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

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

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

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

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

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

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

----

|                                       |   |  Number      of shares of common stock outstanding of the registrants atOctober      28, 2009 |       |
|--------------------------------------------|--------|----------------------------------------------------------------------------------------------------|------------|
|                                       |   |                                                                                               |       |
| American      Electric Power Company, Inc. |   | 477,658,465                                                                                        |       |
|                                       |   | ($6.50      par value)                                                                             |       |
| Appalachian      Power Company             |   |                                                                                               | 13,499,500 |   |
|                                       |   | (no      par value)                                                                                |       |
| Columbus      Southern Power Company       |   |                                                                                               | 16,410,426 |   |
|                                       |   | (no      par value)                                                                                |       |
| Indiana      Michigan Power Company        |   |                                                                                               | 1,400,000  |   |
|                                       |   | (no      par value)                                                                                |       |
| Ohio      Power Company                    |   |                                                                                               | 27,952,473 |   |
|                                       |   | (no      par value)                                                                                |       |
| Public      Service Company of Oklahoma    |   |                                                                                               | 9,013,000  |   |
|                                       |   | ($15      par value)                                                                               |       |
| Southwestern      Electric Power Company   |   |                                                                                               | 7,536,640  |   |
|                                       |   | ($18      par value)                                                                               |       |

----

| Glossary      of Terms                                               |
|----------------------------------------------------------------------|
|                                                                 |
| Forward-Looking      Information                                     |
|                                                                 |
| Part      I. FINANCIAL INFORMATION                                   |
|                                                                 |   |
|                                                                 | Items      1, 2 and 3 - Financial Statements, Management’s Financial Discussion and      Analysis and Quantitative and Qualitative Disclosures About Risk      Management Activities: |
| American      Electric Power Company, Inc. and Subsidiary Companies: |
|                                                                 | Management’s      Financial Discussion and Analysis of Results of  Operations |
|                                                                 | Quantitative      and Qualitative Disclosures About Risk Management    Activities |
|                                                                 | Condensed      Consolidated Financial Statements |
|                                                                 | Index      to Condensed Notes to Condensed Consolidated Financial      Statements |
|                                                                 |   |
| Appalachian      Power Company and Subsidiaries:                     |
|                                                                 | Management’s      Financial Discussion and Analysis |
|                                                                 | Quantitative      and Qualitative Disclosures About Risk Management    Activities |
|                                                                 | Condensed      Consolidated Financial Statements |
|                                                                 | Index      to Condensed Notes to Condensed Financial Statements of Registrant      Subsidiaries |
|                                                                 |   |
| Columbus      Southern Power Company and Subsidiaries:               |
|                                                                 | Management’s      Narrative Financial Discussion and Analysis |
|                                                                 | Quantitative      and Qualitative Disclosures About Risk Management    Activities |
|                                                                 | Condensed      Consolidated Financial Statements |
|                                                                 | Index      to Condensed Notes to Condensed Financial Statements of Registrant      Subsidiaries |
|                                                                 |   |
| Indiana      Michigan Power Company and Subsidiaries:                |
|                                                                 | Management’s      Narrative Financial Discussion and Analysis |
|                                                                 | Quantitative      and Qualitative Disclosures About Risk Management    Activities |
|                                                                 | Condensed      Consolidated Financial Statements |
|                                                                 | Index      to Condensed Notes to Condensed Financial Statements of Registrant      Subsidiaries |

|                                                   |
|--------------------------------------------------------|
| Ohio      Power Company Consolidated:                  |
|                                                   | Management’s      Financial Discussion and Analysis |
|                                                   | Quantitative      and Qualitative Disclosures About Risk Management    Activities |
|                                                   | Condensed      Consolidated Financial Statements |
|                                                   | Index      to Condensed Notes to Condensed Financial Statements of Registrant      Subsidiaries |
|                                                   |   |
| Public      Service Company of Oklahoma:               |
|                                                   | Management’s      Narrative Financial Discussion and Analysis |
|                                                   | Quantitative      and Qualitative Disclosures About Risk Management    Activities |
|                                                   | Condensed      Financial Statements |
|                                                   | Index      to Condensed Notes to Condensed Financial Statements of Registrant      Subsidiaries |
|                                                   |   |
| Southwestern      Electric Power Company Consolidated: |
|                                                   | Management’s      Financial Discussion and Analysis |
|                                                   | Quantitative      and Qualitative Disclosures About Risk Management    Activities |
|                                                   | Condensed      Consolidated Financial Statements |
|                                                   | Index      to Condensed Notes to Condensed Financial Statements of Registrant      Subsidiaries |

|                                                                                     |
|------------------------------------------------------------------------------------------|
| Condensed      Notes to Condensed Financial Statements of Registrant      Subsidiaries   |
|                                                                                     |   |
| Combined      Management’s Discussion and Analysis of Registrant      Subsidiaries |
|                                                                                     |   |
| Controls      and Procedures                                                             |
|                                                                                     |   |   |
| Part      II.  OTHER INFORMATION                                               |
|                                                                                     |
|                                                                                     | Item      1. | Legal      Proceedings |
|                                                                                     | Item      1A. | Risk      Factors |
|                                                                                     | Item      2. | Unregistered      Sales of Equity Securities and Use of Proceeds |
|                                                                                     | Item      4. | Submission      Matters to a Vote of Security Holders |
|                                                                                     | Item      5. | Other      Information |
|                                                                                     | Item      6. | Exhibits: |
|                                                                                     |   |   |   |   | Exhibit      12 |
|                                                                                     |   |   |   |   | Exhibit      31(a) |
|                                                                                     |   |   |   |   | Exhibit      31(b) |
|                                                                                     |   |   |   |   | Exhibit      32(a) |
|                                                                                     |   |   |   |   | Exhibit      32(b) |
|                                                                                     |   |   |   |   |   |
| SIGNATURE                                                                                |   |

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

----

GLOSSARY OF TERMS

| 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              |   | American      Electric Power System, an integrated electric utility system, owned and      operated by AEP’s electric utility subsidiaries.                                                                                                  |
| AEP      West companies      |   | PSO,      SWEPCo, TCC and TNC.                                                                                                                                                                                                                     |
| AEPSC                        |   | American      Electric Power Service Corporation, a service subsidiary providing      management and professional services to AEP and its      subsidiaries.                                                                                       |
| AFUDC                        |   | Allowance      for Funds Used During Construction.                                                                                                                                                                                                 |
| ALJ                          |   | Administrative      Law Judge.                                                                                                                                                                                                                     |
| AOCI                         |   | Accumulated      Other Comprehensive Income.                                                                                                                                                                                                       |
| APB                          |   | Accounting      Principles Board Opinion.                                                                                                                                                                                                          |
| APCo                         |   | Appalachian      Power Company, an AEP electric utility subsidiary.                                                                                                                                                                                |
| APSC                         |   | Arkansas      Public Service Commission.                                                                                                                                                                                                           |
| ASU                          |   | Accounting      Standards Update issued by the Financial Accounting Standards      Board.                                                                                                                                                          |
| CAA                          |   | Clean      Air Act.                                                                                                                                                                                                                                |
| CO2                          |   | Carbon      Dioxide.                                                                                                                                                                                                                               |
| Cook      Plant              |   | Donald      C. Cook Nuclear Plant, a two-unit, 2,110 MW nuclear plant owned by      I&M.                                                                                                                                                       |
| CSPCo                        |   | Columbus      Southern Power Company, an AEP electric utility  subsidiary.                                                                                                                                                                         |
| CSW                          |   | Central      and South West Corporation, a subsidiary of AEP (Effective January 21,      2003, the legal name of Central and South West Corporation was changed to      AEP Utilities, Inc.).                                                      |
| CSW      Operating Agreement |   | Agreement,      dated January 1, 1997, by and among PSO, SWEPCo, TCC and TNC governing      generating capacity allocation.  This agreement was amended in      May 2006 to remove TCC and TNC.  AEPSC acts as the      agent. |
| CTC                          |   | Competition      Transition Charge.                                                                                                                                                                                                                |
| CWIP                         |   | Construction      Work in Progress.                                                                                                                                                                                                                |
| DHLC                         |   | Dolet      Hills Lignite Company, LLC, a wholly-owned lignite mining subsidiary of      SWEPCo that is a consolidated variable interest entity.                                                                                                    |
| E&R                      |   | Environmental      compliance and transmission and distribution system      reliability.                                                                                                                                                           |
| EaR                          |   | Earnings      at Risk, a method to quantify risk exposure.                                                                                                                                                                                         |
| EIS                          |   | Energy      Insurance Services, Inc., a protected cell captive insurance company that      is a consolidated variable interest entity.                                                                                                             |
| EITF                         |   | Financial      Accounting Standards Board’s Emerging Issues TaskForce.                                                                                                                                                                       |
| EITF      06-10              |   | EITF      Issue No. 06-10 “Accounting for Collateral Assignment Split-Dollar Life      Insurance Arrangements.”                                                                                                                        |
| ENEC                         |   | Expanded      Net Energy Cost.                                                                                                                                                                                                                     |
| EPS                          |   | Earnings      Per Share.                                                                                                                                                                                                                           |
| ERCOT                        |   | Electric      Reliability Council of Texas.                                                                                                                                                                                                        |
| ERISA                        |   | Employee      Retirement Income Security Act of 1974, as amended.                                                                                                                                                                                  |
| ESP                          |   | Electric      Security Plan.                                                                                                                                                                                                                       |

| ETT                                   |   | Electric      Transmission Texas, LLC, a 50% equity interest joint venture with      MidAmerican Energy Holdings Company 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.                                                                                                                                                                                                                               |
| FSP                                   |   | FASB      Staff Position.                                                                                                                                                                                                                                                |
| FSP      SFAS 107-1 and APB      28-1 |   | FSP      SFAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of      Financial Instruments.”                                                                                                                                                      |
| 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.                                                                                                                                                                                        |
| GHG                                   |   | Greenhouse      gases.                                                                                                                                                                                                                                                   |
| 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.                                                                                                                                                                                                                              |
| JBR                                   |   | Jet      Bubbling Reactor.                                                                                                                                                                                                                                               |
| JMG                                   |   | JMG      Funding LP.                                                                                                                                                                                                                                                     |
| KGPCo                                 |   | Kingsport      Power Company, an AEP electric distribution subsidiary.                                                                                                                                                                                                   |
| KPCo                                  |   | Kentucky      Power Company, an AEP electric utility subsidiary.                                                                                                                                                                                                         |
| 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.                                                                                                                                                                                                                                      |
| MTM                                   |   | Mark-to-Market.                                                                                                                                                                                                                                                          |
| MW                                    |   | Megawatt.                                                                                                                                                                                                                                                                |
| MWH                                   |   | Megawatthour.                                                                                                                                                                                                                                                            |
| NOx                                   |   | Nitrogen      oxide.                                                                                                                                                                                                                                                     |
| Nonutility      Money Pool            |   | AEP      Consolidated’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.                                                                                                                                                                                                    |
| PATH                                  |   | Potomac      Appalachian Transmission Highline, LLC and its subsidiaries, a joint      venture with Allegheny Energy Inc. formed to own and operate electric      transmission facilities in PJM.                                                                        |

| PJM                                              |   | Pennsylvania      – New Jersey – Maryland regional transmission  organization.                                                                                |
|--------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| PSO                                              |   | Public      Service Company of Oklahoma, an AEP electric utility      subsidiary.                                                                                         |
| PUCO                                             |   | Public      Utilities Commission of Ohio.                                                                                                                                 |
| PUCT                                             |   | Public      Utility Commission of Texas.                                                                                                                                  |
| REP                                              |   | Texas      Retail Electric Provider.                                                                                                                                      |
| 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.                                  |
| RSP                                              |   | Rate      Stabilization Plan.                                                                                                                                             |
| RTO                                              |   | Regional      Transmission Organization.                                                                                                                                  |
| S&P                                          |   | Standard      and Poor’s.                                                                                                                                           |
| SEC                                              |   | United      States Securities and Exchange Commission.                                                                                                                    |
| SECA                                             |   | Seams      Elimination Cost Allocation.                                                                                                                                   |
| SEET                                             |   | Significant      Excess Earnings Test.                                                                                                                                    |
| SFAS                                             |   | Statement      of Financial Accounting Standards issued by the Financial Accounting      Standards Board.                                                                 |
| SFAS      157                                    |   | Statement      of Financial Accounting Standards No. 157, “Fair Value      Measurements.”                                                                     |
| 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.                                                                                                      |
| TEM                                              |   | SUEZ      Energy Marketing NA, Inc. (formerly known as Tractebel Energy Marketing,      Inc.).                                                                            |
| Texas      Restructuring   Legislation |   | Legislation      enacted in 1999 to restructure the electric utility industry in      Texas.                                                                              |
| TNC                                              |   | AEP      Texas North Company, an AEP electric utilitysubsidiary.                                                                                                          |
| 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.                                                                                                                               |
| VaR                                              |   | Value      at Risk, a method to quantify risk exposure.                                                                                                                   |
| VIE                                              |   | Variable      Interest Entity.                                                                                                                                            |
| Virginia      SCC                                |   | Virginia      State Corporation Commission.                                                                                                                               |
| WPCo                                             |   | Wheeling      Power Company, an AEP electric distribution subsidiary.                                                                                                     |
| WVPSC                                            |   | Public      Service Commission of WestVirginia.                                                                                                                           |

----

FORWARD-LOOKING INFORMATION

| · | The      economic climate and growth in, or contraction within, our service      territory and changes in market demand and demographic      patterns.                                                                                                                                                                                                                                                        |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Inflationary      or deflationary interest rate trends.                                                                                                                                                                                                                                                                                                                                                       |
| · | Volatility      in the financial markets, particularly developments affecting the      availability of capital on reasonable terms and developments impairing our      ability to finance new capital projects and refinance existing debt at      attractive rates.                                                                                                                                          |
| · | The      availability and cost of funds to finance working capital and capital      needs, particularly during periods when the time lag between incurring      costs and recovery is long and the costs are material.                                                                                                                                                                                        |
| · | Electric      load and customer growth.                                                                                                                                                                                                                                                                                                                                                                       |
| · | Weather      conditions, including storms.                                                                                                                                                                                                                                                                                                                                                                    |
| · | 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 including our ability to restore I&M’s Donald C. Cook Nuclear      Plant Unit 1 in a timely manner.                                                                                                                                                                                            |
| · | Our      ability to recover regulatory assets and stranded costs in connection with      deregulation.                                                                                                                                                                                                                                                                                                        |
| · | Our      ability to recover increases in fuel and other energy costs through      regulated or competitive electric rates.                                                                                                                                                                                                                                                                                    |
| · | Our      ability to build or acquire generating capacity, including the Turk Plant,      and transmission line facilities (including our ability to obtain any      necessary regulatory approvals and permits) when needed at acceptable      prices and terms and to recover those costs (including the costs of      projects that are cancelled) through applicable rate cases or competitive      rates. |
| · | New      legislation, litigation and government regulation, including requirements      for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or      particulate matter and other substances that could impact the continued      operation 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 the 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 the recently passed      utility law in Ohio and the allocation of costs within regional      transmission organizations, including PJM and SPP.                                                                                                                                                                                          |
| · | Accounting      pronouncements periodically issued by accounting standard-setting      bodies.                                                                                                                                                                                                                                                                                                                |
| · | The      impact of volatility in the capital markets on the value of the      investments held by our pension, other postretirement benefit plans and      nuclear decommissioning trust and the impact on future funding      requirements.                                                                                                                                                                  |
| · | Prices      and demand for power that we generate and sell at    wholesale.                                                                                                                                                                                                                                                                                                                                   |
| · | Changes      in technology, particularly with respect to new, developing or alternative      sources of generation.                                                                                                                                                                                                                                                                                           |
| · | Other      risks and unforeseen events, including wars, the effects of terrorism      (including increased security costs), embargoes and other catastrophic      events.                                                                                                                                                                                                                                     |

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

----

| · | Margins from      Off-system Sales - Margins from off-system sales continue to      decrease due to reductions in sales volumes and weak market power prices,      reflecting reduced overall demand for electricity.  For the      first nine months of 2009 in comparison to the first nine months of 2008,      off-system sales volumes decreased by 58%.                                                                                                                                                                                                                               |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| · | Industrial KWH      Sales - Industrial KWH sales for both the three months and nine      months ended September 30, 2009 were down 17%.  Approximately      half of the decrease in the first nine months of 2009 was due to cutbacks      or closures by 10 of our large metals producing customers.  We      also experienced continued significant decreases in KWH sales to customers      in the transportation, plastics, rubber and paper manufacturing      industries.                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| · | Risk of Loss of Major      Industrial Customers - We maintain close contact with each of our      major industrial customers individually with respect to their expected      electric needs.  We factor our industrial customer analyses into      our operational planning.  In September 2009, Ormet, a major      industrial customer currently operating at a reduced load of approximately      330 MW (Ormet operated at an approximate 500 MW load in 2008), announced      that it will continue operations at this reduced level at least through      the end of 2009. |

| · | Arkansas - In      September 2009, SWEPCo reached a rate change settlement agreement that      provides for an $18 million increase in revenues based upon a return on      equity of 10.25% and a decrease in annual depreciation rates of $10      million.  The combination of these factors should contribute an      additional $28 million in annual pretax income to SWEPCo      annually.  The settlement agreement also includes a separate      rider of approximately $11 million annually for the recovery of carrying      costs, depreciation and operation and maintenance expenses on the Stall      Unit once it is placed in service as expected in      mid-2010.  Approval of the settlement by the APSC is expected in      the fourth quarter of 2009. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| · | Indiana - In      March 2009, the IURC approved a modified rate settlement agreement that      provides for an annual increase in revenues of $42 million, including a      $19 million increase in revenue from base rates and $23 million in      additional tracker revenues for certain incurred costs, subject to      true-up.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

| · | Ohio - In March 2009, and as amended in July 2009, the      PUCO issued an order that modified and approved CSPCo’s and OPCo’s ESP      filings.  Among other things, the ESP order authorized capped      increases to revenues during the three-year ESP period and also authorized      a fuel adjustment clause (FAC) which allows CSPCo and OPCo to phase-in and      defer actual FAC costs incurred in excess of the caps, that will be      trued-up, subject to annual caps.  The projected revenue      increases for CSPCo and OPCo are listed  below: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Projected      Revenue Increases |   |
|--------|----------------------------------|--------|
|   | 2009                             |   | 2010 |   | 2011 |   |
|   | (in      millions)               |   |
| CSPCo  |                             | $      | 94 |   |   | $ | 109 |   |   | $ | 116 |   |
| OPCo   |                             |   | 103 |   |   |   | 125 |   |   |   | 153 |   |

| · | Oklahoma -      In October 2009, all but two of the parties to PSO’s Capital Reliability      Rider filing agreed to a stipulation that was filed with the OCC for PSO      to collect no more than $30 million under the CRR on an annual basis      beginning January 2010 until PSO’s next base rateorder.                                                                                                                                                                                                                                                                                        |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| · | Texas - In      August 2009, SWEPCo filed a rate case with the PUCT to increase non-fuel      base rates by approximately $75 million annually including return on      equity of 11.5%.  The filing includes financing cost riders of      $32 million related to construction of the Stall Unit and Turk Plant, a      vegetation management rider of $16 million and other requested increases      of $27 million.  The proposed filing would increase SWEPCo’s      annual pretax income by approximately $51 million.                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| · | Virginia - In      July 2009, APCo requested a base rate increase with the Virginia SCC of      $169 million annually (later adjusted to $154 million) based on a 13.35%      return on common equity.  The new rates will become effective,      subject to refund, no later than December 2009. In      August 2009, the Virginia SCC issued an order which provides for a $130      million fuel revenue increase.  If actual fuel costs are greater      or less than the projected fuel costs, APCo will seek appropriate      adjustments in APCo’s next fuel factor proceeding. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| · | West Virginia -      In September 2009, the WVPSC issued an order granting a $355 million      increase over a four-year phase-in period.  The order lowered      annual coal cost projections by $27 million and deferred recovery of      unrecovered ENEC deferrals related to price increases on certain      renegotiated coal contracts.  The WVPSC indicated that it would      review the prudency of these additional costs in the next ENEC proceeding      and APCo will adjust ratesappropriately.                                                                                    |

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

| · | Commercial      barging operations that annually transport approximately 33 million tons      of 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, |   |
|-------------------------------------------------------------------|---------------------------------------|--------|--------------------------------------|--------|
|                                                              | 2009                                  |   | 2008                                 |   | 2009 |   | 2008 |   |
|                                                              | (in      millions)                    |   |
| Utility      Operations                                           |                                  | $      | 448                                  |   |   | $ | 359 |   |   | $ | 1,121 |   |   | $ | 1,036 |   |
| AEP      River Operations                                         |                                  |   | 10                                   |   |   |   | 11 |   |   |   | 22 |   |   |   | 21 |   |
| Generation      and Marketing                                     |                                  |   | 5                                    |   |   |   | 16 |   |   |   | 33 |   |   |   | 43 |   |
| All      Other (a)                                                |                                  |   | (17                                  | )      |   |   | (10 | ) |   |   | (45 | ) |   |   | 133 |   |
| Income      Before Discontinued Operations and Extraordinary Loss |                                  | $      | 446                                  |   |   | $ | 376 |   |   | $ | 1,131 |   |   | $ | 1,233 |   |

| (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 will gradually liquidate and completely expire      in 2011. |
|   | ·                   | The      first quarter 2008 settlement of a purchase power and sale agreement with      TEM related to the Plaquemine Cogeneration Facility which was sold in      2006. |
|   | ·                   | Revenue      sharing related to the Plaquemine Cogeneration  Facility. |

|                                                              |   | Three      Months EndedSeptember      30, |   |   | Nine      Months EndedSeptember      30, |   |
|-------------------------------------------------------------------|--------|-------------------------------------------|--------|--------|------------------------------------------|--------|
|                                                              |   | 2009                                      |   |   | 2008                                     |   |   | 2009 |   |   | 2008 |   |
|                                                              |   | (in      millions)                        |   |
| Revenues                                                          |   | $                                         | 3,389  |   |                                     | $      | 3,968 |   |   | $ | 9,712 |   |   | $ | 10,575 |   |
| Fuel      and Purchased Power                                     |   |                                      | 1,145  |   |                                     |   | 1,841 |   |   |   | 3,337 |   |   |   | 4,428 |   |
| Gross      Margin                                                 |   |                                      | 2,244  |   |                                     |   | 2,127 |   |   |   | 6,375 |   |   |   | 6,147 |   |
| Depreciation      and Amortization                                |   |                                      | 412    |   |                                     |   | 379 |   |   |   | 1,173 |   |   |   | 1,099 |   |
| Other      Operating Expenses                                     |   |                                      | 988    |   |                                     |   | 1,034 |   |   |   | 2,975 |   |   |   | 3,001 |   |
| Operating      Income                                             |   |                                      | 844    |   |                                     |   | 714 |   |   |   | 2,227 |   |   |   | 2,047 |   |
| Other      Income, Net                                            |   |                                      | 42     |   |                                     |   | 47 |   |   |   | 97 |   |   |   | 138 |   |
| Interest      Expense                                             |   |                                      | 232    |   |                                     |   | 224 |   |   |   | 679 |   |   |   | 650 |   |
| Income      Tax Expense                                           |   |                                      | 206    |   |                                     |   | 178 |   |   |   | 524 |   |   |   | 499 |   |
| Income      Before Discontinued Operations and Extraordinary Loss |   | $                                         | 448    |   |                                     | $      | 359 |   |   | $ | 1,121 |   |   | $ | 1,036 |   |

|                    | Three      Months EndedSeptember      30, |   | Nine      Months EndedSeptember      30, |
|-------------------------|-------------------------------------------|--------|------------------------------------------|
| Energy/Delivery Summary | 2009                                      |   | 2008                                     |   | 2009 |   | 2008 |
|                    | (in      millions of KWH)                 |
| Retail:                 |                                      |   |                                     |   |   |   |   |   |
| Residential             | 15,967                               |   |                                     | 15,965  |   | 44,731  |   | 44,986  |
| Commercial              | 13,569                               |   |                                     | 13,731  |   | 37,773  |   | 38,099  |
| Industrial              | 13,641                               |   |                                     | 16,409  |   | 40,564  |   | 48,915  |
| Miscellaneous           | 800                                  |   |                                     | 846  |   | 2,289  |   | 2,381  |
| Total      Retail (a)   | 43,977                               |   |                                     | 46,951  |   | 125,357  |   | 134,381  |
|                    |                                      |   |                                     |   |   |   |   |   |
| Wholesale               | 8,289                                |   |                                     | 13,165  |   | 22,233  |   | 35,904  |
|                    |                                      |   |                                     |   |   |   |   |   |
| Total      KWHs         | 52,266                               |   |                                     | 60,116  |   | 147,590  |   | 170,285  |

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

|                            | Three      Months EndedSeptember      30, |   | Nine      Months EndedSeptember      30, |
|---------------------------------|-------------------------------------------|--------|------------------------------------------|
|                            | 2009                                      |   | 2008                                     |   | 2009 |   | 2008 |
|                            | (in      degree days)                     |
| Weather      Summary            |                                      |   |                                     |   |   |   |   |   |
| Eastern Region                  |                                      |   |                                     |   |   |   |   |   |
| Actual      – Heating (a) | 6                                    |   |                                     | -  |   | 2,062  |   | 1,966  |
| Normal      – Heating (b) | 7                                    |   |                                     | 7  |   | 1,969  |   | 1,950  |
|                            |                                      |   |                                     |   |   |   |   |   |
| Actual      – Cooling (c) | 509                                  |   |                                     | 659  |   | 813  |   | 936  |
| Normal      – Cooling (b) | 703                                  |   |                                     | 687  |   | 993  |   | 969  |
|                            |                                      |   |                                     |   |   |   |   |   |
| Western Region      (d)         |                                      |   |                                     |   |   |   |   |   |
| Actual      – Heating (a) | -                                    |   |                                     | -  |   | 902  |   | 981  |
| Normal      – Heating (b) | 2                                    |   |                                     | 2  |   | 941  |   | 967  |
|                            |                                      |   |                                     |   |   |   |   |   |
| Actual      – Cooling (c) | 1,170                                |   |                                     | 1,251  |   | 1,878  |   | 1,955  |
| Normal      – Cooling (b) | 1,401                                |   |                                     | 1,402  |   | 2,080  |   | 2,074  |

| (a) | Eastern      region and western region heating degree days are calculated on a 55      degree temperature base. |
|-----|-----------------------------------------------------------------------------------------------------------------|
| (b) | Normal      Heating/Cooling represents the thirty-year average of degree      days.                             |
| (c) | Eastern      region and western region cooling degree days are calculated on a 65      degree temperature base. |
| (d) | Western      region statistics represent PSO/SWEPCo customer base  only.                                        |

| Third      Quarter of 2008                               |   |   |   |   | $      | 359    |   |
|----------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                     |   |   |   |   |   |   |   |
| Changes      in Gross Margin:                            |   |   |   |   |   |   |   |
| Retail      Margins                                      |   |   | 281    |   |   |   |   |   |
| Off-system      Sales                                    |   |   | (226   | )      |   |   |   |   |
| Transmission      Revenues                               |   |   | 10     |   |   |   |   |   |
| Other      Revenues                                      |   |   | 52     |   |   |   |   |   |
| Total      Change in Gross Margin                        |   |   |   |   |   |   | 117    |   |
|                                                     |   |   |   |   |   |   |   |   |
| Total      Expenses and Other:                           |   |   |   |   |   |   |   |   |
| Other      Operation and Maintenance                     |   |   | 52     |   |   |   |   |   |
| Gain      on Sales of Assets, Net                        |   |   | (2     | )      |   |   |   |   |
| Depreciation      and Amortization                       |   |   | (33    | )      |   |   |   |   |
| Taxes      Other Than Income Taxes                       |   |   | (4     | )      |   |   |   |   |
| Interest      and Investment Income                      |   |   | (8     | )      |   |   |   |   |
| Carrying      Costs Income                               |   |   | (9     | )      |   |   |   |   |
| Allowance      for Equity Funds Used During Construction |   |   | 12     |   |   |   |   |   |
| Interest      Expense                                    |   |   | (8     | )      |   |   |   |   |
| Total      Expenses and Other                            |   |   |   |   |   |   | -      |   |
|                                                     |   |   |   |   |   |   |   |   |
| Income      Tax Expense                                  |   |   |   |   |   |   | (28    | ) |
|                                                     |   |   |   |   |   |   |   |   |
| Third      Quarter of 2009                               |   |   |   |   |   | $      | 448    |   |

| · | Retail      Margins increased $281 million primarily due to the    following:                                                                                                                                                                                       |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                                              | An      $87 million increase related to the PUCO’s approval of our Ohio ESPs, a      $43 million increase related to base rates and recovery of E&R costs      in Virginia and construction financing costs in West Virginia, a $22      million increase in base rates in Oklahoma and a $7 million net rate      increase for I&M. |
|   | ·                                                                                                                                                                                                                                                              | A      $151 million increase in fuel margins in Ohio due to the deferral of fuel      costs by CSPCo and OPCo in 2009.  The PUCO’s March 2009 approval      of CSPCo’s and OPCo’s ESPs allows for the deferral and recovery of fuel      and related costs during the ESP period.  See “Ohio Electric      Security Plan Filings” section of Note 3. |
|   | ·                                                                                                                                                                                                                                                              | A      $90 million increase resulting from reduced sharing of off-system sales      margins with retail customers in our eastern service territory due to a      decrease in total off-system sales. |
|   | These      increases were partially offset by:                                                                                                                                                                                                                      |
|   | ·                                                                                                                                                                                                                                                              | A      $61 million decrease in margins from industrial sales due to reduced      operating levels and suspended operations by certain large industrial      customers in our service territories. |
|   | ·                                                                                                                                                                                                                                                              | A      $42 million decrease in usage primarily due to a 23% decrease in cooling      degree days in our eastern region. |
|   | ·                                                                                                                                                                                                                                                              | A      $19 million decrease in fuel margins due to higher fuel and purchased      power costs related to the Cook Plant Unit 1 shutdown.  This      decrease in fuel margins was offset by a corresponding increase in Other      Revenues as discussed below. |
| · | Margins      from Off-system Sales decreased $226 million primarily due to lower      physical sales volumes and lower margins in our eastern service territory      reflecting lower market prices, partially offset by higher trading and      marketing margins. |
| · | Transmission      Revenues increased $10 million primarily due to increased rates in the      ERCOT and SPP regions.                                                                                                                                                |

| · | Other      Revenues increased $52 million primarily due to Cook Plant accidental      outage insurance policy proceeds of $46 million.  Of these      insurance proceeds, $19 million were used to reduce customer      bills.  This increase in revenues was offset by a corresponding      decrease in Retail Margins as discussed above.  See “Cook Plant      Unit 1 Fire and Shutdown” section of Note4. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Other      Operation and Maintenance expenses decreased $52 million primarily due to      the following:                                                                                                                                                                                                                                                                                                                                                                |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | A      $37 million decrease in storm restoration expenses. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | A      $23 million decrease in plant operating and maintenance      expenses. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | A      $10 million decrease in transmission expense including lower forestry      expenses, RTO fees and reliability expenses. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | An      $8 million decrease related to the establishment of a regulatory asset in      Virginia for the deferral of transmission costs. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | A      $7 million decrease in customer service expenses. |
|   | These      decreases were partially offset by:                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | A      $30 million increase in administrative and general expenses, primarily      employee medical expenses. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | An      $11 million increase in distribution reliability and other      expenses. |
| · | Depreciation      and Amortization increased $33 million primarily due to higher depreciable      property balances as the result of environmental improvements placed in      service at OPCo and various other property additions and higher      depreciation rates for OPCo related to shortened depreciable lives for      certain generating facilities.                                                                                                          |
| · | Interest      and Investment Income decreased $8 million primarily due to the 2008      favorable effect of interest income related to federal income tax refunds      filed with the IRS.                                                                                                                                                                                                                                                                              |
| · | Carrying      Costs Income decreased $9 million primarily due to the completion of      reliability deferrals in Virginia in December 2008 and the decrease of      environmental deferrals in Virginia in 2009.                                                                                                                                                                                                                                                        |
| · | Allowance      for Equity Funds Used During Construction increased $12 million as a      result of construction at SWEPCo’s Turk Plant and Stall Unit and the      reapplication of “Regulated Operations” accounting guidance for the      generation portion of SWEPCo’s Texas retail jurisdiction effective April      2009.  See “Texas Rate Matters – Texas Restructuring – SPP”      section of Note 3. |
| · | Interest      Expense increased $8 million primarily due to increased long-term      debt.                                                                                                                                                                                                                                                                                                                                                                              |
| · | Income      Tax Expense increased $28 million primarily due to an increase in pretax      income, partially offset by state income taxes and changes in certain      book/tax differences accounted for on a flow-through  basis.                                                                                                                                                                                                                                       |

| Nine      Months Ended September 30, 2008                |   |   |   |   | $      | 1,036  |   |
|----------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                     |   |   |   |   |   |   |   |
| Changes      in Gross Margin:                            |   |   |   |   |   |   |   |
| Retail      Margins                                      |   |   | 570    |   |   |   |   |   |
| Off-system      Sales                                    |   |   | (517   | )      |   |   |   |   |
| Transmission      Revenues                               |   |   | 22     |   |   |   |   |   |
| Other      Revenues                                      |   |   | 153    |   |   |   |   |   |
| Total      Change in Gross Margin                        |   |   |   |   |   |   | 228    |   |
|                                                     |   |   |   |   |   |   |   |   |
| Total      Expenses and Other:                           |   |   |   |   |   |   |   |   |
| Other      Operation and Maintenance                     |   |   | 31     |   |   |   |   |   |
| Gain      on Sales of Assets, Net                        |   |   | (1     | )      |   |   |   |   |
| Depreciation      and Amortization                       |   |   | (74    | )      |   |   |   |   |
| Taxes      Other Than Income Taxes                       |   |   | (4     | )      |   |   |   |   |
| Interest      and Investment Income                      |   |   | (37    | )      |   |   |   |   |
| Carrying      Costs Income                               |   |   | (31    | )      |   |   |   |   |
| Allowance      for Equity Funds Used During Construction |   |   | 27     |   |   |   |   |   |
| Interest      Expense                                    |   |   | (29    | )      |   |   |   |   |
| Total      Expenses and Other                            |   |   |   |   |   |   | (118   | ) |
|                                                     |   |   |   |   |   |   |   |   |
| Income      Tax Expense                                  |   |   |   |   |   |   | (25    | ) |
|                                                     |   |   |   |   |   |   |   |   |
| Nine      Months Ended September 30, 2009                |   |   |   |   |   | $      | 1,121  |   |

| · | Retail      Margins increased $570 million primarily due to the    following:                                                                                                                                                                                                                                                                                                                                                                             |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                    | A      $183 million increase related to the PUCO’s approval of our Ohio ESPs, a      $147 million increase related to base rates and recovery of E&R costs      in Virginia and construction financing costs in West Virginia, a $63      million increase in base rates in Oklahoma and a $32 million net rate      increase for I&M. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                    | A      $207 million increase resulting from reduced sharing of off-system sales      margins with retail customers in our eastern service territory due to a      decrease in total off-system sales. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                    | A      $199 million increase in fuel margins in Ohio due to the deferral of fuel      costs by CSPCo and OPCo in 2009.  The PUCO’s March 2009 approval      of CSPCo’s and OPCo’s ESPs allows for the deferral and recovery of fuel      and related costs during the ESP period.  See “Ohio Electric      Security Plan Filings” section of Note 3. |
|   | These      increases were partially offset by:                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                    | A      $150 million decrease in margins from industrial sales due to reduced      operating levels and suspended operations by certain large industrial      customers in our service territories. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                    | A      $59 million decrease in fuel margins due to higher fuel and purchased      power costs related to the Cook Plant Unit 1 shutdown.  This      decrease in fuel margins was offset by a corresponding increase in Other      Revenues as discussed below. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                    | A      $34 million decrease in usage primarily due to a 13% decrease in cooling      degree days in our eastern region. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                    | A      $29 million decrease related to favorable coal contract amendments in      2008. |
| · | Margins      from Off-system Sales decreased $517 million primarily due to lower      physical sales volumes and lower margins in our eastern service territory      reflecting lower market prices, partially offset by higher trading and      marketing margins.                                                                                                                                                                                       |
| · | Transmission      Revenues increased $22 million primarily due to increased rates in the      ERCOT and SPP regions.                                                                                                                                                                                                                                                                                                                                      |
| · | Other      Revenues increased $153 million primarily due to Cook Plant accidental      outage insurance policy proceeds of $145 million.  Of these      insurance proceeds, $59 million were used to reduce customer      bills.  This increase in revenues was offset by a corresponding      decrease in Retail Margins as discussed above.  See “Cook Plant      Unit 1 Fire and Shutdown” section of Note4. |

| · | Other      Operation and Maintenance expenses decreased $31 million primarily due to      the following:                                                                                                                                                                                                                                                                                                                                                                |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | An      $80 million decrease in plant outage and other plant operating and      maintenance expenses. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | A      $55 million decrease in tree trimming, reliability and other transmission      and distribution expenses. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | The      write-off in the first quarter of 2008 of $10 million of unrecoverable      pre-construction costs for PSO’s cancelled Red Rock Generating      Facility. |
|   | These      decreases were partially offset by:                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | The      deferral of $72 million of Oklahoma ice storm costs in 2008 resulting from      an OCC order approving recovery of January and December 2007 ice storm      expenses. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | A      $37 million increase in administrative and general expenses, primarily      employee medical expenses. |
| · | Depreciation      and Amortization increased $74 million primarily due to higher depreciable      property balances as the result of environmental improvements placed in      service at OPCo and various other property additions and higher      depreciation rates for OPCo related to shortened depreciable lives for      certain generating facilities.                                                                                                          |
| · | Interest      and Investment Income decreased $37 million primarily due to the 2008      favorable effect of interest income related to federal income tax refunds      filed with the IRS and the second quarter 2009 recognition of      other-than-temporary losses related to equity investments held by      EIS.                                                                                                                                                  |
| · | Carrying      Costs Income decreased $31 million primarily due to the completion of      reliability deferrals in Virginia in December 2008 and the decrease of      environmental deferrals in Virginia in 2009.                                                                                                                                                                                                                                                       |
| · | Allowance      for Equity Funds Used During Construction increased $27 million as a      result of construction at SWEPCo’s Turk Plant and Stall Unit and the      reapplication of “Regulated Operations” accounting guidance for the      generation portion of SWEPCo’s Texas retail jurisdiction effective April      2009.  See “Texas Rate Matters – Texas Restructuring – SPP”      section of Note 3. |
| · | Interest      Expense increased $29 million primarily due to increased long-term      debt.                                                                                                                                                                                                                                                                                                                                                                             |
| · | Income      Tax Expense increased $25 million primarily due to an increase in pretax      book income.                                                                                                                                                                                                                                                                                                                                                                  |

| Debt and Equity    Capitalization                          |   |                    |         |                   |
|------------------------------------------------------------|--------|-------------------------|--------------|------------------------|
|                                                       |   | September      30, 2009 |         | December      31, 2008 |
|                                                       |   | ($      in millions)    |
| Long-term      Debt, including amounts due within one year |   | $                       | 17,253  |                   | 56.2% |   | $ | 15,983  |   | 55.6% |
| Short-term      Debt                                       |   |                    | 352     |                   | 1.1    |   |   | 1,976  |   | 6.9    |
| Total      Debt                                            |   |                    | 17,605  |                   | 57.3    |   |   | 17,959  |   | 62.5    |
| Preferred      Stock of Subsidiaries                       |   |                    | 61      |                   | 0.2    |   |   | 61  |   | 0.2    |
| AEP      Common Equity                                     |   |                    | 13,064  |                   | 42.5    |   |   | 10,693  |   | 37.2    |
| Noncontrolling      Interests                              |   |                    | -       |                   | -    |   |   | 17  |   | 0.1    |
|                                                       |   |                    |         |                   |   |   |   |   |   |   |
| Total      Debt and Equity Capitalization                  |   | $                       | 30,730  |                   | 100.0% |   | $ | 28,730  |   | 100.0% |

|                                             |   | Amount             |   |   | Maturity |
|--------------------------------------------------|--------|--------------------|--------|--------|----------|
|                                             |   | (in      millions) |   |   |     |
| Commercial      Paper Backup:                    |   |               |   |   |     |
| Revolving      Credit Facility                   |   | $                  | 1,500  |   |     | March      2011 |
| Revolving      Credit Facility                   |   |               | 1,454  |   | (a)      | April      2012 |
| Revolving      Credit Facility                   |   |               | 627    |   | (a)      | April      2011 |
| Total                                            |   |               | 3,581  |   |     |   |
| Cash      and Cash Equivalents                   |   |               | 877    |   |     |   |
| Total      Liquidity Sources                     |   |               | 4,458  |   |     |   |
| Less: AEP      Commercial Paper Outstanding |   |               | 347    |   |     |   |
| Letters      of Credit Issued                    |   |               | 470    |   |     |   |
|                                             |   |               |   |   |     |   |
| Net      Available Liquidity                     |   | $                  | 3,641  |   |     |   |

| (a) | Net      of contractually terminated Lehman Brothers Bank’s commitment amount of      $69 million. |
|-----|----------------------------------------------------------------------------------------------------------|

