34,271  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | 18,113  |   | $ | (2,320) |   | $ | -  |   | $ | 31,608  |   | $ | 47,401  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair Value of Derivative Instruments  |
| December 31, 2009                     |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OPCo                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   |   | Management |   |   |   |   |   |   |   |   |
|                                  |   |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   | Commodity |   | Commodity |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | (a) |   | (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 255,179  |   | $ | 2,199  |   | $ | -  |   | $ | (207,330) |   | $ | 50,048  |
| Long-term Risk Management Assets      |   |   | 88,064  |   |   | -  |   |   | -  |   |   | (60,061) |   |   | 28,003  |
| Total Assets                          |   |   | 343,243  |   |   | 2,199  |   |   | -  |   |   | (267,391) |   |   | 78,051  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 240,877  |   |   | 2,998  |   |   | -  |   |   | (219,484) |   |   | 24,391  |
| Long-term Risk Management Liabilities |   |   | 81,186  |   |   | 47  |   |   | -  |   |   | (68,723) |   |   | 12,510  |
| Total Liabilities                     |   |   | 322,063  |   |   | 3,045  |   |   | -  |   |   | (288,207) |   |   | 36,901  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | 21,180  |   | $ | (846) |   | $ | -  |   | $ | 20,816  |   | $ | 41,150  |

----

| Fair Value of Derivative Instruments  |
|---------------------------------------|
| September 30, 2010                    |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| PSO                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   |   | Management |   |   |   |   |   |   |   |   |
|                                  |   |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   | Commodity |   | Commodity |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | (a) |   | (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 7,587  |   | $ | 65  |   | $ | -  |   | $ | (4,652) |   | $ | 3,000  |
| Long-term Risk Management Assets      |   |   | 1,604  |   |   | 4  |   |   | -  |   |   | (1,107) |   |   | 501  |
| Total Assets                          |   |   | 9,191  |   |   | 69  |   |   | -  |   |   | (5,759) |   |   | 3,501  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 4,928  |   |   | 63  |   |   | -  |   |   | (4,683) |   |   | 308  |
| Long-term Risk Management Liabilities |   |   | 1,228  |   |   | 6  |   |   | -  |   |   | (1,115) |   |   | 119  |
| Total Liabilities                     |   |   | 6,156  |   |   | 69  |   |   | -  |   |   | (5,798) |   |   | 427  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | 3,035  |   | $ | -  |   | $ | -  |   | $ | 39  |   | $ | 3,074  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair Value of Derivative Instruments  |
| December 31, 2009                     |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| PSO                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   |   | Management |   |   |   |   |   |   |   |   |
|                                  |   |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   | Commodity |   | Commodity |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | (a) |   | (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 14,885  |   | $ | 179  |   | $ | -  |   | $ | (12,688) |   | $ | 2,376  |
| Long-term Risk Management Assets      |   |   | 2,640  |   |   | -  |   |   | -  |   |   | (2,590) |   |   | 50  |
| Total Assets                          |   |   | 17,525  |   |   | 179  |   |   | -  |   |   | (15,278) |   |   | 2,426  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 14,981  |   |   | 301  |   |   | -  |   |   | (12,703) |   |   | 2,579  |
| Long-term Risk Management Liabilities |   |   | 2,913  |   |   | -  |   |   | -  |   |   | (2,769) |   |   | 144  |
| Total Liabilities                     |   |   | 17,894  |   |   | 301  |   |   | -  |   |   | (15,472) |   |   | 2,723  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | (369) |   | $ | (122) |   | $ | -  |   | $ | 194  |   | $ | (297) |

----

| Fair Value of Derivative Instruments  |
|---------------------------------------|
| September 30, 2010                    |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SWEPCo                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   |   | Management |   |   |   |   |   |   |   |   |
|                                  |   |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   | Commodity |   | Commodity |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | (a) |   | (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 12,973  |   | $ | 48  |   | $ | 2  |   | $ | (11,006) |   | $ | 2,017  |
| Long-term Risk Management Assets      |   |   | 3,027  |   |   | 3  |   |   | 6  |   |   | (2,617) |   |   | 419  |
| Total Assets                          |   |   | 16,000  |   |   | 51  |   |   | 8  |   |   | (13,623) |   |   | 2,436  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 11,431  |   |   | 37  |   |   | 87  |   |   | (11,032) |   |   | 523  |
| Long-term Risk Management Liabilities |   |   | 2,926  |   |   | 6  |   |   | -  |   |   | (2,660) |   |   | 272  |
| Total Liabilities                     |   |   | 14,357  |   |   | 43  |   |   | 87  |   |   | (13,692) |   |   | 795  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | 1,643  |   | $ | 8  |   | $ | (79) |   | $ | 69  |   | $ | 1,641  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair Value of Derivative Instruments  |
| December 31, 2009                     |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SWEPCo                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |   | Risk |   |   |   |   |   |   |   |   |
|                                  |   |   | Management |   |   |   |   |   |   |   |   |
|                                  |   |   | Contracts |   | Hedging Contracts |   |   |   |   |
|                                  |   |   |   |   |   |   |   | Interest Rate |   |   |   |   |
|                                  |   |   | Commodity |   | Commodity |   | and Foreign |   |   |   |   |
| Balance Sheet Location                |   | (a) |   | (a) |   | Currency (a) |   | Other (a) (b) |   | Total |
|                                  |   |   | (in thousands) |
| Current Risk Management Assets        |   | $ | 22,847  |   | $ | 169  |   | $ | 42  |   | $ | (20,009) |   | $ | 3,049  |
| Long-term Risk Management Assets      |   |   | 4,145  |   |   | -  |   |   | 5  |   |   | (4,066) |   |   | 84  |
| Total Assets                          |   |   | 26,992  |   |   | 169  |   |   | 47  |   |   | (24,075) |   |   | 3,133  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Risk Management Liabilities   |   |   | 20,788  |   |   | -  |   |   | 89  |   |   | (20,033) |   |   | 844  |
| Long-term Risk Management Liabilities |   |   | 4,568  |   |   | -  |   |   | -  |   |   | (4,347) |   |   | 221  |
| Total Liabilities                     |   |   | 25,356  |   |   | -  |   |   | 89  |   |   | (24,380) |   |   | 1,065  |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total MTM Derivative Contract Net     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Assets (Liabilities) |   | $ | 1,636  |   | $ | 169  |   | $ | (42) |   | $ | 305  |   | $ | 2,068  |

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

----

| Amount of Gain (Loss) Recognized on           |
|-----------------------------------------------|
| Risk Management Contracts                     |
| For the Three Months Ended September 30, 2010 |
|                                          |
| Location of Gain (Loss)                       |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                          |   |   | (in thousands) |
| Electric Generation, Transmission and         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          | Distribution Revenues |   | $ |  1,938  |   | $ |  6,436  |   | $ |  6,374  |   | $ |  5,378  |   | $ |  686  |   | $ |  1,123  |
| Sales to AEP Affiliates                       |   |   |  (522) |   |   |  (704) |   |   |  (571) |   |   |  2,605  |   |   |  (204) |   |   |  (486) |
| Regulatory Assets (a)                         |   |   |  -  |   |   |  (2,013) |   |   |  -  |   |   |  (4,064) |   |   |  16  |   |   |  -  |
| Regulatory Liabilities (a)                    |   |   |  4,538  |   |   |  -  |   |   |  1,956  |   |   |  -  |   |   |  999  |   |   |  893  |
| Total Gain (Loss) on Risk Management          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          | Contracts |   | $ | 5,954  |   | $ |  3,719  |   | $ |  7,759  |   | $ |  3,919  |   | $ |  1,497  |   | $ |  1,530  |
|                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amount of Gain (Loss) Recognized on           |
| Risk Management Contracts                     |
| For the Three Months Ended September 30, 2009 |
|                                          |
| Location of Gain (Loss)                       |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                          |   |   | (in thousands) |
| Electric Generation, Transmission and         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          | Distribution Revenues |   | $ |  2,240  |   | $ |  6,551  |   | $ |  7,127  |   | $ |  3,155  |   | $ |  (850) |   | $ |  (1,067) |
| Sales to AEP Affiliates                       |   |   |  (237) |   |   |  (238) |   |   |  (292) |   |   |  302  |   |   |  1,135  |   |   |  1,347  |
| Regulatory Assets (a)                         |   |   |  -  |   |   |  (2,616) |   |   |  (1,278) |   |   |  (2,922) |   |   |  (617) |   |   |  (20) |
| Regulatory Liabilities (a)                    |   |   |  10,199  |   |   |  4,774  |   |   |  3,369  |   |   |  5,384  |   |   |  (480) |   |   |  9  |
| Total Gain (Loss) on Risk Management          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          | Contracts |   | $ |  12,202  |   | $ |  8,471  |   | $ |  8,926  |   | $ |  5,919  |   | $ |  (812) |   | $ |  269  |

| Amount of Gain (Loss) Recognized on          |
|----------------------------------------------|
| Risk Management Contracts                    |
| For the Nine Months Ended September 30, 2010 |
|                                         |
| Location of Gain (Loss)                      |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                         |   |   | (in thousands) |
| Electric Generation, Transmission and        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                         | Distribution Revenues |   | $ |  4,419  |   | $ |  19,513  |   | $ |  15,762  |   | $ |  17,609  |   | $ |  1,716  |   | $ |  2,524  |
| Sales to AEP Affiliates                      |   |   |  (2,098) |   |   |  (2,153) |   |   |  (1,913) |   |   |  5,014  |   |   |  (502) |   |   |  (1,024) |
| Regulatory Assets (a)                        |   |   |  -  |   |   |  (3,557) |   |   |  -  |   |   |  (5,725) |   |   |  321  |   |   |  73  |
| Regulatory Liabilities (a)                   |   |   |  19,686  |   |   |  -  |   |   |  10,418  |   |   |  -  |   |   |  3,763  |   |   |  1,406  |
| Total Gain (Loss) on Risk Management         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                         | Contracts |   | $ |  22,007  |   | $ |  13,803  |   | $ |  24,267  |   | $ |  16,898  |   | $ |  5,298  |   | $ |  2,979  |
|                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amount of Gain (Loss) Recognized on          |
| Risk Management Contracts                    |
| For the Nine Months Ended September 30, 2009 |
|                                         |
| Location of Gain (Loss)                      |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                         |   |   | (in thousands) |
| Electric Generation, Transmission and        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                         | Distribution Revenues |   | $ |  13,211  |   | $ |  26,557  |   | $ |  31,333  |   | $ |  27,453  |   | $ |  (2) |   | $ |  151  |
| Sales to AEP Affiliates                      |   |   |  (7,563) |   |   |  (4,707) |   |   |  (4,710) |   |   |  (1,191) |   |   |  510  |   |   |  372  |
| Regulatory Assets (a)                        |   |   |  -  |   |   |  (6,243) |   |   |  (3,727) |   |   |  (7,231) |   |   |  (283) |   |   |  200  |
| Regulatory Liabilities (a)                   |   |   |  24,479  |   |   |  2,284  |   |   |  4,347  |   |   |  2,300  |   |   |  (1,696) |   |   |  (65) |
| Total Gain (Loss) on Risk Management         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                         | Contracts |   | $ |  30,127  |   | $ |  17,891  |   | $ |  27,243  |   | $ |  21,331  |   | $ |  (1,471) |   | $ |  658  |