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

| · | Placed      AEP on negative outlook.                                                                                                 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|
| · | Affirmed      the Baa2 rating for TCC and downgraded TNC to Baa2.  Both      companies were also placed on stable outlook. |
| · | Affirmed      the stable rating outlooks for CSPCo, I&M, KPCo and    PSO.                                                        |
| · | Changed      the rating outlook for APCo from negative to stable.                                                                    |
| · | Downgraded      SWEPCo to Baa3 and placed it on stable outlook.                                                                      |
| · | Downgraded      OPCo to Baa1 and placed it on stableoutlook.                                                                         |

| · | Affirmed      its stable rating outlook for I&M, PSO and TNC.                                 |
|--------|---------------------------------------------------------------------------------------------------|
| · | Changed      its rating outlook for SWEPCo and TCC from stable to    negative.                    |
| · | Downgraded      APCo’s senior unsecured rating to BBB and placed it on stable      outlook. |

|                                                  | Nine      Months Ended |   |
|-------------------------------------------------------|------------------------|--------|
|                                                  | September      30,     |   |
|                                                  | 2009                   |   | 2008 |   |
|                                                  | (in      millions)     |   |
| Cash      and Cash Equivalents at Beginning of Period |                   | $      | 411 |   |   | $ | 178 |   |
| Net      Cash Flows from Operating Activities         |                   |   | 1,871 |   |   |   | 2,059 |   |
| Net      Cash Flows Used for Investing Activities     |                   |   | (2,097 | ) |   |   | (3,061 | ) |
| Net      Cash Flows from Financing Activities         |                   |   | 692 |   |   |   | 1,162 |   |
| Net      Increase in Cash and Cash Equivalents        |                   |   | 466 |   |   |   | 160 |   |
| Cash      and Cash Equivalents at End of Period       |                   | $      | 877 |   |   | $ | 338 |   |

|                                                      | Nine      Months Ended |   |
|-----------------------------------------------------------|------------------------|--------|
|                                                      | September      30,     |   |
|                                                      | 2009                   |   | 2008 |   |
|                                                      | (in      millions)     |   |
| Net      Income                                           |                   | $      | 1,126 |   |   | $ | 1,234 |   |
| Less:  Discontinued      Operations, Net of Tax |                   |   | - |   |   |   | (1 | ) |
| Income      Before Discontinued Operations                |                   |   | 1,126 |   |   |   | 1,233 |   |
| Depreciation      and Amortization                        |                   |   | 1,200 |   |   |   | 1,123 |   |
| Other                                                     |                   |   | (455 | ) |   |   | (297 | ) |
| Net      Cash Flows from Operating Activities             |                   | $      | 1,871 |   |   | $ | 2,059 |   |

|                                               | Nine      Months Ended |   |
|----------------------------------------------------|------------------------|--------|
|                                               | September      30,     |   |
|                                               | 2009                   |   | 2008 |   |
|                                               | (in      millions)     |   |
| Construction      Expenditures                     |                   | $      | (2,123 | ) |   | $ | (2,576 | ) |
| Purchases/Sales      of Investment Securities, Net |                   |   | (49 | ) |   |   | (474 | ) |
| Acquisitions      of Nuclear Fuel                  |                   |   | (153 | ) |   |   | (99 | ) |
| Acquisitions      of Assets                        |                   |   | (70 | ) |   |   | (97 | ) |
| Proceeds      from Sales of Assets                 |                   |   | 258 |   |   |   | 83 |   |
| Other                                              |                   |   | 40 |   |   |   | 102 |   |
| Net      Cash Flows Used for Investing Activities  |                   | $      | (2,097 | ) |   | $ | (3,061 | ) |

|                                          | Nine      Months Ended |   |
|-----------------------------------------------|------------------------|--------|
|                                          | September      30,     |   |
|                                          | 2009                   |   | 2008 |   |
|                                          | (in      millions)     |   |
| Issuance      of Common Stock, Net            |                   | $      | 1,706 |   |   | $ | 106 |   |
| Issuance/Retirement      of Debt, Net         |                   |   | (371 | ) |   |   | 1,621 |   |
| Dividends      Paid on Common Stock           |                   |   | (564 | ) |   |   | (500 | ) |
| Other                                         |                   |   | (79 | ) |   |   | (65 | ) |
| Net      Cash Flows from Financing Activities |                   | $      | 692 |   |   | $ | 1,162 |   |

|                                                      | September      30, |   | December      31, |   |
|-----------------------------------------------------------|--------------------|--------|-------------------|--------|
|                                                      | 2009               |   | 2008              |   |
|                                                      | (in      millions) |   |
| AEP      Credit Accounts Receivable Purchase Commitments  |               | $      | 530               |   |   | $ | 650 |   |
| Rockport      Plant Unit 2 Future Minimum Lease Payments  |               |   | 1,996             |   |   |   | 2,070 |   |
| Railcars      Maximum Potential Loss From Lease Agreement |               |   | 25                |   |   |   | 25 |   |

|       |   |            |   |               |   |               |   |               |   |           |   |            |   |                |    |        | Commercial |
|------------|--------|-----------------|--------|--------------------|--------|--------------------|--------|--------------------|--------|----------------|--------|-----------------|--------|---------------------|---------|-------------|------------|
|       |   |            |   |               |   | Total              |   |               |   |           |   |            |   |                | Nominal |        | Operation  |
| Operating  |   | Project         |   |               |   | Projected          |   |               |   |           |   |            |   |                | MW      |        | Date       |
| Company    |   | Name            |   | Location           |   | Cost      (a)      |   | CWIP      (b)      |   | Fuel      Type |   | Plant      Type |   | Capacity            |    | (Projected) |
|       |   |            |   |               |   | (in      millions) |   | (in      millions) |   |           |   |            |   |                |    |        |
| AEGCo      |   | Dresden         | (c)    | Ohio               |   | $                  | 321    | (d)                | $      | 199            | (d)    | Gas             |   | Combined-cycle      |    | 580         |       | 2013 |
| SWEPCo     |   | Stall           |   | Louisiana          |   |               | 386    |               |   | 364            |   | Gas             |   | Combined-cycle      |    | 500         |       | 2010 |
| SWEPCo     |   | Turk            | (e)    | Arkansas           |   |               | 1,633  | (e)                |   | 622            | (f)    | Coal            |   | Ultra-supercritical |    | 600         | (e)        | 2012 |
| APCo       |   | Mountaineer     | (g)    | West      Virginia |   |               |   | (g)                |   |           |   | Coal            |   | IGCC                |    | 629         |       |   | (g) |
| CSPCo/OPCo |   | Great      Bend | (g)    | Ohio               |   |               |   | (g)                |   |           |   | Coal            |   | IGCC                |    | 629         |       |   | (g) |

| (a) | Amount      excludes AFUDC.                                                                                                                                                                                                                                 |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Amount      includes AFUDC.                                                                                                                                                                                                                                 |
| (c) | In      September 2007, AEGCo purchased the partially completed Dresden plant from      Dresden Energy LLC, a subsidiary of Dominion Resources, Inc., for $85      million, which is included in the “Total Projected Cost” section      above. |
| (d) | During      2009, AEGCo suspended construction of the Dresden Plant.  As a      result, AEGCo has stopped recording AFUDC and will resume recording AFUDC      once construction is resumed.                                                      |
| (e) | SWEPCo      owns approximately 73%, or 440 MW, totaling $1.2 billion in capital      investment.  See “Turk Plant” section below.                                                                                                     |
| (f) | Amount      represents SWEPCo’s CWIP balance only.                                                                                                                                                                                                    |
| (g) | Construction      of IGCC plants is subject to regulatory  approvals.                                                                                                                                                                                       |

|  Company |   |  Proposed      Project                                                               |   | Federal      StimulusFunds      Requested |                  |
|---------------|--------|-------------------------------------------------------------------------------------------|--------|-------------------------------------------|-----------------------|
|          |   |                                                                                      |   | (in      millions)                        |                  |
| APCo          |   | Carbon      Capture and Sequestration Demonstration Project at the Mountaineer      Plant |   | $                                         | 334              |   |
| APCo          |   | Hydro Generation      Modernization Project in London, W.V.                          |   |                                      | 2           |   |
| CSPCo         |   | gridSMART                                                                                 |   |                                      | 75          |   |
| TCC           |   | gridSMART                                                                                 |   |                                      | 123         | (a) |
| TNC           |   | gridSMART                                                                                 |   |                                      | 32          | (a) |
| ETT           |   | gridSMART                                                                                 |   |                                      | 12          |   |

| (a) | In      October 2009, these applications were not selected by the DOE for      award. |
|-----|---------------------------------------------------------------------------------------|

| · | Requirements      under CAA to reduce emissions of SO2,      NOx,      particulate matter and mercury from fossil fuel-fired power plants;      and   |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Requirements      under the Clean Water Act to reduce the impacts of water intake structures      on aquatic species at certain of our power  plants. |

| · | 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. |

----

|                                                       |   | Utility      Operations |   |   | Generation      andMarketing |   |   | All      Other |   |   | Sub-TotalMTM      Risk Management Contracts |   |   | Cash      Flow Hedge Contracts |   |   | CollateralDeposits |   |   | Total  |   |
|------------------------------------------------------------|--------|-------------------------|--------|--------|------------------------------|--------|--------|----------------|--------|--------|---------------------------------------------|--------|--------|--------------------------------|--------|--------|--------------------|--------|--------|--------|--------|
| Current      Assets                                        |   | $                       | 252    |   |                         | $      | 36     |           |   | $      | 12                                          |   |   | $                              | 300    |   |               | $      | 15     |   |   | $ | (15 | ) |   | $ | 300 |   |
| Noncurrent      Assets                                     |   |                    | 178    |   |                         |   | 210    |           |   |   | 3                                           |   |   |                           | 391    |   |               |   | 2      |   |   |   | (14 | ) |   |   | 379 |   |
| Total      Assets                                          |   |                    | 430    |   |                         |   | 246    |           |   |   | 15                                          |   |   |                           | 691    |   |               |   | 17     |   |   |   | (29 | ) |   |   | 679 |   |
|                                                       |   |                    |   |   |                         |   |   |           |   |   |                                        |   |   |                           |   |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Current      Liabilities                                   |   |                    | 126    |   |                         |   | 23     |           |   |   | 17                                          |   |   |                           | 166    |   |               |   | 18     |   |   |   | (48 | ) |   |   | 136 |   |
| Noncurrent      Liabilities                                |   |                    | 112    |   |                         |   | 79     |           |   |   | 1                                           |   |   |                           | 192    |   |               |   | 10     |   |   |   | (52 | ) |   |   | 150 |   |
| Total      Liabilities                                     |   |                    | 238    |   |                         |   | 102    |           |   |   | 18                                          |   |   |                           | 358    |   |               |   | 28     |   |   |   | (100 | ) |   |   | 286 |   |
|                                                       |   |                    |   |   |                         |   |   |           |   |   |                                        |   |   |                           |   |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Total MTMDerivative Contract Net Assets      (Liabilities) |   | $                       | 192    |   |                         | $      | 144    |           |   | $      | (3                                          | )      |   | $                              | 333    |   |               | $      | (11    | )      |   | $ | 71 |   |   | $ | 393 |   |

|                                                                                                                  |   | Utility      Operations |   |   | GenerationandMarketing |   |   | All      Other |   |   | Total  |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|-------------------------|--------|--------|------------------------|--------|--------|----------------|--------|--------|--------|--------|
| Total      MTM Risk Management Contract Net Assets (Liabilities) at December 31,      2008                       |   | $                       | 175    |   |                   | $      | 104    |           |   | $      | (7     | )      |   | $ | 272 |   |
| (Gain)      Loss from Contracts Realized/Settled During the Period and Entered in a      Prior Period                 |   |                    | (77    | )      |                   |   | (5     | )              |   |   | 4      |   |   |   | (78 | ) |
| Fair      Value of New Contracts at Inception When Entered During the Period      (a)                            |   |                    | 14     |   |                   |   | 61     |           |   |   | -      |   |   |   | 75 |   |
| Net      Option Premiums Paid (Received) for Unexercised or Unexpired Option      Contracts Entered During the Period |   |                    | -      |   |                   |   | -      |           |   |   | -      |   |   |   | - |   |
| Changes      in Fair Value Due to Valuation Methodology Changes on Forward      Contracts                             |   |                    | -      |   |                   |   | -      |           |   |   | -      |   |   |   | - |   |
| Changes      in Fair Value Due to Market Fluctuations During the      Period (b)                            |   |                    | 9      |   |                   |   | (16    | )              |   |   | -      |   |   |   | (7 | ) |
| Changes      in Fair Value Allocated to Regulated Jurisdictions(c)                                               |   |                    | 71     |   |                   |   | -      |           |   |   | -      |   |   |   | 71 |   |
| Total      MTM Risk Management Contract Net Assets (Liabilities)      at September 30, 2009                 |   | $                       | 192    |   |                   | $      | 144    |           |   | $      | (3     | )      |   |   | 333 |   |
| Cash      Flow Hedge Contracts                                                                                   |   |                    |   |   |                   |   |   |           |   |   |   |   |   |   | (11 | ) |
| Collateral      Deposits                                                                                              |   |                    |   |   |                   |   |   |           |   |   |   |   |   |   | 71 |   |
| Total      MTM Derivative Contract Net Assets at September 30, 2009                                                   |   |                    |   |   |                   |   |   |           |   |   |   |   |   | $ | 393 |   |

| (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) | Market      fluctuations are attributable to various factors such as supply/demand,      weather, etc.                                                                                                                                                                                                                                                                                                                         |
| (c) | “Change      in Fair Value Allocated to Regulated Jurisdictions” relates to the net      gains (losses) of those contracts that are not reflected on the Condensed      Consolidated Statements of Income.  These net gains (losses) are      recorded as regulatoryliabilities/assets.                                                                                                                  |

|                                                    | Remainder2009 |     | 2010   |   | 2011      |   | 2012   |     | 2013   |   | After2013      (f) |   | Total  |
|---------------------------------------------------------|---------------|----------|--------|--------|-----------|--------|--------|----------|--------|--------|--------------------|--------|--------|
| Utility      Operations                                 |          |     |   |   |      |   |   |     |   |   |               |   |   |   |   |   |   |   |   |   |
| Level      1 (a)                                        | $             | (1)      |   | $      | -    |   | $      | -   |   | $      | -             |   | $      | -  |   | $ | -  |   | $ | (1) |
| Level      2 (b)                                        |          | 24  |   |   | 43   |   |   | 18  |   |   | 3             |   |   | 8  |   |   | 1  |   |   | 97  |
| Level      3 (c)                                        |          | 19  |   |   | 39   |   |   | 6   |   |   | 3             |   |   | -  |   |   | -  |   |   | 67  |
| Total                                                   |          | 42  |   |   | 82   |   |   | 24  |   |   | 6             |   |   | 8  |   |   | 1  |   |   | 163  |
|                                                    |          |     |   |   |      |   |   |     |   |   |               |   |   |   |   |   |   |   |   |   |
| Generation      and Marketing                           |          |     |   |   |      |   |   |     |   |   |               |   |   |   |   |   |   |   |   |   |
| Level      1 (a)                                        |          | (2)      |   |   | 1    |   |   | -   |   |   | -             |   |   | -  |   |   | -  |   |   | (1) |
| Level      2 (b)                                        |          | 1   |   |   | 14   |   |   | 17  |   |   | 16            |   |   | 19  |   |   | 41  |   |   | 108  |
| Level      3 (c)                                        |          | -   |   |   | 1    |   |   | 1   |   |   | 2             |   |   | 3  |   |   | 30  |   |   | 37  |
| Total                                                   |          | (1)      |   |   | 16   |   |   | 18  |   |   | 18            |   |   | 22  |   |   | 71  |   |   | 144  |
|                                                    |          |     |   |   |      |   |   |     |   |   |               |   |   |   |   |   |   |   |   |   |
| All      Other                                          |          |     |   |   |      |   |   |     |   |   |               |   |   |   |   |   |   |   |   |   |
| Level      1 (a)                                        |          | -   |   |   | -    |   |   | -   |   |   | -             |   |   | -  |   |   | -  |   |   | -  |
| Level      2 (b)                                        |          | (1)      |   |   | (4)       |   |   | 2   |   |   | -             |   |   | -  |   |   | -  |   |   | (3) |
| Level      3 (c)                                        |          | -   |   |   | -    |   |   | -   |   |   | -             |   |   | -  |   |   | -  |   |   | -  |
| Total                                                   |          | (1)      |   |   | (4)       |   |   | 2   |   |   | -             |   |   | -  |   |   | -  |   |   | (3) |
|                                                    |          |     |   |   |      |   |   |     |   |   |               |   |   |   |   |   |   |   |   |   |
| Total                                                   |          |     |   |   |      |   |   |     |   |   |               |   |   |   |   |   |   |   |   |   |
| Level      1 (a)                                        |          | (3)      |   |   | 1    |   |   | -   |   |   | -             |   |   | -  |   |   | -  |   |   | (2) |
| Level      2 (b)                                        |          | 24  |   |   | 53   |   |   | 37  |   |   | 19            |   |   | 27  |   |   | 42  |   |   | 202  |
| Level      3 (c) (d)                                    |          | 19  |   |   | 40   |   |   | 7   |   |   | 5             |   |   | 3  |   |   | 30  |   |   | 104  |
| Total                                                   |          | 40  |   |   | 94   |   |   | 44  |   |   | 24            |   |   | 30  |   |   | 72  |   |   | 304  |
| Dedesignated      Risk Management Contracts (e)         |          | 4   |   |   | 14   |   |   | 6   |   |   | 5             |   |   | -  |   |   | -  |   |   | 29  |
| Total      MTM Risk Management Contract Net Assets | $             | 44  |   | $      | 108  |   | $      | 50  |   | $      | 29            |   | $      | 30  |   | $ | 72  |   |  $ | 333  |

| (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) | A      significant portion of the total volumetric position within the      consolidated Level 3 balance has been economically  hedged.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (e) | Dedesignated      Risk Management Contracts are contracts that were originally MTM but were      subsequently elected 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      within Utility Operations Revenues over the remaining life of the      contracts.                                                                                                                                                                                                                                                                                 |
| (f) | There      is mark-to-market value of $72 million in individual periods beyond      2013.  $51 million of this mark-to-market value is in periods      2014-2018, $14 million is in periods 2019-2023 and $7 million is in      periods 2024-2028.                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

|                                |   | Exposure      Before Credit Collateral              |   |   | Credit      Collateral |   |   | Net      Exposure |   |   | Number      of Counterparties >10% ofNet      Exposure |   |   | Net      Exposureof      Counterparties >10% |   |
|-------------------------------------|--------|-----------------------------------------------------|--------|--------|------------------------|--------|--------|-------------------|--------|--------|-----------------------------------------------------------|--------|--------|-------------------------------------------------|--------|
| Counterparty      Credit Quality    |   | (in      millions, except number of counterparties) |   |
| Investment      Grade               |   | $                                                   | 775    |   |                   | $      | 69     |              |   | $      | 706                                                       |   |   |                                            | 2      |   |   | $ | 228 |   |
| Split      Rating                   |   |                                                | 7      |   |                   |   | -      |              |   |   | 7                                                         |   |   |                                            | 2      |   |   |   | 7 |   |
| Noninvestment      Grade            |   |                                                | 4      |   |                   |   | 2      |              |   |   | 2                                                         |   |   |                                            | 2      |   |   |   | 1 |   |
| No      External Ratings:           |   |                                                |   |   |                   |   |   |              |   |   |                                                      |   |   |                                            |   |   |   |   |   |   |
| Internal      Investment Grade      |   |                                                | 75     |   |                   |   | 4      |              |   |   | 71                                                        |   |   |                                            | 4      |   |   |   | 56 |   |
| Internal      Noninvestment Grade   |   |                                                | 112    |   |                   |   | 12     |              |   |   | 100                                                       |   |   |                                            | 3      |   |   |   | 86 |   |
| Total      as of September 30, 2009 |   | $                                                   | 973    |   |                   | $      | 87     |              |   | $      | 886                                                       |   |   |                                            | 13     |   |   | $ | 378 |   |
|                                |   |                                                |   |   |                   |   |   |              |   |   |                                                      |   |   |                                            |   |   |   |   |   |   |
| Total      as of December 31, 2008  |   | $                                                   | 793    |   |                   | $      | 29     |              |   | $      | 764                                                       |   |   |                                            | 9      |   |   | $ | 284 |   |

| Nine      Months Ended  |   |   | Twelve      Months Ended |   |
|-------------------------|--------|--------|--------------------------|--------|
| September      30, 2009 |   |   | December      31, 2008   |   |
| (in      millions)      |   |   | (in      millions)       |   |
| End                     |   |   | High                     |   |   | Average |   |   | Low |   |   | End |   |   | High |   |   | Average |   |   | Low |   |
| $                       | 1      |   |                     | $      | 2 |   |   | $ | 1 |   |   | $ | - |   |   | $ | - |   |   | $ | 3 |   |   | $ | 1 |   |   | $ | - |   |

----

AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARYCOMPANIES

|                                                                                |   | Three      Months Ended |        |   | Nine      Months Ended |   |
|-------------------------------------------------------------------------------------|--------|-------------------------|-------------|--------|------------------------|--------|
| REVENUES                                                                            |   | 2009                    |        |   | 2008                   |   |   | 2009 |   |   | 2008 |   |
| Utility      Operations                                                             |   | $                       | 3,364       |   |                   | $      | 4,108 |   |   | $ | 9,666 |   |   | $ | 10,318 |   |
| Other      Revenues                                                                 |   |                    | 183         |   |                   |   | 83 |   |   |   | 541 |   |   |   | 886 |   |
| TOTAL      REVENUES                                                                 |   |                    | 3,547       |   |                   |   | 4,191 |   |   |   | 10,207 |   |   |   | 11,204 |   |
| EXPENSES                                                                            |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel      and Other Consumables Used for Electric Generation                        |   |                    | 931         |   |                   |   | 1,480 |   |   |   | 2,624 |   |   |   | 3,513 |   |
| Purchased      Electricity for Resale                                               |   |                    | 247         |   |                   |   | 394 |   |   |   | 800 |   |   |   | 1,023 |   |
| Other      Operation and Maintenance                                                |   |                    | 899         |   |                   |   | 1,010 |   |   |   | 2,724 |   |   |   | 2,870 |   |
| Gain      on Sales of Assets, Net                                                   |   |                    | (2          | )      |                   |   | (6 | ) |   |   | (13 | ) |   |   | (14 | ) |
| Asset      Impairments and Other Related Charges                                    |   |                    | -           |   |                   |   | - |   |   |   | - |   |   |   | (255 | ) |
| Depreciation      and Amortization                                                  |   |                    | 421         |   |                   |   | 387 |   |   |   | 1,200 |   |   |   | 1,123 |   |
| Taxes      Other Than Income Taxes                                                  |   |                    | 193         |   |                   |   | 189 |   |   |   | 582 |   |   |   | 578 |   |
| TOTAL      EXPENSES                                                                 |   |                    | 2,689       |   |                   |   | 3,454 |   |   |   | 7,917 |   |   |   | 8,838 |   |
|                                                                                |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING      INCOME                                                               |   |                    | 858         |   |                   |   | 737 |   |   |   | 2,290 |   |   |   | 2,366 |   |
|                                                                                |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Income (Expense):                                                        |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      and Investment Income                                                 |   |                    | 5           |   |                   |   | 14 |   |   |   | 5 |   |   |   | 45 |   |
| Carrying      Costs Income                                                          |   |                    | 12          |   |                   |   | 21 |   |   |   | 33 |   |   |   | 64 |   |
| Allowance      for Equity Funds Used During Construction                            |   |                    | 23          |   |                   |   | 11 |   |   |   | 59 |   |   |   | 32 |   |
| Interest      Expense                                                               |   |                    | (248        | )      |                   |   | (216 | ) |   |   | (726 | ) |   |   | (669 | ) |
|                                                                                |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME      BEFORE INCOME TAX EXPENSE AND EQUITY EARNINGS                           |   |                    | 650         |   |                   |   | 567 |   |   |   | 1,661 |   |   |   | 1,838 |   |
|                                                                                |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Income      Tax Expense                                                             |   |                    | 208         |   |                   |   | 192 |   |   |   | 535 |   |   |   | 608 |   |
| Equity      Earnings of Unconsolidated Subsidiaries                                 |   |                    | 4           |   |                   |   | 1 |   |   |   | 5 |   |   |   | 3 |   |
|                                                                                |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME      BEFORE DISCONTINUED OPERATIONS AND EXTRAORDINARY LOSS                   |   |                    | 446         |   |                   |   | 376 |   |   |   | 1,131 |   |   |   | 1,233 |   |
|                                                                                |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| DISCONTINUED      OPERATIONS, NET OF TAX                                            |   |                    | -           |   |                   |   | - |   |   |   | - |   |   |   | 1 |   |
|                                                                                |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME      BEFORE EXTRAORDINARY LOSS                                               |   |                    | 446         |   |                   |   | 376 |   |   |   | 1,131 |   |   |   | 1,234 |   |
|                                                                                |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| EXTRAORDINARY      LOSS, NET OF TAX                                                 |   |                    | -           |   |                   |   | - |   |   |   | (5 | ) |   |   | - |   |
|                                                                                |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME                                                                     |   |                    | 446         |   |                   |   | 376 |   |   |   | 1,126 |   |   |   | 1,234 |   |
|                                                                                |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Less:  Net      Income Attributable to Noncontrolling Interests           |   |                    | 2           |   |                   |   | 1 |   |   |   | 5 |   |   |   | 4 |   |
|                                                                                |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME ATTRIBUTABLE TO AEP SHAREHOLDERS                                    |   |                    | 444         |   |                   |   | 375 |   |   |   | 1,121 |   |   |   | 1,230 |   |
|                                                                                |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Less:  Preferred      Stock Dividend Requirements of Subsidiaries         |   |                    | 1           |   |                   |   | 1 |   |   |   | 2 |   |   |   | 2 |   |
|                                                                                |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS      ATTRIBUTABLE TO AEP COMMON SHAREHOLDERS                               |   | $                       | 443         |   |                   | $      | 374 |   |   | $ | 1,119 |   |   | $ | 1,228 |   |
|                                                                                |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| WEIGHTED      AVERAGE NUMBER OF BASIC AEP COMMON SHARES OUTSTANDING                 |   |                    | 476,948,143 |   |                   |   | 402,286,779 |   |   |   | 452,255,119 |   |   |   | 401,535,661 |   |
|                                                                                |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| BASIC      EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO AEP COMMON      SHAREHOLDERS   |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Income      Before Discontinued Operations and Extraordinary Loss                   |   | $                       | 0.93        |   |                   | $      | 0.93 |   |   | $ | 2.48 |   |   | $ | 3.06 |   |
| Discontinued      Operations, Net of Tax                                            |   |                    | -           |   |                   |   | - |   |   |   | - |   |   |   | - |   |
| Income      Before Extraordinary Loss                                               |   |                    | 0.93        |   |                   |   | 0.93 |   |   |   | 2.48 |   |   |   | 3.06 |   |
| Extraordinary      Loss, Net of Tax                                                 |   |                    | -           |   |                   |   | - |   |   |   | (0.01 | ) |   |   | - |   |
|                                                                                |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL      BASIC EARNINGS PER SHARE ATTRIBUTABLE TO AEP COMMON      SHAREHOLDERS    |   | $                       | 0.93        |   |                   | $      | 0.93 |   |   | $ | 2.47 |   |   | $ | 3.06 |   |
|                                                                                |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| WEIGHTED      AVERAGE NUMBER OF DILUTED AEP COMMON SHARES OUTSTANDING               |   |                    | 477,111,144 |   |                   |   | 403,910,309 |   |   |   | 452,495,494 |   |   |   | 402,925,534 |   |
|                                                                                |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| DILUTED      EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO AEP COMMON      SHAREHOLDERS |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Income      Before Discontinued Operations and Extraordinary Loss                   |   | $                       | 0.93        |   |                   | $      | 0.93 |   |   | $ | 2.48 |   |   | $ | 3.05 |   |
| Discontinued      Operations, Net of Tax                                            |   |                    | -           |   |                   |   | - |   |   |   | - |   |   |   | - |   |
| Income      Before Extraordinary Loss                                               |   |                    | 0.93        |   |                   |   | 0.93 |   |   |   | 2.48 |   |   |   | 3.05 |   |
| Extraordinary      Loss, Net of Tax                                                 |   |                    | -           |   |                   |   | - |   |   |   | (0.01 | ) |   |   | - |   |
|                                                                                |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL      DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO AEP COMMON      SHAREHOLDERS  |   | $                       | 0.93        |   |                   | $      | 0.93 |   |   | $ | 2.47 |   |   | $ | 3.05 |   |
|                                                                                |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| CASH      DIVIDENDS PAID PER SHARE                                                  |   | $                       | 0.41        |   |                   | $      | 0.41 |   |   | $ | 1.23 |   |   | $ | 1.23 |   |
|                                                                                |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| See      Condensed Notes to Condensed consolidated Financial    Statements          |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                   |   | 2009   |   |   | 2008   |   |
|----------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| CURRENT      ASSETS                                                                    |   |   |   |   |   |   |
| Cash      and Cash Equivalents                                                         |   | $      | 877    |   |   | $      | 411 |   |
| Other      Temporary Investments                                                       |   |   | 259    |   |   |   | 327 |   |
| Accounts      Receivable:                                                              |   |   |   |   |   |   |   |   |
| Customers                                                                              |   |   | 600    |   |   |   | 569 |   |
| Accrued      Unbilled Revenues                                                         |   |   | 402    |   |   |   | 449 |   |
| Miscellaneous                                                                          |   |   | 63     |   |   |   | 90 |   |
| Allowance      for Uncollectible Accounts                                              |   |   | (36    | )      |   |   | (42 | ) |
| Total      Accounts Receivable                                                         |   |   | 1,029  |   |   |   | 1,066 |   |
| Fuel                                                                                   |   |   | 998    |   |   |   | 634 |   |
| Materials      and Supplies                                                            |   |   | 569    |   |   |   | 539 |   |
| Risk      Management Assets                                                            |   |   | 300    |   |   |   | 256 |   |
| Regulatory      Asset for Under-Recovered Fuel Costs                                   |   |   | 103    |   |   |   | 284 |   |
| Margin      Deposits                                                                   |   |   | 101    |   |   |   | 86 |   |
| Prepayments      and Other Current Assets                                              |   |   | 243    |   |   |   | 172 |   |
| TOTAL      CURRENT ASSETS                                                              |   |   | 4,479  |   |   |   | 3,775 |   |
|                                                                                   |   |   |   |   |   |   |   |   |
| PROPERTY,      PLANT AND EQUIPMENT                                                     |   |   |   |   |   |   |   |   |
| Electric:                                                                              |   |   |   |   |   |   |   |   |
| Production                                                                             |   |   | 22,552 |   |   |   | 21,242 |   |
| Transmission                                                                           |   |   | 8,198  |   |   |   | 7,938 |   |
| Distribution                                                                           |   |   | 13,336 |   |   |   | 12,816 |   |
| Other      Property, Plant and Equipment (including coal mining and nuclear      fuel) |   |   | 3,821  |   |   |   | 3,741 |   |
| Construction      Work in Progress                                                     |   |   | 3,251  |   |   |   | 3,973 |   |
| Total      Property, Plant and Equipment                                               |   |   | 51,158 |   |   |   | 49,710 |   |
| Accumulated      Depreciation and Amortization                                         |   |   | 17,337 |   |   |   | 16,723 |   |
| TOTAL      PROPERTY, PLANT AND EQUIPMENT - NET                                         |   |   | 33,821 |   |   |   | 32,987 |   |
|                                                                                   |   |   |   |   |   |   |   |   |
| OTHER      NONCURRENT ASSETS                                                           |   |   |   |   |   |   |   |   |
| Regulatory      Assets                                                                 |   |   | 4,360  |   |   |   | 3,783 |   |
| Securitized      Transition Assets                                                     |   |   | 1,940  |   |   |   | 2,040 |   |
| Spent      Nuclear Fuel and Decommissioning Trusts                                     |   |   | 1,364  |   |   |   | 1,260 |   |
| Goodwill                                                                               |   |   | 76     |   |   |   | 76 |   |
| Long-term      Risk Management Assets                                                  |   |   | 379    |   |   |   | 355 |   |
| Deferred      Charges and Other Noncurrent Assets                                      |   |   | 774    |   |   |   | 879 |   |
| TOTAL      OTHER NONCURRENT ASSETS                                                     |   |   | 8,893  |   |   |   | 8,393 |   |
|                                                                                   |   |   |   |   |   |   |   |   |
| TOTAL      ASSETS                                                                      |   | $      | 47,193 |   |   | $      | 45,155 |   |