----

----

----

| Total Accumulated Other Comprehensive Income (Loss) Activity for Cash Flow Hedges |
|-----------------------------------------------------------------------------------|
| For the Three Months Ended September 30, 2010                                     |
|                                                                              |
| Commodity Contracts                                                               |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                              |   | (in thousands) |
| Balance in AOCI as of June 30, 2010                                               |   | $ |  (1,437) |   | $ |  (807) |   | $ |  (813) |   | $ |  (941) |   | $ |  (84) |   | $ |  (33) |
| Changes in Fair Value Recognized in AOCI                                          |   |   |  (1,212) |   |   |  (729) |   |   |  (776) |   |   |  (914) |   |   |  69  |   |   |  60  |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Electric Generation, Transmission, and |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Distribution Revenues |   |   |  60  |   |   |  159  |   |   |  127  |   |   |  184  |   |   |  -  |   |   |  -  |
|                                                                              |   | Fuel and Other Consumables Used for |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Electric Generation |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  40  |   |   |  -  |
|                                                                              |   | Purchased Electricity for Resale |   |   |  56  |   |   |  156  |   |   |  138  |   |   |  195  |   |   |  -  |   |   |  -  |
|                                                                              |   | Other Operation Expense |   |   |  (7) |   |   |  (5) |   |   |  (5) |   |   |  (6) |   |   |  (7) |   |   |  (7) |
|                                                                              |   | Maintenance Expense |   |   |  (11) |   |   |  (3) |   |   |  (5) |   |   |  (6) |   |   |  (4) |   |   |  (3) |
|                                                                              |   | Property, Plant and Equipment |   |   |  (11) |   |   |  (4) |   |   |  (5) |   |   |  (9) |   |   |  (7) |   |   |  (5) |
|                                                                              |   | Regulatory Assets (a) |   |   |  436  |   |   |  -  |   |   |  58  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Regulatory Liabilities (a) |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |
| Balance in AOCI as of September 30, 2010                                          |   | $ |  (2,126) |   | $ |  (1,233) |   | $ |  (1,281) |   | $ |  (1,497) |   | $ |  7  |   | $ |  12  |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Rate and Foreign Currency                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Contracts                                                                         |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                              |   |   |   |   | (in thousands) |
| Balance in AOCI as of June 30, 2010                                               |   | $ |  (8,298) |   | $ |  -  |   | $ |  (9,011) |   | $ |  11,492  |   | $ |  (443) |   | $ |  (4,812) |
| Changes in Fair Value Recognized in AOCI                                          |   |   |  (790) |   |   |  -  |   |   |  -  |   |   |  1  |   |   |  -  |   |   |  122  |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Depreciation and Amortization |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  1  |   |   |  -  |   |   |  -  |
|                                                                              |   | Other Operation Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  (3) |
|                                                                              |   | Interest Expense |   |   |  394  |   |   |  -  |   |   |  252  |   |   |  (341) |   |   |  18  |   |   |  207  |
| Balance in AOCI as of September 30, 2010                                          |   | $ |  (8,694) |   | $ |  -  |   | $ |  (8,759) |   | $ |  11,153  |   | $ |  (425) |   | $ |  (4,486) |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Contracts                                                                   |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                              |   |   |   |   | (in thousands) |
| Balance in AOCI as of June 30, 2010                                               |   | $ |  (9,735) |   | $ |  (807) |   | $ |  (9,824) |   | $ |  10,551  |   | $ |  (527) |   | $ |  (4,845) |
| Changes in Fair Value Recognized in AOCI                                          |   |   |  (2,002) |   |   |  (729) |   |   |  (776) |   |   |  (913) |   |   |  69  |   |   |  182  |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Electric Generation, Transmission, and |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Distribution Revenues |   |   |  60  |   |   |  159  |   |   |  127  |   |   |  184  |   |   |  -  |   |   |  -  |
|                                                                              |   | Fuel and Other Consumables Used for |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Electric Generation |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  40  |   |   |  -  |
|                                                                              |   | Purchased Electricity for Resale |   |   |  56  |   |   |  156  |   |   |  138  |   |   |  195  |   |   |  -  |   |   |  -  |
|                                                                              |   | Other Operation Expense |   |   |  (7) |   |   |  (5) |   |   |  (5) |   |   |  (6) |   |   |  (7) |   |   |  (10) |
|                                                                              |   | Maintenance Expense |   |   |  (11) |   |   |  (3) |   |   |  (5) |   |   |  (6) |   |   |  (4) |   |   |  (3) |
|                                                                              |   | Depreciation and Amortization |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  1  |   |   |  -  |   |   |  -  |
|                                                                              |   | Interest Expense |   |   |  394  |   |   |  -  |   |   |  252  |   |   |  (341) |   |   |  18  |   |   |  207  |
|                                                                              |   | Property, Plant and Equipment |   |   |  (11) |   |   |  (4) |   |   |  (5) |   |   |  (9) |   |   |  (7) |   |   |  (5) |
|                                                                              |   | Regulatory Assets (a) |   |   |  436  |   |   |  -  |   |   |  58  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Regulatory Liabilities (a) |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |
| Balance in AOCI as of September 30, 2010                                          |   | $ |  (10,820) |   | $ |  (1,233) |   | $ |  (10,040) |   | $ |  9,656  |   | $ |  (418) |   | $ |  (4,474) |

----

| Total Accumulated Other Comprehensive Income (Loss) Activity for Cash Flow Hedges |
|-----------------------------------------------------------------------------------|
| For the Three Months Ended September 30, 2009                                     |
|                                                                              |
| Commodity Contracts                                                               |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                              |   | (in thousands) |
| Balance in AOCI as of June 30, 2009                                               |   | $ |  2,296  |   | $ |  1,189  |   | $ |  1,170  |   | $ |  1,526  |   | $ |  127  |   | $ |  141  |
| Changes in Fair Value Recognized in AOCI                                          |   |   |  (451) |   |   |  (232) |   |   |  (227) |   |   |  (346) |   |   |  (377) |   |   |  (45) |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Electric Generation, Transmission, and |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Distribution Revenues |   |   |  (720) |   |   |  (1,815) |   |   |  (1,385) |   |   |  (2,126) |   |   |  -  |   |   |  -  |
|                                                                              |   | Fuel and Other Consumables Used for |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Electric Generation |   |   |  (39) |   |   |  (17) |   |   |  (20) |   |   |  (27) |   |   |  (20) |   |   |  (22) |
|                                                                              |   | Purchased Electricity for Resale |   |   |  444  |   |   |  1,116  |   |   |  852  |   |   |  1,313  |   |   |  -  |   |   |  -  |
|                                                                              |   | Other Operation Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Maintenance Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Property, Plant and Equipment |   |   |  (23) |   |   |  (9) |   |   |  (12) |   |   |  (17) |   |   |  (12) |   |   |  (9) |
|                                                                              |   | Regulatory Assets (a) |   |   |  1,664  |   |   |  -  |   |   |  226  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Regulatory Liabilities (a) |   |   |  (2,709) |   |   |  -  |   |   |  (369) |   |   |  -  |   |   |  -  |   |   |  -  |
| Balance in AOCI as of September 30, 2009                                          |   | $ |  462  |   | $ |  232  |   | $ |  235  |   | $ |  323  |   | $ |  (282) |   | $ |  65  |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Rate and Foreign Currency                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Contracts                                                                         |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                              |   |   |   |   | (in thousands) |
| Balance in AOCI as of June 30, 2009                                               |   | $ |  (7,285) |   | $ |  -  |   | $ |  (10,017) |   | $ |  16,662  |   | $ |  (613) |   | $ |  (5,497) |
| Changes in Fair Value Recognized in AOCI                                          |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  (4,038) |   |   |  -  |   |   |  82  |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Depreciation and Amortization |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Expense |   |   |  -  |   |   |  -  |   |   |  (2) |   |   |  1  |   |   |  -  |   |   |  -  |
|                                                                              |   | Interest Expense |   |   |  418  |   |   |  -  |   |   |  253  |   |   |  (113) |   |   |  46  |   |   |  208  |
| Balance in AOCI as of September 30, 2009                                          |   | $ |  (6,867) |   | $ |  -  |   | $ |  (9,766) |   | $ |  12,512  |   | $ |  (567) |   | $ |  (5,207) |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Contracts                                                                   |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                              |   |   |   |   | (in thousands) |
| Balance in AOCI as of June 30, 2009                                               |   | $ |  (4,989) |   | $ |  1,189  |   | $ |  (8,847) |   | $ |  18,188  |   | $ |  (486) |   | $ |  (5,356) |
| Changes in Fair Value Recognized in AOCI                                          |   |   |  (451) |   |   |  (232) |   |   |  (227) |   |   |  (4,384) |   |   |  (377) |   |   |  37  |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Electric Generation, Transmission, and |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Distribution Revenues |   |   |  (720) |   |   |  (1,815) |   |   |  (1,385) |   |   |  (2,126) |   |   |  -  |   |   |  -  |
|                                                                              |   | Fuel and Other Consumables Used for |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Electric Generation |   |   |  (39) |   |   |  (17) |   |   |  (20) |   |   |  (27) |   |   |  (20) |   |   |  (22) |
|                                                                              |   | Purchased Electricity for Resale |   |   |  444  |   |   |  1,116  |   |   |  852  |   |   |  1,313  |   |   |  -  |   |   |  -  |
|                                                                              |   | Other Operation Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Maintenance Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Depreciation and Amortization |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Expense |   |   |  -  |   |   |  -  |   |   |  (2) |   |   |  1  |   |   |  -  |   |   |  -  |
|                                                                              |   | Interest Expense |   |   |  418  |   |   |  -  |   |   |  253  |   |   |  (113) |   |   |  46  |   |   |  208  |
|                                                                              |   | Property, Plant and Equipment |   |   |  (23) |   |   |  (9) |   |   |  (12) |   |   |  (17) |   |   |  (12) |   |   |  (9) |
|                                                                              |   | Regulatory Assets (a) |   |   |  1,664  |   |   |  -  |   |   |  226  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Regulatory Liabilities (a) |   |   |  (2,709) |   |   |  -  |   |   |  (369) |   |   |  -  |   |   |  -  |   |   |  -  |
| Balance in AOCI as of September 30, 2009                                          |   | $ |  (6,405) |   | $ |  232  |   | $ |  (9,531) |   | $ |  12,835  |   | $ |  (849) |   | $ |  (5,142) |

----

| Total Accumulated Other Comprehensive Income (Loss) Activity for Cash Flow Hedges |
|-----------------------------------------------------------------------------------|
| For the Nine Months Ended September 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                                          |   |   |  (3,069) |   |   |  (1,806) |   |   |  (1,859) |   |   |  (2,214) |   |   |  (36) |   |   |  (36) |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Electric Generation, Transmission, and |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Distribution Revenues |   |   |  117  |   |   |  303  |   |   |  247  |   |   |  351  |   |   |  -  |   |   |  -  |
|                                                                              |   | Fuel and Other Consumables Used for |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Electric Generation |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  (13) |   |   |  190  |   |   |  -  |
|                                                                              |   | Purchased Electricity for Resale |   |   |  267  |   |   |  706  |   |   |  593  |   |   |  828  |   |   |  -  |   |   |  -  |
|                                                                              |   | Other Operation Expense |   |   |  (31) |   |   |  (24) |   |   |  (22) |   |   |  (26) |   |   |  (26) |   |   |  (30) |
|                                                                              |   | Maintenance Expense |   |   |  (47) |   |   |  (15) |   |   |  (19) |   |   |  (21) |   |   |  (16) |   |   |  (15) |
|                                                                              |   | Property, Plant and Equipment |   |   |  (44) |   |   |  (21) |   |   |  (22) |   |   |  (31) |   |   |  (27) |   |   |  (19) |
|                                                                              |   | Regulatory Assets (a) |   |   |  1,424  |   |   |  -  |   |   |  183  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Regulatory Liabilities (a) |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  (5) |   |   |  -  |   |   |  -  |
| Balance in AOCI as of September 30, 2010                                          |   | $ |  (2,126) |   | $ |  (1,233) |   | $ |  (1,281) |   | $ |  (1,497) |   | $ |  7  |   | $ |  12  |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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                                          |   |   |  (3,475) |   |   |  -  |   |   |  -  |   |   |  1  |   |   |  -  |   |   |  (81) |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Depreciation and Amortization |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  3  |   |   |  -  |   |   |  -  |
|                                                                              |   | Other Operation Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  21  |
|                                                                              |   | Interest Expense |   |   |  1,231  |   |   |  -  |   |   |  755  |   |   |  (1,023) |   |   |  96  |   |   |  621  |
| Balance in AOCI as of September 30, 2010                                          |   | $ |  (8,694) |   | $ |  -  |   | $ |  (8,759) |   | $ |  11,153  |   | $ |  (425) |   | $ |  (4,486) |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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                                          |   |   |  (6,544) |   |   |  (1,806) |   |   |  (1,859) |   |   |  (2,213) |   |   |  (36) |   |   |  (117) |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Electric Generation, Transmission, and |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Distribution Revenues |   |   |  117  |   |   |  303  |   |   |  247  |   |   |  351  |   |   |  -  |   |   |  -  |
|                                                                              |   | Fuel and Other Consumables Used for |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Electric Generation |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  (13) |   |   |  190  |   |   |  -  |
|                                                                              |   | Purchased Electricity for Resale |   |   |  267  |   |   |  706  |   |   |  593  |   |   |  828  |   |   |  -  |   |   |  -  |
|                                                                              |   | Other Operation Expense |   |   |  (31) |   |   |  (24) |   |   |  (22) |   |   |  (26) |   |   |  (26) |   |   |  (9) |
|                                                                              |   | Maintenance Expense |   |   |  (47) |   |   |  (15) |   |   |  (19) |   |   |  (21) |   |   |  (16) |   |   |  (15) |
|                                                                              |   | Depreciation and Amortization |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  3  |   |   |  -  |   |   |  -  |
|                                                                              |   | Interest Expense |   |   |  1,231  |   |   |  -  |   |   |  755  |   |   |  (1,023) |   |   |  96  |   |   |  621  |
|                                                                              |   | Property, Plant and Equipment |   |   |  (44) |   |   |  (21) |   |   |  (22) |   |   |  (31) |   |   |  (27) |   |   |  (19) |
|                                                                              |   | Regulatory Assets (a) |   |   |  1,424  |   |   |  -  |   |   |  183  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Regulatory Liabilities (a) |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  (5) |   |   |  -  |   |   |  -  |
| Balance in AOCI as of September 30, 2010                                          |   | $ |  (10,820) |   | $ |  (1,233) |   | $ |  (10,040) |   | $ |  9,656  |   | $ |  (418) |   | $ |  (4,474) |

----

| Total Accumulated Other Comprehensive Income (Loss) Activity for Cash Flow Hedges |
|-----------------------------------------------------------------------------------|
| For the Nine Months Ended September 30, 2009                                      |
|                                                                              |
| Commodity Contracts                                                               |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                              |   | (in thousands) |
| Balance in AOCI as of December 31, 2008                                           |   | $ |  2,726  |   | $ |  1,531  |   | $ |  1,482  |   | $ |  1,898  |   | $ |  -  |   | $ |  -  |
| Changes in Fair Value Recognized in AOCI                                          |   |   |  (278) |   |   |  (257) |   |   |  (233) |   |   |  (325) |   |   |  (246) |   |   |  100  |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Electric Generation, Transmission, and |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Distribution Revenues |   |   |  (1,429) |   |   |  (3,586) |   |   |  (2,774) |   |   |  (4,319) |   |   |  -  |   |   |  -  |
|                                                                              |   | Fuel and Other Consumables Used for |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Electric Generation |   |   |  (45) |   |   |  (21) |   |   |  (24) |   |   |  (32) |   |   |  (23) |   |   |  (25) |
|                                                                              |   | Purchased Electricity for Resale |   |   |  1,038  |   |   |  2,576  |   |   |  2,033  |   |   |  3,120  |   |   |  -  |   |   |  -  |
|                                                                              |   | Other Operation Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Maintenance Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Property, Plant and Equipment |   |   |  (26) |   |   |  (11) |   |   |  (13) |   |   |  (19) |   |   |  (13) |   |   |  (10) |
|                                                                              |   | Regulatory Assets (a) |   |   |  3,800  |   |   |  -  |   |   |  457  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Regulatory Liabilities (a) |   |   |  (5,324) |   |   |  -  |   |   |  (693) |   |   |  -  |   |   |  -  |   |   |  -  |
| Balance in AOCI as of September 30, 2009                                          |   | $ |  462  |   | $ |  232  |   | $ |  235  |   | $ |  323  |   | $ |  (282) |   | $ |  65  |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Rate and Foreign Currency                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Contracts                                                                         |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                              |   |   |   |   | (in thousands) |
| Balance in AOCI as of December 31, 2008                                           |   | $ |  (8,118) |   | $ |  -  |   | $ |  (10,521) |   | $ |  1,752  |   | $ |  (704) |   | $ |  (5,924) |
| Changes in Fair Value Recognized in AOCI                                          |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  10,915  |   |   |  -  |   |   |  95  |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Depreciation and Amortization |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Expense |   |   |  -  |   |   |  -  |   |   |  (4) |   |   |  3  |   |   |  -  |   |   |  -  |
|                                                                              |   | Interest Expense |   |   |  1,251  |   |   |  -  |   |   |  759  |   |   |  (158) |   |   |  137  |   |   |  622  |
| Balance in AOCI as of September 30, 2009                                          |   | $ |  (6,867) |   | $ |  -  |   | $ |  (9,766) |   | $ |  12,512  |   | $ |  (567) |   | $ |  (5,207) |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Contracts                                                                   |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
|                                                                              |   |   |   |   | (in thousands) |
| Balance in AOCI as of December 31, 2008                                           |   | $ |  (5,392) |   | $ |  1,531  |   | $ |  (9,039) |   | $ |  3,650  |   | $ |  (704) |   | $ |  (5,924) |
| Changes in Fair Value Recognized in AOCI                                          |   |   |  (278) |   |   |  (257) |   |   |  (233) |   |   |  10,590  |   |   |  (246) |   |   |  195  |
| Amount of (Gain) or Loss Reclassified                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | from AOCI to Income Statement/within |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              | Balance Sheet: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   | Electric Generation, Transmission, and |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Distribution Revenues |   |   |  (1,429) |   |   |  (3,586) |   |   |  (2,774) |   |   |  (4,319) |   |   |  -  |   |   |  -  |
|                                                                              |   | Fuel and Other Consumables Used for |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Electric Generation |   |   |  (45) |   |   |  (21) |   |   |  (24) |   |   |  (32) |   |   |  (23) |   |   |  (25) |
|                                                                              |   | Purchased Electricity for Resale |   |   |  1,038  |   |   |  2,576  |   |   |  2,033  |   |   |  3,120  |   |   |  -  |   |   |  -  |
|                                                                              |   | Other Operation Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Maintenance Expense |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Depreciation and Amortization |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   | Expense |   |   |  -  |   |   |  -  |   |   |  (4) |   |   |  3  |   |   |  -  |   |   |  -  |
|                                                                              |   | Interest Expense |   |   |  1,251  |   |   |  -  |   |   |  759  |   |   |  (158) |   |   |  137  |   |   |  622  |
|                                                                              |   | Property, Plant and Equipment |   |   |  (26) |   |   |  (11) |   |   |  (13) |   |   |  (19) |   |   |  (13) |   |   |  (10) |
|                                                                              |   | Regulatory Assets (a) |   |   |  3,800  |   |   |  -  |   |   |  457  |   |   |  -  |   |   |  -  |   |   |  -  |
|                                                                              |   | Regulatory Liabilities (a) |   |   |  (5,324) |   |   |  -  |   |   |  (693) |   |   |  -  |   |   |  -  |   |   |  -  |
| Balance in AOCI as of September 30, 2009                                          |   | $ |  (6,405) |   | $ |  232  |   | $ |  (9,531) |   | $ |  12,835  |   | $ |  (849) |   | $ |  (5,142) |

----

| Impact of Cash Flow Hedges on the Registrant Subsidiaries’ |
|------------------------------------------------------------------|
| Condensed Balance Sheets                                         |
| September 30, 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                                                             |   | $ |  70  |   | $ |  -  |   | $ |  (3,367) |   | $ |  (1,216) |   | $ |  (2,126) |   | $ |  (8,694) |
| CSPCo                                                            |   |   |  32  |   |   |  -  |   |   |  (1,940) |   |   |  -  |   |   |  (1,233) |   |   |  -  |
| I&M                                                          |   |   |  37  |   |   |  -  |   |   |  (2,023) |   |   |  -  |   |   |  (1,281) |   |   |  (8,759) |
| OPCo                                                             |   |   |  50  |   |   |  -  |   |   |  (2,370) |   |   |  -  |   |   |  (1,497) |   |   |  11,153  |
| PSO                                                              |   |   |  21  |   |   |  -  |   |   |  (21) |   |   |  -  |   |   |  7  |   |   |  (425) |
| SWEPCo                                                           |   |   |  19  |   |   |  8  |   |   |  (11) |   |   |  (87) |   |   |  12  |   |   |  (4,486) |

|    |   |      | Expected to be Reclassified to |     |          |              |
|---------|--------|-----------|--------------------------------|----------|---------------|-------------------|
|    |   |      | Net Income During the Next     |     |          |              |
|    |   |      | Twelve Months                  |     |          |              |
|    |   |      |                           |     |          |              | Maximum Term for |
|    |   |      |                           |     | Interest Rate |              | Exposure to |
|    |   |      |                           |     | and Foreign   |              | Variability of Future |
| Company |   | Commodity |                           | Currency |          | Cash Flows        |
|    |   |      | (in thousands)                 |     | (in months)   |
| APCo    |   | $         |  (2,002)                  |     | $             |  (1,733)     |   |   |  15  |
| CSPCo   |   |      |  (1,161)                  |     |          |  -      |   |   |  15  |
| I&M |   |      |  (1,208)                  |     |          |  (1,007)     |   |   |  15  |
| OPCo    |   |      |  (1,410)                  |     |          |  1,359  |   |   |  15  |
| PSO     |   |      |  9                   |     |          |  (73)        |   |   |  15  |
| SWEPCo  |   |      |  13                  |     |          |  (829)       |   |   |  26  |

----

| Impact of Cash Flow Hedges on the Registrant Subsidiaries’ |
|------------------------------------------------------------------|
| Condensed Balance Sheets                                         |
| December 31, 2009                                                |
|                                                             |
|                                                             |   |   | Hedging Assets (a) |   | Hedging Liabilities (a) |   | AOCI Gain (Loss) Net of Tax |
|                                                             |   |   |   |   | Interest Rate |   |   |   | Interest Rate |   |   |   | Interest Rate |
|                                                             |   |   |   |   | and Foreign |   |   |   | and Foreign |   |   |   | and Foreign |
| Company                                                          |   | Commodity |   | Currency |   | Commodity |   | Currency |   | Commodity |   | Currency |
|                                                             |   |   | (in thousands) |
| APCo                                                             |   | $ |  1,999  |   | $ |  -  |   | $ |  (3,542) |   | $ |  -  |   | $ |  (743) |   | $ |  (6,450) |
| CSPCo                                                            |   |   |  984  |   |   |  -  |   |   |  (1,794) |   |   |  -  |   |   |  (376) |   |   |  -  |
| I&M                                                          |   |   |  1,011  |   |   |  -  |   |   |  (1,809) |   |   |  -  |   |   |  (382) |   |   |  (9,514) |
| OPCo                                                             |   |   |  1,242  |   |   |  -  |   |   |  (2,088) |   |   |  -  |   |   |  (366) |   |   |  12,172  |
| PSO                                                              |   |   |  178  |   |   |  -  |   |   |  (300) |   |   |  -  |   |   |  (78) |   |   |  (521) |
| SWEPCo                                                           |   |   |  168  |   |   |  5  |   |   |  -  |   |   |  (46) |   |   |  112  |   |   |  (5,047) |

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

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

----

|    |   |               | September 30, 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    |   | $                  |  7,600     |   | $ |  9,459  |   | $ |  9,261  |
| CSPCo   |   |               |  4,381     |   |   |  5,453  |   |   |  5,339  |
| I&M |   |               |  4,570     |   |   |  5,688  |   |   |  5,569  |
| OPCo    |   |               |  5,347     |   |   |  6,656  |   |   |  6,517  |
| PSO     |   |               |  10        |   |   |  1,809  |   |   |  1,694  |
| SWEPCo  |   |               |  12        |   |   |  2,167  |   |   |  2,029  |

|    |   |               | December 31, 2009    |
|---------|--------|--------------------|----------------------|
|    |   |               |                 |   |   |   |   |   |   |   |
|    |   |               | 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    |   | $                  |  2,229     |   | $ |  8,433  |   | $ |  7,947  |
| CSPCo   |   |               |  1,129     |   |   |  4,272  |   |   |  4,026  |
| I&M |   |               |  1,139     |   |   |  4,309  |   |   |  4,060  |
| OPCo    |   |               |  1,315     |   |   |  4,975  |   |   |  4,688  |
| PSO     |   |               |  689       |   |   |  2,772  |   |   |  2,083  |
| SWEPCo  |   |               |  819       |   |   |  3,297  |   |   |  2,477  |

----

|    |   |                 | September 30, 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    |   | $                    |  128,044   |   | $ |  19,328  |   | $ |  30,372  |
| CSPCo   |   |                 |  73,111    |   |   |  11,142  |   |   |  16,807  |
| I&M |   |                 |  76,260    |   |   |  11,622  |   |   |  17,528  |
| OPCo    |   |                 |  89,264    |   |   |  13,600  |   |   |  20,540  |
| PSO     |   |                 |  117       |   |   |  -  |   |   |  40  |
| SWEPCo  |   |                 |  233       |   |   |  -  |   |   |  133  |
|    |   |                 |                 |   |   |   |   |   |   |   |
|    |   |                 | December 31, 2009    |
|    |   |                 |                 |   |   |   |   |   |   |   |
|    |   |                 | 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    |   | $                    |  154,924   |   | $ |  3,115  |   | $ |  33,186  |
| CSPCo   |   |                 |  78,489    |   |   |  1,578  |   |   |  16,813  |
| I&M |   |                 |  79,158    |   |   |  1,592  |   |   |  16,955  |
| OPCo    |   |                 |  91,430    |   |   |  1,838  |   |   |  19,615  |
| PSO     |   |                 |  40        |   |   |  -  |   |   |  40  |
| SWEPCo  |   |                 |  139       |   |   |  -  |   |   |  93  |