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

----

|                                                                                            |        |               |         |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2009 |   | 2008 |
|-------------------------------------------------------------------------------------------------|-------------|--------------------|--------------|--------|--------|--------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|------|--------|------|
| CURRENT      LIABILITIES                                                                        |        | (in      millions) |
| Accounts      Payable                                                                           |        | $                  | 1,004   |   | $      | 1,297   |
| Short-term      Debt                                                                            |        |               | 352     |   |   | 1,976   |
| Long-term      Debt Due Within One Year                                                         |        |               | 1,540   |   |   | 447     |
| Risk      Management Liabilities                                                                |        |               | 136     |   |   | 134     |
| Customer      Deposits                                                                          |        |               | 265     |   |   | 254     |
| Accrued      Taxes                                                                              |        |               | 470     |   |   | 634     |
| Accrued      Interest                                                                           |        |               | 232     |   |   | 270     |
| Regulatory      Liability for Over-Recovered Fuel Costs                                         |        |               | 107     |   |   | 66      |
| Other      Current Liabilities                                                                  |        |               | 881     |   |   | 1,219   |
| TOTAL      CURRENT LIABILITIES                                                                  |        |               | 4,987   |   |   | 6,297   |
|                                                                                            |        |               |         |   |   |         |
| NONCURRENT      LIABILITIES                                                                     |        |               |         |   |   |         |
| Long-term      Debt                                                                             |        |               | 15,713  |   |   | 15,536  |
| Long-term      Risk Management Liabilities                                                      |        |               | 150     |   |   | 170     |
| Deferred      Income Taxes                                                                      |        |               | 5,824   |   |   | 5,128   |
| Regulatory      Liabilities and Deferred Investment Tax Credits                                 |        |               | 2,901   |   |   | 2,789   |
| Asset      Retirement Obligations                                                               |        |               | 1,197   |   |   | 1,154   |
| Employee      Benefits and Pension Obligations                                                  |        |               | 2,168   |   |   | 2,184   |
| Deferred      Credits and Other Noncurrent Liabilities                                          |        |               | 1,128   |   |   | 1,126   |
| TOTAL      NONCURRENT LIABILITIES                                                               |        |               | 29,081  |   |   | 28,087  |
|                                                                                            |        |               |         |   |   |         |
| TOTAL      LIABILITIES                                                                          |        |               | 34,068  |   |   | 34,384  |
|                                                                                            |        |               |         |   |   |         |
| Cumulative      Preferred Stock Not Subject to Mandatory Redemption                             |        |               | 61      |   |   | 61      |
|                                                                                            |        |               |         |   |   |         |
| Commitments      and Contingencies (Note 4)                                                     |        |               |         |   |   |         |
|                                                                                            |        |               |         |   |   |         |
| EQUITY                                                                                          |        |               |         |   |   |         |
| Common      Stock – Par Value – $6.50 Per Share:                                    |        |               |         |   |   |         |
|                                                                                            | 2009        |               | 2008         |   |   |         |   |   |   |   |
| Shares      Authorized                                                                          | 600,000,000 |               | 600,000,000  |   |   |         |   |   |   |   |
| Shares      Issued                                                                              | 497,649,344 |               | 426,321,248  |   |   |         |   |   |   |   |
| (20,249,992      shares were held in treasury at September 30, 2009 and December 31,      2008) |        |               | 3,235   |   |   | 2,771   |
| Paid-in      Capital                                                                            |        |               | 5,826   |   |   | 4,527   |
| Retained      Earnings                                                                          |        |               | 4,407   |   |   | 3,847   |
| Accumulated      Other Comprehensive Income (Loss)                                              |        |               | (404)        |   |   | (452)        |
| TOTAL      AEP COMMON SHAREHOLDERS’ EQUITY                                                |        |               | 13,064  |   |   | 10,693  |
|                                                                                            |        |               |         |   |   |         |
| Noncontrolling      Interests                                                                   |        |               | -       |   |   | 17      |
|                                                                                            |        |               |         |   |   |         |
| TOTAL      EQUITY                                                                               |        |               | 13,064  |   |   | 10,710  |
|                                                                                            |        |               |         |   |   |         |
| TOTAL      LIABILITIES AND EQUITY                                                               |        | $                  | 47,193  |   | $      | 45,155  |

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

----

|                                                                                       |   | 2009   |   |   | 2008   |   |
|--------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| OPERATING      ACTIVITIES                                                                  |   |   |   |   |   |   |
| Net      Income                                                                            |   | $      | 1,126  |   |   | $      | 1,234 |   |
| Less:  Discontinued      Operations, Net of Tax                                  |   |   | -      |   |   |   | (1 | ) |
| Income      Before Discontinued Operations                                                 |   |   | 1,126  |   |   |   | 1,233 |   |
| Adjustments      to Reconcile Net Income to Net Cash Flows from Operating      Activities: |   |   |   |   |   |   |   |   |
| Depreciation      and Amortization                                                         |   |   | 1,200  |   |   |   | 1,123 |   |
| Deferred      Income Taxes                                                                 |   |   | 662    |   |   |   | 397 |   |
| Extraordinary      Loss, Net of Tax                                                        |   |   | 5      |   |   |   | - |   |
| Carrying      Costs Income                                                                 |   |   | (33    | )      |   |   | (64 | ) |
| Allowance      for Equity Funds Used During Construction                                   |   |   | (59    | )      |   |   | (32 | ) |
| Mark-to-Market      of Risk Management Contracts                                           |   |   | (99    | )      |   |   | 14 |   |
| Amortization      of Nuclear Fuel                                                          |   |   | 41     |   |   |   | 72 |   |
| Deferred      Property Taxes                                                               |   |   | 144    |   |   |   | 136 |   |
| Fuel      Over/Under-Recovery, Net                                                         |   |   | (377   | )      |   |   | (284 | ) |
| Gain      on Sales of Assets, Net                                                          |   |   | (13    | )      |   |   | (14 | ) |
| Change      in Other Noncurrent Assets                                                     |   |   | 26     |   |   |   | (160 | ) |
| Change      in Other Noncurrent Liabilities                                                |   |   | 164    |   |   |   | (74 | ) |
| Changes      in Certain Components of Working Capital:                                     |   |   |   |   |   |   |   |   |
| Accounts      Receivable, Net                                                              |   |   | 68     |   |   |   | (69 | ) |
| Fuel,      Materials and Supplies                                                          |   |   | (394   | )      |   |   | (49 | ) |
| Margin      Deposits                                                                       |   |   | (15    | )      |   |   | (20 | ) |
| Accounts      Payable                                                                      |   |   | (29    | )      |   |   | 77 |   |
| Customer      Deposits                                                                     |   |   | 11     |   |   |   | (14 | ) |
| Accrued      Taxes, Net                                                                    |   |   | (165   | )      |   |   | (40 | ) |
| Accrued      Interest                                                                      |   |   | (38    | )      |   |   | (5 | ) |
| Other      Current Assets                                                                  |   |   | (71    | )      |   |   | (43 | ) |
| Other      Current Liabilities                                                             |   |   | (283   | )      |   |   | (125 | ) |
| Net      Cash Flows from Operating Activities                                              |   |   | 1,871  |   |   |   | 2,059 |   |
|                                                                                       |   |   |   |   |   |   |   |   |
| INVESTING      ACTIVITIES                                                                  |   |   |   |   |   |   |   |   |
| Construction      Expenditures                                                             |   |   | (2,123 | )      |   |   | (2,576 | ) |
| Change      in Other Temporary Investments, Net                                            |   |   | 72     |   |   |   | 106 |   |
| Purchases      of Investment Securities                                                    |   |   | (573   | )      |   |   | (1,386 | ) |
| Sales      of Investment Securities                                                        |   |   | 524    |   |   |   | 912 |   |
| Acquisitions      of Nuclear Fuel                                                          |   |   | (153   | )      |   |   | (99 | ) |
| Acquisitions      of Assets                                                                |   |   | (70    | )      |   |   | (97 | ) |
| Proceeds      from Sales of Assets                                                         |   |   | 258    |   |   |   | 83 |   |
| Other      Investing Activities                                                            |   |   | (32    | )      |   |   | (4 | ) |
| Net      Cash Flows Used for Investing Activities                                          |   |   | (2,097 | )      |   |   | (3,061 | ) |
|                                                                                       |   |   |   |   |   |   |   |   |
| FINANCING      ACTIVITIES                                                                  |   |   |   |   |   |   |   |   |
| Issuance      of Common Stock, Net                                                         |   |   | 1,706  |   |   |   | 106 |   |
| Issuance      of Long-term Debt                                                            |   |   | 1,912  |   |   |   | 2,561 |   |
| Change      in Short-term Debt, Net                                                        |   |   | (1,624 | )      |   |   | 642 |   |
| Retirement      of Long-term Debt                                                          |   |   | (659   | )      |   |   | (1,582 | ) |
| Principal      Payments for Capital Lease Obligations                                      |   |   | (62    | )      |   |   | (76 | ) |
| Dividends      Paid on Common Stock                                                        |   |   | (564   | )      |   |   | (500 | ) |
| Dividends      Paid on Cumulative Preferred Stock                                          |   |   | (2     | )      |   |   | (2 | ) |
| Other      Financing Activities                                                            |   |   | (15    | )      |   |   | 13 |   |
| Net      Cash Flows from Financing Activities                                              |   |   | 692    |   |   |   | 1,162 |   |
|                                                                                       |   |   |   |   |   |   |   |   |
| Net      Increase in Cash and Cash Equivalents                                             |   |   | 466    |   |   |   | 160 |   |
| Cash      and Cash Equivalents at Beginning of Period                                      |   |   | 411    |   |   |   | 178 |   |
| Cash      and Cash Equivalents at End of Period                                            |   | $      | 877    |   |   | $      | 338 |   |
|                                                                                       |   |   |   |   |   |   |   |   |
| SUPPLEMENTARY      INFORMATION                                                             |   |   |   |   |   |   |   |   |
| Cash      Paid for Interest, Net of Capitalized Amounts                                    |   | $      | 744    |   |   | $      | 657 |   |
| Net      Cash Paid (Received) for Income Taxes                                             |   |   | (74    | )      |   |   | 126 |   |
| Noncash      Acquisitions Under Capital Leases                                             |   |   | 53     |   |   |   | 47 |   |
| Noncash      Acquisition of Land/Mineral Rights                                            |   |   | -      |   |   |   | 42 |   |
| Construction      Expenditures Included in Accounts Payable at September 30,               |   |   | 229    |   |   |   | 373 |   |
| Acquisition      of Nuclear Fuel Included in Accounts Payable at September    30,          |   |   | -      |   |   |   | 66 |   |
|                                                                                       |   |   |   |   |   |   |   |   |
| See      Condensed Notes to Condensed Consolidated Financial      Statements.              |   |   |   |   |   |   |   |   |

----

|                                                                        | AEP      Common Shareholders |      |   |   |        |
|-----------------------------------------------------------------------------|------------------------------|-----------|--------|--------|-------------|
|                                                                        | Common      Stock            |      |   |   |        |   | Accumulated |   |   |   |   |
|                                                                        |                         |      |   |   |        |   |   |   | Other |   |   |   |   |
|                                                                        |                         |      |   |   | Paid-in     |   | Retained |   | Comprehensive |   | Noncontrolling |   |   |
|                                                                        | Shares                       |      | Amount |   | Capital     |   | Earnings |   | Income      (Loss) |   | Interests |   | Total |
| TOTAL      EQUITY – DECEMBER 31, 2007                                 |                         | 422  |   | $      | 2,743  |   | $ | 4,352  |   | $ | 3,138  |   | $ | (154) |   | $ | 18   |   | $ | 10,097  |
|                                                                        |                         |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EITF      06-10 Adoption, Net of Tax of $6                                  |                         |      |   |   |        |   |   |   |   |   | (10) |   |   |   |   |   |   |   |   | (10) |
| SFAS      157 Adoption, Net of Tax of $0                                    |                         |      |   |   |        |   |   |   |   |   | (1) |   |   |   |   |   |   |   |   | (1) |
| Issuance      of Common Stock                                               |                         | 3    |   |   | 17     |   |   | 89  |   |   |   |   |   |   |   |   |   |   |   | 106  |
| Common      Stock Dividends                                                 |                         |      |   |   |        |   |   |   |   |   | (494) |   |   |   |   |   | (6) |   |   | (500) |
| Preferred      Stock Dividends                                              |                         |      |   |   |        |   |   |   |   |   | (2) |   |   |   |   |   |   |   |   | (2) |
| Other      Changes in Equity                                                |                         |      |   |   |        |   |   | 3  |   |   |   |   |   |   |   |   | 1  |   |   | 4  |
| SUBTOTAL      – EQUITY                                                |                         |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 9,694  |
|                                                                        |                         |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE      INCOME                                                   |                         |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Comprehensive Income (Loss), Net of Taxes:                       |                         |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      Flow Hedges, Net of Tax of $4                                     |                         |      |   |   |        |   |   |   |   |   |   |   |   | 7  |   |   |   |   |   | 7  |
| Securities      Available for Sale, Net of Tax of $5                        |                         |      |   |   |        |   |   |   |   |   |   |   |   | (10) |   |   |   |   |   | (10) |
| Amortization      of Pension and OPEB Deferred Costs, Net of Tax of $5 |                         |      |   |   |        |   |   |   |   |   |   |   |   | 9  |   |   |   |   |   | 9  |
| NET      INCOME                                                             |                         |      |   |   |        |   |   |   |   |   | 1,230  |   |   |   |   |   | 4  |   |   | 1,234  |
| TOTAL      COMPREHENSIVE INCOME                                             |                         |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,240  |
|                                                                        |                         |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL      EQUITY – SEPTEMBER 30, 2008                                |                         | 425  |   | $      | 2,760  |   | $ | 4,444  |   | $ | 3,861  |   | $ | (148) |   | $ | 17   |   | $ | 10,934  |
|                                                                        |                         |      |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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 Dividends                                              |                         |      |   |   |        |   |   |   |   |   | (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  |

| 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.  | Acquisitions      and Discontinued Operations             |
| 6.  | Benefit      Plans                                        |
| 7.  | Business      Segments                                    |
| 8.  | Derivatives      and Hedging                              |
| 9.  | Fair      Value Measurements                              |
| 10. | Income      Taxes                                         |
| 11. | Financing      Activities                                 |

----

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

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

|                                                       |   | Three      Months Ended September 30,     |   |
|------------------------------------------------------------|--------|-------------------------------------------|--------|
|                                                       |   | 2009                                      |   |   | 2008 |   |
|                                                       |   | (in      millions, except per share data) |   |
|                                                       |   |                                      |   |   | $/share |   |   |   |   |   | $/share |   |
| Earnings      Applicable to AEP Common Shareholders        |   | $                                         | 443    |   |   |   |   |   | $ | 374 |   |   |   |   |
|                                                       |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      Average Number of Basic Shares Outstanding   |   |                                      | 476.9  |   |   | $ | 0.93 |   |   |   | 402.3 |   |   | $ | 0.93 |   |
| Weighted      Average Dilutive Effect of:                  |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Performance      Share Units                               |   |                                      | 0.1    |   |   |   | - |   |   |   | 1.3 |   |   |   | - |   |
| Stock      Options                                         |   |                                      | -      |   |   |   | - |   |   |   | 0.1 |   |   |   | - |   |
| Restricted      Stock Units                                |   |                                      | 0.1    |   |   |   | - |   |   |   | 0.1 |   |   |   | - |   |
| Restricted      Shares                                     |   |                                      | -      |   |   |   | - |   |   |   | 0.1 |   |   |   | - |   |
| Weighted      Average Number of Diluted Shares Outstanding |   |                                      | 477.1  |   |   | $ | 0.93 |   |   |   | 403.9 |   |   | $ | 0.93 |   |

|                                                       |   | Nine      Months Ended September 30,      |   |
|------------------------------------------------------------|--------|-------------------------------------------|--------|
|                                                       |   | 2009                                      |   |   | 2008 |   |
|                                                       |   | (in      millions, except per share data) |   |
|                                                       |   |                                      |   |   | $/share |   |   |   |   |   | $/share |   |
| Earnings      Applicable to AEP Common Shareholders        |   | $                                         | 1,119  |   |   |   |   |   | $ | 1,228 |   |   |   |   |
|                                                       |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      Average Number of Basic Shares Outstanding   |   |                                      | 452.3  |   |   | $ | 2.47 |   |   |   | 401.5 |   |   | $ | 3.06 |   |
| Weighted      Average Dilutive Effect of:                  |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Performance      Share Units                               |   |                                      | 0.2    |   |   |   | - |   |   |   | 1.0 |   |   |   | (0.01 | ) |
| Stock      Options                                         |   |                                      | -      |   |   |   | - |   |   |   | 0.2 |   |   |   | - |   |
| Restricted      Stock Units                                |   |                                      | -      |   |   |   | - |   |   |   | 0.1 |   |   |   | - |   |
| Restricted      Shares                                     |   |                                      | -      |   |   |   | - |   |   |   | 0.1 |   |   |   | - |   |
| Weighted      Average Number of Diluted Shares Outstanding |   |                                      | 452.5  |   |   | $ | 2.47 |   |   |   | 402.9 |   |   | $ | 3.05 |   |

|                                   |   | SWEPCoSabine |   |   | SWEPCoDHLC |   |   | OPCoJMG |   |   | I&MDCC      Fuel |   |   | EIS    |   |
|----------------------------------------|--------|--------------|--------|--------|------------|--------|--------|---------|--------|--------|----------------------|--------|--------|--------|--------|
| ASSETS                                 |   |         |   |   |       |   |   |    |   |   |                 |   |   |   |   |
| Current      Assets                    |   | $            | 38     |   |       | $      | 19     |    |   | $      | 18                   |   |   | $      | 38     |   |   | $ | 125 |   |
| Net      Property, Plant and Equipment |   |         | 133    |   |       |   | 29     |    |   |   | 407                  |   |   |   | 101    |   |   |   | - |   |
| Other      Noncurrent Assets           |   |         | 30     |   |       |   | 10     |    |   |   | -                    |   |   |   | 65     |   |   |   | 2 |   |
| Total      Assets                      |   | $            | 201    |   |       | $      | 58     |    |   | $      | 425                  |   |   | $      | 204    |   |   | $ | 127 |   |
|                                   |   |         |   |   |       |   |   |    |   |   |                 |   |   |   |   |   |   |   |   |   |
| LIABILITIES      AND EQUITY            |   |         |   |   |       |   |   |    |   |   |                 |   |   |   |   |   |   |   |   |   |
| Current      Liabilities               |   | $            | 27     |   |       | $      | 15     |    |   | $      | 20                   |   |   | $      | 38     |   |   | $ | 38 |   |
| Noncurrent      Liabilities            |   |         | 174    |   |       |   | 40     |    |   |   | 46                   |   |   |   | 166    |   |   |   | 75 |   |
| Equity                                 |   |         | -      |   |       |   | 3      |    |   |   | 359                  |   |   |   | -      |   |   |   | 14 |   |
| Total      Liabilities and Equity      |   | $            | 201    |   |       | $      | 58     |    |   | $      | 425                  |   |   | $      | 204    |   |   | $ | 127 |   |

|                                   |   | SWEPCoSabine |   |   | SWEPCoDHLC |   |   | OPCoJMG |   |   | I&MDCC      Fuel |   |   | EIS    |   |
|----------------------------------------|--------|--------------|--------|--------|------------|--------|--------|---------|--------|--------|----------------------|--------|--------|--------|--------|
| ASSETS                                 |   |         |   |   |       |   |   |    |   |   |                 |   |   |   |   |
| Current      Assets                    |   | $            | 33     |   |       | $      | 22     |    |   | $      | 11                   |   |   | $      | -      |   |   | $ | 107 |   |
| Net      Property, Plant and Equipment |   |         | 117    |   |       |   | 33     |    |   |   | 423                  |   |   |   | -      |   |   |   | - |   |
| Other      Noncurrent Assets           |   |         | 24     |   |       |   | 11     |    |   |   | 1                    |   |   |   | -      |   |   |   | 2 |   |
| Total      Assets                      |   | $            | 174    |   |       | $      | 66     |    |   | $      | 435                  |   |   | $      | -      |   |   | $ | 109 |   |
|                                   |   |         |   |   |       |   |   |    |   |   |                 |   |   |   |   |   |   |   |   |   |
| LIABILITIES      AND EQUITY            |   |         |   |   |       |   |   |    |   |   |                 |   |   |   |   |   |   |   |   |   |
| Current      Liabilities               |   | $            | 32     |   |       | $      | 18     |    |   | $      | 161                  |   |   | $      | -      |   |   | $ | 30 |   |
| Noncurrent      Liabilities            |   |         | 142    |   |       |   | 44     |    |   |   | 257                  |   |   |   | -      |   |   |   | 60 |   |
| Equity                                 |   |         | -      |   |       |   | 4      |    |   |   | 17                   |   |   |   | -      |   |   |   | 19 |   |
| Total      Liabilities and Equity      |   | $            | 174    |   |       | $      | 66     |    |   | $      | 435                  |   |   | $      | -      |   |   | $ | 109 |   |

|                               |   | September      30, 2009                                |   | December      31, 2008 |   |
|------------------------------------|--------|--------------------------------------------------------|--------|------------------------|--------|
|                               |   | As      Reported on the ConsolidatedBalance      Sheet |   | MaximumExposure        |   | As      Reported on the ConsolidatedBalance      Sheet |   |   | MaximumExposure |   |
|                               |   |                                                   |   | (in      millions)     |   |   |   |   |
| Capital      Contribution from AEP |   | $                                                      | 11     |                   |   | $ | 11 |   |   | $ | 4 |   |   | $ | 4 |   |
| Retained      Earnings             |   |                                                   | 2      |                   |   |   | 2 |   |   |   | 2 |   |   |   | 2 |   |
|                               |   |                                                   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Investment in PATH-WV   |   | $                                                      | 13     |                   |   | $ | 13 |   |   | $ | 6 |   |   | $ | 6 |   |

|   | Total      Depreciation Expense Variance |   |
|--------|------------------------------------------|--------|
|   | Three      Months Ended                  |   | Nine      Months Ended |   |
|   | September      30, 2009/2008             |   | September      30, 2009/2008 |   |
|   | (in      millions)                       |   |
| CSPCo  |                                     | $      | (4 | ) |   | $ | (13 | ) |
| OPCo   |                                     |   | 18 |   |   |   | 52 |   |

|                                                                                                                  |   | Three      Months EndedSeptember      30, |   |   | Nine      Months EndedSeptember      30, |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|--------|--------|------------------------------------------|--------|
|                                                                                                                  |   | 2009                                      |   |   | 2008                                     |   |   | 2009 |   |   | 2008 |   |
| Related      Party Transactions                                                                                       |   | (in      millions)                        |   |
| AEP      Consolidated Revenues – Utility Operations:                                                            |   |                                      |   |   |                                     |   |   |   |   |   |   |   |
| Power      Pool Purchases – Ohio Valley Electric Corporation (43.47% owned)      (a)                       |   | $                                         | -      |   |                                     | $      | (14 | ) |   | $ | - |   |   | $ | (40 | ) |
| AEP      Consolidated Revenues – Other:                                                                         |   |                                      |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Ohio      Valley Electric Corporation – Barging and Other Transportation      Services (43.47% Owned) |   |                                      | 7      |   |                                     |   | 7 |   |   |   | 22 |   |   |   | 21 |   |
| AEP      Consolidated Expenses – Purchased Energy for Resale:                                                   |   |                                      |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Ohio      Valley Electric Corporation (43.47% Owned)                                                                  |   |                                      | 71     |   |                                     |   | 70 |   |   |   | 213 |   |   |   | 194 |   |

| (a) | In      2006, the AEP Power Pool began purchasing power from OVEC as part of risk      management activities.  The agreement expired in May 2008 and      subsequently ended in December2008. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                        | Three      Months EndedSeptember      30, |   | Nine      Months EndedSeptember      30, |   |
|-----------------------------------------------------------------------------|-------------------------------------------|--------|------------------------------------------|--------|
|                                                                        | 2009                                      |   | 2008                                     |   | 2009 |   | 2008 |   |
| Amounts      Attributable To AEP Common Shareholders                        | (in      millions)                        |   |
| Income      Before Discontinued Operations and Extraordinary      Loss |                                      | $      | 443                                      |   |   | $ | 374 |   |   | $ | 1,124 |   |   | $ | 1,227 |   |
| Discontinued      Operations, Net of Tax                                    |                                      |   | -                                        |   |   |   | - |   |   |   | - |   |   |   | 1 |   |
| Extraordinary      Loss, Net of Tax                                         |                                      |   | -                                        |   |   |   | - |   |   |   | (5 | ) |   |   | - |   |
| Net      Income                                                             |                                      | $      | 443                                      |   |   | $ | 374 |   |   | $ | 1,119 |   |   | $ | 1,228 |   |

| 2.   | NEW ACCOUNTING      PRONOUNCEMENTS AND EXTRAORDINARYITEM |
|----------------|----------------------------------------------------------|

| · | Reclassifies      Minority Interest Expense of $1 million and $3 million and Interest      Expense of $0 million and $1 million for the three and nine months ended      September 30, 2008, respectively, as Net Income Attributable to      Noncontrolling Interest below Net Income in the presentation of Earnings      Attributable to AEP Common Shareholders in our Condensed Consolidated      Statements of Income. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Repositions      Preferred Stock Dividend Requirements of Subsidiaries of $1 million and $2      million for the three and nine months ended September 30, 2008,      respectively, below Net Income in the presentation of Earnings      Attributable to AEP Common Shareholders in our Condensed Consolidated      Statements of Income.                                                                                   |
| · | Reclassifies      minority interest of $17 million as of December 31, 2008 previously      included in Deferred Credits and Other Noncurrent Liabilities and Total      Liabilities as Noncontrolling Interests in Total Equity on our Condensed      Consolidated Balance Sheets.                                                                                                                                           |
| · | Separately      reflects changes in Noncontrolling Interests on the Condensed Consolidated      Statements of Changes in Equity and Comprehensive Income      (Loss).                                                                                                                                                                                                                                                        |
| · | Reclassifies      dividends paid to noncontrolling interests of $6 million for the nine      months ended September 30, 2008 from Operating Activities to Financing      Activities in our Condensed Consolidated Statements of Cash      Flows.                                                                                                                                                                             |

| SFAS      168 “The FASB Accounting Standards CodificationTM      and the Hierarchy of Generally Accepted Accounting Principles”      (SFAS 168) |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| EITF      Issue No. 08-5 “Issuer’s Accounting for Liabilities Measured at Fair Value      with a Third-Party Credit Enhancement” (EITF  08-5) |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| FSP      EITF 03-6-1 “Determining Whether Instruments Granted in Share-Based      Payment Transactions Are Participating Securities”      (EITF  03-6-1) |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| FSP      SFAS 107-1 and APB 28-1 “Interim Disclosures about Fair Value of Financial      Instruments” (FSP SFAS 107-1 and APB28-1) |
|------------------------------------------------------------------------------------------------------------------------------------------------|

| FSP      SFAS 115-2 and SFAS 124-2 “Recognition and Presentation of      Other-Than-Temporary Impairments” (FSP SFAS 115-2 and SFAS      124-2) |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ASU      2009-12 “Investments in Certain Entities That Calculate Net Asset Value      per Share (or its Equivalent)” (ASU2009-12) |
|-----------------------------------------------------------------------------------------------------------------------------------------------|

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

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

| ·   | CSPCo      should attempt to mitigate the costs of its gridSMART advanced metering      proposal that will affect portions of its service territory by seeking      funds under the American Recovery and Reinvestment Act of      2009.  As a result, a rider was established to recover $32      million related to gridSMART during the three-year ESP      period.  In August 2009, CSPCo filed for $75 million in federal      grant funding under the American Recovery and Reinvestment Act of      2009. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | CSPCo      and OPCo can recover their incremental carrying costs related to      environmental investments made from 2001 through 2008 that are not      reflected in existing rates.  Future recovery during the ESP      period of incremental carrying charges on environmental expenditures      incurred beginning in 2009 may be requested in annual    filings. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | CSPCo’s      and OPCo’s Provider of Last Resort revenues were increased by $97 million      and $55 million, respectively, to compensate for the risk of customers      changing electric suppliers during the ESP  period. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | CSPCo      and OPCo must fund a combined minimum of $15 million in costs over the ESP      period for low-income, at-risk customer programs.  In March      2009, this funding obligation was recognized as a liability and charged to      Other Operation and Maintenance expense.  At September 30, 2009,      CSPCo’s and OPCo’s remaining liability balances were $6 million      each. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | The      PUCT ruling that TCC did not comply with the Texas Restructuring      Legislation and PUCT rules regarding the required auction of 15% of its      Texas jurisdictional installed capacity, which led to a significant      disallowance of capacity auction true-up revenues.                                                                                                                                      |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | The      PUCT ruling that TCC acted in a manner that was commercially unreasonable      because TCC failed to determine a minimum price at which it would reject      bids for the sale of its nuclear generating plant and TCC bundled      out-of-the-money gas units with the sale of its coal unit, which led to      the disallowance of a significant portion of TCC’s net stranded generation      plant costs. |
| · | Two      federal matters regarding the allocation of off-system sales related to      fuel recoveries and a potential tax normalization    violation.                                                                                                                                                                                                                                                                        |

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

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

|                                  |   | U.K. Generation(a) |    |
|---------------------------------------|--------|--------------------|---------|
| Three      Months Ended September 30, |   | (in      millions) |    |
| 2009      Revenue                     |   | $                  | -  |   |
| 2009      Pretax Income               |   |               | -  |   |
| 2009      Earnings, Net of Tax   |   |               | -  |   |
|                                  |   |               |    |   |
| 2008      Revenue                     |   | $                  | -  |   |
| 2008      Pretax Income               |   |               | -  |   |
| 2008      Earnings, Net of Tax   |   |               | -  |   |

|                                 |   | U.K. Generation(a) |    |
|--------------------------------------|--------|--------------------|---------|
| Nine      Months Ended September 30, |   | (in      millions) |    |
| 2009      Revenue                    |   | $                  | -  |   |
| 2009      Pretax Income              |   |               | -  |   |
| 2009      Earnings, Net of Tax  |   |               | -  |   |
|                                 |   |               |    |   |
| 2008      Revenue                    |   | $                  | -  |   |
| 2008      Pretax Income              |   |               | 2  |   |
| 2008      Earnings, Net of Tax  |   |               | 1  |   |

| (a) | The      2008 amounts relate to final proceeds received for the sale of land      related to the sale of U.K.Generation. |
|-----|--------------------------------------------------------------------------------------------------------------------------|

|                                       |                                  |   | Other      Postretirement             |   |
|--------------------------------------------|---------------------------------------|--------|---------------------------------------|--------|
|                                       | Pension      Plans                    |   | Benefit      Plans                    |   |
|                                       | Three      Months Ended September 30, |   | Three      Months Ended September 30, |   |
|                                       | 2009                                  |   | 2008                                  |   | 2009 |   | 2008 |   |
|                                       | (in      millions)                    |   |
| Service      Cost                          |                                  | $      | 26                                    |   |   | $ | 25 |   |   | $ | 11 |   |   | $ | 10 |   |
| Interest      Cost                         |                                  |   | 64                                    |   |   |   | 62 |   |   |   | 27 |   |   |   | 28 |   |
| Expected      Return on Plan Assets        |                                  |   | (80                                   | )      |   |   | (84 | ) |   |   | (21 | ) |   |   | (27 | ) |
| Amortization      of Transition Obligation |                                  |   | -                                     |   |   |   | - |   |   |   | 7 |   |   |   | 7 |   |
| Amortization      of Net Actuarial Loss    |                                  |   | 14                                    |   |   |   | 10 |   |   |   | 11 |   |   |   | 3 |   |
| Net      Periodic Benefit Cost             |                                  | $      | 24                                    |   |   | $ | 13 |   |   | $ | 35 |   |   | $ | 21 |   |

|                                       |                                 |   | Other      Postretirement            |   |
|--------------------------------------------|--------------------------------------|--------|--------------------------------------|--------|
|                                       | Pension      Plans                   |   | Benefit      Plans                   |   |
|                                       | Nine      Months Ended September 30, |   | Nine      Months Ended September 30, |   |
|                                       | 2009                                 |   | 2008                                 |   | 2009 |   | 2008 |   |
|                                       | (in      millions)                   |   |
| Service      Cost                          |                                 | $      | 78                                   |   |   | $ | 75 |   |   | $ | 32 |   |   | $ | 31 |   |
| Interest      Cost                         |                                 |   | 191                                  |   |   |   | 187 |   |   |   | 82 |   |   |   | 84 |   |
| Expected      Return on Plan Assets        |                                 |   | (241                                 | )      |   |   | (252 | ) |   |   | (61 | ) |   |   | (83 | ) |
| Amortization      of Transition Obligation |                                 |   | -                                    |   |   |   | - |   |   |   | 20 |   |   |   | 21 |   |
| Amortization      of Net Actuarial Loss    |                                 |   | 44                                   |   |   |   | 29 |   |   |   | 32 |   |   |   | 8 |   |
| Net      Periodic Benefit Cost             |                                 | $      | 72                                   |   |   | $ | 39 |   |   | $ | 105 |   |   | $ | 61 |   |