----

|                            |   | 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                             |   |   |   |   |

----

|    |   | September 30, 2010 |                  | December 31, 2009 |
|---------|--------|--------------------|-----------------------|-------------------|
| Company |   | Book Value         |                  | Fair Value        |   | Book Value |   | Fair Value |
|    |   | (in thousands)     |
| APCo    |   | $                  |  3,560,959  |              | $ |  4,075,531  |   | $ |  3,477,306  |   | $ |  3,699,373  |
| CSPCo   |   |               |  1,588,753  |              |   |  1,791,795  |   |   |  1,536,393  |   |   |  1,616,857  |
| I&M |   |               |  2,118,911  |              |   |  2,399,239  |   |   |  2,077,906  |   |   |  2,192,854  |
| OPCo    |   |               |  2,929,386  |              |   |  3,249,304  |   |   |  3,242,505  |   |   |  3,380,084  |
| PSO     |   |               |  970,643    |              |   |  1,095,500  |   |   |  968,121  |   |   |  1,007,183  |
| SWEPCo  |   |               |  1,769,457  |              |   |  2,050,992  |   |   |  1,474,153  |   |   |  1,554,165  |

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

----

|                         |                                         |   | September 30, 2010  |                  | December 31, 2009 |
|------------------------------|----------------------------------------------|--------|---------------------|-----------------------|-------------------|
|                         |                                         |   | Estimated           |                  | Gross             |   | Other-Than- |   | Estimated |   | Gross |   | Other-Than- |
|                         |                                         | Fair   | Unrealized          | Temporary             | Fair              | Unrealized | Temporary |
|                         |                                         | Value  | Gains               | Impairments           | Value             | Gains | Impairments |
|                         |                                         |   | (in thousands)      |
| Cash and Cash Equivalents    |                                         | $      |  30,217   |                  | $                 |  -  |   | $ |  -  |   | $ |  14,412  |   | $ |  -  |   | $ |  -  |
| Fixed Income Securities:     |                                         |   |                |                  |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                         | United States Government                     |   |                |  489,026    |              |   |  40,901  |   |   |  (1,036) |   |   |  400,565  |   |   |  12,708  |   |   |  (3,472) |
|                         | Corporate Debt                               |   |                |  64,744     |              |   |  5,039  |   |   |  (1,988) |   |   |  57,291  |   |   |  4,636  |   |   |  (2,177) |
|                         | State and Local Government                   |   |                |  307,660    |              |   |  (6,991) |   |   |  (527) |   |   |  368,930  |   |   |  7,924  |   |   |  991  |
|                         |   Subtotal Fixed Income Securities |   |  861,430  |                  |              |  38,949  |   |   |  (3,551) |   |   |  826,786  |   |   |  25,268  |   |   |  (4,658) |
| Equity Securities - Domestic |                                         |   |  574,052  |                  |              |  124,051  |   |   |  (122,769) |   |   |  550,721  |   |   |  234,437  |   |   |  (119,379) |
| Spent Nuclear Fuel and       |                                         |   |                |                  |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                         | Decommissioning Trusts                  |   | $                   |  1,465,699  |              | $ |  163,000  |   | $ |  (126,320) |   | $ |  1,391,919  |   | $ |  259,705  |   | $ |  (124,037) |

|                                      |   | Three Months Ended |          | Nine Months Ended |
|-------------------------------------------|--------|--------------------|---------------|-------------------|
|                                      |   | September 30,      |          | September 30,     |
|                                      |   | 2010               |          | 2009              |   | 2010 |   | 2009 |
|                                      |   | (in thousands)     |
| Proceeds From Investment Sales            |   | $                  | 495,221  |              | $ | 112,900  |   | $ | 1,087,484  |   | $ | 523,927  |
| Purchases of Investments                  |   |               | 511,688  |              |   | 129,239  |   |   | 1,128,747  |   |   | 571,167  |
| Gross Realized Gains on Investment Sales  |   |               | 1,168    |              |   | 1,137  |   |   | 7,518  |   |   | 10,490  |
| Gross Realized Losses on Investment Sales |   |               | 33       |              |   | 196  |   |   | 450  |   |   | 1,004  |

|                     | Fair Value     |   |
|--------------------------|----------------|--------|
|                     | of Debt        |   |
|                     | Securities     |   |
|                     | (in thousands) |   |
| Within 1 year            |           | $      | 13,134 |   |
| 1 year – 5 years   |           |   | 346,079 |   |
| 5 years – 10 years |           |   | 266,801 |   |
| After 10 years           |           |   | 235,416 |   |
| Total                    |           | $      | 861,430 |   |

----

| Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|--------------------------------------------------------------------|
| September 30, 2010                                                 |
| APCo                                                               |   |   |   |   |   |   |   |   |   |
|                                                               |   | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                                            | (in thousands) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g)                        | $ |  2,786  |   | $ |  489,714  |   | $ |  27,711  |   | $ |  (412,038) |   | $ |  108,173  |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | Commodity Hedges (a) |   |  -  |   |   |  1,548  |   |   |  -  |   |   |  (1,478) |   |   |  70  |
| Dedesignated Risk Management Contracts (b)                         |   |  -  |   |   |  -  |   |   |  -  |   |   |  4,822  |   |   |  4,822  |
| Total Risk Management Assets                                       | $ |  2,786  |   | $ |  491,262  |   | $ |  27,711  |   | $ |  (408,694) |   | $ |  113,065  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g)                        | $ |  2,725  |   | $ |  478,028  |   | $ |  11,146  |   | $ |  (452,592) |   | $ |  39,307  |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | Commodity Hedges (a) |   |  -  |   |   |  4,845  |   |   |  -  |   |   |  (1,478) |   |   |  3,367  |
|                                                               | Interest Rate/Foreign Currency Hedges |   |  -  |   |   |  1,216  |   |   |  -  |   |   |  -  |   |   |  1,216  |
| DETM Assignment (c)                                                |   |  -  |   |   |  -  |   |   |  -  |   |   |  632  |   |   |  632  |
| Total Risk Management Liabilities                                  | $ |  2,725  |   | $ |  484,089  |   | $ |  11,146  |   | $ |  (453,438) |   | $ |  44,522  |

| Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|--------------------------------------------------------------------|
| December 31, 2009                                                  |
| APCo                                                               |   |   |   |   |   |   |   |   |   |
|                                                               |   | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                                            | (in thousands) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Cash Deposits (d)                                            | $ |  421  |   | $ |  -  |   | $ |  -  |   | $ |  51  |   | $ |  472  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a)                            |   |  2,344  |   |   |  449,406  |   |   |  12,866  |   |   |  (360,248) |   |   |  104,368  |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | Commodity Hedges (a) |   |  -  |   |   |  3,620  |   |   |  -  |   |   |  (1,621) |   |   |  1,999  |
| Dedesignated Risk Management Contracts (b)                         |   |  -  |   |   |  -  |   |   |  -  |   |   |  8,730  |   |   |  8,730  |
| Total Risk Management Assets                                       |   |  2,344  |   |   |  453,026  |   |   |  12,866  |   |   |  (353,139) |   |   |  115,097  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                                                       | $ |  2,765  |   | $ |  453,026  |   | $ |  12,866  |   | $ |  (353,088) |   | $ |  115,569  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a)                            | $ |  2,648  |   | $ |  422,063  |   | $ |  3,438  |   | $ |  (388,265) |   | $ |  39,884  |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | Commodity Hedges (a) |   |  -  |   |   |  5,163  |   |   |  -  |   |   |  (1,621) |   |   |  3,542  |
| DETM Assignment (c)                                                |   |  -  |   |   |  -  |   |   |  -  |   |   |  2,730  |   |   |  2,730  |
| Total Risk Management Liabilities                                  | $ |  2,648  |   | $ |  427,226  |   | $ |  3,438  |   | $ |  (387,156) |   | $ |  46,156  |

----

| Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|--------------------------------------------------------------------|
| September 30, 2010                                                 |
| CSPCo                                                              |   |   |   |   |   |   |   |   |   |
|                                                               |   | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                                            | (in thousands) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g)                        | $ |  1,606  |   | $ |  280,931  |   | $ |  15,972  |   | $ |  (236,273) |   | $ |  62,236  |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | Commodity Hedges (a) |   |  -  |   |   |  876  |   |   |  -  |   |   |  (844) |   |   |  32  |
| Dedesignated Risk Management Contracts (b)                         |   |  -  |   |   |  -  |   |   |  -  |   |   |  2,780  |   |   |  2,780  |
| Total Risk Management Assets                                       | $ |  1,606  |   | $ |  281,807  |   | $ |  15,972  |   | $ |  (234,337) |   | $ |  65,048  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g)                        | $ |  1,571  |   | $ |  274,233  |   | $ |  6,425  |   | $ |  (259,644) |   | $ |  22,585  |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | Commodity Hedges (a) |   |  -  |   |   |  2,784  |   |   |  -  |   |   |  (844) |   |   |  1,940  |
| DETM Assignment (c)                                                |   |  -  |   |   |  -  |   |   |  -  |   |   |  364  |   |   |  364  |
| Total Risk Management Liabilities                                  | $ |  1,571  |   | $ |  277,017  |   | $ |  6,425  |   | $ |  (260,124) |   | $ |  24,889  |

|                                       | Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|--------------------------------------------|--------------------------------------------------------------------|
|                                       | December 31, 2009                                                  |
| CSPCo                                      |                                                               |   |   |   |   |   |   |   |   |
|                                       |                                                               | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                    | (in thousands)                                                     |
|                                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Cash Deposits (d)                    | $                                                                  |  16,129  |   | $ |  -  |   | $ |  -  |   | $ |  21  |   | $ |  16,150  |
|                                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                     |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a)    |                                                               |  1,188  |   |   |  227,150  |   |   |  6,518  |   |   |  (182,038) |   |   |  52,818  |
| Cash Flow Hedges:                          |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       | Commodity Hedges (a)                                               |   |  -  |   |   |  1,805  |   |   |  -  |   |   |  (821) |   |   |  984  |
| Dedesignated Risk Management Contracts (b) |                                                               |  -  |   |   |  -  |   |   |  -  |   |   |  4,423  |   |   |  4,423  |
| Total Risk Management Assets               |                                                               |  1,188  |   |   |  228,955  |   |   |  6,518  |   |   |  (178,436) |   |   |  58,225  |
|                                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                               | $                                                                  |  17,317  |   | $ |  228,955  |   | $ |  6,518  |   | $ |  (178,415) |   | $ |  74,375  |
|                                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                               |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a)    | $                                                                  |  1,342  |   | $ |  213,330  |   | $ |  1,742  |   | $ |  (196,226) |   | $ |  20,188  |
| Cash Flow Hedges:                          |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       | Commodity Hedges (a)                                               |   |  -  |   |   |  2,615  |   |   |  -  |   |   |  (821) |   |   |  1,794  |
| DETM Assignment (c)                        |                                                               |  -  |   |   |  -  |   |   |  -  |   |   |  1,383  |   |   |  1,383  |
| Total Risk Management Liabilities          | $                                                                  |  1,342  |   | $ |  215,945  |   | $ |  1,742  |   | $ |  (195,664) |   | $ |  23,365  |

----

| Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|--------------------------------------------------------------------|
| September 30, 2010                                                 |
| I&M                                                            |   |   |   |   |   |   |   |   |   |
|                                                               |   |   | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                                            | (in thousands) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g)                        | $ |  1,676  |   | $ |  301,988  |   | $ |  16,655  |   | $ |  (242,039) |   | $ |  78,280  |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | Commodity Hedges (a) |   |  -  |   |   |  919  |   |   |  -  |   |   |  (882) |   |   |  37  |
| Dedesignated Risk Management Contracts (b)                         |   |  -  |   |   |  -  |   |   |  -  |   |   |  2,900  |   |   |  2,900  |
| Total Risk Management Assets                                       |   |  1,676  |   |   |  302,907  |   |   |  16,655  |   |   |  (240,021) |   |   |  81,217  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Spent Nuclear Fuel and Decommissioning Trusts                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents (e)                                      |   |  -  |   |   |  20,776  |   |   |  -  |   |   |  9,441  |   |   |  30,217  |
| Fixed Income Securities:                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | United States Government |   |  -  |   |   |  489,026  |   |   |  -  |   |   |  -  |   |   |  489,026  |
|                                                               | Corporate Debt |   |  -  |   |   |  64,744  |   |   |  -  |   |   |  -  |   |   |  64,744  |
|                                                               | State and Local Government |   |  -  |   |   |  307,660  |   |   |  -  |   |   |  -  |   |   |  307,660  |
|                                                               |   | Subtotal Fixed Income Securities |   |  -  |   |   |  861,430  |   |   |  -  |   |   |  -  |   |   |  861,430  |
| Equity Securities - Domestic (f)                                   |   |  574,052  |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  574,052  |
| Total Spent Nuclear Fuel and Decommissioning Trusts                |   |  574,052  |   |   |  882,206  |   |   |  -  |   |   |  9,441  |   |   |  1,465,699  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                                                       | $ |  575,728  |   | $ |  1,185,113  |   | $ |  16,655  |   | $ |  (230,580) |   | $ |  1,546,916  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g)                        | $ |  1,639  |   | $ |  281,426  |   | $ |  6,697  |   | $ |  (266,397) |   | $ |  23,365  |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | Commodity Hedges (a) |   |  -  |   |   |  2,905  |   |   |  -  |   |   |  (882) |   |   |  2,023  |
| DETM Assignment (c)                                                |   |  -  |   |   |  -  |   |   |  -  |   |   |  380  |   |   |  380  |
| Total Risk Management Liabilities                                  | $ |  1,639  |   | $ |  284,331  |   | $ |  6,697  |   | $ |  (266,899) |   | $ |  25,768  |

----

|                                                |                       | Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|-----------------------------------------------------|----------------------------|--------------------------------------------------------------------|
|                                                |                       | December 31, 2009                                                  |
| I&M                                             |                       |                                                               |   |   |   |   |   |   |   |
|                                                |                       |                                                               | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                             | (in thousands)             |
|                                                |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                              |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a)             | $                          |  1,198                                                   |   | $ |  231,777  |   | $ |  6,571  |   | $ |  (181,446) |   | $ |  58,100  |
| Cash Flow Hedges:                                   |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                | Commodity Hedges (a)       |                                                               |  -  |   |   |  1,839  |   |   |  -  |   |   |  (828) |   |   |  1,011  |
| Dedesignated Risk Management Contracts (b)          |                       |  -                                                       |   |   |  -  |   |   |  -  |   |   |  4,461  |   |   |  4,461  |
| Total Risk Management Assets                        |                       |  1,198                                                   |   |   |  233,616  |   |   |  6,571  |   |   |  (177,813) |   |   |  63,572  |
|                                                |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Spent Nuclear Fuel and Decommissioning Trusts       |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents (e)                       |                       |  -                                                       |   |   |  3,562  |   |   |  -  |   |   |  10,850  |   |   |  14,412  |
| Fixed Income Securities:                            |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                | United States Government   |                                                               |  -  |   |   |  400,565  |   |   |  -  |   |   |  -  |   |   |  400,565  |
|                                                | Corporate Debt             |                                                               |  -  |   |   |  57,291  |   |   |  -  |   |   |  -  |   |   |  57,291  |
|                                                | State and Local Government |                                                               |  -  |   |   |  368,930  |   |   |  -  |   |   |  -  |   |   |  368,930  |
|                                                |                       | Subtotal Fixed Income Securities                                   |   |  -  |   |   |  826,786  |   |   |  -  |   |   |  -  |   |   |  826,786  |
| Equity Securities - Domestic (f)                    |                       |  550,721                                                 |   |   |  -  |   |   |  -  |   |   |  -  |   |   |  550,721  |
| Total Spent Nuclear Fuel and Decommissioning Trusts |                       |  550,721                                                 |   |   |  830,348  |   |   |  -  |   |   |  10,850  |   |   |  1,391,919  |
|                                                |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                                        | $                          |  551,919                                                 |   | $ |  1,063,964  |   | $ |  6,571  |   | $ |  (166,963) |   | $ |  1,455,491  |
|                                                |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                        |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                         |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a)             | $                          |  1,353                                                   |   | $ |  213,242  |   | $ |  1,755  |   | $ |  (195,732) |   | $ |  20,618  |
| Cash Flow Hedges:                                   |                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                | Commodity Hedges (a)       |                                                               |  -  |   |   |  2,637  |   |   |  -  |   |   |  (828) |   |   |  1,809  |
| DETM Assignment (c)                                 |                       |  -                                                       |   |   |  -  |   |   |  -  |   |   |  1,395  |   |   |  1,395  |
| Total Risk Management Liabilities                   | $                          |  1,353                                                   |   | $ |  215,879  |   | $ |  1,755  |   | $ |  (195,165) |   | $ |  23,822  |

----

|                                        | Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|---------------------------------------------|--------------------------------------------------------------------|
|                                        | September 30, 2010                                                 |
| OPCo                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |                                                               | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                     | (in thousands)                                                     |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Cash Deposits (d)                     | $                                                                  |  26  |   | $ |  -  |   | $ |  -  |   | $ |  -  |   | $ |  26  |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                      |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g) |                                                               |  1,961  |   |   |  373,224  |   |   |  19,540  |   |   |  (316,496) |   |   |  78,229  |
| Cash Flow Hedges:                           |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        | Commodity Hedges (a)                                               |   |  -  |   |   |  1,092  |   |   |  -  |   |   |  (1,042) |   |   |  50  |
| Dedesignated Risk Management Contracts (b)  |                                                               |  -  |   |   |  -  |   |   |  -  |   |   |  3,393  |   |   |  3,393  |
| Total Risk Management Assets                |                                                               |  1,961  |   |   |  374,316  |   |   |  19,540  |   |   |  (314,145) |   |   |  81,672  |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                                | $                                                                  |  1,987  |   | $ |  374,316  |   | $ |  19,540  |   | $ |  (314,145) |   | $ |  81,698  |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                 |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g) | $                                                                  |  1,917  |   | $ |  366,812  |   | $ |  7,883  |   | $ |  (345,156) |   | $ |  31,456  |
| Cash Flow Hedges:                           |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        | Commodity Hedges (a)                                               |   |  -  |   |   |  3,412  |   |   |  -  |   |   |  (1,042) |   |   |  2,370  |
| DETM Assignment (c)                         |                                                               |  -  |   |   |  -  |   |   |  -  |   |   |  445  |   |   |  445  |
| Total Risk Management Liabilities           | $                                                                  |  1,917  |   | $ |  370,224  |   | $ |  7,883  |   | $ |  (345,753) |   | $ |  34,271  |

|                                       | Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|--------------------------------------------|--------------------------------------------------------------------|
|                                       | December 31, 2009                                                  |
| OPCo                                       |                                                               |   |   |   |   |   |   |   |   |
|                                       |                                                               | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                    | (in thousands)                                                     |
|                                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Cash Deposits (d)                    | $                                                                  |  1,075  |   | $ |  -  |   | $ |  -  |   | $ |  24  |   | $ |  1,099  |
|                                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                     |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a)    |                                                               |  1,383  |   |   |  332,904  |   |   |  7,644  |   |   |  (270,272) |   |   |  71,659  |
| Cash Flow Hedges:                          |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       | Commodity Hedges (a)                                               |   |  -  |   |   |  2,199  |   |   |  -  |   |   |  (957) |   |   |  1,242  |
| Dedesignated Risk Management Contracts (b) |                                                               |  -  |   |   |  -  |   |   |  -  |   |   |  5,150  |   |   |  5,150  |
| Total Risk Management Assets               |                                                               |  1,383  |   |   |  335,103  |   |   |  7,644  |   |   |  (266,079) |   |   |  78,051  |
|                                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                               | $                                                                  |  2,458  |   | $ |  335,103  |   | $ |  7,644  |   | $ |  (266,055) |   | $ |  79,150  |
|                                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                               |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a)    | $                                                                  |  1,562  |   | $ |  317,114  |   | $ |  2,075  |   | $ |  (287,549) |   | $ |  33,202  |
| Cash Flow Hedges:                          |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       | Commodity Hedges (a)                                               |   |  -  |   |   |  3,045  |   |   |  -  |   |   |  (957) |   |   |  2,088  |
| DETM Assignment (c)                        |                                                               |  -  |   |   |  -  |   |   |  -  |   |   |  1,611  |   |   |  1,611  |
| Total Risk Management Liabilities          | $                                                                  |  1,562  |   | $ |  320,159  |   | $ |  2,075  |   | $ |  (286,895) |   | $ |  36,901  |

----

|                                        | Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|---------------------------------------------|--------------------------------------------------------------------|
|                                        | September 30, 2010                                                 |
| PSO                                         |                                                               |   |   |   |   |   |   |   |   |
|                                        |                                                               | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                     | (in thousands)                                                     |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                      |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g) | $                                                                  |  9  |   | $ |  9,098  |   | $ |  11  |   | $ |  (5,638) |   | $ |  3,480  |
| Cash Flow Hedges:                           |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        | Commodity Hedges (a)                                               |   |  -  |   |   |  69  |   |   |  -  |   |   |  (48) |   |   |  21  |
| Total Risk Management Assets                | $                                                                  |  9  |   | $ |  9,167  |   | $ |  11  |   | $ |  (5,686) |   | $ |  3,501  |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                 |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g) | $                                                                  |  8  |   | $ |  6,066  |   | $ |  9  |   | $ |  (5,693) |   | $ |  390  |
| Cash Flow Hedges:                           |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        | Commodity Hedges (a)                                               |   |  -  |   |   |  69  |   |   |  -  |   |   |  (48) |   |   |  21  |
| DETM Assignment (c)                         |                                                               |  -  |   |   |  -  |   |   |  -  |   |   |  16  |   |   |  16  |
| Total Risk Management Liabilities           | $                                                                  |  8  |   | $ |  6,135  |   | $ |  9  |   | $ |  (5,725) |   | $ |  427  |

|                                    | Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|-----------------------------------------|--------------------------------------------------------------------|
|                                    | December 31, 2009                                                  |
| PSO                                     |                                                               |   |   |   |   |   |   |   |   |
|                                    |                                                               | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                 | (in thousands)                                                     |
|                                    |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                  |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) | $                                                                  |  -  |   | $ |  17,494  |   | $ |  14  |   | $ |  (15,260) |   | $ |  2,248  |
| Cash Flow Hedges:                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                    | Commodity Hedges (a)                                               |   |  -  |   |   |  179  |   |   |  -  |   |   |  (1) |   |   |  178  |
| Total Risk Management Assets            | $                                                                  |  -  |   | $ |  17,673  |   | $ |  14  |   | $ |  (15,261) |   | $ |  2,426  |
|                                    |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                            |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                    |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities             |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) | $                                                                  |  -  |   | $ |  17,865  |   | $ |  12  |   | $ |  (15,454) |   | $ |  2,423  |
| Cash Flow Hedges:                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                    | Commodity Hedges (a)                                               |   |  -  |   |   |  301  |   |   |  -  |   |   |  (1) |   |   |  300  |
| Total Risk Management Liabilities       | $                                                                  |  -  |   | $ |  18,166  |   | $ |  12  |   | $ |  (15,455) |   | $ |  2,723  |

----

| Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|--------------------------------------------------------------------|
| September 30, 2010                                                 |
| SWEPCo                                                             |   |   |   |   |   |   |   |   |   |
|                                                               |   | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                                            | (in thousands) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g)                        | $ |  11  |   | $ |  15,793  |   | $ |  21  |   | $ |  (13,416) |   | $ |  2,409  |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | Commodity Hedges (a) |   |  -  |   |   |  51  |   |   |  -  |   |   |  (32) |   |   |  19  |
|                                                               | Interest Rate/Foreign Currency Hedges (a) |   |  -  |   |   |  8  |   |   |  -  |   |   |  -  |   |   |  8  |
| Total Risk Management Assets                                       | $ |  11  |   | $ |  15,852  |   | $ |  21  |   | $ |  (13,448) |   | $ |  2,436  |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) (g)                        | $ |  10  |   | $ |  14,153  |   | $ |  19  |   | $ |  (13,504) |   | $ |  678  |
| Cash Flow Hedges:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               | Commodity Hedges (a) |   |  -  |   |   |  43  |   |   |  -  |   |   |  (32) |   |   |  11  |
|                                                               | Interest Rate/Foreign Currency Hedges (a) |   |  -  |   |   |  87  |   |   |  -  |   |   |  -  |   |   |  87  |
| DETM Assignment (c)                                                |   |  -  |   |   |  -  |   |   |  -  |   |   |  19  |   |   |  19  |
| Total Risk Management Liabilities                                  | $ |  10  |   | $ |  14,283  |   | $ |  19  |   | $ |  (13,517) |   | $ |  795  |

|                                    | Assets and Liabilities Measured at Fair Value on a Recurring Basis |
|-----------------------------------------|--------------------------------------------------------------------|
|                                    | December 31, 2009                                                  |
| SWEPCo                                  |                                                               |   |   |   |   |   |   |   |   |
|                                    |                                                               | Level 1 |   | Level 2 |   | Level 3 |   | Other |   | Total |
| Assets:                                 | (in thousands)                                                     |
|                                    |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Assets                  |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) | $                                                                  |  -  |   | $ |  26,945  |   | $ |  22  |   | $ |  (24,007) |   | $ |  2,960  |
| Cash Flow Hedges:                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                    | Commodity Hedges (a)                                               |   |  -  |   |   |  216  |   |   |  -  |   |   |  (43) |   |   |  173  |
| Total Risk Management Assets            | $                                                                  |  -  |   | $ |  27,161  |   | $ |  22  |   | $ |  (24,050) |   | $ |  3,133  |
|                                    |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                            |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                    |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Liabilities             |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk Management Commodity Contracts (a) | $                                                                  |  -  |   | $ |  25,312  |   | $ |  19  |   | $ |  (24,312) |   | $ |  1,019  |
| Cash Flow Hedges:                       |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                    | Commodity Hedges (a)                                               |   |  -  |   |   |  89  |   |   |  -  |   |   |  (43) |   |   |  46  |
| Total Risk Management Liabilities       | $                                                                  |  -  |   | $ |  25,401  |   | $ |  19  |   | $ |  (24,355) |   | $ |  1,065  |