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

| · | Commercial      barging operations that annually transport approximately 33 million tons      of coal and dry bulk commodities primarily on the Ohio, Illinois and lower      Mississippi Rivers. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| · | Parent’s      guarantee revenue received from affiliates, investment income, interest      income and interest expense and other nonallocated  costs.                                                                                                    |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Forward      natural gas contracts that were not sold with our natural gas pipeline and      storage operations in 2004 and 2005.  These contracts are      financial derivatives which will gradually liquidate and completely expire      in 2011. |
| · | The      first quarter 2008 cash settlement of a purchase power and sale agreement      with TEM related to the Plaquemine Cogeneration Facility which was sold in      2006.                                                                                  |
| · | Revenue      sharing related to the Plaquemine Cogeneration  Facility.                                                                                                                                                                                         |

|                                                                        |   |                    |        | Nonutility      Operations |   |                   |   |               |     |                         |   |
|-----------------------------------------------------------------------------|--------|-------------------------|-------------|----------------------------|--------|------------------------|--------|--------------------|----------|------------------------------|--------|
|                                                                        |   | Utility      Operations |        | AEP      RiverOperations   |   | GenerationandMarketing |   | All      Other (a) |     | Reconciling      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 Discontinued Operations and Extraordinary    Loss |   | $                       | 448    |                       | $      | 10                |   | $                  | 5   |                         | $      | (17) |   | $ | -  |   | $ | 446  |   |
| Extraordinary      Loss, Net of Tax                                         |   |                    | -      |                       |   | -                 |   |               | -   |                         |   | -  |   |   | -  |   |   | -  |   |
| Net      Income (Loss)                                                      |   |                    | 448    |                       |   | 10                |   |               | 5   |                         |   | (17) |   |   | -  |   |   | 446  |   |
| Less:      Net Income Attributable to Noncontrolling Interests              |   |                    | 2      |                       |   | -                 |   |               | -   |                         |   | -  |   |   | -  |   |   | 2  |   |
| Net      Income (Loss) Attributable to AEP Shareholders                |   |                    | 446    |                       |   | 10                |   |               | 5   |                         |   | (17) |   |   | -  |   |   | 444  |   |
| Less:      Preferred Stock Dividend Requirements of Subsidiaries            |   |                    | 1      |                       |   | -                 |   |               | -   |                         |   | -  |   |   | -  |   |   | 1 |   |
| Earnings      (Loss) Attributable to AEP Common Shareholders                |   | $                       | 445    |                       | $      | 10                |   | $                  | 5   |                         | $      | (17) |   | $ | -  |   | $ | 443  |   |

|                                                                               |   |                    |        | Nonutility      Operations |   |                   |   |               |     |                         |   |
|------------------------------------------------------------------------------------|--------|-------------------------|-------------|----------------------------|--------|------------------------|--------|--------------------|----------|------------------------------|--------|
|                                                                               |   | Utility      Operations |        | AEP      RiverOperations   |   | GenerationandMarketing |   | All      Other (a) |     | Reconciling      Adjustments |   | Consolidated |   |
|                                                                               |   | (in      millions)      |
| Three      Months Ended September 30, 2008                                         |   |                    |        |                       |   |                   |   |               |     |                         |   |   |   |   |   |   |   |   |   |
| Revenues      from:                                                                |   |                    |        |                       |   |                   |   |               |     |                         |   |   |   |   |   |   |   |   |   |
| External      Customers                                                            |   | $                       | 4,108  | (d)                        | $      | 160               |   | $                  | 1   |                         | $      | (78) |   | $ | -  |   | $ | 4,191  |   |
| Other      Operating Segments                                                      |   |                    | (140)       | (d)                        |   | 7                 |   |               | 95  |                         |   | 83  |   |   | (45) |   |   | -  |   |
| Total      Revenues                                                                |   | $                       | 3,968  |                       | $      | 167               |   | $                  | 96  |                         | $      | 5  |   | $ | (45) |   | $ | 4,191  |   |
|                                                                               |   |                    |        |                       |   |                   |   |               |     |                         |   |   |   |   |   |   |   |   |   |
| Income      (Loss) Before Discontinued Operations and Extraordinary      Loss |   | $                       | 359    |                       | $      | 11                |   | $                  | 16  |                         | $      | (10) |   | $ | -  |   | $ | 376  |   |
| Discontinued      Operations, Net of Tax                                           |   |                    | -      |                       |   | -                 |   |               | -   |                         |   | -  |   |   | -  |   |   | -  |   |
| Net      Income (Loss)                                                             |   |                    | 359    |                       |   | 11                |   |               | 16  |                         |   | (10) |   |   | -  |   |   | 376  |   |
| Less:      Net Income Attributable to Noncontrolling Interests                     |   |                    | 1      |                       |   | -                 |   |               | -   |                         |   | -  |   |   | -  |   |   | 1  |   |
| Net      Income (Loss) Attributable to AEP Shareholders                            |   |                    | 358    |                       |   | 11                |   |               | 16  |                         |   | (10) |   |   | -  |   |   | 375  |   |
| Less:      Preferred Stock Dividend Requirements of Subsidiaries                   |   |                    | 1      |                       |   | -                 |   |               | -   |                         |   | -  |   |   | -  |   |   | 1  |   |
| Earnings      (Loss) Attributable to AEP Common Shareholders                       |   | $                       | 357         |                       | $      | 11                |   | $                  | 16  |                         | $      | (10) |   | $ | -  |   | $ | 374  |   |

|                                                                        |   |                    |        | Nonutility      Operations |   |                   |   |               |      |                         |   |
|-----------------------------------------------------------------------------|--------|-------------------------|-------------|----------------------------|--------|------------------------|--------|--------------------|-----------|------------------------------|--------|
|                                                                        |   | Utility      Operations |        | AEP      RiverOperations   |   | GenerationandMarketing |   | All      Other (a) |      | Reconciling      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 Discontinued Operations and 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  |   |
| Less:      Net Income Attributable to Noncontrolling Interests              |   |                    | 5      |                       |   | -                 |   |               | -    |                         |   | -  |   |   | -  |   |   | 5  |   |
| Net      Income (Loss) Attributable to AEP Shareholders                     |   |                    | 1,111  |                       |   | 22                |   |               | 33   |                         |   | (45) |   |   | -  |   |   | 1,121  |   |
| Less:      Preferred Stock Dividend Requirements of Subsidiaries            |   |                    | 2      |                       |   | -                 |   |               | -    |                         |   | -  |   |   | -  |   |   | 2  |   |
| Earnings      (Loss) Attributable to AEP Common Shareholders                |   | $                       | 1,109  |                       | $      | 22                |   | $                  | 33   |                         | $      | (45) |   | $ | -  |   | $ | 1,119  |   |

|                                                              |   |                    |         | Nonutility      Operations |   |                   |   |               |      |                         |   |
|-------------------------------------------------------------------|--------|-------------------------|--------------|----------------------------|--------|------------------------|--------|--------------------|-----------|------------------------------|--------|
|                                                              |   | Utility      Operations |         | AEP      RiverOperations   |   | GenerationandMarketing |   | All      Other (a) |      | Reconciling      Adjustments |   | Consolidated |   |
|                                                              |   | (in      millions)      |         |
| Nine      Months Ended September 30, 2008                         |   |                    |         |                       |   |                   |   |               |      |                         |   |   |   |   |   |   |   |   |   |
| Revenues      from:                                               |   |                    |         |                       |   |                   |   |               |      |                         |   |   |   |   |   |   |   |   |   |
| External      Customers                                           |   | $                       | 10,318  | (d)                        | $      | 442               |   | $                  | 409  |                         | $      | 35  |   | $ | -  |   | $ | 11,204  |   |
| Other      Operating Segments                                     |   |                    | 257     | (d)                        |   | 18                |   |               | (143)     |                         |   | (17) |   |   | (115) |   |   | -  |   |
| Total      Revenues                                               |   | $                       | 10,575  |                       | $      | 460               |   | $                  | 266  |                         | $      | 18  |   | $ | (115) |   | $ | 11,204  |   |
|                                                              |   |                    |         |                       |   |                   |   |               |      |                         |   |   |   |   |   |   |   |   |   |
| Income      Before Discontinued Operations and Extraordinary Loss |   | $                       | 1,036   |                       | $      | 21                |   | $                  | 43   |                         | $      | 133  |   | $ | -  |   | $ | 1,233  |   |
| Discontinued      Operations, Net of Tax                          |   |                    | -       |                       |   | -                 |   |               | -    |                         |   | 1  |   |   | -  |   |   | 1  |   |
| Net      Income                                                   |   |                    | 1,036   |                       |   | 21                |   |               | 43   |                         |   | 134  |   |   | -  |   |   | 1,234  |   |
| Less:      Net Income Attributable to Noncontrolling Interests    |   |                    | 4       |                       |   | -                 |   |               | -    |                         |   | -  |   |   | -  |   |   | 4  |   |
| Net      Income Attributable to AEP Shareholders                  |   |                    | 1,032   |                       |   | 21                |   |               | 43   |                         |   | 134  |   |   | -  |   |   | 1,230  |   |
| Less:      Preferred Stock Dividend Requirements of Subsidiaries  |   |                    | 2       |                       |   | -                 |   |               | -    |                         |   | -  |   |   | -  |   |   | 2  |   |
| Earnings      Attributable to AEP Common Shareholders             |   | $                       | 1,030   |                       | $      | 21                |   | $                  | 43   |                         | $      | 134  |   | $ | -  |   | $ | 1,228  |   |

|                                                 |   |                    |         | Nonutility      Operations |   |                   |   |               |      |                            |   |
|------------------------------------------------------|--------|-------------------------|--------------|----------------------------|--------|------------------------|--------|--------------------|-----------|---------------------------------|--------|
|                                                 |   | Utility      Operations |         | AEP      RiverOperations   |   | GenerationandMarketing |   | All      Other (a) |      | Reconciling      Adjustments(c) |   | Consolidated |   |
|                                                 |   | (in      millions)      |         |
| September      30, 2009                              |   |                    |         |                       |   |                   |   |               |      |                            |   |   |   |   |   |   |   |   |   |
| Total      Property, Plant and Equipment             |   | $                       | 50,392  |                       | $      | 423               |   | $                  | 570  |                            | $      | 10  |   | $ | (237) |   | $ | 51,158  |   |
| Accumulated      Depreciation and Amortization       |   |                    | 17,114  |                       |   | 84                |   |               | 161  |                            |   | 8  |   |   | (30) |   |   | 17,337  |   |
| Total      Property, Plant and Equipment – Net |   | $                       | 33,278  |                       | $      | 339               |   | $                  | 409  |                            | $      | 2  |   | $ | (207) |   | $ | 33,821  |   |
|                                                 |   |                    |         |                       |   |                   |   |               |      |                            |   |   |   |   |   |   |   |   |   |
| Total      Assets                                    |   | $                       | 45,776  |                       | $      | 467               |   | $                  | 791  |                            | $      | 15,436  |   | $ | (15,277) | (b) | $ | 47,193  |   |

|                                                 |   |                    |         | Nonutility      Operations |   |                   |   |               |      |                            |   |
|------------------------------------------------------|--------|-------------------------|--------------|----------------------------|--------|------------------------|--------|--------------------|-----------|---------------------------------|--------|
|                                                 |   | Utility      Operations |         | AEP      RiverOperations   |   | GenerationandMarketing |   | All      Other (a) |      | Reconciling      Adjustment (c) |   | Consolidated |   |
| December      31, 2008                               |   | (in      millions)      |         |
| Total      Property, Plant and Equipment             |   | $                       | 48,997  |                       | $      | 371               |   | $                  | 565  |                            | $      | 10  |   | $ | (233) |   | $ | 49,710  |   |
| Accumulated      Depreciation and Amortization  |   |                    | 16,525  |                       |   | 73                |   |               | 140  |                            |   | 8  |   |   | (23) |   |   | 16,723  |   |
| Total      Property, Plant and Equipment – Net |   | $                       | 32,472  |                       | $      | 298               |   | $                  | 425  |                            | $      | 2  |   | $ | (210) |   | $ | 32,987  |   |
|                                                 |   |                    |         |                       |   |                   |   |               |      |                            |   |   |   |   |   |   |   |   |   |
| Total      Assets                                    |   | $                       | 43,773  |                       | $      | 439               |   | $                  | 737  |                            | $      | 14,501  |   | $ | (14,295) | (b) | $ | 45,155  |   |

| (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 will gradually liquidate and completely expire      in 2011. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | The      first quarter 2008 cash settlement of a purchase power and sale agreement      with TEM related to the Plaquemine Cogeneration Facility which was sold in      2006.  The cash settlement of $255 million ($164 million, net of      tax) is included in Net Income. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Revenue      sharing related to the Plaquemine CogenerationFacility. |
| (b)    | Reconciling      Adjustments for Total Assets primarily include the elimination of      intercompany advances to affiliates and intercompany accounts receivable      along with the elimination of AEP’s investments in subsidiary      companies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| (c)    | Includes      eliminations due to an intercompany capital lease.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (d)    | PSO      and SWEPCo transferred certain existing ERCOT energy marketing contracts      to AEP Energy Partners, Inc. (AEPEP) (Generation and Marketing segment)      and entered into intercompany financial and physical purchase and sales      agreements with AEPEP.  As a result, we reported third-party net      purchases or sales activity for these energy marketing contracts as      Revenues from External Customers for the Utility Operations      segment.  This is offset by the Utility Operations segment’s      related net sales (purchases) for these contracts with AEPEP in Revenues      from Other Operating Segments of $(113) thousand and $(95) million for the      three months ended September 30, 2009 and 2008, respectively, and $(6)      million and $143 million for the nine months ended September 30, 2009 and      2008, respectively.  The Generation and Marketing segment also      reports these purchase or sales contracts with Utility Operations as      Revenues from Other Operating Segments.  These affiliated      contracts between PSO and SWEPCo with AEPEP will end in December      2009. |

| Notional      Volume of Derivative Instruments |
|------------------------------------------------|
| September      30, 2009                        |
|                                           |   |   |   |   | Unit      of |
| Primary      Risk Exposure                     |   | Volume |   | Measure |
|                                           |   | (in      millions) |   |
| Commodity:                                     |   |   |   |   |   |
| Power                                          |   |   | 544         |   | MWHs |
| Coal                                           |   |   | 61         |   | Tons |
| Natural      Gas                               |   |   | 153         |   | MMBtu |
| Heating      Oil and Gasoline                  |   |   | 8         |   | Gallons |
| Interest      Rate                             |   | $ | 216  |   | USD |
|                                           |   |   |   |   |   |
| Interest      Rate and Foreign Currency        |   | $ | 89         |   | USD |

| Fair      Value of Derivative InstrumentsSeptember      30, 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                                    |   |   | $ | 1,518 |   |   | $ | 24 |   |   | $ | - |   |   | $ | (1,242 | ) |   | $ | 300 |   |
| Long-term      Risk Management Assets                                  |   |   |   | 828 |   |   |   | 4 |   |   |   | - |   |   |   | (453 | ) |   |   | 379 |   |
| Total      Assets                                                      |   |   |   | 2,346 |   |   |   | 28 |   |   |   | - |   |   |   | (1,695 | ) |   |   | 679 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      Risk Management Liabilities                               |   |   |   | 1,399 |   |   |   | 24 |   |   |   | 3 |   |   |   | (1,290 | ) |   |   | 136 |   |
| Long-term      Risk Management Liabilities                             |   |   |   | 643 |   |   |   | 10 |   |   |   | 2 |   |   |   | (505 | ) |   |   | 150 |   |
| Total      Liabilities                                                 |   |   |   | 2,042 |   |   |   | 34 |   |   |   | 5 |   |   |   | (1,795 | ) |   |   | 286 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      MTM Derivative Contract Net Assets (Liabilities)            |   |   | $ | 304 |   |   | $ | (6 | ) |   | $ | (5 | ) |   | $ | 100 |   |   | $ | 393 |   |

| (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 contracts, associated      cash collateral in accordance with the accounting guidance for      “Derivatives and Hedging” and dedesignated risk management      contracts.                                                                            |

| Amount      of Gain (Loss) Recognized onRisk      Management Contracts |
|------------------------------------------------------------------------|

|                                         |   | Three      Months Ended |   | Nine      Months Ended  |    |
|----------------------------------------------|--------|-------------------------|--------|-------------------------|---------|
|                                         |   | September      30, 2009 |   | September      30, 2009 |    |
| Location      of Gain (Loss)                 |   | (in      millions)      |   |
| Utility      Operations Revenue              |   |                    | $      | 25                      |    |   | $ | 124 |   |
| Other      Revenue                           |   |                    |   | 1                       |    |   |   | 19 |   |
| Regulatory      Assets                       |   |                    |   | (1                      | )  |   |   | (2 | ) |
| Regulatory      Liabilities                  |   |                    |   | 49                      |    |   |   | 130 |   |
| Total      Gain on Risk Management Contracts |   |                    | $      | 74                      |    |   | $ | 271 |   |

| Total      Accumulated Other Comprehensive Income (Loss) Activity for Cash Flow      Hedges                   |   |
|---------------------------------------------------------------------------------------------------------------|--------|
| For      the Three Months Ended September 30, 2009                                                            |   |
|                                                                                                          |   | Commodity |   |   | Interest      Rate and Foreign Currency |   |   | Total |   |
|                                                                                                          |   | (in      millions) |   |
| Beginning      Balance in AOCI as of July 1, 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                                                                                        |   |   | 2 |   |   |   | - |   |   |   | 2 |   |
| Regulatory      Liabilities                                                                                   |   |   | (3 | ) |   |   | - |   |   |   | (3 | ) |
| Ending      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, 2009                                                             |   |
|                                                                                                          |   | Commodity |   |   | Interest      Rate and Foreign Currency |   |   | Total |   |
|                                                                                                          |   | (in      millions) |   |
| Beginning      Balance in AOCI as of January 1, 2009                                                          |   | $ | 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                                                                                        |   |   | 5 |   |   |   | - |   |   |   | 5 |   |
| Regulatory      Liabilities                                                                                   |   |   | (6 | ) |   |   | - |   |   |   | (6 | ) |
| Ending      Balance in AOCI as of September 30, 2009                                                          |   | $ | (3 | ) |   | $ | (14 | ) |   | $ | (17 | ) |

| Impact      of Cash Flow Hedges on our Condensed Consolidated Balance      SheetSeptember      30, 2009 |               |
|---------------------------------------------------------------------------------------------------------|--------------------|
|                                                                                                    | Commodity          |   | Interest      Rate and Foreign Currency |   | Total |   |
|                                                                                                    | (in      millions) |   |
| Hedging      Assets (a)                                                                                 |               | $ | 17 |   |   | $ | - |   |   | $ | 17 |   |
| Hedging      Liabilities (a)                                                                            |               |   | (23 | ) |   |   | (5 | ) |   |   | (28 | ) |
| AOCI      Gain (Loss) Net of Tax                                                                        |               |   | (3 | ) |   |   | (14 | ) |   |   | (17 | ) |
| Portion      Expected to be Reclassified to Net Income During the Next Twelve      Months               |               |   | 1 |   |   |   | (4 | ) |   |   | (3 | ) |

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

|                |   |                    |   |
|---------------------|--------|-------------------------|--------|
|                |   | September      30, 2009 |   |   | December      31, 2008 |   |
|                |   | Book      Value         |   |   | Fair      Value |   |   | Book      Value |   |   | Fair      Value |   |
|                |   | (in      millions)      |   |
| Long-term      Debt |   | $                       | 17,253 |   |   | $ | 18,251 |   |   | $ | 15,983 |   |   | $ | 15,113 |   |

|                                   |   | September      30, 2009 |      | December      31, 2008      |
|----------------------------------------|--------|-------------------------|-----------|-----------------------------|
|                                   |   | Cost                    |      | Gross      Unrealized Gains |   | Gross      Unrealized Losses |   | EstimatedFairValue |   | Cost |   | Gross      Unrealized Gains |   | Gross      Unrealized Losses |   | EstimatedFairValue |
| Other      Temporary Investments       |   | (in      millions)      |
| Cash      (a)                          |   | $                       | 167  |                        | $ | -  |   | $ | -  |   | $ | 167  |   | $ | 243  |   | $ | -  |   | $ | -  |   | $ | 243  |
| Debt      Securities                   |   |                    | 57   |                        |   | -  |   |   | -  |   |   | 57  |   |   | 56  |   |   | -  |   |   | -  |   |   | 56  |
| Equity      Securities                 |   |                    | 18   |                        |   | 17  |   |   | -  |   |   | 35  |   |   | 27  |   |   | 11  |   |   | 10  |   |   | 28  |
| Total      Other Temporary Investments |   | $                       | 242  |                        | $ | 17  |   | $ | -  |   | $ | 259  |   | $ | 326  |   | $ | 11  |   | $ | 10  |   | $ | 327  |

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

|                    |   |                  |    |                |          |                      |   | Gross      Realized   |
|-------------------------|--------|-----------------------|---------|---------------------|---------------|---------------------------|--------|-----------------------|
|                    |   | Proceeds      From    |    | Purchases           |          | Gross      Realized Gains |   | Losses      on        |
|                    |   | Investment      Sales |    | of      Investments |          | on      Investment Sales  |   | Investment      Sales |
|                    |   | (in      millions)    |
| Three      Months Ended |   | $                     | -  |                |        $ | 1                    |   | $                     | -  |   | $ | -  |
| Nine      Months Ended  |   |                  | -  |                |          | 2                    |   |                  | -  |   |   | -  |

|                                                    | September      30, 2009 |   | December      31, 2008 |   |
|---------------------------------------------------------|-------------------------|--------|------------------------|--------|
|                                                    | EstimatedFairValue      |   | GrossUnrealizedGains   |   | Other-Than-TemporaryImpairments |   | EstimatedFairValue |   | GrossUnrealizedGains |   | Other-Than-TemporaryImpairments |   |
|                                                    | (in      millions)      |   |
| Cash                                                    |                    | $      | 19                     |   |   | $ | - |   |   | $ | - |   |   | $ | 18 |   |   | $ | - |   |   | $ | - |   |
| Debt      Securities                                    |                    |   | 780                    |   |   |   | 35 |   |   |   | (2 | ) |   |   | 773 |   |   |   | 52 |   |   |   | (3 | ) |
| Equity      Securities                                  |                    |   | 565                    |   |   |   | 223 |   |   |   | (135 | ) |   |   | 469 |   |   |   | 89 |   |   |   | (82 | ) |
| Spent      Nuclear Fuel and Decommissioning Trusts |                    | $      | 1,364                  |   |   | $ | 258 |   |   | $ | (137 | ) |   | $ | 1,260 |   |   | $ | 141 |   |   | $ | (85 | ) |

|                    |                  |   |                |   |                      |   | Gross      Realized   |   |
|-------------------------|-----------------------|--------|---------------------|--------|---------------------------|--------|-----------------------|--------|
|                    | Proceeds      From    |   | Purchases           |   | Gross      Realized Gains |   | Losses      on        |   |
|                    | Investment      Sales |   | of      Investments |   | on      Investment Sales  |   | Investment      Sales |   |
|                    | (in      millions)    |   |
| Three      Months Ended |                  | $      | 113                 |   |                      | $      | 129                   |   |   | $ | 1 |   |   | $ | - |   |
| Nine      months Ended  |                  |   | 524                 |   |                      |   | 571                   |   |   |   | 10 |   |   |   | (1 | ) |

|                          |   | Fair      Valueof      DebtSecurities |   |
|-------------------------------|--------|---------------------------------------|--------|
|                          |   | (in      millions)                    |   |
| Within      1 year            |   | $                                     | 27     |   |
| 1      year – 5 years   |   |                                  | 217    |   |
| 5      years – 10 years |   |                                  | 241    |   |
| After      10 years           |   |                                  | 295    |   |
| Total                         |   | $                                     | 780    |   |

| Assets      and Liabilities Measured at Fair Value on a Recurring Basis as of      September 30, 2009 |
|-------------------------------------------------------------------------------------------------------|
|                                                                                                  |   |   |   |   |   |   |   |   |   |
|                                                                                                  | Level      1 |   | Level      2 |   | Level      3 |   | Other |   | Total |
| Assets:                                                                                               | (in      millions) |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and Cash Equivalents (a)                                                                    | $ | 799  |   | $ | -  |   | $ | -  |   | $ | 78  |   | $ | 877  |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Temporary Investments                                                                      |   |
| Cash      and Cash Equivalents (a)                                                                    |   | 142  |   |   | -  |   |   | -  |   |   | 25  |   |   | 167  |
| Debt      Securities (c)                                                                              |   | 57  |   |   | -  |   |   | -  |   |   | -  |   |   | 57  |
| Equity      Securities (d)                                                                            |   | 35  |   |   | -  |   |   | -  |   |   | -  |   |   | 35  |
| TotalOther Temporary      Investments                                                                 |   | 234  |   |   | -  |   |   | -  |   |   | 25  |   |   | 259  |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk      Management Assets                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk      Management Contracts (e)                                                                    |   | 21  |   |   | 2,195  |   |   | 116  |   |   | (1,699) |   |   | 633  |
| Cash      Flow Hedges (e)                                                                             |   | 3  |   |   | 24  |   |   | -  |   |   | (10) |   |   | 17  |
| Dedesignated      Risk Management Contracts (f)                                                       |   | -  |   |   | -  |   |   | -  |   |   | 29  |   |   | 29  |
| Total      Risk Management Assets                                                                     |   | 24  |   |   | 2,219  |   |   | 116  |   |   | (1,680) |   |   | 679  |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Spent      Nuclear Fuel and Decommissioning Trusts                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and Cash Equivalents (g)                                                                    |   | -  |   |   | 10  |   |   | -  |   |   | 9  |   |   | 19  |
| Debt      Securities (h)                                                                              |   | -  |   |   | 780  |   |   | -  |   |   | -  |   |   | 780  |
| Equity      Securities (d)                                                                            |   | 565  |   |   | -  |   |   | -  |   |   | -  |   |   | 565  |
| TotalSpent Nuclear Fuel and      Decommissioning Trusts                                               |   | 565  |   |   | 790  |   |   | -  |   |   | 9  |   |   | 1,364  |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Assets                                                                                     | $ | 1,622  |   | $ | 3,009  |   | $ | 116  |   | $ | (1,568) |   | $ | 3,179  |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk      Management Liabilities                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk      Management Contracts (e)                                                                    | $ | 23  |   | $ | 1,993  |   | $ | 12  |   | $ | (1,770) |   | $ | 258  |
| Cash      Flow Hedges (e)                                                                             |   | 5  |   |   | 33  |   |   | -  |   |   | (10) |   |   | 28  |
| Total      Risk Management Liabilities                                                                | $ | 28  |   | $ | 2,026  |   | $ | 12  |   | $ | (1,780) |   | $ | 286  |

| Assets      and Liabilities Measured at Fair Value on a Recurring Basis as of December      31, 2008 |
|------------------------------------------------------------------------------------------------------|
|                                                                                                 | Level      1 |   | Level      2 |   | Level      3 |   | Other |   | Total |
| Assets:                                                                                              | (in      millions) |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and Cash Equivalents                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and Cash Equivalents (a)                                                                   | $ | 304  |   | $ | -  |   | $ | -  |   | $ | 60  |   | $ | 364  |
| Debt      Securities (b)                                                                             |   | -  |   |   | 47  |   |   | -  |   |   | -  |   |   | 47  |
| Total      Cash and Cash Equivalents                                                                 |   | 304  |   |   | 47  |   |   | -  |   |   | 60  |   |   | 411  |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Temporary Investments                                                                     |   |
| Cash      and Cash Equivalents (a)                                                                   |   | 217  |   |   | -  |   |   | -  |   |   | 26  |   |   | 243  |
| Debt      Securities (c)                                                                             |   | 56  |   |   | -  |   |   | -  |   |   | -  |   |   | 56  |
| Equity      Securities (d)                                                                           |   | 28  |   |   | -  |   |   | -  |   |   | -  |   |   | 28  |
| TotalOther Temporary      Investments                                                                |   | 301  |   |   | -  |   |   | -  |   |   | 26  |   |   | 327  |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk      Management Assets                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk      Management Contracts (e)                                                                   |   | 61  |   |   | 2,413  |   |   | 86  |   |   | (2,022) |   |   | 538  |
| Cash      Flow Hedges (e)                                                                            |   | 6  |   |   | 32  |   |   | -  |   |   | (4) |   |   | 34  |
| Dedesignated      Risk Management Contracts (f)                                                      |   | -  |   |   | -  |   |   | -  |   |   | 39  |   |   | 39  |
| Total      Risk Management Assets                                                                    |   | 67  |   |   | 2,445  |   |   | 86  |   |   | (1,987) |   |   | 611  |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Spent      Nuclear Fuel and Decommissioning Trusts                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and Cash Equivalents (g)                                                                   |   | -  |   |   | 6  |   |   | -  |   |   | 12  |   |   | 18  |
| Debt      Securities (h)                                                                             |   | -  |   |   | 773  |   |   | -  |   |   | -  |   |   | 773  |
| Equity      Securities (d)                                                                           |   | 469  |   |   | -  |   |   | -  |   |   | -  |   |   | 469  |
| TotalSpent Nuclear Fuel and      Decommissioning Trusts                                              |   | 469  |   |   | 779  |   |   | -  |   |   | 12  |   |   | 1,260  |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Assets                                                                                    | $ | 1,141  |   | $ | 3,271  |   | $ | 86  |   | $ | (1,889) |   | $ | 2,609  |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk      Management Liabilities                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk      Management Contracts (e)                                                                   | $ | 77  |   | $ | 2,213  |   | $ | 37  |   | $ | (2,054) |   | $ | 273  |
| Cash      Flow Hedges (e)                                                                            |   | 1  |   |   | 34  |   |   | -  |   |   | (4) |   |   | 31  |
| Total      Risk Management Liabilities                                                               | $ | 78  |   | $ | 2,247  |   | $ | 37  |   | $ | (2,058) |   | $ | 304  |

| (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) | Amount      represents commercial paper investments with maturities of less than      ninety days.                                                                                                                                                                                                                                                                                                                                                                   |
| (c) | Amounts      represent debt-based mutual funds.                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (d) | Amount      represents publicly traded equity securities and equity-based mutual      funds.                                                                                                                                                                                                                                                                                                                                                                         |
| (e) | Amounts      in “Other” column primarily represent counterparty netting of risk      management contracts and associated cash collateral under the accounting      guidance for “Derivatives and Hedging.”                                                                                                                                                                                                                                   |
| (f) | “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 MTM      value will be amortized into Utility Operations Revenues over the      remaining life of the contracts. |
| (g) | Amounts      in “Other” column primarily represent accrued interest receivables from      financial institutions.  Level 2 amounts primarily represent      investments in money market funds.                                                                                                                                                                                                                                                 |
| (h) | Amounts      represent corporate, municipal and treasury  bonds.                                                                                                                                                                                                                                                                                                                                                                                                     |

| Three      Months Ended September 30, 2009                                                                                                                     |   | Net      Risk Management Assets (Liabilities) |      | Other      Temporary Investments |   | Investments      in Debt Securities |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|-----------|----------------------------------|--------|-------------------------------------|
|                                                                                                                                                           |   | (in      millions)                            |
| Balance      as of July 1, 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 (b)                                                                                                                  |   |                                          | -    |                             |   | -                              |   |   | -  |
| Transfers      in and/or out of Level 3 (c)                                                                                                                    |   |                                          | 7    |                             |   | -                              |   |   | -  |
| Changes      in Fair Value Allocated to Regulated Jurisdictions (d)                                                                                            |   |                                          | 28   |                             |   | -                              |   |   | -  |
| Balance      as of September 30, 2009                                                                                                                          |   | $                                             | 104  |                             | $      | -                              |   | $ | -  |

| Nine      Months Ended September 30, 2009                                                                                                                 |   | Net      Risk Management Assets (Liabilities) |      | Other      Temporary Investments |   | Investments      in Debt Securities |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|-----------|----------------------------------|--------|-------------------------------------|
|                                                                                                                                                      |   | (in      millions)                            |
| Balance      as of January 1, 2009                                                                                                                        |   | $                                             | 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 (b)                                                                                                             |   |                                          | -    |                             |   | -                              |   |   | -  |
| Transfers      in and/or out of Level 3 (c)                                                                                                               |   |                                          | (26)      |                             |   | -                              |   |   | -  |
| Changes      in Fair Value Allocated to Regulated Jurisdictions (d)                                                                                       |   |                                          | 51   |                             |   | -                              |   |   | -  |
| Balance      as of September 30, 2009                                                                                                                     |   | $                                             | 104  |                             | $      | -                              |   | $ | -  |

| Three      Months Ended September 30, 2008                                                                                                           |   | Net      Risk Management Assets (Liabilities) |     | Other      Temporary Investments |   | Investments      in Debt Securities |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|----------|----------------------------------|--------|-------------------------------------|
|                                                                                                                                                 |   | (in      millions)                            |
| Balance      as of July 1, 2008                                                                                                                      |   | $                                             | (8)      |                             | $      | -                              |   | $ | -  |
| Realized      (Gain) Loss Included in Net Income (or Changes in Net Assets)      (a)                                                                 |   |                                          | 17  |                             |   | -                              |   |   | -  |
| Unrealized      Gain (Loss) Included in Net Income (or Changes in Net      Assets) Relating to Assets Still Held at the Reporting Date      (a) |   |                                          | (7)      |                             |   | -                              |   |   | -  |
| Realized      and Unrealized Gains (Losses) Included in Other      Comprehensive Income                                                    |   |                                          | -   |                             |   | -                              |   |   | -  |
| Purchases,      Issuances and Settlements (b)                                                                                                        |   |                                          | -   |                             |   | -                              |   |   | -  |
| Transfers      in and/or out of Level 3 (c)                                                                                                          |   |                                          | (10)     |                             |   | -                              |   |   | -  |
| Changes      in Fair Value Allocated to Regulated Jurisdictions (d)                                                                                  |   |                                          | 15  |                             |   | -                              |   |   | -  |
| Balance      as of September 30, 2008                                                                                                                |   | $                                             | 7   |                             | $      | -                              |   | $ | -  |

| Nine      Months Ended September 30, 2008                                                                                                                 |   | Net      Risk Management Assets (Liabilities) |     | Other      Temporary Investments |   | Investments      in Debt Securities |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|----------|----------------------------------|--------|-------------------------------------|
|                                                                                                                                                      |   | (in      millions)                            |
| Balance      as of January 1, 2008                                                                                                                        |   | $                                             | 49  |                             | $      | -                              |   | $ | -  |
| Realized      (Gain) Loss Included in Net Income (or Changes in Net Assets)      (a)                                                                      |   |                                          | -   |                             |   | -                              |   |   | -  |
| Unrealized      Gain (Loss) Included in Net Income (or Changes in Net      Assets) Relating to Assets Still Held at the Reporting Date      (a) |   |                                          | 4   |                             |   | -                              |   |   | -  |
| Realized      and Unrealized Gains (Losses) Included in Other      Comprehensive Income                                                         |   |                                          | -   |                             |   | -                              |   |   | -  |
| Purchases,      Issuances and Settlements (b)                                                                                                             |   |                                          | -   |                             |   | (118)                               |   |   | (17) |
| Transfers      in and/or out of Level 3 (c)                                                                                                               |   |                                          | (35)     |                             |   | 118                            |   |   | 17  |
| Changes      in Fair Value Allocated to Regulated Jurisdictions (d)                                                                                       |   |                                          | (11)     |                             |   | -                              |   |   | -  |
| Balance      as of September 30, 2008                                                                                                                     |   | $                                             | 7   |                             | $      | -                              |   | $ | -  |

| (a) | Included      in revenues on our Condensed Consolidated Statements of      Income.                                                                                                                                                                                                                                                                                                  |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Includes      principal amount of securities settled during the  period.                                                                                                                                                                                                                                                                                                            |
| (c) | “Transfers      in and/or out of Level 3” represent 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. |
| (d) | “Changes      in Fair Value Allocated to Regulated Jurisdictions” relates to the net      gains (losses) of those contracts that are not reflected on the Condensed      Consolidated Statements of Income.  These net gains (losses) are      recorded as regulatoryliabilities/assets.                                                                      |

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

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

|                                   |   | September      30, |   |   | December      31, |   |
|----------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
| Type      of Debt                      |   | 2009               |   |   | 2008              |   |
|                                   |   | (in      millions) |   |
| Senior      Unsecured Notes            |   | $                  | 12,316 |   |              | $      | 11,069 |   |
| Pollution      Control Bonds           |   |               | 2,055  |   |              |   | 1,946 |   |
| Notes      Payable                     |   |               | 288    |   |              |   | 233 |   |
| Securitization      Bonds              |   |               | 1,995  |   |              |   | 2,132 |   |
| Junior      Subordinated Debentures    |   |               | 315    |   |              |   | 315 |   |
| Spent      Nuclear Fuel Obligation (a) |   |               | 264    |   |              |   | 264 |   |
| Other      Long-term Debt              |   |               | 87     |   |              |   | 88 |   |
| Unamortized      Discount (net)        |   |               | (67    | )      |              |   | (64 | ) |
| Total      Long-term Debt Outstanding  |   |               | 17,253 |   |              |   | 15,983 |   |
| Less      Portion Due Within One Year  |   |               | 1,540  |   |              |   | 447 |   |
| Long-term      Portion                 |   | $                  | 15,713 |   |              | $      | 15,536 |   |

| (a) | Pursuant      to the Nuclear Waste Policy Act of 1982, I&M (a nuclear licensee) has      an obligation to the United States Department of Energy for spent nuclear      fuel disposal.  The obligation includes a one-time fee for      nuclear fuel consumed prior to April 7, 1983.  Trust fund assets      related to this obligation of $306 million and $301 million at September      30, 2009 and December 31, 2008, respectively, are included in Spent      Nuclear Fuel and Decommissioning Trusts on our Condensed Consolidated      Balance Sheets. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Company                   |   | Type      of Debt            |   | Principal      Amount |        | Interest      Rate |   | Due      Date |
|---------------------------|--------|------------------------------|--------|-----------------------|-------------|--------------------|--------|---------------|
|                      |   |                         |   | (in      millions)    |        | (%)                |   |          |
| Issuances:                |   |                         |   |                  |        |               |   |          |
| APCo                      |   | Senior      Unsecured Notes  |   | $                     | 350    |               | 7.95   |          | 2020 |
| CSPCo                     |   | Pollution      Control Bonds |   |                  | 60     |               | 3.875  |          | 2038 |
| CSPCo                     |   | Pollution      Control Bonds |   |                  | 32     |               | 5.80   |          | 2038 |
| I&M                   |   | Senior      Unsecured Notes  |   |                  | 475    |               | 7.00   |          | 2019 |
| I&M                   |   | Notes      Payable           |   |                  | 102    |               | 5.44   |          | 2013 |
| I&M                   |   | Pollution      Control Bonds |   |                  | 50     |               | 6.25   |          | 2025 |
| I&M                   |   | Pollution      Control Bonds |   |                  | 50     |               | 6.25   |          | 2025 |
| OPCo                      |   | Senior      Unsecured Notes  |   |                  | 500    |               | 5.375  |          | 2021 |
| PSO                       |   | Pollution      Control Bonds |   |                  | 34     |               | 5.25   |          | 2014 |
|                      |   |                         |   |                  |        |               |   |          |   |
| Non-Registrant:           |   |                         |   |                  |        |               |   |          |   |
| AEP      River Operations |   | Notes      Payable           |   |                  | 49     |               | 7.59   |          | 2026 |
| KPCo                      |   | Senior      Unsecured Notes  |   |                  | 40     |               | 7.25   |          | 2021 |
| KPCo                      |   | Senior      Unsecured Notes  |   |                  | 30     |               | 8.03   |          | 2029 |
| KPCo                      |   | Senior      Unsecured Notes  |   |                  | 60     |               | 8.13   |          | 2039 |
| TCC                       |   | Pollution      Control Bonds |   |                  | 101    |               | 6.30   |          | 2029 |
| Total      Issuances      |   |                         |   | $                     | 1,933  | (a)                |   |          |   |

| (a) | Amount      indicated on the statement of cash flows of $1,912 million is net of      issuance costs and premium ordiscount. |
|-----|------------------------------------------------------------------------------------------------------------------------------|

|  Company                                 |   | Type      of Debt            |   | Principal      Amount Paid |      | Interest      Rate |     | Due      Date |
|-----------------------------------------------|--------|------------------------------|--------|----------------------------|-----------|--------------------|----------|---------------|
|                                          |   |                         |   | (in      millions)         |      | (%)                |     |          |
| Retirements      and Principal Payments:      |   |                         |   |                       |      |               |     |          |
| APCo                                          |   | Senior      Unsecured Notes  |   | $                          | 150  |               | 6.60     |          | 2009 |
| OPCo                                          |   | Pollution      Control Bonds |   |                       | 218  |               | Variable |          | 2028-2029 |
| OPCo                                          |   | Notes      Payable           |   |                       | 1    |               | 6.27     |          | 2009 |
| OPCo                                          |   | Notes      Payable           |   |                       | 7    |               | 7.21     |          | 2009 |
| OPCo                                          |   | Notes      Payable           |   |                       | 70   |               | 7.49     |          | 2009 |
| PSO                                           |   | Senior      Unsecured Notes  |   |                       | 50   |               | 4.70     |          | 2009 |
| SWEPCo                                        |   | Notes      Payable           |   |                       | 3    |               | 4.47     |          | 2011 |
|                                          |   |                         |   |                       |      |               |     |          |   |
| Non-Registrant:                               |   |                         |   |                       |      |               |     |          |   |
| AEP      Subsidiaries                         |   | Notes      Payable           |   |                       | 11   |               | Variable |          | 2017 |
| AEP      Subsidiaries                         |   | Notes      Payable           |   |                       | 4    |               | 5.88     |          | 2011 |
| AEGCo                                         |   | Senior      Unsecured Notes  |   |                       | 7    |               | 6.33     |          | 2037 |
| TCC                                           |   | Securitization      Bonds    |   |                       | 54   |               | 5.56     |          | 2010 |
| TCC                                           |   | Securitization      Bonds    |   |                       | 84   |               | 4.98     |          | 2010 |
| Total      Retirements and Principal Payments |   |                         |   | $                          | 659  |               |     |          |   |

|                                                  |   | September      30, 2009 |          | December      31, 2008 |    |
|-------------------------------------------------------|--------|-------------------------|---------------|------------------------|---------|
|                                                  |   | OutstandingAmount       |          | InterestRate      (a)  |    | OutstandingAmount |   | InterestRate      (a) |   |
| Type      of Debt                                     |   | (in      thousands)     |          |                   |    | (in      thousands) |   |   |   |
| Line      of Credit – AEP (b)                   |   | $                       | -        |                   | -  |   | $ | 1,969,000  |   | 2.28% | (c) |
| Line      of Credit – Sabine Mining Company (d) |   |                    | 5,273    |                   | 1.60%   |   |   | 7,172  |   | 1.54% |   |
| Commercial      Paper – AEP                     |   |                    | 347,000  |                   | 0.45%   |   |   | -  |   | -  |   |
| Total                                                 |   | $                       | 352,273  |                   |    |   | $ | 1,976,172  |   |   |   |

| (a) | Weighted      average rate.                                                                                                                                                              |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Paid      primarily with proceeds from the April 2009 equity    issuance.                                                                                                                |
| (c) | Rate      based on LIBOR.                                                                                                                                                                |
| (d) | Sabine      Mining Company is a consolidated variable interest entity.  This      line of credit does not reduce available liquidity under AEP’s credit      facilities. |

----

----

APPALACHIAN POWER COMPANY AND SUBSIDIARIES

| Third      Quarter of 2008           |   |   |   |   | $      | 39     |   |
|--------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                 |   |   |   |   |   |   |   |
| Changes      in Gross Margin:        |   |   |   |   |   |   |   |
| Retail      Margins                  |   |   | 77     |   |   |   |   |   |
| Off-system      Sales                |   |   | (65    | )      |   |   |   |   |
| Total      Change in Gross Margin    |   |   |   |   |   |   | 12     |   |
|                                 |   |   |   |   |   |   |   |   |
| Total      Expenses and Other:       |   |   |   |   |   |   |   |   |
| Other      Operation and Maintenance |   |   | (4     | )      |   |   |   |   |
| Depreciation      and Amortization   |   |   | (7     | )      |   |   |   |   |
| Carrying      Costs Income           |   |   | (5     | )      |   |   |   |   |
| Other      Income                    |   |   | (3     | )      |   |   |   |   |
| Interest      Expense                |   |   | (5     | )      |   |   |   |   |
| Total      Expenses and Other        |   |   |   |   |   |   | (24    | ) |
|                                 |   |   |   |   |   |   |   |   |
| Third      Quarter of 2009           |   |   |   |   |   | $      | 27     |   |

| · | Retail      Margins increased $77 million primarily due to the    following:                                                                                                                                                          |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                | A      $54 million increase due to a decrease in off-system sales margins shared      with customers in Virginia and West Virginia. |
|   | ·                                                                                                                                                                                                                                | A      $37 million increase in rate relief primarily due to the impact of the      Virginia base rate order issued in October 2008, an increase in the      recovery of E&R costs in Virginia and an increase in the recovery of      construction financing costs in West Virginia. |
|   | These      increases were partially offset by:                                                                                                                                                                                        |
|   | ·                                                                                                                                                                                                                                | A      $9 million decrease due to higher capacity settlement expenses under the      Interconnection Agreement net of recovery in West Virginia and      environmental deferrals in Virginia. |
|   | ·                                                                                                                                                                                                                                | A      $5 million decrease in industrial sales primarily due to suspended      operations by APCo’s largest customer, CenturyAluminum. |
| · | Margins      from Off-system Sales decreased $65 million primarily due to lower      physical sales volumes and lower margins as a result of lower market      prices, partially offset by higher trading and marketing      margins. |

| · | Other      Operation and Maintenance expenses increased $4 million primarily due to      the following: |
|--------|---------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                  | A      $9 million increase related to the establishment of a regulatory asset in      the third quarter of 2008 for Virginia’s share of previously expended NSR      settlement costs.  See “Virginia Rate Matters – Virginia E&R      Costs Recovery Filing” section of Note 3. |
|   | ·                                                                                                  | A      $2 million increase related to generation plant    maintenance. |
|   | These      increases were partially offset by:                                                          |
|   | ·                                                                                                  | An      $8 million decrease related to the establishment of a regulatory asset for      the deferral of transmission costs.  See “Virginia Rate Matters      – Rate Adjustment Clauses” section of Note3. |

| · | Depreciation      and Amortization expenses increased $7 million primarily due to increased      assets to depreciate reflecting environmental upgrades at the Amos and      Clinch River Plants. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Carrying      Costs Income decreased $5 million due to completion of reliability      deferrals in Virginia in December 2008 and a decrease of environmental      deferrals in Virginia in 2009.  |
| · | Interest      Expense increased $5 million primarily due to an increase in long-term      borrowings.                                                                                             |

| Nine      Months Ended September 30, 2008 |   |   |   |   | $      | 121    |   |
|-------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                      |   |   |   |   |   |   |   |
| Changes      in Gross Margin:             |   |   |   |   |   |   |   |
| Retail      Margins                       |   |   | 230    |   |   |   |   |   |
| Off-system      Sales                     |   |   | (159   | )      |   |   |   |   |
| Total      Change in Gross Margin         |   |   |   |   |   |   | 71     |   |
|                                      |   |   |   |   |   |   |   |   |
| Total      Expenses and Other:            |   |   |   |   |   |   |   |   |
| Other      Operation and Maintenance      |   |   | 16     |   |   |   |   |   |
| Depreciation      and Amortization        |   |   | (17    | )      |   |   |   |   |
| Carrying      Costs Income                |   |   | (23    | )      |   |   |   |   |
| Other      Income                         |   |   | (7     | )      |   |   |   |   |
| Interest      Expense                     |   |   | (15    | )      |   |   |   |   |
| Total      Expenses and Other             |   |   |   |   |   |   | (46    | ) |
|                                      |   |   |   |   |   |   |   |   |
| Income      Tax Expense                   |   |   |   |   |   |   | (15    | ) |
|                                      |   |   |   |   |   |   |   |   |
| Nine      Months Ended September 30, 2009 |   |   |   |   |   | $      | 131    |   |

| · | Retail      Margins increased $230 million primarily due to the    following:                                                                                                                                                          |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                 | A      $128 million increase in rate relief primarily due to the impact of the      Virginia base rate order issued in October 2008, an increase in the      recovery of E&R costs in Virginia and an increase in the recovery of      construction financing costs in West Virginia. |
|   | ·                                                                                                                                                                                                                                 | A      $124 million increase due to a decrease in off-system sales margins shared      with customers in Virginia and West Virginia. |
|   | ·                                                                                                                                                                                                                                 | A      $19 million increase due to new rates effective January 2009 for a power      supply contract with KGPCo. |
|   | These      increases were partially offset by:                                                                                                                                                                                         |
|   | ·                                                                                                                                                                                                                                 | A      $37 million decrease due to higher capacity settlement expenses under the      Interconnection Agreement net of recovery in West Virginia and      environmental deferrals in Virginia. |
|   | ·                                                                                                                                                                                                                                 | A      $15 million decrease in industrial sales primarily due to suspended      operations by APCo’s largest customer, CenturyAluminum. |
| · | Margins      from Off-system Sales decreased $159 million primarily due to lower      physical sales volumes and lower margins as a result of lower market      prices, partially offset by higher trading and marketing      margins. |

| · | Other      Operation and Maintenance expenses decreased $16 million primarily due to      the following:                                                                                                                                                                                                                                         |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                                                                                                                           | A      $14 million decrease related to the establishment of a regulatory asset in      2009 for the deferral of transmission costs.  See “Virginia Rate      Matters – Rate Adjustment Clauses” section of Note 3. |
|   | ·                                                                                                                                                                                                                                                                                                                                           | A      $6 million decrease in employee benefit expenses. |
|   | ·                                                                                                                                                                                                                                                                                                                                           | A      $2 million decrease in generation plant maintenance. |
|   | These      decreases were partially offset by:                                                                                                                                                                                                                                                                                                   |
|   | ·                                                                                                                                                                                                                                                                                                                                           | A      $9 million increase related to the establishment of a regulatory asset in      the third quarter of 2008 for Virginia’s share of previously expended NSR      settlement costs.  See “Virginia Rate Matters – Virginia E&R      Costs Recovery Filing” section of Note 3. |
| · | Depreciation      and Amortization expenses increased $17 million primarily due to increased      assets to depreciate reflecting environmental upgrades at the Amos and      Clinch River Plants and the amortization of carrying charges and      depreciation expenses that are being collected through the Virginia      E&R surcharges. |
| · | Carrying      Costs Income decreased $23 million due to completion of reliability      deferrals in Virginia in December 2008 and a decrease of environmental      deferrals in Virginia in 2009.                                                                                                                                                |
| · | Interest      Expense increased $15 million primarily due to an increase in long-term      borrowings.                                                                                                                                                                                                                                           |
| · | Other      Income decreased $7 million primarily due to higher interest income that      was recorded in 2008 related to a tax refund and other tax      adjustments.                                                                                                                                                                            |
| · | Income      Tax Expense increased $15 million primarily due to an increase in pretax      book income and changes in certain book/tax differences accounted for on a      flow-through basis.                                                                                                                                                    |

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

|                                                  |   | 2009                |          | 2008   |
|-------------------------------------------------------|--------|---------------------|---------------|--------|
|                                                  |   | (in      thousands) |
| Cash      and Cash Equivalents at Beginning of Period |   | $                   | 1,996    |   | $ | 2,195  |
| Cash      Flows from (Used for):                      |   |                |          |   |   |   |
| Operating      Activities                             |   |                | (53,712)      |   |   | 208,445  |
| Investing      Activities                             |   |                | (406,707)     |   |   | (472,029) |
| Financing      Activities                             |   |                | 460,237  |   |   | 263,376  |
| Net      Decrease in Cash and Cash Equivalents        |   |                | (182)         |   |   | (208) |
| Cash      and Cash Equivalents at End of Period       |   | $                   | 1,814    |   | $ | 1,987  |

|                        |   | PrincipalAmount     |          | Interest |   | Due    |
|-----------------------------|--------|---------------------|---------------|----------|--------|--------|
| Type      of Debt           |   |                | Rate          |     | Date   |
|                        |   | (in      thousands) |          | (%)      |   |   |
| Senior      Unsecured Notes |   | $                   | 350,000  |     | 7.95   |   | 2020 |

|                        |   | PrincipalAmount      Paid |          | Interest |   | Due    |
|-----------------------------|--------|---------------------------|---------------|----------|--------|--------|
| Type      of Debt           |   |                      | Rate          |     | Date   |
|                        |   | (in      thousands)       |          | (%)      |   |   |
| Senior      Unsecured Notes |   | $                         | 150,000  |     | 6.60   |   | 2009 |
| Land      Note              |   |                      | 12       |     | 13.718 |   | 2026 |

----

|                                                        |   | MTM      Risk |    |   | Cash      Flow |   |   | DETM       |   |   |       |   |   |   |    |
|-------------------------------------------------------------|--------|---------------|---------|--------|----------------|--------|--------|------------|--------|--------|------------|--------|--------|--------|---------|
|                                                        |   | Management    |    |   | Hedge          |   |   | Assignment |   |   | Collateral |   |   |   |    |
|                                                        |   | Contracts     |    |   | Contracts      |   |   | (a)        |   |   | Deposits   |   |   | Total  |    |
| Current      Assets                                         |   | $             | 85,559  |   |           | $      | 2,818  |       |   | $      | -          |   |   | $      | (4,942  | ) |   | $ | 83,435 |   |
| Noncurrent      Assets                                      |   |          | 61,936  |   |           |   | 553    |       |   |   | -          |   |   |   | (4,737  | ) |   |   | 57,752 |   |
| Total      MTM Derivative Contract Assets                   |   |          | 147,495 |   |           |   | 3,371  |       |   |   | -          |   |   |   | (9,679  | ) |   |   | 141,187 |   |
|                                                        |   |          |    |   |           |   |   |       |   |   |       |   |   |   |    |   |   |   |   |   |
| Current      Liabilities                                    |   |          | 42,005  |   |           |   | 2,397  |       |   |   | 2,767      |   |   |   | (16,167 | ) |   |   | 31,002 |   |
| Noncurrent      Liabilities                                 |   |          | 38,585  |   |           |   | 996    |       |   |   | 697        |   |   |   | (16,624 | ) |   |   | 23,654 |   |
| Total      MTM Derivative Contract Liabilities              |   |          | 80,590  |   |           |   | 3,393  |       |   |   | 3,464      |   |   |   | (32,791 | ) |   |   | 54,656 |   |
|                                                        |   |          |    |   |           |   |   |       |   |   |       |   |   |   |    |   |   |   |   |   |
| Total      MTM Derivative Contract Net Assets (Liabilities) |   | $             | 66,905  |   |           | $      | (22    | )          |   | $      | (3,464     | )      |   | $      | 23,112  |   |   | $ | 86,531 |   |

| (a) | See      “Natural Gas Contracts with DETM” section of Note 15 of the 2008 Annual      Report. |
|-----|-----------------------------------------------------------------------------------------------------------|

| Total      MTM Risk Management Contract Net Assets at December 31,    2008                                            |   | $      | 56,936  |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|
| (Gain)      Loss from Contracts Realized/Settled During the Period and Entered in a      Prior Period                 |   |   | (24,390 | )      |
| 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 |   |   | (185    | )      |
| Change      in Fair Value Due to Valuation Methodology Changes on Forward      Contracts                              |   |   | -       |   |
| Changes      in Fair Value Due to Market Fluctuations During the Period    (b)                                        |   |   | (530    | )      |
| Changes      in Fair Value Allocated to Regulated Jurisdictions (c)                                                   |   |   | 35,074  |   |
| Total      MTM Risk Management Contract Net Assets                                                                    |   |   | 66,905  |   |
| Cash      Flow Hedge Contracts                                                                                        |   |   | (22     | )      |
| DETM      Assignment (d)                                                                                              |   |   | (3,464  | )      |
| Collateral      Deposits                                                                                              |   |   | 23,112  |   |
| Total      MTM Derivative Contract Net Assets at September 30, 2009                                                   |   | $      | 86,531  |   |

| (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) | Market      fluctuations are attributable to various factors such as supply/demand,      weather, etc.                                                                                                                                                                                                                                                                                                              |
| (c) | “Changes      in Fair Value Allocated to Regulated Jurisdictions” relates to the net      gains (losses) of those contracts that are not reflected on the Condensed      Consolidated Statements of Income.  These net gains (losses) are      recorded as regulatory liabilities/assets.                                                                                                     |
| (d) | See      “Natural Gas Contracts with DETM” section of Note 15 of the 2008 Annual      Report.                                                                                                                                                                                                                                                                                                           |

|                                                    |   | Remainder |   |   |   |   |   |   |   |   |   |   |   |   |   |   | After  |   |   |   |   |
|---------------------------------------------------------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                    |   | 2009      |   |   | 2010   |   |   | 2011   |   |   | 2012   |   |   | 2013   |   |   | 2013   |   |   | Total  |   |
| Level      1 (a)                                        |   | $         | (444   | )      |   | $      | (48    | )      |   | $      | 1      |   |   | $      | -      |   |   | $      | -      |   |   | $ | - |   |   | $ | (491 | ) |
| Level      2 (b)                                        |   |      | 8,411  |   |   |   | 14,350 |   |   |   | 6,979  |   |   |   | 983    |   |   |   | 2,758  |   |   |   | 220 |   |   |   | 33,701 |   |
| Level      3 (c)                                        |   |      | 6,659  |   |   |   | 13,812 |   |   |   | 2,118  |   |   |   | 1,085  |   |   |   | (26    | )      |   |   | - |   |   |   | 23,648 |   |
| Total                                                   |   |      | 14,626 |   |   |   | 28,114 |   |   |   | 9,098  |   |   |   | 2,068  |   |   |   | 2,732  |   |   |   | 220 |   |   |   | 56,858 |   |
| Dedesignated      Risk Management Contracts (d)         |   |      | 1,444  |   |   |   | 4,951  |   |   |   | 1,928  |   |   |   | 1,724  |   |   |   | -      |   |   |   | - |   |   |   | 10,047 |   |
| Total      MTM Risk Management Contract Net Assets |   | $         | 16,070 |   |   | $      | 33,065 |   |   | $      | 11,026 |   |   | $      | 3,792  |   |   | $      | 2,732  |   |   | $ | 220 |   |   | $ | 66,905 |   |

| (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.                                                                                                                                                                                                                                                                                                   |

| Nine      Months Ended  |   |   |   |    | Twelve      Months Ended |
|-------------------------|--------|--------|--------|---------|--------------------------|
| September      30, 2009 |   |   |   |    | December      31, 2008   |
| (in      thousands)     |   |   |   |    | (in      thousands)      |
| End                     |   | High   |   | Average |                     | Low |   |   |   |   | End |   | High |   | Average |   | Low |
| $258                    |   | $699   |   | $353    |                     | $151 |   |   |   |   | $176 |   | $1,096 |   | $396 |   | $161 |

----

|                                                                            |   | Three      Months Ended |    |   | Nine      Months Ended |   |
|---------------------------------------------------------------------------------|--------|-------------------------|---------|--------|------------------------|--------|
|                                                                            |   | 2009                    |    |   | 2008                   |   |   | 2009 |   |   | 2008 |   |
| REVENUES                                                                        |   |                    |    |   |                   |   |   |   |   |   |   |   |
| Electric      Generation, Transmission and Distribution                         |   | $                       | 629,566 |   |                   | $      | 719,295 |   |   | $ | 1,929,552 |   |   | $ | 1,926,841 |   |
| Sales      to AEP Affiliates                                                    |   |                    | 63,645  |   |                   |   | 74,632 |   |   |   | 181,914 |   |   |   | 262,230 |   |
| Other      Revenues                                                             |   |                    | 2,462   |   |                   |   | 4,906 |   |   |   | 6,348 |   |   |   | 12,186 |   |
| TOTAL      REVENUES                                                             |   |                    | 695,673 |   |                   |   | 798,833 |   |   |   | 2,117,814 |   |   |   | 2,201,257 |   |
|                                                                            |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES                                                                        |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel      and Other Consumables Used for Electric Generation                    |   |                    | 140,321 |   |                   |   | 220,955 |   |   |   | 402,893 |   |   |   | 554,022 |   |
| Purchased      Electricity for Resale                                           |   |                    | 54,087  |   |                   |   | 71,075 |   |   |   | 189,534 |   |   |   | 167,205 |   |
| Purchased      Electricity from AEP Affiliates                                  |   |                    | 202,043 |   |                   |   | 219,595 |   |   |   | 570,231 |   |   |   | 595,433 |   |
| Other      Operation                                                            |   |                    | 68,402  |   |                   |   | 66,316 |   |   |   | 197,441 |   |   |   | 210,262 |   |
| Maintenance                                                                     |   |                    | 53,164  |   |                   |   | 51,292 |   |   |   | 158,552 |   |   |   | 161,371 |   |
| Depreciation      and Amortization                                              |   |                    | 69,701  |   |                   |   | 62,364 |   |   |   | 203,844 |   |   |   | 186,528 |   |
| Taxes      Other Than Income Taxes                                              |   |                    | 24,257  |   |                   |   | 24,319 |   |   |   | 72,156 |   |   |   | 72,414 |   |
| TOTAL      EXPENSES                                                             |   |                    | 611,975 |   |                   |   | 715,916 |   |   |   | 1,794,651 |   |   |   | 1,947,235 |   |
|                                                                            |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING      INCOME                                                           |   |                    | 83,698  |   |                   |   | 82,917 |   |   |   | 323,163 |   |   |   | 254,022 |   |
|                                                                            |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Income (Expense):                                                    |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Income                                                            |   |                    | 301     |   |                   |   | 1,945 |   |   |   | 1,078 |   |   |   | 7,541 |   |
| Carrying      Costs Income                                                      |   |                    | 6,467   |   |                   |   | 11,924 |   |   |   | 16,341 |   |   |   | 38,921 |   |
| Allowance      for Equity Funds Used During Construction                        |   |                    | 1,897   |   |                   |   | 2,130 |   |   |   | 5,734 |   |   |   | 6,278 |   |
| Interest      Expense                                                           |   |                    | (51,982 | )      |                   |   | (47,385 | ) |   |   | (153,144 | ) |   |   | (138,644 | ) |
|                                                                            |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME      BEFORE INCOME TAX EXPENSE                                           |   |                    | 40,381  |   |                   |   | 51,531 |   |   |   | 193,172 |   |   |   | 168,118 |   |
|                                                                            |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Income      Tax Expense                                                         |   |                    | 13,011  |   |                   |   | 12,516 |   |   |   | 62,225 |   |   |   | 47,508 |   |
|                                                                            |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME                                                                 |   |                    | 27,370  |   |                   |   | 39,015 |   |   |   | 130,947 |   |   |   | 120,610 |   |
|                                                                            |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred      Stock Dividend Requirements Including Capital Stock Expense |   |                    | 225     |   |                   |   | 238 |   |   |   | 675 |   |   |   | 714 |   |
|                                                                            |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS      ATTRIBUTABLE TO COMMON STOCK                                      |   | $                       | 27,145  |   |                   | $      | 38,777 |   |   | $ | 130,272 |   |   | $ | 119,896 |   |

----

|                                                                              |   | Common      Stock |    |   | Paid-in      Capital |   |      | Retained      Earnings |   |   | Accumulated      Other Comprehensive Income (Loss) |   |   | Total  |    |
|-----------------------------------------------------------------------------------|--------|-------------------|---------|--------|----------------------|--------|-----------|------------------------|--------|--------|----------------------------------------------------|--------|--------|--------|---------|
| TOTAL COMMON SHAREHOLDER’S      EQUITY –      DECEMBER 31,      2007  |   | $                 | 260,458 |   |                 | $      | 1,025,149 |                   |   | $      | 831,612                                            |   |   | $      | (35,187 | ) |   | $ | 2,082,032 |   |
|                                                                              |   |              |    |   |                 |   |      |                   |   |   |                                               |   |   |   |    |   |   |   |   |   |
| EITF      06-10 Adoption, Net of Tax of $1,175                                    |   |              |    |   |                 |   |      |                   |   |   | (2,181                                             | )      |   |   |    |   |   |   | (2,181 | ) |
| SFAS      157 Adoption, Net of Tax of $154                                        |   |              |    |   |                 |   |      |                   |   |   | (286                                               | )      |   |   |    |   |   |   | (286 | ) |
| Capital      Contribution from Parent                                             |   |              |    |   |                 |   | 175,000   |                   |   |   |                                               |   |   |   |    |   |   |   | 175,000 |   |
| Preferred      Stock Dividends                                                    |   |              |    |   |                 |   |      |                   |   |   | (599                                               | )      |   |   |    |   |   |   | (599 | ) |
| Capital      Stock Expense                                                        |   |              |    |   |                 |   | 115       |                   |   |   | (115                                               | )      |   |   |    |   |   |   | - |   |
| SUBTOTAL      – COMMON SHAREHOLDER’S EQUITY                           |   |              |    |   |                 |   |      |                   |   |   |                                               |   |   |   |    |   |   |   | 2,253,966 |   |
|                                                                              |   |              |    |   |                 |   |      |                   |   |   |                                               |   |   |   |    |   |   |   |   |   |
| COMPREHENSIVE      INCOME                                                         |   |              |    |   |                 |   |      |                   |   |   |                                               |   |   |   |    |   |   |   |   |   |
| Other      Comprehensive Income (Loss), Net of Taxes:                        |   |              |    |   |                 |   |      |                   |   |   |                                               |   |   |   |    |   |   |   |   |   |
| Cash      Flow Hedges, Net of Tax of      $677                               |   |              |    |   |                 |   |      |                   |   |   |                                               |   |   |   | (1,258  | ) |   |   | (1,258 | ) |
| Amortization      of Pension and OPEB Deferred Costs, Net of Tax of $1,346        |   |              |    |   |                 |   |      |                   |   |   |                                               |   |   |   | 2,499   |   |   |   | 2,499 |   |
| NET      INCOME                                                                   |   |              |    |   |                 |   |      |                   |   |   | 120,610                                            |   |   |   |    |   |   |   | 120,610 |   |
| TOTAL      COMPREHENSIVE INCOME                                                   |   |              |    |   |                 |   |      |                   |   |   |                                               |   |   |   |    |   |   |   | 121,851 |   |
|                                                                              |   |              |    |   |                 |   |      |                   |   |   |                                               |   |   |   |    |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER’S      EQUITY –      SEPTEMBER 30,      2008 |   | $                 | 260,458 |   |                 | $      | 1,200,264 |                   |   | $      | 949,041                                            |   |   | $      | (33,946 | ) |   | $ | 2,375,817 |   |
|                                                                              |   |              |    |   |                 |   |      |                   |   |   |                                               |   |   |   |    |   |   |   |   |   |
| 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 |   |

----

|                                                 |   | 2009   |      |   | 2008   |   |
|------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| CURRENT      ASSETS                                  |   |   |      |   |   |   |
| Cash      and Cash Equivalents                       |   | $      | 1,814     |   |   | $      | 1,996 |   |
| Accounts      Receivable:                            |   |   |      |   |   |   |   |   |
| Customers                                            |   |   | 126,428   |   |   |   | 175,709 |   |
| Affiliated      Companies                            |   |   | 121,925   |   |   |   | 110,982 |   |
| Accrued      Unbilled Revenues                       |   |   | 47,736    |   |   |   | 55,733 |   |
| Miscellaneous                                        |   |   | 768       |   |   |   | 498 |   |
| Allowance      for Uncollectible Accounts            |   |   | (5,426    | )      |   |   | (6,176 | ) |
| Total      Accounts Receivable                       |   |   | 291,431   |   |   |   | 336,746 |   |
| Fuel                                                 |   |   | 282,835   |   |   |   | 131,239 |   |
| Materials      and Supplies                          |   |   | 84,568    |   |   |   | 76,260 |   |
| Risk      Management Assets                          |   |   | 83,435    |   |   |   | 65,140 |   |
| Accrued      Tax Benefits                            |   |   | 88,542    |   |   |   | 15,599 |   |
| Regulatory      Asset for Under-Recovered Fuel Costs |   |   | 92,629    |   |   |   | 165,906 |   |
| Prepayments      and Other Current Assets            |   |   | 46,879    |   |   |   | 45,657 |   |
| TOTAL      CURRENT ASSETS                            |   |   | 972,133   |   |   |   | 838,543 |   |
|                                                 |   |   |      |   |   |   |   |   |
| PROPERTY,      PLANT AND EQUIPMENT                   |   |   |      |   |   |   |   |   |
| Electric:                                            |   |   |      |   |   |   |   |   |
| Production                                           |   |   | 4,214,909 |   |   |   | 3,708,850 |   |
| Transmission                                         |   |   | 1,797,755 |   |   |   | 1,754,192 |   |
| Distribution                                         |   |   | 2,606,423 |   |   |   | 2,499,974 |   |
| Other      Property, Plant and Equipment             |   |   | 358,696   |   |   |   | 358,873 |   |
| Construction      Work in Progress                   |   |   | 661,531   |   |   |   | 1,106,032 |   |
| Total      Property, Plant and Equipment             |   |   | 9,639,314 |   |   |   | 9,427,921 |   |
| Accumulated      Depreciation and Amortization       |   |   | 2,752,839 |   |   |   | 2,675,784 |   |
| TOTAL PROPERTY, PLANT AND      EQUIPMENT – NET |   |   | 6,886,475 |   |   |   | 6,752,137 |   |
|                                                 |   |   |      |   |   |   |   |   |
| OTHER      NONCURRENT ASSETS                         |   |   |      |   |   |   |   |   |
| Regulatory      Assets                               |   |   | 1,329,527 |   |   |   | 999,061 |   |
| Long-term      Risk Management Assets                |   |   | 57,752    |   |   |   | 51,095 |   |
| Deferred      Charges and Other Noncurrent Assets    |   |   | 96,180    |   |   |   | 121,828 |   |
| TOTAL      OTHER NONCURRENT ASSETS                   |   |   | 1,483,459 |   |   |   | 1,171,984 |   |
|                                                 |   |   |      |   |   |   |   |   |
| TOTAL      ASSETS                                    |   | $      | 9,342,067 |   |   | $      | 8,762,664 |   |

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

----

|                                                                |   | 2009                |      |   | 2008   |   |
|---------------------------------------------------------------------|--------|---------------------|-----------|--------|--------|--------|
| CURRENT      LIABILITIES                                            |   | (in      thousands) |      |
| Advances      from Affiliates                                       |   | $                   | 231,788   |   |   | $      | 194,888 |   |
| Accounts      Payable:                                              |   |                |      |   |   |   |   |   |
| General                                                             |   |                | 195,277   |   |   |   | 358,081 |   |
| Affiliated      Companies                                           |   |                | 111,723   |   |   |   | 206,813 |   |
| Long-term      Debt Due Within One Year – Nonaffiliated       |   |                | 200,018   |   |   |   | 150,017 |   |
| Long-term      Debt Due Within One Year – Affiliated          |   |                | 100,000   |   |   |   | - |   |
| Risk      Management Liabilities                                    |   |                | 31,002    |   |   |   | 30,620 |   |
| Customer      Deposits                                              |   |                | 57,804    |   |   |   | 54,086 |   |
| Deferred      Income Taxes                                          |   |                | 74,192    |   |   |   | - |   |
| Accrued      Taxes                                                  |   |                | 42,531    |   |   |   | 65,550 |   |
| Accrued      Interest                                               |   |                | 69,748    |   |   |   | 47,804 |   |
| Other      Current Liabilities                                      |   |                | 70,346    |   |   |   | 113,655 |   |
| TOTAL      CURRENT LIABILITIES                                      |   |                | 1,184,429 |   |   |   | 1,221,514 |   |
|                                                                |   |                |      |   |   |   |   |   |
| NONCURRENT      LIABILITIES                                         |   |                |      |   |   |   |   |   |
| Long-term      Debt – Nonaffiliated                           |   |                | 3,072,342 |   |   |   | 2,924,495 |   |
| Long-term      Debt – Affiliated                              |   |                | -         |   |   |   | 100,000 |   |
| Long-term      Risk Management Liabilities                          |   |                | 23,654    |   |   |   | 26,388 |   |
| Deferred      Income Taxes                                          |   |                | 1,316,661 |   |   |   | 1,131,164 |   |
| Regulatory      Liabilities and Deferred Investment Tax Credits     |   |                | 547,099   |   |   |   | 521,508 |   |
| Employee      Benefits and Pension Obligations                      |   |                | 323,237   |   |   |   | 331,000 |   |
| Deferred      Credits and Other Noncurrent Liabilities              |   |                | 117,287   |   |   |   | 112,252 |   |
| TOTAL      NONCURRENT LIABILITIES                                   |   |                | 5,400,280 |   |   |   | 5,146,807 |   |
|                                                                |   |                |      |   |   |   |   |   |
| TOTAL      LIABILITIES                                              |   |                | 6,584,709 |   |   |   | 6,368,321 |   |
|                                                                |   |                |      |   |   |   |   |   |
| Cumulative      Preferred Stock Not Subject to Mandatory Redemption |   |                | 17,752    |   |   |   | 17,752 |   |
|                                                                |   |                |      |   |   |   |   |   |
| 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                                                |   |                | 1,475,368 |   |   |   | 1,225,292 |   |
| Retained      Earnings                                              |   |                | 1,061,338 |   |   |   | 951,066 |   |
| Accumulated      Other Comprehensive Income (Loss)                  |   |                | (57,558   | )      |   |   | (60,225 | ) |
| TOTAL      COMMON SHAREHOLDER’S EQUITY                        |   |                | 2,739,606 |   |   |   | 2,376,591 |   |
|                                                                |   |                |      |   |   |   |   |   |
| TOTAL      LIABILITIES AND SHAREHOLDERS’ EQUITY               |   | $                   | 9,342,067 |   |   | $      | 8,762,664 |   |

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

----

|                                                                                                  |   | 2009   |     |   | 2008   |   |
|-------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
| OPERATING      ACTIVITIES                                                                             |   |   |     |   |   |   |
| Net      Income                                                                                       |   | $      | 130,947  |   |   | $      | 120,610 |   |
| Adjustments      to Reconcile Net Income to Net Cash Flows from (Used for) Operating      Activities: |   |   |     |   |   |   |   |   |
| Depreciation      and Amortization                                                                    |   |   | 203,844  |   |   |   | 186,528 |   |
| Deferred      Income Taxes                                                                            |   |   | 229,246  |   |   |   | 111,297 |   |
| Carrying      Costs Income                                                                            |   |   | (16,341  | )      |   |   | (38,921 | ) |
| Allowance      for Equity Funds Used During Construction                                              |   |   | (5,734   | )      |   |   | (6,278 | ) |
| Mark-to-Market      of Risk Management Contracts                                                      |   |   | (31,415  | )      |   |   | 7,450 |   |
| Fuel      Over/Under-Recovery, Net                                                                    |   |   | (181,241 | )      |   |   | (113,748 | ) |
| Change      in Other Noncurrent Assets                                                                |   |   | (38,470  | )      |   |   | (24,670 | ) |
| Change      in Other Noncurrent Liabilities                                                           |   |   | 22,595   |   |   |   | (12,565 | ) |
| Changes      in Certain Components of Working Capital:                                                |   |   |     |   |   |   |   |   |
| Accounts      Receivable, Net                                                                         |   |   | 51,667   |   |   |   | (12,313 | ) |
| Fuel,      Materials and Supplies                                                                     |   |   | (159,904 | )      |   |   | 3,483 |   |
| Accounts      Payable                                                                                 |   |   | (131,914 | )      |   |   | 41,869 |   |
| Accrued      Taxes, Net                                                                               |   |   | (95,962  | )      |   |   | (51,208 | ) |
| Other      Current Assets                                                                             |   |   | (14,172  | )      |   |   | (17,202 | ) |
| Other      Current Liabilities                                                                        |   |   | (16,858  | )      |   |   | 14,113 |   |
| Net      Cash Flows from (Used for) Operating Activities                                              |   |   | (53,712  | )      |   |   | 208,445 |   |
|                                                                                                  |   |   |     |   |   |   |   |   |
| INVESTING      ACTIVITIES                                                                             |   |   |     |   |   |   |   |   |
| Construction      Expenditures                                                                        |   |   | (420,075 | )      |   |   | (487,797 | ) |
| Change      in Other Cash Deposits                                                                    |   |   | 235      |   |   |   | (18 | ) |
| Acquisitions      of Assets                                                                           |   |   | (1,024   | )      |   |   | - |   |
| Proceeds      from Sales of Assets                                                                    |   |   | 14,157   |   |   |   | 15,786 |   |
| Net      Cash Flows Used for Investing Activities                                                     |   |   | (406,707 | )      |   |   | (472,029 | ) |
|                                                                                                  |   |   |     |   |   |   |   |   |
| FINANCING      ACTIVITIES                                                                             |   |   |     |   |   |   |   |   |
| Capital      Contribution from Parent                                                                 |   |   | 250,000  |   |   |   | 175,000 |   |
| Issuance      of Long-term Debt – Nonaffiliated                                                 |   |   | 345,658  |   |   |   | 686,512 |   |
| Change      in Advances from Affiliates, Net                                                          |   |   | 36,900   |   |   |   | (181,699 | ) |
| Retirement      of Long-term Debt – Nonaffiliated                                               |   |   | (150,012 | )      |   |   | (412,786 | ) |
| Principal      Payments for Capital Lease Obligations                                                 |   |   | (2,582   | )      |   |   | (3,052 | ) |
| Dividends      Paid on Common Stock                                                                   |   |   | (20,000  | )      |   |   | - |   |
| Dividends      Paid on Cumulative Preferred Stock                                                     |   |   | (599     | )      |   |   | (599 | ) |
| Other      Financing Activities                                                                       |   |   | 872      |   |   |   | - |   |
| Net      Cash Flows from Financing Activities                                                         |   |   | 460,237  |   |   |   | 263,376 |   |
|                                                                                                  |   |   |     |   |   |   |   |   |
| Net      Decrease in Cash and Cash Equivalents                                                        |   |   | (182     | )      |   |   | (208 | ) |
| Cash      and Cash Equivalents at Beginning of Period                                                 |   |   | 1,996    |   |   |   | 2,195 |   |
| Cash      and Cash Equivalents at End of Period                                                       |   | $      | 1,814    |   |   | $      | 1,987 |   |
|                                                                                                  |   |   |     |   |   |   |   |   |
| SUPPLEMENTARY      INFORMATION                                                                        |   |   |     |   |   |   |   |   |
| Cash      Paid for Interest, Net of Capitalized Amounts                                               |   | $      | 148,745  |   |   | $      | 110,349 |   |
| Net      Cash Received for Income Taxes                                                               |   |   | (14,679  | )      |   |   | (26,330 | ) |
| Noncash      Acquisitions Under Capital Leases                                                        |   |   | 884      |   |   |   | 1,246 |   |
| Construction      Expenditures Included in Accounts Payable at September 30,                          |   |   | 56,989   |   |   |   | 112,376 |   |