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

----

| Three Months Ended September 30, 2010        |                                           | APCo           |               | CSPCo             |   | I&M           |              | OPCo   |              | PSO               |   | SWEPCo             |
|----------------------------------------------|------------------------------------------------|----------------|--------------------|-------------------|--------|-------------------|-------------------|--------|-------------------|-------------------|--------|--------------------|
|                                         |                                           | (in thousands) |
| Balance as of June 30, 2010                  |                                           | $              |  10,874  |              | $      |  6,153  |              | $      |  6,209  |              | $      |  7,069   |   | $ |  (2) |   | $ |  (2) |
| Realized Gain (Loss) Included in Net Income  |                                           |           |               |              |   |              |              |   |              |              |   |               |   |   |   |   |   |   |
|                                         | (or Changes in Net Assets) (a) (b)             |           |               |  (1,680)     |   |              |  (845)       |   |              |  (850)       |   |               |  (981) |   |   |  2  |   |   |  2  |
| Unrealized Gain (Loss) Included in Net       |                                           |           |               |              |   |              |              |   |              |              |   |               |   |   |   |   |   |   |
|                                         | Income (or Changes in Net Assets) Relating     |           |               |              |   |              |              |   |              |              |   |               |   |   |   |   |   |   |   |
|                                         | to Assets Still Held at the Reporting Date (a) |           |               |  -      |   |              |  5,941  |   |              |  -      |   |               |  9,258  |   |   |  -  |   |   |  -  |
| Realized and Unrealized Gains (Losses)       |                                           |           |               |              |   |              |              |   |              |              |   |               |   |   |   |   |   |   |
|                                         | Included in Other Comprehensive Income         |           |               |  -      |   |              |  -      |   |              |  -      |   |               |  -  |   |   |  -  |   |   |  -  |
| Purchases, Issuances and Settlements (c)     |                                           |           |  195     |              |   |  118    |              |   |  133    |              |   |  157     |   |   |  2  |   |   |  3  |
| Transfers into Level 3 (d) (h)               |                                           |           |  380     |              |   |  215    |              |   |  217    |              |   |  247     |   |   |  -  |   |   |  -  |
| Transfers out of Level 3 (e) (h)             |                                           |           |  (890)        |              |   |  (503)       |              |   |  (508)       |              |   |  (579)        |   |   |  (1) |   |   |  (2) |
| Changes in Fair Value Allocated to Regulated |                                           |           |               |              |   |              |              |   |              |              |   |               |   |   |   |   |   |   |
|                                         | Jurisdictions (g)                              |           |               |  7,686  |   |              |  (1,532)     |   |              |  4,757  |   |               |  (3,514) |   |   |  1  |   |   |  1  |
| Balance as of September 30, 2010             |                                           | $              |  16,565  |              | $      |  9,547  |              | $      |  9,958  |              | $      |  11,657  |   | $ |  2  |   | $ |  2  |

| Nine Months Ended September 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)             |           |               |  1,269   |   |              |  713     |   |              |  721    |   |               |  825  |   |   |  1  |   |   |  3  |
| Unrealized Gain (Loss) Included in Net       |                                           |           |               |               |   |              |               |   |              |              |   |               |   |   |   |   |   |   |
|                                         | Income (or Changes in Net Assets) Relating     |           |               |               |   |              |               |   |              |              |   |               |   |   |   |   |   |   |   |
|                                         | to Assets Still Held at the Reporting Date (a) |           |               |  -       |   |              |  10,670  |   |              |  -      |   |               |  14,651  |   |   |  -  |   |   |  -  |
| Realized and Unrealized Gains (Losses)       |                                           |           |               |               |   |              |               |   |              |              |   |               |   |   |   |   |   |   |
|                                         | Included in Other Comprehensive Income         |           |               |  -       |   |              |  -       |   |              |  -      |   |               |  -  |   |   |  -  |   |   |  -  |
| Purchases, Issuances and Settlements (c)     |                                           |           |  (5,463)      |               |   |  (3,059)     |               |   |  (3,100)     |              |   |  (3,565)      |   |   |  (1) |   |   |  (2) |
| Transfers into Level 3 (d) (h)               |                                           |           |  986     |               |   |  530    |               |   |  528    |              |   |  615     |   |   |  -  |   |   |  -  |
| Transfers out of Level 3 (e) (h)             |                                           |           |  (2,088)      |               |   |  (1,195)     |               |   |  (1,199)     |              |   |  (1,376)      |   |   |  -  |   |   |  -  |
| Changes in Fair Value Allocated to Regulated |                                           |           |               |               |   |              |               |   |              |              |   |               |   |   |   |   |   |   |
|                                         | Jurisdictions (g)                              |           |               |  12,433  |   |              |  (2,888)      |   |              |  8,192  |   |               |  (5,062) |   |   |  -  |   |   |  (2) |
| Balance as of September 30, 2010             |                                           | $              |  16,565  |               | $      |  9,547  |               | $      |  9,958  |              | $      |  11,657  |   | $ |  2  |   | $ |  2  |

----

| Three Months Ended September 30, 2009        |                                           | APCo           |               | CSPCo              |   | I&M            |              | OPCo   |               | PSO               |   | SWEPCo             |
|----------------------------------------------|------------------------------------------------|----------------|--------------------|--------------------|--------|--------------------|-------------------|--------|--------------------|-------------------|--------|--------------------|
|                                         |                                           | (in thousands) |
| Balance as of June 30, 2009                  |                                           | $              |  13,900  |               | $      |  7,372   |              | $      |  7,135   |              | $      |  9,410   |   | $ |  12  |   | $ |  15  |
| Realized (Gain) Loss Included in Net Income  |                                           |           |               |               |   |               |              |   |               |              |   |               |   |   |   |   |   |   |
|                                         | (or Changes in Net Assets) (a)                 |           |               |  (2,762)      |   |               |  (1,465)     |   |               |  (1,418)     |   |               |  (2,087) |   |   |  (11) |   |   |  (13) |
| Unrealized Gain (Loss) Included in Net       |                                           |           |               |               |   |               |              |   |               |              |   |               |   |   |   |   |   |   |
|                                         | Income (or Changes in Net Assets) Relating     |           |               |               |   |               |              |   |               |              |   |               |   |   |   |   |   |   |   |
|                                         | to Assets Still Held at the Reporting Date (a) |           |               |  -       |   |               |  347    |   |               |  -      |   |               |  (185) |   |   |  -  |   |   |  -  |
| Realized and Unrealized Gains (Losses)       |                                           |           |               |               |   |               |              |   |               |              |   |               |   |   |   |   |   |   |
|                                         | Included in Other Comprehensive Income         |           |               |  -       |   |               |  -      |   |               |  -      |   |               |  -  |   |   |  -  |   |   |  -  |
| Purchases, Issuances and Settlements         |                                           |           |  -       |               |   |  -       |              |   |  -       |              |   |  -       |   |   |  -  |   |   |  -  |
| Transfers in and/or out of Level 3 (f)       |                                           |           |  2,322   |               |   |  1,231   |              |   |  1,192   |              |   |  1,525   |   |   |  -  |   |   |  -  |
| Changes in Fair Value Allocated to Regulated |                                           |           |               |               |   |               |              |   |               |              |   |               |   |   |   |   |   |   |
|                                         | Jurisdictions (g)                              |           |               |  10,188  |   |               |  5,047  |   |               |  5,176  |   |               |  5,723  |   |   |  4  |   |   |  4  |
| Balance as of September 30, 2009             |                                           | $              |  23,648  |               | $      |  12,532  |              | $      |  12,085  |              | $      |  14,386  |   | $ |  5  |   | $ |  6  |

| Nine Months Ended September 30, 2009         |                                           | APCo           |               | CSPCo              |   | I&M            |              | OPCo   |               | PSO                |   | SWEPCo             |
|----------------------------------------------|------------------------------------------------|----------------|--------------------|--------------------|--------|--------------------|-------------------|--------|--------------------|--------------------|--------|--------------------|
|                                         |                                           | (in thousands) |
| Balance as of December 31, 2008              |                                           | $              |  8,009   |               | $      |  4,497   |              | $      |  4,352   |               | $      |  5,563   |   | $ |  (2) |   | $ |  (3) |
| Realized (Gain) Loss Included in Net Income  |                                           |           |               |               |   |               |              |   |               |               |   |               |   |   |   |   |   |   |
|                                         | (or Changes in Net Assets) (a)                 |           |               |  (6,448)      |   |               |  (3,621)     |   |               |  (3,504)      |   |               |  (4,473) |   |   |  3  |   |   |  5  |
| Unrealized Gain (Loss) Included in Net       |                                           |           |               |               |   |               |              |   |               |               |   |               |   |   |   |   |   |   |
|                                         | Income (or Changes in Net Assets) Relating     |           |               |               |   |               |              |   |               |               |   |               |   |   |   |   |   |   |   |
|                                         | to Assets Still Held at the Reporting Date (a) |           |               |  -       |   |               |  6,069  |   |               |  -       |   |               |  6,906  |   |   |  -  |   |   |  -  |
| Realized and Unrealized Gains (Losses)       |                                           |           |               |               |   |               |              |   |               |               |   |               |   |   |   |   |   |   |
|                                         | Included in Other Comprehensive Income         |           |               |  -       |   |               |  -      |   |               |  -       |   |               |  -  |   |   |  -  |   |   |  -  |
| Purchases, Issuances and Settlements         |                                           |           |  -       |               |   |  -       |              |   |  -       |               |   |  -       |   |   |  -  |   |   |  -  |
| Transfers in and/or out of Level 3 (f)       |                                           |           |  (328)        |               |   |  (184)        |              |   |  (178)        |               |   |  (228)        |   |   |  -  |   |   |  -  |
| Changes in Fair Value Allocated to Regulated |                                           |           |               |               |   |               |              |   |               |               |   |               |   |   |   |   |   |   |
|                                         | Jurisdictions (g)                              |           |               |  22,415  |   |               |  5,771  |   |               |  11,415  |   |               |  6,618  |   |   |  4  |   |   |  4  |
| Balance as of September 30, 2009             |                                           | $              |  23,648  |               | $      |  12,532  |              | $      |  12,085  |               | $      |  14,386  |   | $ |  5  |   | $ |  6  |