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

----

|                                                      | Footnote      Reference |
|-----------------------------------------------------------|-------------------------|
|                                                      |                    |
| 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            |

----

----

COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES

| Third      Quarter of 2008           |   |   |   |   | $      | 82     |   |
|--------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                 |   |   |   |   |   |   |   |
| Changes      in Gross Margin:        |   |   |   |   |   |   |   |
| Retail      Margins                  |   |   | 33     |   |   |   |   |   |
| Off-system      Sales                |   |   | (41    | )      |   |   |   |   |
| Total      Change in Gross Margin    |   |   |   |   |   |   | (8     | ) |
|                                 |   |   |   |   |   |   |   |   |
| Total      Expenses and Other:       |   |   |   |   |   |   |   |   |
| Other      Operation and Maintenance |   |   | 18     |   |   |   |   |   |
| Depreciation      and Amortization   |   |   | 14     |   |   |   |   |   |
| Other      Income                    |   |   | (1     | )      |   |   |   |   |
| Interest      Expense                |   |   | (1     | )      |   |   |   |   |
| Total      Expenses and Other        |   |   |   |   |   |   | 30     |   |
|                                 |   |   |   |   |   |   |   |   |
| Income      Tax Expense              |   |   |   |   |   |   | (6     | ) |
|                                 |   |   |   |   |   |   |   |   |
| Third      Quarter of 2009           |   |   |   |   |   | $      | 98     |   |

| · | Retail      Margins increased $33 million primarily due to:                                                                                                                                                                           |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                | A      $37 million increase related to the implementation of higher rates set by      the Ohio ESP. |
|   | ·                                                                                                                                                                                                                                | A      $35 million increase in fuel margins due to the deferral of fuel costs in      2009.  The PUCO’s March 2009 approval of CSPCo’s ESP allows for      the recovery of fuel and related costs incurred since January 1,      2009.  See “Ohio Electric Security Plan Filings” section of Note      3. |
|   | These      increases were partially offset by:                                                                                                                                                                                        |
|   | ·                                                                                                                                                                                                                                | A      $16 million decrease in residential and commercial revenue primarily due      to a 30% decrease in cooling degree days. |
|   | ·                                                                                                                                                                                                                                | A      $13 million decrease in industrial sales primarily due to reduced      operating levels by CSPCo’s largest industrial customer,      Ormet. |
|   | ·                                                                                                                                                                                                                                | A      $13 million decrease related to the cessation of Restructuring Transition      Charge (RTC) revenues with the implementation of rates under the Ohio      ESP. |
| · | Margins      from Off-system Sales decreased $41 million primarily due to lower      physical sales volumes and lower margins as a result of lower market      prices, partially offset by higher trading and marketing      margins. |

| · | Other      Operation and Maintenance expenses decreased $18 million primarily due      to:                                                                     |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                         | An      $8 million decrease in expenses related to CSPCo’s Unit Power Agreement      for AEGCo’s Lawrenceburg Plant.  In 2008, these expenses were      recorded in Other Operation and Maintenance.  With the March      2009 ESP order, approval was granted to record these costs in purchased      power and recover through the FAC. |
|   | ·                                                                                                                                                         | A      $6 million decrease in recoverable PJM expenses. |
|   | ·                                                                                                                                                         | A      $2 million decrease in employee benefit expenses. |
| · | Depreciation      and Amortization decreased $14 million primarily due to the completed      amortization of transition regulatory assets in December    2008. |
| · | Income      Tax Expense increased $6 million primarily due to an increase in pretax      book income.                                                          |

| Nine      Months Ended September 30, 2008 |   |   |   |   | $      | 214    |   |
|-------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                      |   |   |   |   |   |   |   |
| Changes      in Gross Margin:             |   |   |   |   |   |   |   |
| Retail      Margins                       |   |   | 63     |   |   |   |   |   |
| Off-system      Sales                     |   |   | (92    | )      |   |   |   |   |
| Transmission      Revenues                |   |   | (1     | )      |   |   |   |   |
| Other                                     |   |   | (1     | )      |   |   |   |   |
| Total      Change in Gross Margin         |   |   |   |   |   |   | (31    | ) |
|                                      |   |   |   |   |   |   |   |   |
| Total      Expenses and Other:            |   |   |   |   |   |   |   |   |
| Other      Operation and Maintenance      |   |   | 29     |   |   |   |   |   |
| Depreciation      and Amortization        |   |   | 41     |   |   |   |   |   |
| Taxes      Other Than Income Taxes        |   |   | (2     | )      |   |   |   |   |
| Other      Income                         |   |   | (4     | )      |   |   |   |   |
| Interest      Expense                     |   |   | (7     | )      |   |   |   |   |
| Total      Expenses and Other             |   |   |   |   |   |   | 57     |   |
|                                      |   |   |   |   |   |   |   |   |
| Income      Tax Expense                   |   |   |   |   |   |   | (9     | ) |
|                                      |   |   |   |   |   |   |   |   |
| Nine      Months Ended September 30, 2009 |   |   |   |   |   | $      | 231    |   |

| · | Retail      Margins increased $63 million primarily due to:                                                                                                                                                                           |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                | An      $80 million increase related to the implementation of higher rates set by      the Ohio ESP. |
|   | ·                                                                                                                                                                                                                                | A      $57 million increase in fuel margins due to the deferral of fuel costs in      2009.  The PUCO’s March 2009 approval of CSPCo’s ESP allows for      the recovery of fuel and related costs incurred since January 1,      2009.  See “Ohio Electric Security Plan Filings” section of Note      3. |
|   | These      increases were partially offset by:                                                                                                                                                                                        |
|   | ·                                                                                                                                                                                                                                | A      $39 million decrease as a result of Restructuring Transition Charge (RTC)      revenues.  The PUCO allowed CSPCo to continue collecting the RTC      pending the implementation of the new ESP tariffs which did not occur      until March 30, 2009.  During the first quarter of 2009, these      revenues were offset in fuel under-recovery.  In 2008, RTC      revenues were recorded but were offset through the amortization of the      transition regulatory assets as discussed below.  With the      implementation of the Ohio ESP, RTC revenues ended.  See “Ohio      Electric Security Plan Filings” section of Note 3. |
|   | ·                                                                                                                                                                                                                                | A      $25 million decrease in industrial sales primarily due to reduced      operating levels by CSPCo’s largest industrial customer,      Ormet. |
|   | ·                                                                                                                                                                                                                                | A      $10 million decrease in commercial revenue primarily due to reduced usage      and an 18% decrease in cooling degree days. |
| · | Margins      from Off-system Sales decreased $92 million primarily due to lower      physical sales volumes and lower margins as a result of lower market      prices, partially offset by higher trading and marketing      margins. |

| · | Other      Operation and Maintenance expenses decreased $29 million primarily due      to:                                                                                                                                                          |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                              | A      $25 million decrease in expenses related to CSPCo’s Unit Power Agreement      for AEGCo’s Lawrenceburg Plant.  In 2008, these expenses were      recorded in Other Operation and Maintenance.  With the March      2009 ESP order, approval was granted to record these costs in purchased      power and recover through the FAC. |
|   | ·                                                                                                                                                                                                                                              | A      $6 million decrease in employee benefit expenses. |
|   | ·                                                                                                                                                                                                                                              | A      $4 million decrease in recoverable PJM expenses. |
|   | ·                                                                                                                                                                                                                                              | A      $3 million decrease in net allocated transmission expenses related to the      AEP Transmission Equalization Agreement. |
|   | ·                                                                                                                                                                                                                                              | A      $2 million decrease in boiler plant maintenance expenses primarily related      to work performed at the Conesville Plant in 2008. |
|   | ·                                                                                                                                                                                                                                              | A      $2 million decrease in maintenance expenses for overhead transmission      lines. |
|   | These      decreases were partially offset by:                                                                                                                                                                                                      |
|   | ·                                                                                                                                                                                                                                              | A      $13 million increase in overhead distribution line expenses primarily due      to ice and wind storms in the first quarter of 2009 and increased      vegetation management activities. |
|   | ·                                                                                                                                                                                                                                              | A      $6 million increase related to an obligation to contribute to the      “Partnership with Ohio” fund for low income, at-risk customers ordered by      the PUCO’s March 2009 approval of CSPCo’s ESP.  See “Ohio      Electric Security Plan Filings” section of Note 3. |
| · | Depreciation      and Amortization decreased $41 million primarily due to the completed      amortization of transition regulatory assets in December    2008.                                                                                      |
| · | Taxes      Other Than Income Taxes increased $2 million primarily due to an increase      in property taxes partially offset by a decrease in state excise      taxes.                                                                              |
| · | Other      Income decreased $4 million primarily due to interest income recorded in      2008 on expected federal tax refund related to Simple Service Cost      Method.                                                                            |
| · | Interest      Expense increased $7 million primarily due to an increase in long-term      borrowings and adjustments recorded in 2008 related to tax reserves, which      were partially offset by an increase in the debt component of      AFUDC. |
| · | Income      Tax Expense increased $9 million primarily due to an increase in pretax      book income.                                                                                                                                               |

----

----

|                                                         |   | Three      Months Ended |    |   | Nine      Months Ended |   |
|--------------------------------------------------------------|--------|-------------------------|---------|--------|------------------------|--------|
|                                                         |   | 2009                    |    |   | 2008                   |   |   | 2009 |   |   | 2008 |   |
| REVENUES                                                     |   |                    |    |   |                   |   |   |   |   |   |   |   |
| Electric      Generation, Transmission and Distribution      |   | $                       | 533,306 |   |                   | $      | 633,325 |   |   | $ | 1,482,421 |   |   | $ | 1,638,705 |   |
| Sales      to AEP Affiliates                                 |   |                    | 22,143  |   |                   |   | 29,032 |   |   |   | 51,514 |   |   |   | 111,553 |   |
| Other      Revenues                                          |   |                    | 694     |   |                   |   | 1,426 |   |   |   | 1,820 |   |   |   | 4,121 |   |
| TOTAL      REVENUES                                          |   |                    | 556,143 |   |                   |   | 663,783 |   |   |   | 1,535,755 |   |   |   | 1,754,379 |   |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES                                                     |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel      and Other Consumables Used for Electric Generation |   |                    | 88,523  |   |                   |   | 112,566 |   |   |   | 222,943 |   |   |   | 283,946 |   |
| Purchased      Electricity for Resale                        |   |                    | 21,750  |   |                   |   | 63,441 |   |   |   | 74,010 |   |   |   | 150,637 |   |
| Purchased      Electricity from AEP Affiliates               |   |                    | 105,120 |   |                   |   | 139,017 |   |   |   | 294,280 |   |   |   | 343,699 |   |
| Other      Operation                                         |   |                    | 68,971  |   |                   |   | 87,358 |   |   |   | 210,614 |   |   |   | 245,379 |   |
| Maintenance                                                  |   |                    | 23,926  |   |                   |   | 23,039 |   |   |   | 86,558 |   |   |   | 80,705 |   |
| Depreciation      and Amortization                           |   |                    | 36,292  |   |                   |   | 50,373 |   |   |   | 105,863 |   |   |   | 146,668 |   |
| Taxes      Other Than Income Taxes                           |   |                    | 44,149  |   |                   |   | 44,533 |   |   |   | 132,576 |   |   |   | 130,078 |   |
| TOTAL      EXPENSES                                          |   |                    | 388,731 |   |                   |   | 520,327 |   |   |   | 1,126,844 |   |   |   | 1,381,112 |   |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING      INCOME                                        |   |                    | 167,412 |   |                   |   | 143,456 |   |   |   | 408,911 |   |   |   | 373,267 |   |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Income (Expense):                                 |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Income                                         |   |                    | 144     |   |                   |   | 1,515 |   |   |   | 618 |   |   |   | 5,457 |   |
| Carrying      Costs Income                                   |   |                    | 1,984   |   |                   |   | 1,566 |   |   |   | 5,394 |   |   |   | 4,870 |   |
| Allowance      for Equity Funds Used During Construction     |   |                    | 914     |   |                   |   | 745 |   |   |   | 2,799 |   |   |   | 2,165 |   |
| Interest      Expense                                        |   |                    | (22,487 | )      |                   |   | (21,127 | ) |   |   | (64,356 | ) |   |   | (57,612 | ) |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME      BEFORE INCOME TAX EXPENSE                        |   |                    | 147,967 |   |                   |   | 126,155 |   |   |   | 353,366 |   |   |   | 328,147 |   |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Income      Tax Expense                                      |   |                    | 50,374  |   |                   |   | 44,493 |   |   |   | 122,737 |   |   |   | 113,939 |   |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME                                              |   |                    | 97,593  |   |                   |   | 81,662 |   |   |   | 230,629 |   |   |   | 214,208 |   |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Capital      Stock Expense                                   |   |                    | 39      |   |                   |   | 39 |   |   |   | 118 |   |   |   | 118 |   |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS      ATTRIBUTABLE TO COMMON STOCK                   |   | $                       | 97,554  |   |                   | $      | 81,623 |   |   | $ | 230,511 |   |   | $ | 214,090 |   |

| The      common stock of CSPCo is wholly-owned byAEP. |
|-------------------------------------------------------|

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

----

|                                                                         |   | Common      Stock |   |   | Paid-in      Capital |   |    | Retained      Earnings |   |   | AccumulatedOtherComprehensive      Income (Loss) |   |   | Total  |    |
|------------------------------------------------------------------------------|--------|-------------------|--------|--------|----------------------|--------|---------|------------------------|--------|--------|--------------------------------------------------|--------|--------|--------|---------|
| TOTAL COMMON SHAREHOLDER’S      EQUITY – DECEMBER      31, 2007  |   | $                 | 41,026 |   |                 | $      | 580,349 |                   |   | $      | 561,696                                          |   |   | $      | (18,794 | ) |   | $ | 1,164,277 |   |
|                                                                         |   |              |   |   |                 |   |    |                   |   |   |                                             |   |   |   |    |   |   |   |   |   |
| EITF      06-10 Adoption, Net of Tax of $589                                 |   |              |   |   |                 |   |    |                   |   |   | (1,095                                           | )      |   |   |    |   |   |   | (1,095 | ) |
| SFAS      157 Adoption, Net of Tax of $170                                   |   |              |   |   |                 |   |    |                   |   |   | (316                                             | )      |   |   |    |   |   |   | (316 | ) |
| Common      Stock Dividends                                                  |   |              |   |   |                 |   |    |                   |   |   | (87,500                                          | )      |   |   |    |   |   |   | (87,500 | ) |
| Capital      Stock Expense                                                   |   |              |   |   |                 |   | 118     |                   |   |   | (118                                             | )      |   |   |    |   |   |   | - |   |
| SUBTOTAL      – COMMON SHAREHOLDER’S EQUITY                      |   |              |   |   |                 |   |    |                   |   |   |                                             |   |   |   |    |   |   |   | 1,075,366 |   |
|                                                                         |   |              |   |   |                 |   |    |                   |   |   |                                             |   |   |   |    |   |   |   |   |   |
| COMPREHENSIVE      INCOME                                                    |   |              |   |   |                 |   |    |                   |   |   |                                             |   |   |   |    |   |   |   |   |   |
| Other      Comprehensive Income, Net of Taxes:                               |   |              |   |   |                 |   |    |                   |   |   |                                             |   |   |   |    |   |   |   |   |   |
| Cash      Flow Hedges, Net of Tax of $582                                    |   |              |   |   |                 |   |    |                   |   |   |                                             |   |   |   | 1,080   |   |   |   | 1,080 |   |
| Amortization      of Pension and OPEB Deferred Costs, Net of Tax of $456     |   |              |   |   |                 |   |    |                   |   |   |                                             |   |   |   | 846     |   |   |   | 846 |   |
| NET      INCOME                                                              |   |              |   |   |                 |   |    |                   |   |   | 214,208                                          |   |   |   |    |   |   |   | 214,208 |   |
| TOTAL      COMPREHENSIVE INCOME                                              |   |              |   |   |                 |   |    |                   |   |   |                                             |   |   |   |    |   |   |   | 216,134 |   |
|                                                                         |   |              |   |   |                 |   |    |                   |   |   |                                             |   |   |   |    |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER’S      EQUITY – SEPTEMBER      30, 2008 |   | $                 | 41,026 |   |                 | $      | 580,467 |                   |   | $      | 686,875                                          |   |   | $      | (16,868 | ) |   | $ | 1,291,500 |   |
|                                                                         |   |              |   |   |                 |   |    |                   |   |   |                                             |   |   |   |    |   |   |   |   |   |
| 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 |   |

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

----

|                                                 |   | 2009   |      |   | 2008   |   |
|------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| CURRENT      ASSETS                                  |   |   |      |   |   |   |
| Cash      and Cash Equivalents                       |   | $      | 1,204     |   |   | $      | 1,063 |   |
| Other      Cash Deposits                             |   |   | 20,077    |   |   |   | 32,300 |   |
| Accounts      Receivable:                            |   |   |      |   |   |   |   |   |
| Customers                                            |   |   | 22,153    |   |   |   | 56,008 |   |
| Affiliated      Companies                            |   |   | 20,176    |   |   |   | 44,235 |   |
| Accrued      Unbilled Revenues                       |   |   | 24,878    |   |   |   | 18,359 |   |
| Miscellaneous                                        |   |   | 2,141     |   |   |   | 11,546 |   |
| Allowance      for Uncollectible Accounts            |   |   | (3,565    | )      |   |   | (2,895 | ) |
| Total      Accounts Receivable                       |   |   | 65,783    |   |   |   | 127,253 |   |
| Fuel                                                 |   |   | 72,204    |   |   |   | 42,075 |   |
| Materials      and Supplies                          |   |   | 38,886    |   |   |   | 33,781 |   |
| Emission      Allowances                             |   |   | 13,794    |   |   |   | 20,211 |   |
| Risk      Management Assets                          |   |   | 43,916    |   |   |   | 35,984 |   |
| Accrued      Tax Benefits                            |   |   | 18,023    |   |   |   | 469 |   |
| Margin      Deposits                                 |   |   | 17,652    |   |   |   | 13,613 |   |
| Prepayments      and Other Current Assets            |   |   | 9,616     |   |   |   | 27,411 |   |
| TOTAL      CURRENT ASSETS                            |   |   | 301,155   |   |   |   | 334,160 |   |
|                                                 |   |   |      |   |   |   |   |   |
| PROPERTY,      PLANT AND EQUIPMENT                   |   |   |      |   |   |   |   |   |
| Electric:                                            |   |   |      |   |   |   |   |   |
| Production                                           |   |   | 2,372,111 |   |   |   | 2,326,056 |   |
| Transmission                                         |   |   | 610,824   |   |   |   | 574,018 |   |
| Distribution                                         |   |   | 1,699,698 |   |   |   | 1,625,000 |   |
| Other      Property, Plant and Equipment             |   |   | 201,890   |   |   |   | 211,088 |   |
| Construction      Work in Progress                   |   |   | 399,388   |   |   |   | 394,918 |   |
| Total      Property, Plant and Equipment             |   |   | 5,283,911 |   |   |   | 5,131,080 |   |
| Accumulated      Depreciation and Amortization       |   |   | 1,844,261 |   |   |   | 1,781,866 |   |
| TOTAL      PROPERTY, PLANT AND EQUIPMENT – NET |   |   | 3,439,650 |   |   |   | 3,349,214 |   |
|                                                 |   |   |      |   |   |   |   |   |
| OTHER      NONCURRENT ASSETS                         |   |   |      |   |   |   |   |   |
| Regulatory      Assets                               |   |   | 335,691   |   |   |   | 298,357 |   |
| Long-term      Risk Management Assets                |   |   | 30,569    |   |   |   | 28,461 |   |
| Deferred      Charges and Other Noncurrent Assets    |   |   | 72,798    |   |   |   | 125,814 |   |
| TOTAL      OTHER NONCURRENT ASSETS                   |   |   | 439,058   |   |   |   | 452,632 |   |
|                                                 |   |   |      |   |   |   |   |   |
| TOTAL      ASSETS                                    |   | $      | 4,179,863 |   |   | $      | 4,136,006 |   |

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

----

|                                                            |   | 2009                |      |   | 2008   |   |
|-----------------------------------------------------------------|--------|---------------------|-----------|--------|--------|--------|
| CURRENT      LIABILITIES                                        |   | (in      thousands) |      |
| Advances      from Affiliates                                   |   | $                   | 20,095    |   |   | $      | 74,865 |   |
| Accounts      Payable:                                          |   |                |      |   |   |   |   |   |
| General                                                         |   |                | 88,992    |   |   |   | 131,417 |   |
| Affiliated      Companies                                       |   |                | 84,743    |   |   |   | 120,420 |   |
| Long-term      Debt Due Within One Year – Affiliated      |   |                | 100,000   |   |   |   | - |   |
| Risk      Management Liabilities                                |   |                | 16,275    |   |   |   | 16,490 |   |
| Customer      Deposits                                          |   |                | 28,067    |   |   |   | 30,145 |   |
| Accrued      Taxes                                              |   |                | 100,021   |   |   |   | 185,293 |   |
| Accrued      Interest                                           |   |                | 26,776    |   |   |   | 23,867 |   |
| Other      Current Liabilities                                  |   |                | 67,275    |   |   |   | 58,811 |   |
| TOTAL      CURRENT LIABILITIES                                  |   |                | 532,244   |   |   |   | 641,308 |   |
|                                                            |   |                |      |   |   |   |   |   |
| NONCURRENT      LIABILITIES                                     |   |                |      |   |   |   |   |   |
| Long-term      Debt – Nonaffiliated                       |   |                | 1,436,291 |   |   |   | 1,343,594 |   |
| Long-term      Debt – Affiliated                          |   |                | -         |   |   |   | 100,000 |   |
| Long-term      Risk Management Liabilities                      |   |                | 12,522    |   |   |   | 14,774 |   |
| Deferred      Income Taxes                                      |   |                | 511,102   |   |   |   | 435,773 |   |
| Regulatory      Liabilities and Deferred Investment Tax Credits |   |                | 179,825   |   |   |   | 161,102 |   |
| Employee      Benefits and Pension Obligations                  |   |                | 142,020   |   |   |   | 148,123 |   |
| Deferred      Credits and Other Noncurrent Liabilities          |   |                | 47,726    |   |   |   | 46,067 |   |
| TOTAL      NONCURRENT LIABILITIES                               |   |                | 2,329,486 |   |   |   | 2,249,433 |   |
|                                                            |   |                |      |   |   |   |   |   |
| TOTAL      LIABILITIES                                          |   |                | 2,861,730 |   |   |   | 2,890,741 |   |
|                                                            |   |                |      |   |   |   |   |   |
| 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                                            |   |                | 580,624   |   |   |   | 580,506 |   |
| Retained      Earnings                                          |   |                | 747,146   |   |   |   | 674,758 |   |
| Accumulated      Other Comprehensive Income (Loss)              |   |                | (50,663   | )      |   |   | (51,025 | ) |
| TOTAL      COMMON SHAREHOLDER’S EQUITY                    |   |                | 1,318,133 |   |   |   | 1,245,265 |   |
|                                                            |   |                |      |   |   |   |   |   |
| TOTAL      LIABILITIES AND SHAREHOLDER’S EQUITY           |   | $                   | 4,179,863 |   |   | $      | 4,136,006 |   |

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

----

|                                                                                       |   | 2009   |     |   | 2008   |   |
|--------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
| OPERATING      ACTIVITIES                                                                  |   |   |     |   |   |   |
| Net      Income                                                                            |   | $      | 230,629  |   |   | $      | 214,208 |   |
| Adjustments      to Reconcile Net Income to Net Cash Flows from Operating      Activities: |   |   |     |   |   |   |   |   |
| Depreciation      and Amortization                                                         |   |   | 105,863  |   |   |   | 146,668 |   |
| Deferred      Income Taxes                                                                 |   |   | 97,279   |   |   |   | 8,981 |   |
| Carrying      Costs Income                                                                 |   |   | (5,394   | )      |   |   | (4,870 | ) |
| Allowance      for Equity Funds Used During Construction                                   |   |   | (2,799   | )      |   |   | (2,165 | ) |
| Mark-to-Market      of Risk Management Contracts                                           |   |   | (14,832  | )      |   |   | 5,326 |   |
| Deferred      Property Taxes                                                               |   |   | 67,012   |   |   |   | 65,763 |   |
| Fuel      Over/Under-Recovery, Net                                                         |   |   | (36,401  | )      |   |   | - |   |
| Change      in Other Noncurrent Assets                                                     |   |   | (18,365  | )      |   |   | (7,942 | ) |
| Change      in Other Noncurrent Liabilities                                                |   |   | 22,644   |   |   |   | (4,081 | ) |
| Changes      in Certain Components of Working Capital:                                     |   |   |     |   |   |   |   |   |
| Accounts      Receivable, Net                                                              |   |   | 62,244   |   |   |   | (13,757 | ) |
| Fuel,      Materials and Supplies                                                          |   |   | (28,817  | )      |   |   | 7,415 |   |
| Accounts      Payable                                                                      |   |   | (56,723  | )      |   |   | (2,650 | ) |
| Customer      Deposits                                                                     |   |   | (2,078   | )      |   |   | (13,100 | ) |
| Accrued      Taxes, Net                                                                    |   |   | (102,827 | )      |   |   | (26,358 | ) |
| Other      Current Assets                                                                  |   |   | 8,017    |   |   |   | (13,178 | ) |
| Other      Current Liabilities                                                             |   |   | (5,914   | )      |   |   | (14,018 | ) |
| Net      Cash Flows from Operating Activities                                              |   |   | 319,538  |   |   |   | 346,242 |   |
|                                                                                       |   |   |     |   |   |   |   |   |
| INVESTING      ACTIVITIES                                                                  |   |   |     |   |   |   |   |   |
| Construction      Expenditures                                                             |   |   | (216,737 | )      |   |   | (304,175 | ) |
| Change      in Other Cash Deposits                                                         |   |   | 12,223   |   |   |   | 21,796 |   |
| Change      in Advances to Affiliates, Net                                                 |   |   | -        |   |   |   | (21,833 | ) |
| Acquisitions      of Assets                                                                |   |   | (227     | )      |   |   | - |   |
| Proceeds      from Sales of Assets                                                         |   |   | 721      |   |   |   | 1,287 |   |
| Net      Cash Flows Used for Investing Activities                                          |   |   | (204,020 | )      |   |   | (302,925 | ) |
|                                                                                       |   |   |     |   |   |   |   |   |
| FINANCING      ACTIVITIES                                                                  |   |   |     |   |   |   |   |   |
| Issuance      of Long-term Debt – Nonaffiliated                                      |   |   | 91,204   |   |   |   | 346,407 |   |
| Change      in Advances from Affiliates, Net                                               |   |   | (54,770  | )      |   |   | (95,199 | ) |
| Retirement      of Long-term Debt – Nonaffiliated                                    |   |   | -        |   |   |   | (204,245 | ) |
| Principal      Payments for Capital Lease Obligations                                      |   |   | (2,017   | )      |   |   | (2,213 | ) |
| Dividends      Paid on Common Stock                                                        |   |   | (150,000 | )      |   |   | (87,500 | ) |
| Other      Financing Activities                                                            |   |   | 206      |   |   |   | - |   |
| Net      Cash Flows Used for Financing Activities                                          |   |   | (115,377 | )      |   |   | (42,750 | ) |
|                                                                                       |   |   |     |   |   |   |   |   |
| Net      Increase in Cash and Cash Equivalents                                             |   |   | 141      |   |   |   | 567 |   |
| Cash      and Cash Equivalents at Beginning of Period                                      |   |   | 1,063    |   |   |   | 1,389 |   |
| Cash      and Cash Equivalents at End of Period                                            |   | $      | 1,204    |   |   | $      | 1,956 |   |
|                                                                                       |   |   |     |   |   |   |   |   |
| SUPPLEMENTARY      INFORMATION                                                             |   |   |     |   |   |   |   |   |
| Cash      Paid for Interest, Net of Capitalized Amounts                                    |   | $      | 71,032   |   |   | $      | 57,004 |   |
| Net      Cash Paid for Income Taxes                                                        |   |   | 10,997   |   |   |   | 53,682 |   |
| Noncash      Acquisitions Under Capital Leases                                             |   |   | 784      |   |   |   | 1,374 |   |
| Construction      Expenditures Included in Accounts Payable at September 30,               |   |   | 26,688   |   |   |   | 51,997 |   |
| Noncash      Dividend of Property to Parent                                                |   |   | 8,123    |   |   |   | - |   |

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

----

|                                                      | 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      |

----

----

INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES

| Third      Quarter of 2008            |   |   |   |   | $      | 46     |   |
|---------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                  |   |   |   |   |   |   |   |
| Changes      in Gross Margin:         |   |   |   |   |   |   |   |
| Retail      Margins                   |   |   | (2     | )      |   |   |   |   |
| FERC      Municipals and Cooperatives |   |   | 1      |   |   |   |   |   |
| Off-system      Sales                 |   |   | (39    | )      |   |   |   |   |
| Other                                 |   |   | 38     |   |   |   |   |   |
| Total      Change in Gross Margin     |   |   |   |   |   |   | (2     | ) |
|                                  |   |   |   |   |   |   |   |   |
| Total      Expenses and Other:        |   |   |   |   |   |   |   |   |
| Other      Operation and Maintenance  |   |   | 17     |   |   |   |   |   |
| Depreciation      and Amortization    |   |   | (2     | )      |   |   |   |   |
| Other      Income                     |   |   | 4      |   |   |   |   |   |
| Interest      Expense                 |   |   | (5     | )      |   |   |   |   |
| Total      Expenses and Other         |   |   |   |   |   |   | 14     |   |
|                                  |   |   |   |   |   |   |   |   |
| Income      Tax Expense               |   |   |   |   |   |   | (3     | ) |
|                                  |   |   |   |   |   |   |   |   |
| Third      Quarter of 2009            |   |   |   |   |   | $      | 55     |   |

| · | Margins      from Off-system Sales decreased $39 million primarily due to lower      physical sales volumes and lower margins as a result of lower market      prices, partially offset by higher trading and marketing      margins.                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Other      revenues increased $38 million primarily due to Cook Plant accidental      outage insurance policy proceeds of $46 million.  Of these      insurance proceeds, $19 million were used to reduce customer bills which      are primarily included in Retail Margins.  See “Cook Plant Unit      1 Fire and Shutdown” section of Note 4.  A decrease in River      Transportation Division (RTD) revenues partially offset the insurance      proceeds.  RTD’s related expenses which offset the RTD revenues      are included in Other Operation on the Condensed Consolidated Statements      of Income. |

| · | Other      Operation and Maintenance expenses decreased $17 million primarily due to      declines in operation and maintenance expenses of $9 million for nuclear      operations and $8 million for RTD caused by decreased barging      activity. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Other      Income increased $4 million due to higher equity AFUDC.                                                                                                                                                                                   |
| · | Interest      Expense increased $5 million primarily due to increased      borrowings.  In January 2009, I&M issued $475 million of 7%      Senior Unsecured Notes.                                                                    |

| Nine      Months Ended September 30, 2008 |   |   |   |   | $      | 151    |   |
|-------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                      |   |   |   |   |   |   |   |
| Changes      in Gross Margin:             |   |   |   |   |   |   |   |
| Retail      Margins                       |   |   | (26    | )      |   |   |   |   |
| FERC      Municipals and Cooperatives     |   |   | 5      |   |   |   |   |   |
| Off-system      Sales                     |   |   | (94    | )      |   |   |   |   |
| Transmission      Revenues                |   |   | (1     | )      |   |   |   |   |
| Other                                     |   |   | 132    |   |   |   |   |   |
| Total      Change in Gross Margin         |   |   |   |   |   |   | 16     |   |
|                                      |   |   |   |   |   |   |   |   |
| Total      Expenses and Other:            |   |   |   |   |   |   |   |   |
| Other      Operation and Maintenance      |   |   | 43     |   |   |   |   |   |
| Depreciation      and Amortization        |   |   | (5     | )      |   |   |   |   |
| Taxes      Other Than Income Taxes        |   |   | 2      |   |   |   |   |   |
| Other      Income                         |   |   | 8      |   |   |   |   |   |
| Interest      Expense                     |   |   | (18    | )      |   |   |   |   |
| Total      Expenses and Other             |   |   |   |   |   |   | 30     |   |
|                                      |   |   |   |   |   |   |   |   |
| Income      Tax Expense                   |   |   |   |   |   |   | (13    | ) |
|                                      |   |   |   |   |   |   |   |   |
| Nine      Months Ended September 30, 2009 |   |   |   |   |   | $      | 184    |   |

| · | Retail      Margins decreased $26 million primarily due to the    following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | A      $37 million decline due to a 16% decrease in industrial sales resulting      from reduced operating levels and suspended operations by certain large      industrial customers. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Lower      fuel recoveries reflecting $59 million of Cook Plant accidental outage      insurance proceeds allocated to customers under fuel    clauses. |
|   | These      decreases were partially offset by:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | A      $29 million increase in capacity revenue reflecting MLR      changes. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | A      $26 million increase from an Indiana rate settlement.  See      “Indiana Base Rate Filing” section of Note 3. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | A      $17 million favorable impact for lower PJM charges reflecting a decline in      sales volume. |
| · | Margins      from Off-system Sales decreased $94 million primarily due to lower      physical sales volumes and lower margins as a result of lower market      prices, partially offset by higher trading and marketing      margins.                                                                                                                                                                                                                                                                                                                                                                                                   |
| · | Other      revenues increased $132 million primarily due to Cook Plant accidental      outage insurance policy proceeds of $145 million.  Of the      insurance proceeds, $59 million were used to reduce customer bills which      are primarily included in Retail Margins.  See “Cook Plant Unit      1 Fire and Shutdown” section of Note 4.  A decrease in RTD      revenues partially offset the insurance proceeds.  RTD’s related      expenses which offset the RTD revenues are included in Other Operation on      the Condensed Consolidated Statements ofIncome. |

| · | Other Operation      and Maintenance expenses decreased $43 million primarily due to the      following:                                                                      |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                             | A      $21 million decline for nuclear and coal-fired generating operation and      maintenance expenses reflecting cost containment efforts, deferral of      costs during outages and deferral of NSR costs provided in the rate      settlement for recovery.  See “Indiana Base Rate Filing” section      of Note 3. |
|   | ·                                                                                                                                                                             | An      $11 million decline for RTD caused by decreased barging      activity. |
|   | ·                                                                                                                                                                             | A      $7 million decline in accretion expense reflecting a change in the annual      decommissioning estimate at Cook Plant for an extension of its life      authorized in the rate settlement. |
| · | Other      Income increased $8 million due to higher equity AFUDC.                                                                                                                 |
| · | Interest      Expense increased $18 million primarily due to increased      borrowings.  In January 2009, I&M issued $475 million of 7%      Senior Unsecured Notes. |
| · | Income      Tax Expense increased $13 million primarily due to an increase in pretax      book income, partially offset by a decrease in state income      taxes.                  |

----

----

|                                                         |   | Three      Months Ended |    |   | Nine      Months Ended |   |
|--------------------------------------------------------------|--------|-------------------------|---------|--------|------------------------|--------|
|                                                         |   | 2009                    |    |   | 2008                   |   |   | 2009 |   |   | 2008 |   |
| REVENUES                                                     |   |                    |    |   |                   |   |   |   |   |   |   |   |
| Electric      Generation, Transmission and Distribution      |   | $                       | 435,399 |   |                   | $      | 513,548 |   |   | $ | 1,257,673 |   |   | $ | 1,370,158 |   |
| Sales      to AEP Affiliates                                 |   |                    | 43,796  |   |                   |   | 72,295 |   |   |   | 161,167 |   |   |   | 232,734 |   |
| Other      Revenues – Affiliated                       |   |                    | 24,958  |   |                   |   | 31,792 |   |   |   | 80,890 |   |   |   | 84,268 |   |
| Other      Revenues – Nonaffiliated                    |   |                    | 48,114  |   |                   |   | 3,388 |   |   |   | 149,997 |   |   |   | 13,659 |   |
| TOTAL      REVENUES                                          |   |                    | 552,267 |   |                   |   | 621,023 |   |   |   | 1,649,727 |   |   |   | 1,700,819 |   |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES                                                     |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel      and Other Consumables Used for Electric Generation |   |                    | 105,287 |   |                   |   | 141,563 |   |   |   | 316,449 |   |   |   | 351,300 |   |
| Purchased      Electricity for Resale                        |   |                    | 28,203  |   |                   |   | 39,427 |   |   |   | 97,417 |   |   |   | 87,351 |   |
| Purchased      Electricity from AEP Affiliates               |   |                    | 93,093  |   |                   |   | 112,060 |   |   |   | 253,964 |   |   |   | 296,559 |   |
| Other      Operation                                         |   |                    | 121,737 |   |                   |   | 136,875 |   |   |   | 346,421 |   |   |   | 381,928 |   |
| Maintenance                                                  |   |                    | 50,650  |   |                   |   | 52,573 |   |   |   | 148,412 |   |   |   | 156,402 |   |
| Depreciation      and Amortization                           |   |                    | 34,032  |   |                   |   | 31,822 |   |   |   | 100,406 |   |   |   | 95,301 |   |
| Taxes      Other Than Income Taxes                           |   |                    | 19,122  |   |                   |   | 19,992 |   |   |   | 58,071 |   |   |   | 60,236 |   |
| TOTAL      EXPENSES                                          |   |                    | 452,124 |   |                   |   | 534,312 |   |   |   | 1,321,140 |   |   |   | 1,429,077 |   |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING      INCOME                                        |   |                    | 100,143 |   |                   |   | 86,711 |   |   |   | 328,587 |   |   |   | 271,742 |   |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Income (Expense):                                 |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Income                                            |   |                    | 5,024   |   |                   |   | 880 |   |   |   | 12,879 |   |   |   | 4,621 |   |
| Interest      Expense                                        |   |                    | (25,668 | )      |                   |   | (20,629 | ) |   |   | (75,372 | ) |   |   | (56,977 | ) |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME      BEFORE INCOME TAX EXPENSE                        |   |                    | 79,499  |   |                   |   | 66,962 |   |   |   | 266,094 |   |   |   | 219,386 |   |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Income      Tax Expense                                      |   |                    | 24,640  |   |                   |   | 21,326 |   |   |   | 81,774 |   |   |   | 68,348 |   |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME                                              |   |                    | 54,859  |   |                   |   | 45,636 |   |   |   | 184,320 |   |   |   | 151,038 |   |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred      Stock Dividend Requirements                   |   |                    | 85      |   |                   |   | 85 |   |   |   | 255 |   |   |   | 255 |   |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS      ATTRIBUTABLE TO COMMON STOCK                   |   | $                       | 54,774  |   |                   | $      | 45,551 |   |   | $ | 184,065 |   |   | $ | 150,783 |   |

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

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

----

|                                                                                     |   | Common      Stock |   |   | Paid-in      Capital |   |    | Retained      Earnings |   |   | Accumulated      Other Comprehensive Income (Loss) |   |   | Total  |    |
|------------------------------------------------------------------------------------------|--------|-------------------|--------|--------|----------------------|--------|---------|------------------------|--------|--------|----------------------------------------------------|--------|--------|--------|---------|
|                                                                                     |   |              |   |   |                 |   |    |                   |   |   |                                               |   |   |   |    |
| TOTAL COMMON SHAREHOLDER’S      EQUITY – DECEMBER      31, 2007              |   | $                 | 56,584 |   |                 | $      | 861,291 |                   |   | $      | 483,499                                            |   |   | $      | (15,675 | ) |   | $ | 1,385,699 |   |
|                                                                                     |   |              |   |   |                 |   |    |                   |   |   |                                               |   |   |   |    |   |   |   |   |   |
| EITF      06-10 Adoption, Net of Tax of $753                                             |   |              |   |   |                 |   |    |                   |   |   | (1,398                                             | )      |   |   |    |   |   |   | (1,398 | ) |
| Common      Stock Dividends                                                              |   |              |   |   |                 |   |    |                   |   |   | (56,250                                            | )      |   |   |    |   |   |   | (56,250 | ) |
| Preferred      Stock Dividends                                                           |   |              |   |   |                 |   |    |                   |   |   | (255                                               | )      |   |   |    |   |   |   | (255 | ) |
| SUBTOTAL      – COMMON SHAREHOLDER’S EQUITY                                  |   |              |   |   |                 |   |    |                   |   |   |                                               |   |   |   |    |   |   |   | 1,327,796 |   |
|                                                                                     |   |              |   |   |                 |   |    |                   |   |   |                                               |   |   |   |    |   |   |   |   |   |
| COMPREHENSIVE      INCOME                                                                |   |              |   |   |                 |   |    |                   |   |   |                                               |   |   |   |    |   |   |   |   |   |
| Other      Comprehensive Income, Net of Taxes:                                           |   |              |   |   |                 |   |    |                   |   |   |                                               |   |   |   |    |   |   |   |   |   |
| Cash      Flow Hedges, Net of Tax of $967                                                |   |              |   |   |                 |   |    |                   |   |   |                                               |   |   |   | 1,795   |   |   |   | 1,795 |   |
| Amortization      of Pension and OPEB Deferred  Costs,      Net of Tax of $178 |   |              |   |   |                 |   |    |                   |   |   |                                               |   |   |   | 331     |   |   |   | 331 |   |
| NET      INCOME                                                                          |   |              |   |   |                 |   |    |                   |   |   | 151,038                                            |   |   |   |    |   |   |   | 151,038 |   |
| TOTAL      COMPREHENSIVE INCOME                                                          |   |              |   |   |                 |   |    |                   |   |   |                                               |   |   |   |    |   |   |   | 153,164 |   |
|                                                                                     |   |              |   |   |                 |   |    |                   |   |   |                                               |   |   |   |    |   |   |   |   |   |
| TOTAL COMMON SHAREHOLDER’S      EQUITY – SEPTEMBER      30, 2008             |   | $                 | 56,584 |   |                 | $      | 861,291 |                   |   | $      | 576,634                                            |   |   | $      | (13,549 | ) |   | $ | 1,480,960 |   |
|                                                                                     |   |              |   |   |                 |   |    |                   |   |   |                                               |   |   |   |    |   |   |   |   |   |
| 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 |   |

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

----

|                                                                                   |   | 2009   |      |   | 2008   |   |
|----------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| CURRENT      ASSETS                                                                    |   |   |      |   |   |   |
| Cash      and Cash Equivalents                                                         |   | $      | 843       |   |   | $      | 728 |   |
| Advances      to Affiliates                                                       |   |   | 160,749   |   |   |   | - |   |
| Accounts      Receivable:                                                              |   |   |      |   |   |   |   |   |
| Customers                                                                              |   |   | 54,690    |   |   |   | 70,432 |   |
| Affiliated      Companies                                                              |   |   | 117,941   |   |   |   | 94,205 |   |
| Accrued      Unbilled Revenues                                                         |   |   | 11,612    |   |   |   | 19,260 |   |
| Miscellaneous                                                                          |   |   | 2,477     |   |   |   | 1,010 |   |
| Allowance      for Uncollectible Accounts                                              |   |   | (2,113    | )      |   |   | (3,310 | ) |
| Total      Accounts Receivable                                                         |   |   | 184,607   |   |   |   | 181,597 |   |
| Fuel                                                                                   |   |   | 67,795    |   |   |   | 67,138 |   |
| Materials      and Supplies                                                            |   |   | 151,578   |   |   |   | 150,644 |   |
| Risk      Management Assets                                                            |   |   | 43,120    |   |   |   | 35,012 |   |
| Regulatory      Asset for Under-Recovered Fuel Costs                                   |   |   | 9,965     |   |   |   | 33,066 |   |
| Prepayments      and Other Current Assets                                              |   |   | 166,137   |   |   |   | 66,733 |   |
| TOTAL      CURRENT ASSETS                                                              |   |   | 784,794   |   |   |   | 534,918 |   |
|                                                                                   |   |   |      |   |   |   |   |   |
| PROPERTY,      PLANT AND EQUIPMENT                                                     |   |   |      |   |   |   |   |   |
| Electric:                                                                              |   |   |      |   |   |   |   |   |
| Production                                                                             |   |   | 3,584,836 |   |   |   | 3,534,188 |   |
| Transmission                                                                           |   |   | 1,147,401 |   |   |   | 1,115,762 |   |
| Distribution                                                                           |   |   | 1,339,065 |   |   |   | 1,297,482 |   |
| Other      Property, Plant and Equipment (including nuclear fuel and coal      mining) |   |   | 785,504   |   |   |   | 703,287 |   |
| Construction      Work in Progress                                                     |   |   | 308,039   |   |   |   | 249,020 |   |
| Total      Property, Plant and Equipment                                               |   |   | 7,164,845 |   |   |   | 6,899,739 |   |
| Accumulated      Depreciation, Depletion and Amortization                              |   |   | 3,101,119 |   |   |   | 3,019,206 |   |
| TOTAL      PROPERTY, PLANT AND EQUIPMENT – NET                                   |   |   | 4,063,726 |   |   |   | 3,880,533 |   |
|                                                                                   |   |   |      |   |   |   |   |   |
| OTHER      NONCURRENT ASSETS                                                           |   |   |      |   |   |   |   |   |
| Regulatory      Assets                                                                 |   |   | 495,305   |   |   |   | 455,132 |   |
| Spent      Nuclear Fuel and Decommissioning Trusts                                     |   |   | 1,364,442 |   |   |   | 1,259,533 |   |
| Long-term      Risk Management Assets                                                  |   |   | 29,592    |   |   |   | 27,616 |   |
| Deferred      Charges and Other Noncurrent Assets                                      |   |   | 88,894    |   |   |   | 86,193 |   |
| TOTAL      OTHER NONCURRENT ASSETS                                                     |   |   | 1,978,233 |   |   |   | 1,828,474 |   |
|                                                                                   |   |   |      |   |   |   |   |   |
| TOTAL      ASSETS                                                                      |   | $      | 6,826,753 |   |   | $      | 6,243,925 |   |

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

----

|                                                                |   | 2009                |      |   | 2008   |   |
|---------------------------------------------------------------------|--------|---------------------|-----------|--------|--------|--------|
| CURRENT      LIABILITIES                                            |   | (in      thousands) |      |
| Advances      from Affiliates                                       |   | $                   | -         |   |   | $      | 476,036 |   |
| Accounts      Payable:                                              |   |                |      |   |   |   |   |   |
| General                                                             |   |                | 144,806   |   |   |   | 194,211 |   |
| Affiliated      Companies                                           |   |                | 73,395    |   |   |   | 117,589 |   |
| Long-term      Debt Due Within One Year – Nonaffiliated       |   |                | 37,544    |   |   |   | - |   |
| Long-term      Debt Due Within One Year – Affiliated          |   |                | 25,000    |   |   |   | - |   |
| Risk      Management Liabilities                                    |   |                | 16,011    |   |   |   | 16,079 |   |
| Customer      Deposits                                              |   |                | 27,493    |   |   |   | 26,809 |   |
| Accrued      Taxes                                                  |   |                | 54,358    |   |   |   | 66,363 |   |
| Obligations      Under Capital Leases                               |   |                | 30,347    |   |   |   | 43,512 |   |
| Other      Current Liabilities                                      |   |                | 118,519   |   |   |   | 141,160 |   |
| TOTAL      CURRENT LIABILITIES                                      |   |                | 527,473   |   |   |   | 1,081,759 |   |
|                                                                |   |                |      |   |   |   |   |   |
| NONCURRENT      LIABILITIES                                         |   |                |      |   |   |   |   |   |
| Long-term      Debt – Nonaffiliated                           |   |                | 2,015,155 |   |   |   | 1,377,914 |   |
| Long-term      Risk Management Liabilities                          |   |                | 12,121    |   |   |   | 14,311 |   |
| Deferred      Income Taxes                                          |   |                | 583,183   |   |   |   | 412,264 |   |
| Regulatory      Liabilities and Deferred Investment Tax Credits     |   |                | 738,889   |   |   |   | 656,396 |   |
| Asset      Retirement Obligations                                   |   |                | 938,504   |   |   |   | 902,920 |   |
| Deferred      Credits and Other Noncurrent Liabilities              |   |                | 337,839   |   |   |   | 355,463 |   |
| TOTAL      NONCURRENT LIABILITIES                                   |   |                | 4,625,691 |   |   |   | 3,719,268 |   |
|                                                                |   |                |      |   |   |   |   |   |
| TOTAL      LIABILITIES                                              |   |                | 5,153,164 |   |   |   | 4,801,027 |   |
|                                                                |   |                |      |   |   |   |   |   |
| Cumulative      Preferred Stock Not Subject to Mandatory Redemption |   |                | 8,077     |   |   |   | 8,080 |   |
|                                                                |   |                |      |   |   |   |   |   |
| 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   |   |   |   | 861,291 |   |
| Retained      Earnings                                              |   |                | 649,202   |   |   |   | 538,637 |   |
| Accumulated      Other Comprehensive Income (Loss)                  |   |                | (21,566   | )      |   |   | (21,694 | ) |
| TOTAL      COMMON SHAREHOLDER’S EQUITY                        |   |                | 1,665,512 |   |   |   | 1,434,818 |   |
|                                                                |   |                |      |   |   |   |   |   |
| TOTAL      LIABILITIES AND SHAREHOLDERS’ EQUITY               |   | $                   | 6,826,753 |   |   | $      | 6,243,925 |   |

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

----

|                                                                                       |   | 2009   |     |   | 2008   |   |
|--------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
| OPERATING      ACTIVITIES                                                                  |   |   |     |   |   |   |
| Net      Income                                                                            |   | $      | 184,320  |   |   | $      | 151,038 |   |
| Adjustments      to Reconcile Net Income to Net Cash Flows from Operating      Activities: |   |   |     |   |   |   |   |   |
| Depreciation      and Amortization                                                         |   |   | 100,406  |   |   |   | 95,301 |   |
| Deferred      Income Taxes                                                                 |   |   | 133,959  |   |   |   | 47,565 |   |
| Amortization      (Deferral) of Incremental Nuclear Refueling Outage Expenses,      Net    |   |   | (4,563   | )      |   |   | 834 |   |
| Allowance      for Equity Funds Used During Construction                                   |   |   | (7,830   | )      |   |   | (967 | ) |
| Mark-to-Market      of Risk Management Contracts                                           |   |   | (14,580  | )      |   |   | 4,876 |   |
| Amortization      of Nuclear Fuel                                                          |   |   | 41,198   |   |   |   | 72,453 |   |
| Change      in Other Noncurrent Assets                                                     |   |   | 285      |   |   |   | 5,678 |   |
| Change      in Other Noncurrent Liabilities                                                |   |   | 50,932   |   |   |   | 38,568 |   |
| Changes      in Certain Components of Working Capital:                                     |   |   |     |   |   |   |   |   |
| Accounts      Receivable, Net                                                              |   |   | (2,322   | )      |   |   | (2,422 | ) |
| Fuel,      Materials and Supplies                                                          |   |   | (1,591   | )      |   |   | 12,736 |   |
| Accounts      Payable                                                                      |   |   | (48,044  | )      |   |   | 16,549 |   |
| Accrued      Taxes, Net                                                                    |   |   | (15,005  | )      |   |   | 2,550 |   |
| Other      Current Assets                                                                  |   |   | (54,221  | )      |   |   | (24,736 | ) |
| Other      Current Liabilities                                                             |   |   | (20,598  | )      |   |   | 1,393 |   |
| Net      Cash Flows from Operating Activities                                              |   |   | 342,346  |   |   |   | 421,416 |   |
|                                                                                       |   |   |     |   |   |   |   |   |
| INVESTING      ACTIVITIES                                                                  |   |   |     |   |   |   |   |   |
| Construction      Expenditures                                                             |   |   | (242,256 | )      |   |   | (221,538 | ) |
| Change      in Advances to Affiliates, Net                                                 |   |   | (160,749 | )      |   |   | - |   |
| Purchases      of Investment Securities                                                    |   |   | (571,167 | )      |   |   | (413,538 | ) |
| Sales      of Investment Securities                                                        |   |   | 523,927  |   |   |   | 362,773 |   |
| Acquisitions      of Nuclear Fuel                                                          |   |   | (153,172 | )      |   |   | (99,110 | ) |
| Other      Investing Activities                                                            |   |   | 18,990   |   |   |   | 3,376 |   |
| Net      Cash Flows Used for Investing Activities                                          |   |   | (584,427 | )      |   |   | (368,037 | ) |
|                                                                                       |   |   |     |   |   |   |   |   |
| FINANCING      ACTIVITIES                                                                  |   |   |     |   |   |   |   |   |
| Capital      Contribution from Parent                                                      |   |   | 120,000  |   |   |   | - |   |
| Issuance      of Long-term Debt – Nonaffiliated                                      |   |   | 670,060  |   |   |   | 115,225 |   |
| Issuance      of Long-term Debt – Affiliated                                         |   |   | 25,000   |   |   |   | - |   |
| Change      in Advances from Affiliates, Net                                               |   |   | (476,036 | )      |   |   | 179,007 |   |
| Retirement      of Long-term Debt – Nonaffiliated                                    |   |   | -        |   |   |   | (262,000 | ) |
| Retirement      of Cumulative Preferred Stock                                              |   |   | (2       | )      |   |   | - |   |
| Principal      Payments for Capital Lease Obligations                                      |   |   | (23,640  | )      |   |   | (28,917 | ) |
| Dividends      Paid on Common Stock                                                        |   |   | (73,500  | )      |   |   | (56,250 | ) |
| Dividends      Paid on Cumulative Preferred Stock                                          |   |   | (255     | )      |   |   | (255 | ) |
| Other      Financing Activities                                                            |   |   | 569      |   |   |   | - |   |
| Net      Cash Flows from (Used for) Financing Activities                                   |   |   | 242,196  |   |   |   | (53,190 | ) |
|                                                                                       |   |   |     |   |   |   |   |   |
| Net      Increase in Cash and Cash Equivalents                                             |   |   | 115      |   |   |   | 189 |   |
| Cash      and Cash Equivalents at Beginning of Period                                      |   |   | 728      |   |   |   | 1,139 |   |
| Cash      and Cash Equivalents at End of Period                                            |   | $      | 843      |   |   | $      | 1,328 |   |
|                                                                                       |   |   |     |   |   |   |   |   |
| SUPPLEMENTARY      INFORMATION                                                             |   |   |     |   |   |   |   |   |
| Cash      Paid for Interest, Net of Capitalized Amounts                                    |   | $      | 81,833   |   |   | $      | 57,086 |   |
| Net      Cash Paid (Received) for Income Taxes                                             |   |   | (21,414  | )      |   |   | 7,482 |   |
| Noncash      Acquisitions Under Capital Leases                                             |   |   | 2,344    |   |   |   | 3,279 |   |
| Construction      Expenditures Included in Accounts Payable at September 30,               |   |   | 42,576   |   |   |   | 26,150 |   |
| Acquisition      of Nuclear Fuel Included in Accounts Payable at September    30,          |   |   | 2        |   |   |   | 66,127 |   |

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

----

|                                                      | 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      |

----

----

OHIO POWER COMPANY CONSOLIDATED

| Third      Quarter of 2008           |   |   |   |   | $      | 56     |   |
|--------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                 |   |   |   |   |   |   |   |
| Changes      in Gross Margin:        |   |   |   |   |   |   |   |
| Retail      Margins                  |   |   | 132    |   |   |   |   |   |
| Off-system      Sales                |   |   | (57    | )      |   |   |   |   |
| Other                                |   |   | (2     | )      |   |   |   |   |
| Total      Change in Gross Margin    |   |   |   |   |   |   | 73     |   |
|                                 |   |   |   |   |   |   |   |   |
| Total      Expenses and Other:       |   |   |   |   |   |   |   |   |
| Other      Operation and Maintenance |   |   | 9      |   |   |   |   |   |
| Depreciation      and Amortization   |   |   | (17    | )      |   |   |   |   |
| Taxes      Other Than Income Taxes   |   |   | 1      |   |   |   |   |   |
| Carrying      Costs Income           |   |   | (1     | )      |   |   |   |   |
| Other      Income                    |   |   | (1     | )      |   |   |   |   |
| Interest      Expense                |   |   | (1     | )      |   |   |   |   |
| Total      Expenses and Other        |   |   |   |   |   |   | (10    | ) |
|                                 |   |   |   |   |   |   |   |   |
| Income      Tax Expense              |   |   |   |   |   |   | (22    | ) |
|                                 |   |   |   |   |   |   |   |   |
| Third      Quarter of 2009           |   |   |   |   |   | $      | 97     |   |

| · | Retail      Margins increased $132 million primarily due to the    following:                                                                                                                                                         |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                | An      $85 million increase in fuel margins primarily due to the deferral of fuel      costs in 2009.  The PUCO’s March 2009 approval of OPCo’s ESP      allows for the recovery of fuel and related costs beginning January 1,      2009.  See “Ohio Electric Security Plan Filings” section of Note      3. |
|   | ·                                                                                                                                                                                                                                | A      $50 million increase related to the implementation of higher rates set by      the Ohio ESP. |
|   | ·                                                                                                                                                                                                                                | An      $18 million increase in capacity settlements under the Interconnection      Agreement. |
|   | These      increases were partially offset by:                                                                                                                                                                                        |
|   | ·                                                                                                                                                                                                                                | A      $30 million decrease in industrial sales primarily due to reduced      operating levels and suspended operations by certain large industrial      customers in OPCo’s service territory. |
| · | Margins      from Off-system Sales decreased $57 million primarily due to lower      physical sales volumes and lower margins as a result of lower market      prices, partially offset by higher trading and marketing      margins. |

| · | Other      Operation and Maintenance expenses decreased $9 million primarily due      to:              |
|--------|--------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                 | A      $5 million decrease in maintenance and removal expenses from planned and      forced outages at various plants. |
|   | ·                                                                                                 | A      $2 million decrease in recoverable PJM expenses. |
|   | ·                                                                                                 | A      $2 million decrease in recoverable customer account expenses due to      decreased Universal Service Fund surcharge rates for customers who qualify      for payment assistance. |
|   | ·                                                                                                 | A      $2 million decrease in net allocated transmission expenses related to the      AEP Transmission Equalization Agreement. |
|   | These      decreases were partially offset by:                                                         |
|   | ·                                                                                                 | A      $2 million increase in maintenance of overhead lines primarily due to      increased vegetation management activities slightly offset by reduced wind      storm costs incurred in 2009 versus 2008. |
| · | Depreciation      and Amortization increased $17 million primarily dueto:                              |
|   | ·                                                                                                 | A      $21 million increase from higher depreciable property balances as a result      of environmental improvements placed in service and various other property      additions and higher depreciation rates related to shortened depreciable      lives for certain generating facilities. |
|   | ·                                                                                                 | A      $3 million increase as a result of the completion of the amortization of a      regulated liability in December 2008 related to energy sales to Ormet at      below-market rates.  See “Ormet” section of Note    3. |
|   | The      increase was partially offset by:                                                             |
|   | ·                                                                                                 | A      $7 million decrease due to the completion of the amortization of      regulatory assets in December 2008. |
| · | Income      Tax Expense increased $22 million primarily due to an increase in pretax      book income. |

| Nine      Months Ended September 30, 2008 |   |   |   |   | $      | 248    |   |
|-------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                      |   |   |   |   |   |   |   |
| Changes      in Gross Margin:             |   |   |   |   |   |   |   |
| Retail      Margins                       |   |   | 176    |   |   |   |   |   |
| Off-system      Sales                     |   |   | (117   | )      |   |   |   |   |
| Other                                     |   |   | 4      |   |   |   |   |   |
| Total      Change in Gross Margin         |   |   |   |   |   |   | 63     |   |
|                                      |   |   |   |   |   |   |   |   |
| Total      Expenses and Other:            |   |   |   |   |   |   |   |   |
| Other      Operation and Maintenance      |   |   | (15    | )      |   |   |   |   |
| Depreciation      and Amortization        |   |   | (50    | )      |   |   |   |   |
| Carrying      Costs Income                |   |   | (5     | )      |   |   |   |   |
| Other      Income                         |   |   | (6     | )      |   |   |   |   |
| Total      Expenses and Other             |   |   |   |   |   |   | (76    | ) |
|                                      |   |   |   |   |   |   |   |   |
| Income      Tax Expense                   |   |   |   |   |   |   | (2     | ) |
|                                      |   |   |   |   |   |   |   |   |
| Nine      Months Ended September 30, 2009 |   |   |   |   |   | $      | 233    |   |

| · | Retail      Margins increased $176 million primarily due to the    following:                                                                                                                                                          |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                 | A      $107 million increase in fuel margins primarily due to the deferral of      fuel costs in 2009.  The PUCO’s March 2009 approval of OPCo’s      ESP allows for the recovery of fuel and related costs beginning January 1,      2009.  See “Ohio Electric Security Plan Filings” section of Note      3. |
|   | ·                                                                                                                                                                                                                                 | A      $103 million increase related to the implementation of higher rates set by      the Ohio ESP. |
|   | ·                                                                                                                                                                                                                                 | A      $40 million increase in capacity settlements under the Interconnection      Agreement. |
|   | These      increases were partially offset by:                                                                                                                                                                                         |
|   | ·                                                                                                                                                                                                                                 | A      $59 million decrease in industrial sales due to reduced operating levels      and suspended operations by certain large industrial customers in OPCo’s      service territory. |
|   | ·                                                                                                                                                                                                                                 | A      $29 million decrease related to coal contract amendments recorded in      2008. |
| · | Margins      from Off-system Sales decreased $117 million primarily due to lower      physical sales volumes and lower margins as a result of lower market      prices, partially offset by higher trading and marketing      margins. |

| · | Other      Operation and Maintenance expenses increased $15 million primarily due      to:                                                         |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                             | A      $15 million increase in maintenance of overhead lines primarily due to a      $13 million increase in vegetation management activities and a $3 million      increase in ice and wind storm costs incurred in 2009 versus      2008. |
|   | ·                                                                                                                                             | A      $6 million increase related to an 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.  See “Ohio      Electric Security Plan Filings” section of Note 3. |
|   | These      increases were partially offset by:                                                                                                     |
|   | ·                                                                                                                                             | A      $6 million decrease in recoverable customer account expenses due to      decreased Universal Service Fund surcharge rates for customers who qualify      for payment assistance. |
| · | Depreciation      and Amortization increased $50 million primarily dueto:                                                                          |
|   | ·                                                                                                                                             | A      $61 million increase from higher depreciable property balances as a result      of environmental improvements placed in service and various other property      additions and higher depreciation rates related to shortened depreciable      lives for certain generating facilities. |
|   | ·                                                                                                                                             | An      $8 million increase as a result of the completion of the amortization of a      regulated liability in December 2008 related to energy sales to Ormet at      below market rates.  See “Ormet” section of Note    3. |
|   | These      increases were partially offset by:                                                                                                     |
|   | ·                                                                                                                                             | A      $21 million decrease due to the completion of the amortization of      regulatory assets in December 2008. |
| · | Income      Tax Expense increased $2 million primarily due to changes in certain      book/tax differences accounted for on a flow-through  basis. |

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

|                                                      |   | 2009                |     |   | 2008   |   |
|-----------------------------------------------------------|--------|---------------------|----------|--------|--------|--------|
|                                                      |   | (in      thousands) |     |
| Cash      and Cash Equivalents at Beginning of Period     |   | $                   | 12,679   |   |   | $      | 6,666 |   |
| Cash      Flows from (Used for):                          |   |                |     |   |   |   |   |   |
| Operating      Activities                                 |   |                | 136,802  |   |   |   | 435,406 |   |
| Investing      Activities                                 |   |                | (674,647 | )      |   |   | (486,678 | ) |
| Financing      Activities                                 |   |                | 528,116  |   |   |   | 53,694 |   |
| Net      Increase (Decrease) in Cash and Cash Equivalents |   |                | (9,729   | )      |   |   | 2,422 |   |
| Cash      and Cash Equivalents at End of Period           |   | $                   | 2,950    |   |   | $      | 9,088 |   |

|                        |   | PrincipalAmount     |                | Interest |   | Due    |
|-----------------------------|--------|---------------------|---------------------|----------|--------|--------|
| Type      of Debt           |   |                | Rate                |     | Date   |
|                        |   | (in      thousands) |                | (%)      |   |   |
| Senior      Unsecured Notes |   | $                   | 500,000   |     | 5.375  |   | 2021 |

|                                     |   | PrincipalAmount      Paid |          | Interest |     | Due    |
|------------------------------------------|--------|---------------------------|---------------|----------|----------|--------|
| Type      of Debt                        |   |                      | Rate          |     | Date     |
|                                     |   | (in      thousands)       |          | (%)      |     |   |
| Notes      Payable – Nonaffiliated |   | $                         | 6,500    |     | 7.21     |   | 2009 |
| Notes      Payable – Nonaffiliated |   |                      | 1,000    |     | 6.27     |   | 2009 |
| Notes      Payable – Nonaffiliated |   |                      | 70,000   |     | 7.49     |   | 2009 |
| Pollution      Control Bonds             |   |                      | 218,000  |     | Variable |   | 2028-2029 |

----

|                                                        |   | MTM      Risk Management Contracts |   |   | Cash      Flow HedgeContracts |   |   | DETM      Assignment (a) |   |   | CollateralDeposits |   |   | Total  |    |
|-------------------------------------------------------------|--------|------------------------------------|--------|--------|-------------------------------|--------|--------|--------------------------|--------|--------|--------------------|--------|--------|--------|---------|
| Current      Assets                                         |   | $                                  | 60,270 |   |                          | $      | 1,728  |                     |   | $      | -                  |   |   | $      | (3,004  | ) |   | $ | 58,994 |   |
| Noncurrent      Assets                                      |   |                               | 38,866 |   |                          |   | 338    |                     |   |   | -                  |   |   |   | (2,879  | ) |   |   | 36,325 |   |
| Total      MTM Derivative Contract Assets                   |   |                               | 99,136 |   |                          |   | 2,066  |                     |   |   | -                  |   |   |   | (5,883  | ) |   |   | 95,319 |   |
|                                                        |   |                               |   |   |                          |   |   |                     |   |   |               |   |   |   |    |   |   |   |   |   |
| Current      Liabilities                                    |   |                               | 34,176 |   |                          |   | 1,457  |                     |   |   | 1,682              |   |   |   | (9,871  | ) |   |   | 27,444 |   |
| Noncurrent      Liabilities                                 |   |                               | 25,248 |   |                          |   | 605    |                     |   |   | 423                |   |   |   | (10,142 | ) |   |   | 16,134 |   |
| Total      MTM Derivative Contract Liabilities              |   |                               | 59,424 |   |                          |   | 2,062  |                     |   |   | 2,105              |   |   |   | (20,013 | ) |   |   | 43,578 |   |
|                                                        |   |                               |   |   |                          |   |   |                     |   |   |               |   |   |   |    |   |   |   |   |   |
| Total      MTM Derivative Contract Net Assets (Liabilities) |   | $                                  | 39,712 |   |                          | $      | 4      |                     |   | $      | (2,105             | )      |   | $      | 14,130  |   |   | $ | 51,741 |   |

| (a) | See      “Natural Gas Contracts with DETM” section of Note 15 of the 2008 Annual      Report. |
|-----|-----------------------------------------------------------------------------------------------------------|

| Total      MTM Risk Management Contract Net Assets at December 31,    2008                                            |   | $      | 37,761  |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|
| (Gain)      Loss from Contracts Realized/Settled During the Period and Entered in a      Prior Period                 |   |   | (17,126 | )      |
| Fair      Value of New Contracts at Inception When Entered During the Period      (a)                                 |   |   | 7,733   |   |
| Net      Option Premiums Paid/(Received) for Unexercised or Unexpired Option      Contracts Entered During the Period |   |   | (136    | )      |
| Change      in Fair Value Due to Valuation Methodology Changes on Forward      Contracts                              |   |   | -       |   |
| Changes      in Fair Value Due to Market Fluctuations During the Period    (b)                                        |   |   | 4,862   |   |
| Changes      in Fair Value Allocated to Regulated Jurisdictions (c)                                                   |   |   | 6,618   |   |
| Total      MTM Risk Management Contract Net Assets                                                                    |   |   | 39,712  |   |
| Cash      Flow Hedge Contracts                                                                                        |   |   | 4       |   |
| DETM      Assignment (d)                                                                                              |   |   | (2,105  | )      |
| Collateral      Deposits                                                                                              |   |   | 14,130  |   |
| Total      MTM Derivative Contract Net Assets at September 30, 2009                                                   |   | $      | 51,741  |   |

| (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) | Market      fluctuations are attributable to various factors such as supply/demand,      weather, etc.                                                                                                                                                                                                                                                                                                              |
| (c) | “Changes      in Fair Value Allocated to Regulated Jurisdictions” relates to the net      gains (losses) of those contracts that are not reflected on the Condensed      Consolidated Statements of Income.  These net gains (losses) are      recorded as regulatory liabilities/assets.                                                                                                     |
| (d) | See      “Natural Gas Contracts with DETM” section of Note 15 of the 2008 Annual      Report.                                                                                                                                                                                                                                                                                                           |

|                                                    |   | Remainder |   |   |   |   |   |   |   |   |   |   |   |   |   |   | After  |   |   |   |   |
|---------------------------------------------------------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                    |   | 2009      |   |   | 2010   |   |   | 2011   |   |   | 2012   |   |   | 2013   |   |   | 2013   |   |   | Total  |   |
| Level      1 (a)                                        |   | $         | (270   | )      |   | $      | (29    | )      |   | $      | 1      |   |   | $      | -      |   |   | $      | -      |   |   | $ | - |   |   | $ | (298 | ) |
| Level      2 (b)                                        |   |      | 5,330  |   |   |   | 8,336  |   |   |   | 3,404  |   |   |   | 636    |   |   |   | 1,676  |   |   |   | 134 |   |   |   | 19,516 |   |
| Level      3 (c)                                        |   |      | 4,055  |   |   |   | 8,399  |   |   |   | 1,288  |   |   |   | 660    |   |   |   | (16    | )      |   |   | - |   |   |   | 14,386 |   |
| Total                                                   |   |      | 9,115  |   |   |   | 16,706 |   |   |   | 4,693  |   |   |   | 1,296  |   |   |   | 1,660  |   |   |   | 134 |   |   |   | 33,604 |   |
| Dedesignated      Risk Management Contracts (d)         |   |      | 877    |   |   |   | 3,010  |   |   |   | 1,172  |   |   |   | 1,049  |   |   |   | -      |   |   |   | - |   |   |   | 6,108 |   |
| Total      MTM Risk Management Contract Net Assets |   | $         | 9,992  |   |   | $      | 19,716 |   |   | $      | 5,865  |   |   | $      | 2,345  |   |   | $      | 1,660  |   |   | $ | 134 |   |   | $ | 39,712 |   |

| (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.                                                                                                                                                                                                                                                                                                   |

| Nine      Months Ended  |   |   |   |    | Twelve      Months Ended |
|-------------------------|--------|--------|--------|---------|--------------------------|
| September      30, 2009 |   |   |   |    | December      31, 2008   |
| (in      thousands)     |   |   |   |    | (in      thousands)      |
| End                     |   | High   |   | Average |                     | Low |   |   |   |   | End |   | High |   | Average |   | Low |
| $186                    |   | $530   |   | $259    |                     | $113 |   |   |   |   | $140 |   | $1,284 |   | $411 |   | $131 |