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

----

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

----

|       |   |                    |   | Principal      |                | Interest |        | Due    |
|------------|--------|-------------------------|--------|----------------|---------------------|----------|-------------|--------|
| Company    |   | Type of Debt            |   | Amount         |                | Rate     |        | Date   |
|       |   |                    |   | (in thousands) |                | (%)      |        |   |
| Issuances: |   |                    |   |           |                |     |        |   |   |
| APCo       |   | Senior Unsecured Notes  |   | $              |  300,000  |     | 3.40   |   | 2015  |
| APCo       |   | Pollution Control Bonds |   |           |  17,500   |     | 4.625  |   | 2021  |
| APCo       |   | Pollution Control Bonds |   |           |  50,000   |     | 5.375  |   | 2038  |
| CSPCo      |   | Floating Rate Notes     |   |           |  150,000  |     | Variable    |   | 2012  |
| I&M    |   | Notes Payable           |   |           |  84,500   |     | 4.00   |   | 2014  |
| OPCo       |   | Pollution Control Bonds |   |           |  79,450   |     | 3.25   |   | 2014  |
| OPCo       |   | Pollution Control Bonds |   |           |  86,000   |     | 3.125  |   | 2015  |
| OPCo       |   | Pollution Control Bonds |   |           |  39,130   |     | 2.875  |   | 2014  |
| SWEPCo     |   | Senior Unsecured Notes  |   |           |  350,000  |     | 6.20   |   | 2040  |
| SWEPCo     |   | Pollution Control Bonds |   |           |  53,500   |     | 3.25   |   | 2015  |
| PSO        |   | Notes Payable           |   |           |  1,750    |     | 3.00   |   | 2025  |

|            |                |                       |   |        | Principal           |   | Interest     |   | Due        |
|-----------------|---------------------|----------------------------|--------|-------------|---------------------|--------|--------------|--------|------------|
| Company         |                | Type of Debt               |   | Amount Paid |                | Rate   |         | Date   |
|            |                |                       |   |        | (in thousands)      |   | (%)          |   |       |
| Retirements and |                |                       |   |        |                |   |         |   |       |
|            | Principal Payments: |                       |   |        |                |   |         |   |       |   |
| APCo            |                | Land Note                  |   | $           |  14       |   | 13.718  |   | 2026  |
| APCo            |                | Notes Payable - Affiliated |   |        |  100,000  |   | 4.708   |   | 2010  |
| APCo            |                | Senior Unsecured Notes     |   |        |  150,000  |   | 4.40    |   | 2010  |
| APCo            |                | Pollution Control Bonds    |   |        |  50,000   |   | 7.125   |   | 2010  |
| CSPCo           |                | Notes Payable - Affiliated |   |        |  100,000  |   | 4.64    |   | 2010  |
| I&M         |                | Notes Payable - Affiliated |   |        |  25,000   |   | 5.375   |   | 2010  |
| I&M         |                | Notes Payable              |   |        |  19,200   |   | 5.44    |   | 2013  |
| OPCo            |                | Senior Unsecured Notes     |   |        |  400,000  |   | Variable     |   | 2010  |
| OPCo            |                | Pollution Control Bonds    |   |        |  79,450   |   | 7.125   |   | 2010  |
| OPCo            |                | Pollution Control Bonds    |   |        |  19,565   |   | 5.625   |   | 2022  |
| OPCo            |                | Pollution Control Bonds    |   |        |  19,565   |   | 5.625   |   | 2023  |
| SWEPCo          |                | Notes Payable - Affiliated |   |        |  50,000   |   | 4.45    |   | 2010  |
| SWEPCo          |                | Pollution Control Bonds    |   |        |  53,500   |   | Variable     |   | 2019  |

----

|   |    |   |           |                |       |   |                |   |       |                |               | Loans  |                |   |
|--------|---------|--------|----------------|---------------------|------------|--------|---------------------|--------|------------|---------------------|--------------------|--------|---------------------|--------|
|   |    |   | Maximum        |                | Maximum    |   | Average             |   | Average    |                | (Borrowings)       |   | Authorized          |
|   |    |   | Borrowings     |                | Loans      |   | Borrowings          |   | Loans      |                | to/from Utility    |   | Short-term          |
|   |    |   | from Utility   |                | to Utility |   | from Utility        |   | to Utility |                | Money Pool as of   |   | Borrowing           |
|   | Company |   | Money Pool     |                | Money Pool |   | Money Pool          |   | Money Pool |                | September 30, 2010 |   | Limit               |
|   |    |   | (in thousands) |
|   | APCo    |   | $              |  438,039  |       | $      |  -        |   | $          |  275,422  |               | $      |  -        |   | $ |  (55,113) |   | $ |  600,000  |
|   | CSPCo   |   |           |  134,592  |       |   |  201,486  |   |       |  32,368   |               |   |  71,571   |   |   |  182,225  |   |   |  350,000  |
|   | I&M |   |           |  -        |       |   |  223,111  |   |       |  -        |               |   |  110,696  |   |   |  192,779  |   |   |  500,000  |
|   | OPCo    |   |           |  -        |       |   |  618,559  |   |       |  -        |               |   |  256,426  |   |   |  290,714  |   |   |  600,000  |
|   | PSO     |   |           |  107,320  |       |   |  74,751   |   |       |  50,927   |               |   |  41,836   |   |   |  (23,024) |   |   |  300,000  |
|   | SWEPCo  |   |           |  78,616   |       |   |  274,958  |   |       |  39,458   |               |   |  218,555  |   |   |  213,689  |   |   |  350,000  |

|                  |   | Nine Months Ended September 30, |
|-----------------------|--------|---------------------------------|
|                  |   | 2010                            |   | 2009 |
| Maximum Interest Rate |   |                            | 0.55 | % |   |   | 2.28 | % |
| Minimum Interest Rate |   |                            | 0.09 | % |   |   | 0.27 | % |

----

|    |   | Average Interest Rate for Funds |   | Average Interest Rate for Funds |
|---------|--------|---------------------------------|--------|---------------------------------|
|    |   | Borrowed from                   |   | Loaned to                       |
|    |   | the Utility Money Pool for the  |   | the Utility Money Pool for the  |
|    |   | Nine Months Ended September 30, |   | Nine Months Ended September 30, |
| Company |   | 2010                       |   | 2009                       | 2010  |   | 2009  |
|    |   |                            |   |                            |   |   |   |   |   |   |   |   |
| APCo    |   |  0.25                 | %      |                            |  1.14  | % |   |  -  | % |   |  -  | % |
| CSPCo   |   |  0.18                 | %      |                            |  1.13  | % |   |  0.27  | % |   |  0.57  | % |
| I&M |   |  -                    | %      |                            |  1.46  | % |   |  0.24  | % |   |  0.49  | % |
| OPCo    |   |  -                    | %      |                            |  1.21  | % |   |  0.20  | % |   |  0.38  | % |
| PSO     |   |  0.29                 | %      |                            |  2.01  | % |   |  0.16  | % |   |  1.04  | % |
| SWEPCo  |   |  0.19                 | %      |                            |  1.66  | % |   |  0.27  | % |   |  0.77  | % |

|   |    |                                                              |                              |   |     | September 30, 2010 |   | December 31, 2009 |
|--------|---------|-------------------------------------------------------------------|-----------------------------------|--------|----------|--------------------|--------|-------------------|
|   |    |                                                              |                              |   |     | Outstanding        |   | Interest          |   | Outstanding |   | Interest |
|   | Company |                                                              | Type of Debt                      | Amount | Rate (b) |               | Amount | Rate (b)          |
|   |    |                                                              |                              |   |     | (in thousands)     |   |              |   |   | (in thousands) |   |   |   |
|   | SWEPCo  |                                                              | Line of Credit – Sabine (a) |   | $        |  3,170   |   |  2.20   | % |   | $ |  6,890  |   |  2.06  | % |
|   |    |                                                              |                              |   |     |               |   |              |   |   |   |   |   |   |   |   |
|   | (a)     | Sabine Mining Company is a consolidated variable interest entity. |
|   | (b)     | Weighted average rate.                                            |

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

----

|    |   | September 30,  |    |   | December 31, |   |
|---------|--------|----------------|---------|--------|--------------|--------|
| Company |   | 2010           |    |   | 2009         |   |
|    |   | (in thousands) |    |
| APCo    |   | $              | 142,747 |   |         | $      | 143,938 |   |
| CSPCo   |   |           | 196,949 |   |         |   | 169,095 |   |
| I&M |   |           | 138,134 |   |         |   | 130,193 |   |
| OPCo    |   |           | 168,306 |   |         |   | 160,977 |   |
| PSO     |   |           | 161,179 |   |         |   | 73,518 |   |
| SWEPCo  |   |           | 169,235 |   |         |   | 117,297 |   |

|    |   |       |                             |       |                            |              |   |       |              |   |   |
|---------|--------|------------|----------------------------------|------------|---------------------------------|-------------------|--------|------------|-------------------|--------|--------|
|    |   |       | Three Months Ended September 30, |       | Nine Months Ended September 30, |
| Company |   | 2010  |                             | 2009  |                            | 2010         |   | 2009  |
|    |   |       | (in thousands)                   |
| APCo    |   | $          |  2,949                 |       | $                               |  1,186  |   | $          |  6,725  |   | $      |  3,711  |
| CSPCo   |   |       |  3,300                 |       |                            |  2,956  |   |       |  8,990  |   |   |  8,481  |
| I&M |   |       |  1,832                 |       |                            |  1,617  |   |       |  5,276  |   |   |  4,507  |
| OPCo    |   |       |  2,345                 |       |                            |  2,340  |   |       |  7,494  |   |   |  6,351  |
| PSO     |   |       |  1,537                 |       |                            |  1,738  |   |       |  4,287  |   |   |  5,397  |
| SWEPCo  |   |       |  1,441                 |       |                            |  1,747  |   |       |  4,574  |   |   |  4,569  |

|    |   |       |                             |       |                            |                |   |       |                  |   |   |
|---------|--------|------------|----------------------------------|------------|---------------------------------|---------------------|--------|------------|-----------------------|--------|--------|
|    |   |       | Three Months Ended September 30, |       | Nine Months Ended September 30, |
| Company |   | 2010  |                             | 2009  |                            | 2010           |   | 2009  |
|    |   |       | (in thousands)                   |
| APCo    |   | $          |  338,446               |       | $                               |  298,997  |   | $          |  1,097,276  |   | $      |  923,408  |
| CSPCo   |   |       |  521,030               |       |                            |  442,079  |   |       |  1,368,343  |   |   |  1,243,325  |
| I&M |   |       |  348,039               |       |                            |  319,932  |   |       |  984,631    |   |   |  908,007  |
| OPCo    |   |       |  473,773               |       |                            |  394,335  |   |       |  1,325,613  |   |   |  1,184,744  |
| PSO     |   |       |  398,177               |       |                            |  265,622  |   |       |  924,707    |   |   |  812,264  |
| SWEPCo  |   |       |  430,270               |       |                            |  373,805  |   |       |  1,087,515  |   |   |  1,009,124  |

----

|   |    |   | Expense         |               | Incurred for |   |               |   |        |               |               | Remaining  |
|--------|---------|--------|-----------------|--------------------|--------------|--------|--------------------|--------|-------------|--------------------|--------------------|------------|
|   |    |   | Allocation from |               | Registrant   |   |               |   |        |               |               | Balance at |
|   |    |   | AEPSC           |               | Subsidiaries |   | Settled            |   | Adjustments |               | September 30, 2010 |
|   |    |   | (in thousands)  |
|   | APCo    |   | $               |  20,526  |         | $      |  36,399  |   | $           |  48,431  |               | $          |  (3,621) |   | $ |  4,873  |
|   | CSPCo   |   |            |  11,048  |         |   |  21,244  |   |        |  28,542  |               |       |  (557) |   |   |  3,193  |
|   | I&M |   |            |  12,051  |         |   |  32,985  |   |        |  39,192  |               |       |  (2,135) |   |   |  3,709  |
|   | OPCo    |   |            |  19,427  |         |   |  33,681  |   |        |  50,923  |               |       |  2,175  |   |   |  4,360  |
|   | PSO     |   |            |  10,681  |         |   |  13,324  |   |        |  20,908  |               |       |  (651) |   |   |  2,446  |
|   | SWEPCo  |   |            |  12,588  |         |   |  17,074  |   |        |  26,430  |               |       |  (522) |   |   |  2,710  |

----

|    |   | Budgeted      |   |
|---------|--------|---------------|--------|
|    |   | Construction  |   |
| Company |   | Expenditures  |   |
|    |   | (in millions) |   |
| APCo    |   |          | $      | 466 |   |
| CSPCo   |   |          |   | 178 |   |
| I&M |   |          |   | 307 |   |
| OPCo    |   |          |   | 271 |   |
| PSO     |   |          |   | 171 |   |
| SWEPCo  |   |          |   | 457 |   |

----

----

----

|    |   |            |   |   | LOC Amount         |   |
|---------|--------|-----------------|--------|--------|--------------------|--------|
|    |   |            |   |   | Outstanding        |   |
|    |   | Credit Facility |   |   | Against the        |   |
|    |   | Borrowing/LOC   |   |   | Agreement at       |   |
| Company |   | Limit           |   |   | September 30, 2010 |   |
|    |   | (in millions)   |   |
| APCo    |   | $               | 300    |   |               | $      | 232 |   |
| CSPCo   |   |            | 230    |   |               |   | - |   |
| I&M |   |            | 230    |   |               |   | 78 |   |
| OPCo    |   |            | 400    |   |               |   | 167 |   |
| PSO     |   |            | 65     |   |               |   | - |   |
| SWEPCo  |   |            | 230    |   |               |   | - |   |

----

|                                                      |                                                      |   | DHLC               |          | CCPC   |          | Conner Run    |
|-----------------------------------------------------------|-----------------------------------------------------------|--------|--------------------|---------------|--------|---------------|---------------|
| Number of Citations for Violations of Mandatory Health or |                                                      |   |               |          |   |          |          |   |   |
|                                                      | Safety Standards under 104 *                              |   |               |  7  |   |          |  -  |   |   |  -  |
| 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) *                                                  |   |               |  1  |   |          |  -  |   |   |  -  |
| Number of Flagrant Violations under 110(b)(2) *           |                                                      |   |  -       |          |   |  -  |          |   |  -  |
| Number of Imminent Danger Orders Issued under 107(a) *    |                                                      |   |  -       |          |   |  -  |          |   |  -  |
| Total Dollar Value of Proposed Assessments                |                                                      | $      |  11,472  |          | $      |  -  |          | $ |  -  |
| Number of Mining-related Fatalities                       |                                                      |   |  -       |          |   |  -  |          |   |  -  |
|                                                      |                                                      |   |               |          |   |          |          |   |   |
| * References to sections under the Mine Act               |                                                      |   |               |          |   |          |          |   |   |

----

|                                                                                        | MTM Risk Management Contract Net Assets (Liabilities) |
|---------------------------------------------------------------------------------------------|-------------------------------------------------------|
|                                                                                        | Nine Months Ended September 30, 2010                  |
|                                                                                        | (in thousands)                                        |
|                                                                                        |                                                  |   |
|                                                                                        |                                                  |   |
| APCo                                                                                        |                                                  |
| Total MTM Risk Management Contract Net Assets at December 31, 2009                          | $                                                     |  45,197  |
| (Gain) Loss from Contracts Realized/Settled During the Period and Entered in a Prior Period |                                                  |  (21,694) |
| 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                                     |   |  (245) |
| Changes in Fair Value Due to Market Fluctuations During the Period (c)            |                                                  |  61  |
| Changes in Fair Value Allocated to Regulated Jurisdictions (d)                         |                                                  |  9,815  |
| Total MTM Risk Management Contract Net Assets                                          |                                                  |  33,134  |
| Cash Flow Hedge Contracts                                                                   |                                                  |  (4,513) |
| DETM Assignment (e)                                                                         |                                                  |  (632) |
| Collateral Deposits                                                                         |                                                  |  40,554  |
| Total MTM Derivative Contract Net Assets at September 30, 2010                              | $                                                     |  68,543  |
|                                                                                        |                                                  |   |   |
| OPCo                                                                                        |                                                  |
| Total MTM Risk Management Contract Net Assets at December 31, 2009                          | $                                                     |  26,330  |
| (Gain) Loss from Contracts Realized/Settled During the Period and Entered in a Prior Period |                                                  |  (12,940) |
| Fair Value of New Contracts at Inception When Entered During the Period (a)            |                                                  |  7,641  |
| Changes in Fair Value Due to Valuation Methodology Changes on Forward Contracts (b)         |                                                  |  (715) |
| Net Option Premiums Paid/(Received) for Unexercised or Unexpired Option Contracts Entered   |                                                  |   |
|                                                                                        | During the Period                                     |   |  (363) |
| Changes in Fair Value Due to Market Fluctuations During the Period (c)            |                                                  |  6,615  |
| Changes in Fair Value Allocated to Regulated Jurisdictions (d)                         |                                                  |  (5,062) |
| Total MTM Risk Management Contract Net Assets                                          |                                                  |  21,506  |
| Cash Flow Hedge Contracts                                                                   |                                                  |  (2,320) |
| DETM Assignment (e)                                                                         |                                                  |  (445) |
| Collateral Deposits                                                                         |                                                  |  28,660  |
| Total MTM Derivative Contract Net Assets at September 30, 2010                              | $                                                     |  47,401  |

----

| PSO                                                                                         |              |
|---------------------------------------------------------------------------------------------|-------------------|
| Total MTM Risk Management Contract Net Assets (Liabilities) at December 31, 2009            | $                 |  (369) |
| (Gain) Loss from Contracts Realized/Settled During the Period and Entered in a Prior Period |              |  263  |
| 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 |   |  (42) |
| Changes in Fair Value Due to Market Fluctuations During the Period (c)            |              |  (7) |
| Changes in Fair Value Allocated to Regulated Jurisdictions (d)                         |              |  3,190  |
| Total MTM Risk Management Contract Net Assets                                          |              |  3,035  |
| Cash Flow Hedge Contracts                                                                   |              |  -  |
| DETM Assignment (e)                                                                         |              |  (16) |
| Collateral Deposits                                                                         |              |  55  |
| Total MTM Derivative Contract Net Assets at September 30, 2010                              | $                 |  3,074  |
|                                                                                        |              |   |   |
| SWEPCo                                                                                      |              |
| Total MTM Risk Management Contract Net Assets at December 31, 2009                          | $                 |  1,636  |
| (Gain) Loss from Contracts Realized/Settled During the Period and Entered in a Prior Period |              |  (1,422) |
| 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 |   |  (101) |
| Changes in Fair Value Due to Market Fluctuations During the Period (c)            |              |  -  |
| Changes in Fair Value Allocated to Regulated Jurisdictions (d)                         |              |  1,530  |
| Total MTM Risk Management Contract Net Assets                                          |              |  1,643  |
| Cash Flow Hedge Contracts                                                                   |              |  (71) |
| DETM Assignment (e)                                                                         |              |  (19) |
| Collateral Deposits                                                                         |              |  88  |
| Total MTM Derivative Contract Net Assets at September 30, 2010                              | $                 |  1,641  |

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

----

| Maturity and Source of Fair Value of MTM          |
|---------------------------------------------------|
| Risk Management Contract Net Assets (Liabilities) |
| September 30, 2010                                |
| (in thousands)                                    |
|                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|                                              |   | Remainder |   |   |   |   |   |   |   |   |   |
| APCo                                              | 2010  |   | 2011-2013 |   | 2014+ |   | Total |
| Level 1 (a)                                       | $ |  25  |   | $ |  36  |   | $ |  -  |   | $ |  61  |
| Level 2 (b)                                       |   |  3,183  |   |   |  7,092  |   |   |  1,411  |   |   |  11,686  |
| Level 3 (c)                                       |   |  1,497  |   |   |  11,391  |   |   |  3,677  |   |   |  16,565  |
| Total                                             |   |  4,705  |   |   |  18,519  |   |   |  5,088  |   |   |  28,312  |
| Dedesignated Risk Management                      |   |   |   |   |   |   |   |   |   |   |   |
|                                              | Contracts (d) |   |  1,451  |   |   |  3,371  |   |   |  -  |   |   |  4,822  |
| Total MTM Risk Management                         |   |   |   |   |   |   |   |   |   |   |   |
|                                              | Contract Net Assets | $ |  6,156  |   | $ |  21,890  |   | $ |  5,088  |   | $ |  33,134  |
|                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|                                              |   | Remainder |   |   |   |   |   |   |   |   |   |
| OPCo                                              | 2010  |   | 2011-2013 |   | 2014+ |   | Total |
| Level 1 (a)                                       | $ |  18  |   | $ |  26  |   | $ |  -  |   | $ |  44  |
| Level 2 (b)                                       |   |  1,017  |   |   |  4,402  |   |   |  993  |   |   |  6,412  |
| Level 3 (c)                                       |   |  1,054  |   |   |  8,016  |   |   |  2,587  |   |   |  11,657  |
| Total                                             |   |  2,089  |   |   |  12,444  |   |   |  3,580  |   |   |  18,113  |
| Dedesignated Risk Management                      |   |   |   |   |   |   |   |   |   |   |   |
|                                              | Contracts (d) |   |  1,021  |   |   |  2,372  |   |   |  -  |   |   |  3,393  |
| Total MTM Risk Management                         |   |   |   |   |   |   |   |   |   |   |   |
|                                              | Contract Net Assets | $ |  3,110  |   | $ |  14,816  |   | $ |  3,580  |   | $ |  21,506  |

|                      |                     | Remainder         |              |   |              |              |   |              |
|---------------------------|--------------------------|-------------------|-------------------|--------|-------------------|-------------------|--------|-------------------|
| PSO                       | 2010                |              | 2011-2013         |   | Total             |
| Level 1 (a)               | $                        |  1      |              | $      |  -      |              | $      |  1      |
| Level 2 (b)               |                     |  1,731  |              |   |  1,301  |              |   |  3,032  |
| Level 3 (c)               |                     |  2      |              |   |  -      |              |   |  2      |
| Total MTM Risk Management |                     |              |              |   |              |              |   |              |
|                      | Contract Net Assets | $                 |  1,734  |   | $                 |  1,301  |   | $                 |  3,035  |
|                      |                     |              |              |   |              |              |   |              |   |
|                      |                     | Remainder         |              |   |              |              |   |              |
| SWEPCo                    | 2010                |              | 2011-2013         |   | Total             |
| Level 1 (a)               | $                        |  1      |              | $      |  -      |              | $      |  1      |
| Level 2 (b)               |                     |  992    |              |   |  648    |              |   |  1,640  |
| Level 3 (c)               |                     |  2      |              |   |  -      |              |   |  2      |
| Total MTM Risk Management |                     |              |              |   |              |              |   |              |
|                      | Contract Net Assets | $                 |  995    |   | $                 |  648    |   | $                 |  1,643  |

| (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.                                                                                                                                                                                                                                                                               |

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|    | Nine Months Ended  |   | Twelve Months Ended |
|---------|--------------------|--------|---------------------|
|    | September 30, 2010 |   | December 31, 2009   |
| Company |               | End    |                | High |   | Average |   | Low |   | End |   | High |   | Average |   | Low |
|    | (in thousands)     |   | (in thousands)      |
| APCo    |               | $      | 96                  |   | $ | 659 |   | $ | 216 |   | $ | 71 |   | $ | 275 |   | $ | 699 |   | $ | 333 |   | $ | 151 |
| OPCo    |               |   | 82                  |   |   | 545 |   |   | 180 |   |   | 54 |   |   | 201 |   |   | 530 |   |   | 244 |   |   | 113 |
| PSO     |               |   | 14                  |   |   | 70 |   |   | 17 |   |   | 1 |   |   | 10 |   |   | 34 |   |   | 12 |   |   | 4 |
| SWEPCo  |               |   | 20                  |   |   | 93 |   |   | 24 |   |   | 2 |   |   | 16 |   |   | 49 |   |   | 18 |   |   | 6 |

|    |   | September 30,  |        | December 31, |
|---------|--------|----------------|-------------|--------------|
| Company |   | 2010           |        | 2009         |
|    |   | (in thousands) |
| APCo    |   | $              | 1,301  |         | $ | 1,837  |
| CSPCo   |   |           | 202    |         |   | 216  |
| I&M |   |           | 337    |         |   | 227  |
| OPCo    |   |           | 1,058  |         |   | 1,373  |
| PSO     |   |           | 43     |         |   | 119  |
| SWEPCo  |   |           | 666    |         |   | 305  |

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| We may not fully recover all of the investment in and expenses related to the Turk Plant.  (Applies to AEP and SWEPCo) |
|----------------------------------------------------------------------------------------------------------------------------------|

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| Our request for rate recovery in West Virginia may not be approved in its entirety.  (Applies to AEP and APCo) |
|--------------------------------------------------------------------------------------------------------------------------|

| Our request for rate recovery in Oklahoma may not be approved in its entirety.  (Applies to AEP and PSO) |
|--------------------------------------------------------------------------------------------------------------------|

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| Period                    |   | Total Numberof SharesPurchased |    | Average PricePaid per Share |   |        | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |   | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs |
|---------------------------|--------|--------------------------------|---------|-----------------------------|--------|-------------|----------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------|
| 07/01/10 – 07/31/10 |   |                           | -  |                        | $      | -      |                                                                             |   |                                                                                                         | - |   | $ | - |
| 08/01/10 – 08/31/10 |   |                           | 6  | (a)                         |   | 71.50  |                                                                             |   |                                                                                                         | - |   |   | - |
| 09/01/10 – 09/30/10 |   |                           | -  |                        |   | -      |                                                                             |   |                                                                                                         | - |   |   | - |

| (a) | APCo purchased 3 shares of its 4.50% cumulative preferred stock and I&M purchased 3 shares of its 4.125% cumulative preferred stock in privately-negotiated transactions outside of an announced program. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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