----

|                                                          |   | Three      Months Ended |    |   | Nine      Months Ended |   |
|---------------------------------------------------------------|--------|-------------------------|---------|--------|------------------------|--------|
|                                                          |   | 2009                    |    |   | 2008                   |   |   | 2009 |   |   | 2008 |   |
| REVENUES                                                      |   |                    |    |   |                   |   |   |   |   |   |   |   |
| Electric      Generation, Transmission and Distribution       |   | $                       | 481,049 |   |                   | $      | 600,841 |   |   | $ | 1,463,200 |   |   | $ | 1,672,203 |   |
| Sales      to AEP Affiliates                                  |   |                    | 276,947 |   |                   |   | 245,830 |   |   |   | 714,639 |   |   |   | 739,077 |   |
| Other      Revenues – Affiliated                        |   |                    | 5,646   |   |                   |   | 5,759 |   |   |   | 19,415 |   |   |   | 17,545 |   |
| Other      Revenues – Nonaffiliated                     |   |                    | 2,329   |   |                   |   | 4,584 |   |   |   | 9,445 |   |   |   | 12,738 |   |
| TOTAL      REVENUES                                           |   |                    | 765,971 |   |                   |   | 857,014 |   |   |   | 2,206,699 |   |   |   | 2,441,563 |   |
|                                                          |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES                                                      |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel      and Other Consumables Used for Electric Generation  |   |                    | 238,574 |   |                   |   | 359,341 |   |   |   | 681,523 |   |   |   | 928,465 |   |
| Purchased      Electricity for Resale                         |   |                    | 42,160  |   |                   |   | 56,142 |   |   |   | 138,398 |   |   |   | 129,874 |   |
| Purchased      Electricity from AEP Affiliates                |   |                    | 19,782  |   |                   |   | 48,867 |   |   |   | 56,989 |   |   |   | 116,540 |   |
| Other      Operation                                          |   |                    | 91,162  |   |                   |   | 98,653 |   |   |   | 287,009 |   |   |   | 280,494 |   |
| Maintenance                                                   |   |                    | 50,703  |   |                   |   | 51,791 |   |   |   | 168,893 |   |   |   | 159,706 |   |
| Depreciation      and Amortization                            |   |                    | 89,169  |   |                   |   | 72,180 |   |   |   | 262,576 |   |   |   | 211,919 |   |
| Taxes      Other Than Income Taxes                            |   |                    | 48,300  |   |                   |   | 49,019 |   |   |   | 146,274 |   |   |   | 146,534 |   |
| TOTAL      EXPENSES                                           |   |                    | 579,850 |   |                   |   | 735,993 |   |   |   | 1,741,662 |   |   |   | 1,973,532 |   |
|                                                          |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING      INCOME                                         |   |                    | 186,121 |   |                   |   | 121,021 |   |   |   | 465,037 |   |   |   | 468,031 |   |
|                                                          |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Income (Expense):                                  |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Income                                          |   |                    | 242     |   |                   |   | 2,252 |   |   |   | 1,002 |   |   |   | 6,910 |   |
| Carrying      Costs Income                                    |   |                    | 3,143   |   |                   |   | 3,936 |   |   |   | 7,152 |   |   |   | 12,159 |   |
| Allowance      for Equity Funds Used During Construction      |   |                    | 1,081   |   |                   |   | 555 |   |   |   | 1,849 |   |   |   | 1,801 |   |
| Interest      Expense                                         |   |                    | (40,614 | )      |                   |   | (39,731 | )  |   |   | (114,536 | ) |   |   | (115,088 | ) |
|                                                          |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME      BEFORE INCOME TAX EXPENSE                         |   |                    | 149,973 |   |                   |   | 88,033 |   |   |   | 360,504 |   |   |   | 373,813 |   |
|                                                          |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Income      Tax Expense                                       |   |                    | 53,398  |   |                   |   | 31,601 |   |   |   | 127,408 |   |   |   | 125,782 |   |
|                                                          |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME                                               |   |                    | 96,575  |   |                   |   | 56,432 |   |   |   | 233,096 |   |   |   | 248,031 |   |
|                                                          |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Less:      Net Income Attributable to Noncontrolling Interest |   |                    | 1,026   |   |                   |   | 233 |   |   |   | 2,042 |   |   |   | 1,111 |   |
|                                                          |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME ATTRIBUTABLE TO OPCo SHAREHOLDERS             |   |                    | 95,549  |   |                   |   | 56,199 |   |   |   | 231,054 |   |   |   | 246,920 |   |
|                                                          |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Less:      Preferred Stock Dividend Requirements              |   |                    | 183     |   |                   |   | 183 |   |   |   | 549 |   |   |   | 549 |   |
|                                                          |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS      ATTRIBUTABLE TO OPCo COMMON SHAREHOLDER         |   | $                       | 95,366  |   |                   | $      | 56,016 |   |   | $ | 230,505 |   |   | $ | 246,371 |   |

| The      common stock of OPCo is wholly-owned byAEP. |
|------------------------------------------------------|

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

----

|                                                                                           |   | OPCo      Common Shareholder |    |   |                 |   |      |                   |   |
|------------------------------------------------------------------------------------------------|--------|------------------------------|---------|--------|----------------------|--------|-----------|------------------------|--------|
|                                                                                           |   | Common      Stock            |    |   | Paid-in      Capital |   |      | Retained      Earnings |   |   | AccumulatedOtherComprehensiveIncome      (Loss) |   |   | NoncontrollingInterest |   |   | Total |   |
|                                                                                           |   |                         |    |   |                 |   |      |                   |   |   |   |   |   |   |   |   |   |   |
| TOTAL      EQUITY – DECEMBER 31, 2007                                                    |   | $                            | 321,201 |   |                 | $      | 536,640   |                   |   | $ | 1,469,717 |   |   | $ | (36,541 | ) |   | $ | 15,923 |   |   | $ | 2,306,940 |   |
|                                                                                           |   |                         |    |   |                 |   |      |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EITF      06-10 Adoption, Net of Tax of $1,004                                                 |   |                         |    |   |                 |   |      |                   |   |   | (1,864 | ) |   |   |   |   |   |   |   |   |   |   | (1,864 | ) |
| SFAS      157 Adoption, Net of Tax of $152                                                     |   |                         |    |   |                 |   |      |                   |   |   | (282 | ) |   |   |   |   |   |   |   |   |   |   | (282 | ) |
| Common      Stock Dividends – Nonaffiliated                                              |   |                         |    |   |                 |   |      |                   |   |   |   |   |   |   |   |   |   |   | (1,111 | ) |   |   | (1,111 | ) |
| Preferred      Stock Dividends                                                                 |   |                         |    |   |                 |   |      |                   |   |   | (549 | ) |   |   |   |   |   |   |   |   |   |   | (549 | ) |
| Other      Changes in Equity                                                                   |   |                         |    |   |                 |   |      |                   |   |   |   |   |   |   |   |   |   |   | 1,109 |   |   |   | 1,109 |   |
| SUBTOTAL – EQUITY                                                                        |   |                         |    |   |                 |   |      |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,304,243 |   |
|                                                                                           |   |                         |    |   |                 |   |      |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE      INCOME                                                                      |   |                         |    |   |                 |   |      |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Comprehensive Income, Net of Taxes:                                            |   |                         |    |   |                 |   |      |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      Flow Hedges, Net of Tax of $337                                                      |   |                         |    |   |                 |   |      |                   |   |   |   |   |   |   | 625 |   |   |   |   |   |   |   | 625 |   |
| Amortization      of Pension and OPEB Deferred Costs, Net of Tax of      $1,136 |   |                         |    |   |                 |   |      |                   |   |   |   |   |   |   | 2,110 |   |   |   |   |   |   |   | 2,110 |   |
| NET      INCOME                                                                                |   |                         |    |   |                 |   |      |                   |   |   | 246,920 |   |   |   |   |   |   |   | 1,111 |   |   |   | 248,031 |   |
| TOTAL      COMPREHENSIVE INCOME                                                                |   |                         |    |   |                 |   |      |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 250,766 |   |
|                                                                                           |   |                         |    |   |                 |   |      |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL EQUITY – SEPTEMBER 30,      2008                                              |   | $                            | 321,201 |   |                 | $      | 536,640   |                   |   | $ | 1,713,942 |   |   | $ | (33,806 | ) |   | $ | 17,032 |   |   | $ | 2,555,009 |   |
|                                                                                           |   |                         |    |   |                 |   |      |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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 |   |

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

----

|                                                 |   | 2009   |      |   | 2008   |   |
|------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| CURRENT      ASSETS                                  |   |   |      |   |   |   |
| Cash      and Cash Equivalents                       |   | $      | 2,950     |   |   | $      | 12,679 |   |
| Advances      to Affiliates                          |   |   | 367,743   |   |   |   | - |   |
| Accounts      Receivable:                            |   |   |      |   |   |   |   |   |
| Customers                                            |   |   | 46,310    |   |   |   | 91,235 |   |
| Affiliated      Companies                            |   |   | 167,994   |   |   |   | 118,721 |   |
| Accrued      Unbilled Revenues                       |   |   | 15,821    |   |   |   | 18,239 |   |
| Miscellaneous                                        |   |   | 3,535     |   |   |   | 23,393 |   |
| Allowance      for Uncollectible Accounts            |   |   | (2,737    | )      |   |   | (3,586 | ) |
| Total      Accounts Receivable                       |   |   | 230,923   |   |   |   | 248,002 |   |
| Fuel                                                 |   |   | 364,195   |   |   |   | 186,904 |   |
| Materials      and Supplies                          |   |   | 110,642   |   |   |   | 107,419 |   |
| Risk      Management Assets                          |   |   | 58,994    |   |   |   | 53,292 |   |
| Accrued      Tax Benefits                            |   |   | 30,833    |   |   |   | 13,568 |   |
| Prepayments      and Other Current Assets            |   |   | 34,613    |   |   |   | 42,999 |   |
| TOTAL      CURRENT ASSETS                            |   |   | 1,200,893 |   |   |   | 664,863 |   |
|                                                 |   |   |      |   |   |   |   |   |
| PROPERTY,      PLANT AND EQUIPMENT                   |   |   |      |   |   |   |   |   |
| Electric:                                            |   |   |      |   |   |   |   |   |
| Production                                           |   |   | 6,672,504 |   |   |   | 6,025,277 |   |
| Transmission                                         |   |   | 1,158,700 |   |   |   | 1,111,637 |   |
| Distribution                                         |   |   | 1,536,856 |   |   |   | 1,472,906 |   |
| Other      Property, Plant and Equipment             |   |   | 373,475   |   |   |   | 391,862 |   |
| Construction      Work in Progress                   |   |   | 238,525   |   |   |   | 787,180 |   |
| Total      Property, Plant and Equipment             |   |   | 9,980,060 |   |   |   | 9,788,862 |   |
| Accumulated      Depreciation and Amortization       |   |   | 3,280,362 |   |   |   | 3,122,989 |   |
| TOTAL      PROPERTY, PLANT AND EQUIPMENT – NET |   |   | 6,699,698 |   |   |   | 6,665,873 |   |
|                                                 |   |   |      |   |   |   |   |   |
| OTHER      NONCURRENT ASSETS                         |   |   |      |   |   |   |   |   |
| Regulatory      Assets                               |   |   | 685,750   |   |   |   | 449,216 |   |
| Long-term      Risk Management Assets                |   |   | 36,325    |   |   |   | 39,097 |   |
| Deferred      Charges and Other Noncurrent Assets    |   |   | 114,151   |   |   |   | 184,777 |   |
| TOTAL      OTHER NONCURRENT ASSETS                   |   |   | 836,226   |   |   |   | 673,090 |   |
|                                                 |   |   |      |   |   |   |   |   |
| TOTAL      ASSETS                                    |   | $      | 8,736,817 |   |   | $      | 8,003,826 |   |

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

----

|                                                                |   | 2009                |      |   | 2008   |   |
|---------------------------------------------------------------------|--------|---------------------|-----------|--------|--------|--------|
| CURRENT      LIABILITIES                                            |   | (in      thousands) |      |
| Advances      from Affiliates                                       |   | $                   | -         |   |   | $      | 133,887 |   |
| Accounts      Payable:                                              |   |                |      |   |   |   |   |   |
| General                                                             |   |                | 166,856   |   |   |   | 193,675 |   |
| Affiliated      Companies                                           |   |                | 76,645    |   |   |   | 206,984 |   |
| Long-term      Debt Due Within One Year – Nonaffiliated       |   |                | 479,450   |   |   |   | 77,500 |   |
| Risk      Management Liabilities                                    |   |                | 27,444    |   |   |   | 29,218 |   |
| Customer      Deposits                                              |   |                | 23,069    |   |   |   | 24,333 |   |
| Accrued      Taxes                                                  |   |                | 100,556   |   |   |   | 187,256 |   |
| Accrued      Interest                                               |   |                | 35,514    |   |   |   | 44,245 |   |
| Other      Current Liabilities                                      |   |                | 114,039   |   |   |   | 163,702 |   |
| TOTAL      CURRENT LIABILITIES                                      |   |                | 1,023,573 |   |   |   | 1,060,800 |   |
|                                                                |   |                |      |   |   |   |   |   |
| NONCURRENT      LIABILITIES                                         |   |                |      |   |   |   |   |   |
| Long-term      Debt – Nonaffiliated                           |   |                | 2,562,849 |   |   |   | 2,761,876 |   |
| Long-term      Debt – Affiliated                              |   |                | 200,000   |   |   |   | 200,000 |   |
| Long-term      Risk Management Liabilities                          |   |                | 16,134    |   |   |   | 23,817 |   |
| Deferred      Income Taxes                                          |   |                | 1,122,531 |   |   |   | 927,072 |   |
| Regulatory      Liabilities and Deferred Investment Tax Credits     |   |                | 133,252   |   |   |   | 127,788 |   |
| Employee      Benefits and Pension Obligations                      |   |                | 278,635   |   |   |   | 288,106 |   |
| Deferred      Credits and Other Noncurrent Liabilities              |   |                | 162,385   |   |   |   | 158,996 |   |
| TOTAL      NONCURRENT LIABILITIES                                   |   |                | 4,475,786 |   |   |   | 4,487,655 |   |
|                                                                |   |                |      |   |   |   |   |   |
| TOTAL      LIABILITIES                                              |   |                | 5,499,359 |   |   |   | 5,548,455 |   |
|                                                                |   |                |      |   |   |   |   |   |
| Cumulative      Preferred Stock Not Subject to Mandatory Redemption |   |                | 16,627    |   |   |   | 16,627 |   |
|                                                                |   |                |      |   |   |   |   |   |
| Commitments      and Contingencies (Note 4)                         |   |                |      |   |   |   |   |   |
|                                                                |   |                |      |   |   |   |   |   |
| EQUITY                                                              |   |                |      |   |   |   |   |   |
| Common      Stock – No Par Value:                             |   |                |      |   |   |   |   |   |
| Authorized      – 40,000,000 Shares                           |   |                |      |   |   |   |   |   |
| Outstanding      – 27,952,473 Shares                          |   |                | 321,201   |   |   |   | 321,201 |   |
| Paid-in      Capital                                                |   |                | 1,141,071 |   |   |   | 536,640 |   |
| Retained      Earnings                                              |   |                | 1,878,467 |   |   |   | 1,697,962 |   |
| Accumulated      Other Comprehensive Income (Loss)                  |   |                | (119,908  | )      |   |   | (133,858 | ) |
| TOTAL      COMMON SHAREHOLDER’S EQUITY                        |   |                | 3,220,831 |   |   |   | 2,421,945 |   |
|                                                                |   |                |      |   |   |   |   |   |
| Noncontrolling      Interest                                        |   |                | -         |   |   |   | 16,799 |   |
|                                                                |   |                |      |   |   |   |   |   |
| TOTAL      EQUITY                                                   |   |                | 3,220,831 |   |   |   | 2,438,744 |   |
|                                                                |   |                |      |   |   |   |   |   |
| TOTAL      LIABILITIES AND EQUITY                                   |   | $                   | 8,736,817 |   |   | $      | 8,003,826 |   |

----

|                                                                                       |   | 2009   |     |   | 2008   |   |
|--------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
| OPERATING      ACTIVITIES                                                                  |   |   |     |   |   |   |
| Net      Income                                                                            |   | $      | 233,096  |   |   | $      | 248,031 |   |
| Adjustments      to Reconcile Net Income to Net Cash Flows from Operating      Activities: |   |   |     |   |   |   |   |   |
| Depreciation      and Amortization                                                         |   |   | 262,576  |   |   |   | 211,919 |   |
| Deferred      Income Taxes                                                                 |   |   | 213,458  |   |   |   | 45,424 |   |
| Carrying      Costs Income                                                                 |   |   | (7,152   | )      |   |   | (12,159 | ) |
| Allowance      for Equity Funds Used During Construction                                   |   |   | (1,849   | )      |   |   | (1,801 | ) |
| Mark-to-Market      of Risk Management Contracts                                           |   |   | (15,226  | )      |   |   | (2,028 | ) |
| Deferred      Property Taxes                                                               |   |   | 66,976   |   |   |   | 63,867 |   |
| Fuel      Over/Under-Recovery, Net                                                         |   |   | (242,392 | )      |   |   | - |   |
| Change      in Other Noncurrent Assets                                                     |   |   | 12,690   |   |   |   | (52,788 | ) |
| Change      in Other Noncurrent Liabilities                                                |   |   | 40,709   |   |   |   | 9,300 |   |
| Changes      in Certain Components of Working Capital:                                     |   |   |     |   |   |   |   |   |
| Accounts      Receivable, Net                                                              |   |   | 15,155   |   |   |   | 16,947 |   |
| Fuel,      Materials and Supplies                                                          |   |   | (180,514 | )      |   |   | (48,197 | ) |
| Accounts      Payable                                                                      |   |   | (138,828 | )      |   |   | 45,252 |   |
| Accrued      Taxes, Net                                                                    |   |   | (103,965 | )      |   |   | (56,936 | ) |
| Other      Current Assets                                                                  |   |   | (4,164   | )      |   |   | (14,333 | ) |
| Other      Current Liabilities                                                             |   |   | (13,768  | )      |   |   | (17,092 | ) |
| Net      Cash Flows from Operating Activities                                              |   |   | 136,802  |   |   |   | 435,406 |   |
|                                                                                       |   |   |     |   |   |   |   |   |
| INVESTING      ACTIVITIES                                                                  |   |   |     |   |   |   |   |   |
| Construction      Expenditures                                                             |   |   | (342,633 | )      |   |   | (453,405 | ) |
| Change      in Advances to Affiliates, Net                                                 |   |   | (367,743 | )      |   |   | (39,758 | ) |
| Proceeds      from Sales of Assets                                                         |   |   | 31,253   |   |   |   | 6,872 |   |
| Other      Investing Activities                                                            |   |   | 4,476    |   |   |   | (387 | ) |
| Net      Cash Flows Used for Investing Activities                                          |   |   | (674,647 | )      |   |   | (486,678 | ) |
|                                                                                       |   |   |     |   |   |   |   |   |
| FINANCING      ACTIVITIES                                                                  |   |   |     |   |   |   |   |   |
| Capital      Contribution from Parent                                                      |   |   | 550,000  |   |   |   | - |   |
| Issuance      of Long-term Debt – Nonaffiliated                                      |   |   | 494,078  |   |   |   | 412,389 |   |
| Change      in Short-term Debt, Net – Nonaffiliated                                  |   |   | -        |   |   |   | (701 | ) |
| Change      in Advances from Affiliates, Net                                               |   |   | (133,887 | )      |   |   | (101,548 | ) |
| Retirement      of Long-term Debt – Nonaffiliated                                    |   |   | (295,500 | )      |   |   | (263,463 | ) |
| Retirement      of Cumulative Preferred Stock                                              |   |   | (1       | )      |   |   | - |   |
| Principal      Payments for Capital Lease Obligations                                      |   |   | (3,435   | )      |   |   | (4,636 | ) |
| Dividends      Paid on Common Stock – Nonaffiliated                                  |   |   | (2,042   | )      |   |   | (1,111 | ) |
| Dividends      Paid on Common Stock – Affiliated                                     |   |   | (50,000  | )      |   |   | - |   |
| Dividends      Paid on Cumulative Preferred Stock                                          |   |   | (549     | )      |   |   | (549 | ) |
| Acquisition      of JMG Noncontrolling Interest                                            |   |   | (28,221  | )      |   |   | - |   |
| Other      Financing Activities                                                            |   |   | (2,327   | )      |   |   | 13,313 |   |
| Net      Cash Flows from Financing Activities                                              |   |   | 528,116  |   |   |   | 53,694 |   |
|                                                                                       |   |   |     |   |   |   |   |   |
| Net      Increase (Decrease) in Cash and Cash Equivalents                                  |   |   | (9,729   | )      |   |   | 2,422 |   |
| Cash      and Cash Equivalents at Beginning of Period                                      |   |   | 12,679   |   |   |   | 6,666 |   |
| Cash      and Cash Equivalents at End of Period                                            |   | $      | 2,950    |   |   | $      | 9,088 |   |

| SUPPLEMENTARY      INFORMATION                                               |   |   |    |   |   |   |
|------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Cash      Paid for Interest, Net of Capitalized Amounts                      |   | $      | 119,763 |   |   | $      | 112,321 |   |
| Net      Cash Paid (Received) for Income Taxes                               |   |   | (23,241 | )      |   |   | 61,051 |   |
| Noncash      Acquisitions Under Capital Leases                               |   |   | 2,022   |   |   |   | 2,018 |   |
| Noncash      Acquisition of Coal Land Rights                                 |   |   | -       |   |   |   | 41,600 |   |
| Construction      Expenditures Included in Accounts Payable at September 30, |   |   | 15,527  |   |   |   | 25,839 |   |

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

----

|                                                      | 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      |

----

----

PUBLIC SERVICE COMPANY OF OKLAHOMA

| Third      Quarter of 2008                   |   |   |   |   | $      | 28     |   |
|----------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                         |   |   |   |   |   |   |   |
| Changes      in Gross Margin:                |   |   |   |   |   |   |   |
| Retail      and Off-system Sales Margins (a) |   |   | 20     |   |   |   |   |   |
| Transmission      Revenue                    |   |   | 2      |   |   |   |   |   |
| Other                                        |   |   | (1     | )      |   |   |   |   |
| Total      Change in Gross Margin            |   |   |   |   |   |   | 21     |   |
|                                         |   |   |   |   |   |   |   |   |
| Total      Expenses and Other:               |   |   |   |   |   |   |   |   |
| Other      Operation and Maintenance         |   |   | 6      |   |   |   |   |   |
| Taxes      Other Than Income Taxes           |   |   | (2     | )      |   |   |   |   |
| Other      Income                            |   |   | (1     | )      |   |   |   |   |
| Total      Expenses and Other                |   |   |   |   |   |   | 3      |   |
|                                         |   |   |   |   |   |   |   |   |
| Income      Tax Expense                      |   |   |   |   |   |   | (8     | ) |
|                                         |   |   |   |   |   |   |   |   |
| Third      Quarter of 2009                   |   |   |   |   |   | $      | 44     |   |

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

| · | Retail      and Off-system Sales Margins increased $20 million primarily due to an      increase in retail sales margins resulting from base rate      adjustments. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Other      Operation and Maintenance expenses decreased $6 million primarily due      to:                                                                                    |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                       | A      $4 million decrease in steam generation expense primarily due to higher      planned maintenance in 2008. |
|   | ·                                                                                                                                                                       | A      $2 million decrease primarily due to a decrease in sale of receivable      expense from decreased revenues. |
| · | Taxes      Other Than Income Taxes increased $2 million primarily due to an increase      in state sales and use tax and an increase in real and personal property      tax. |
| · | Income      Tax Expense increased $8 million primarily due to an increase in pretax      book income.                                                                        |

| Nine      Months Ended September 30, 2008    |   |   |   |   | $      | 69     |   |
|----------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                         |   |   |   |   |   |   |   |
| Changes      in Gross Margin:                |   |   |   |   |   |   |   |
| Retail      and Off-system Sales Margins (a) |   |   | 70     |   |   |   |   |   |
| Transmission      Revenues                   |   |   | 3      |   |   |   |   |   |
| Other                                        |   |   | (10    | )      |   |   |   |   |
| Total      Change in Gross Margin            |   |   |   |   |   |   | 63     |   |
|                                         |   |   |   |   |   |   |   |   |
| Total      Expenses and Other:               |   |   |   |   |   |   |   |   |
| Other      Operation and Maintenance         |   |   | 28     |   |   |   |   |   |
| Deferral      of Ice Storm Costs             |   |   | (72    | )      |   |   |   |   |
| Depreciation      and Amortization           |   |   | (6     | )      |   |   |   |   |
| Taxes      Other Than Income Taxes           |   |   | (2     | )      |   |   |   |   |
| Other      Income                            |   |   | (4     | )      |   |   |   |   |
| Total      Expenses and Other                |   |   |   |   |   |   | (56    | ) |
|                                         |   |   |   |   |   |   |   |   |
| Income      Tax Expense                      |   |   |   |   |   |   | (2     | ) |
|                                         |   |   |   |   |   |   |   |   |
| Nine      Months Ended September 30, 2009    |   |   |   |   |   | $      | 74     |   |

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

| · | Retail      and Off-system Sales Margins increased $70 million primarily due to an      increase in retail sales margins resulting from base rate adjustments      including riders of $25 million.  The $25 million increase in      riders were offset by a corresponding $14 million increase in Other      Operation and Maintenance expenses and a $6 million increase in      Depreciation and Amortization expenses as discussed  below. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Other      revenues decreased $10 million primarily due to the sale of SO2      allowances.  The decrease was offset by a corresponding $9      million decrease in Other Operation and Maintenance expenses as discussed      below.                                                                                                                                                                                                           |

| · | Other      Operation and Maintenance expenses decreased $28 million primarily due      to: |
|--------|--------------------------------------------------------------------------------------------|
|   | ·                                                                                     | The      write-off in the first quarter of 2008 of $10 million of unrecoverable      pre-construction costs related to the cancelled Red Rock Generating      Facility. |
|   | ·                                                                                     | A      $10 million decrease due to lower plant maintenance expense primarily due      to the deferral of generation maintenance expenses as a result of PSO’s      base rate filing.  See “2008 Oklahoma Base Rate Filing Appeal”      section of Note 3. |
|   | ·                                                                                     | A      $9 million decrease in expense due to the amortization of regulatory      assets related to the 2007 ice storm expense which is offset by a      corresponding decrease in Other revenues as discussed    above. |
|   | ·                                                                                     | A      $3 million decrease in employee-related expenses. |
|   | ·                                                                                     | A      $3 million decrease primarily due to a decrease in sale of receivable      expense from decreased revenues. |
|   | ·                                                                                     | A      $2 million decrease in expense related to maintenance of overhead      transmission lines. |
|   | These      decreases were partially offset by:                                             |
|   | ·                                                                                     | A      $14 million increase in expense from amortization of regulatory assets      related to the 2007 ice storm, demand side management and distribution      vegetation management directly offset by a corresponding increase in      revenue from the riders discussedabove. |

| · | Deferral      of Ice Storm Costs in 2008 of $72 million results from an OCC order      approving recovery of ice storm costs related to ice storms in January and      December 2007.                                                                                                                                                                       |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Depreciation      and Amortization expenses increased $6 million primarily due to an      increase in  amortization of regulatory assets, largest of which      was related to the Generation Cost Recovery regulatory      asset.  The increase is offset by a corresponding increase in      revenues from riders as discussed above. |
| · | Taxes      Other Than Income Taxes increased $2 million primarily due to an increase      in real and personal property tax.                                                                                                                                                                                                                                |
| · | Other      Income decreased $4 million primarily due to carrying charges related to      the Generation Cost Recovery regulatory assets and a decrease in the      equity component of AFUDC.                                                                                                                                                               |
| · | Income      Tax Expense increased $2 million primarily due to an increase in pretax      book income.                                                                                                                                                                                                                                                       |

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

|                                                      |   | 2009                |     |   | 2008   |   |
|-----------------------------------------------------------|--------|---------------------|----------|--------|--------|--------|
|                                                      |   | (in      thousands) |     |
| Cash      and Cash Equivalents at Beginning of Period     |   | $                   | 1,345    |   |   | $      | 1,370 |   |
| Cash      Flows from (Used for):                          |   |                |     |   |   |   |   |   |
| Operating      Activities                                 |   |                | 232,759  |   |   |   | 42,386 |   |
| Investing      Activities                                 |   |                | (142,945 | )      |   |   | (161,523 | ) |
| Financing      Activities                                 |   |                | (89,852  | )      |   |   | 120,011 |   |
| Net      Increase (Decrease) in Cash and Cash Equivalents |   |                | (38      | )      |   |   | 874 |   |
| Cash      and Cash Equivalents at End of Period           |   | $                   | 1,307    |   |   | $      | 2,244 |   |

|                         |   | Principal           |         | Interest |   | Due    |
|------------------------------|--------|---------------------|--------------|----------|--------|--------|
| Type      of Debt            |   | Amount              |         | Rate     |   | Date   |
|                         |   | (in      thousands) |         | (%)      |   |   |
| Pollution      Control Bonds |   | $                   | 33,700  |     | 5.25   |   | 2014 |

|                        |   | PrincipalAmount      Paid |         | Interest |   | Due    |
|-----------------------------|--------|---------------------------|--------------|----------|--------|--------|
| Type      of Debt           |   |                      | Rate         |     | Date   |
|                        |   | (in      thousands)       |         | (%)      |   |   |
| Senior      Unsecured Notes |   | $                         | 50,000  |     | 4.70   |   | 2009 |

----

|                                                        |   | MTM      Risk Management Contracts |   |   | Cash      FlowHedgeContracts |   |   | CollateralDeposits |   |   | Total  |   |
|-------------------------------------------------------------|--------|------------------------------------|--------|--------|------------------------------|--------|--------|--------------------|--------|--------|--------|--------|
| Current      Assets                                         |   | $                                  | 3,834  |   |                         | $      | 72     |               |   | $      | (1     | )      |   | $ | 3,905 |   |
| Noncurrent      Assets                                      |   |                               | 299    |   |                         |   | 13     |               |   |   | -      |   |   |   | 312 |   |
| Total      MTM Derivative Contract Assets                   |   |                               | 4,133  |   |                         |   | 85     |               |   |   | (1     | )      |   |   | 4,217 |   |
|                                                        |   |                               |   |   |                         |   |   |               |   |   |   |   |   |   |   |   |
| Current      Liabilities                                    |   |                               | 4,279  |   |                         |   | 501    |               |   |   | (15    | )      |   |   | 4,765 |   |
| Noncurrent      Liabilities                                 |   |                               | 447    |   |                         |   | 37     |               |   |   | (11    | )      |   |   | 473 |   |
| Total      MTM Derivative Contract Liabilities              |   |                               | 4,726  |   |                         |   | 538    |               |   |   | (26    | )      |   |   | 5,238 |   |
|                                                        |   |                               |   |   |                         |   |   |               |   |   |   |   |   |   |   |   |
| Total      MTM Derivative Contract Net Assets (Liabilities) |   | $                                  | (593   | )      |                         | $      | (453   | )                  |   | $      | 25     |   |   | $ | (1,021 | ) |

| Total      MTM Risk Management Contract Net Assets at December 31,    2008                                            |   | $      | 1,660  |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
| (Gain)      Loss from Contracts Realized/Settled During the Period and Entered in a      Prior Period                 |   |   | (750   | )      |
| 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 |   |   | (17    | )      |
| Change      in Fair Value Due to Valuation Methodology Changes on Forward      Contracts                              |   |   | -      |   |
| Changes      in Fair Value Due to Market Fluctuations During the Period    (b)                                        |   |   | (43    | )      |
| Changes      in Fair Value Allocated to Regulated Jurisdictions (c)                                                   |   |   | (1,443 | )      |
| Total      MTM Risk Management Contract Net Assets (Liabilities)                                                      |   |   | (593   | )      |
| Cash      Flow Hedge Contracts                                                                                        |   |   | (453   | )      |
| Collateral      Deposits                                                                                              |   |   | 25     |   |
| Total      MTM Derivative Contract Net Assets (Liabilities) at September 30,      2009                                |   | $      | (1,021 | )      |

| (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) | Market      fluctuations are attributable to various factors such as supply/demand,      weather, etc.                                                                                                                                                                                                                                                                                                              |
| (c) | “Changes      in Fair Value Allocated to Regulated Jurisdictions” relates to the net      gains (losses) of those contracts that are not reflected on the Condensed      Statements of Income.  These net gains (losses) are recorded as      regulatory liabilities/assets.                                                                                                                  |

|                                                             |   | Remainder2009 |   |   | 2010   |   |   | 2011   |   |   | 2012 |   |   | 2013   |   |   | After2013 |   |   | Total  |   |
|------------------------------------------------------------------|--------|---------------|--------|--------|--------|--------|--------|--------|--------|--------|------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|
| Level      1 (a)                                                 |   | $             | 47     |   |   | $      | -      |   |   | $      | -    |   |   | $      | -      |   |      | $      | -      |   |   | $ | - |   |   | $ | 47 |   |
| Level      2 (b)                                                 |   |          | 269    |   |   |   | (633   | )      |   |   | (287 | )      |   |   | 6      |   |      |   | -      |   |   |   | - |   |   |   | (645 | ) |
| Level      3 (c)                                                 |   |          | 4      |   |   |   | 1      |   |   |   | -    |   |   |   | -      |   |      |   | -      |   |   |   | - |   |   |   | 5 |   |
| Total      MTM Risk Management Contract Net Assets (Liabilities) |   | $             | 320    |   |   | $      | (632   | )      |   | $      | (287 | )      |   | $      | 6      |   |      | $      | -      |   |   | $ | - |   |   | $ | (593 | ) |

| (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.                                                                                                                                                                                                                        |

| Nine      Months Ended  |   |   |   |    | Twelve      Months Ended |
|-------------------------|--------|--------|--------|---------|--------------------------|
| September      30, 2009 |   |   |   |    | December      31, 2008   |
| (in      thousands)     |   |   |   |    | (in      thousands)      |
| End                     |   | High   |   | Average |                     | Low |   |   |   |   | End |   | High |   | Average |   | Low |
| $9                      |   | $34    |   | $12     |                     | $4 |   |   |   |   | $4 |   | $164 |   | $44 |   | $6 |

----

|                                                         |   | Three      Months Ended |    |   | Nine      Months Ended |   |
|--------------------------------------------------------------|--------|-------------------------|---------|--------|------------------------|--------|
|                                                         |   | 2009                    |    |   | 2008                   |   |   | 2009 |   |   | 2008 |   |
| REVENUES                                                     |   |                    |    |   |                   |   |   |   |   |   |   |   |
| Electric      Generation, Transmission and Distribution      |   | $                       | 311,274 |   |                   | $      | 518,182 |   |   | $ | 853,808 |   |   | $ | 1,194,737 |   |
| Sales      to AEP Affiliates                                 |   |                    | 6,668   |   |                   |   | 32,286 |   |   |   | 34,181 |   |   |   | 89,988 |   |
| Other      Revenues                                          |   |                    | 613     |   |                   |   | 781 |   |   |   | 2,994 |   |   |   | 2,858 |   |
| TOTAL      REVENUES                                          |   |                    | 318,555 |   |                   |   | 551,249 |   |   |   | 890,983 |   |   |   | 1,287,583 |   |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES                                                     |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel      and Other Consumables Used for Electric Generation |   |                    | 79,610  |   |                   |   | 288,027 |   |   |   | 261,762 |   |   |   | 584,769 |   |
| Purchased      Electricity for Resale                        |   |                    | 42,090  |   |                   |   | 77,834 |   |   |   | 132,623 |   |   |   | 230,432 |   |
| Purchased      Electricity from AEP Affiliates               |   |                    | 5,424   |   |                   |   | 15,169 |   |   |   | 14,755 |   |   |   | 53,944 |   |
| Other      Operation                                         |   |                    | 48,145  |   |                   |   | 51,432 |   |   |   | 134,211 |   |   |   | 152,617 |   |
| Maintenance                                                  |   |                    | 24,601  |   |                   |   | 27,530 |   |   |   | 77,996 |   |   |   | 87,772 |   |
| Deferral      of Ice Storm Costs                             |   |                    | -       |   |                   |   | 69 |   |   |   | - |   |   |   | (71,610 | ) |
| Depreciation      and Amortization                           |   |                    | 27,799  |   |                   |   | 27,192 |   |   |   | 84,278 |   |   |   | 78,079 |   |
| Taxes      Other Than Income Taxes                           |   |                    | 9,534   |   |                   |   | 7,839 |   |   |   | 31,243 |   |   |   | 29,265 |   |
| TOTAL      EXPENSES                                          |   |                    | 237,203 |   |                   |   | 495,092 |   |   |   | 736,868 |   |   |   | 1,145,268 |   |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING      INCOME                                        |   |                    | 81,352  |   |                   |   | 56,157 |   |   |   | 154,115 |   |   |   | 142,315 |   |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Income (Expense):                                 |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Income                                            |   |                    | 825     |   |                   |   | 34 |   |   |   | 2,794 |   |   |   | 4,004 |   |
| Carrying      Costs Income                                   |   |                    | 986     |   |                   |   | 3,183 |   |   |   | 3,716 |   |   |   | 6,945 |   |
| Interest      Expense                                        |   |                    | (13,884 | )      |                   |   | (13,713 | ) |   |   | (43,852 | ) |   |   | (43,179 | ) |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME      BEFORE INCOME TAX EXPENSE                        |   |                    | 69,279  |   |                   |   | 45,661 |   |   |   | 116,773 |   |   |   | 110,085 |   |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Income      Tax Expense                                      |   |                    | 25,702  |   |                   |   | 17,917 |   |   |   | 43,036 |   |   |   | 40,815 |   |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME                                              |   |                    | 43,577  |   |                   |   | 27,744 |   |   |   | 73,737 |   |   |   | 69,270 |   |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred      Stock Dividend Requirements                   |   |                    | 53      |   |                   |   | 53 |   |   |   | 159 |   |   |   | 159 |   |
|                                                         |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS      ATTRIBUTABLE TO COMMON STOCK                   |   | $                       | 43,524  |   |                   | $      | 27,691 |   |   | $ | 73,578 |   |   | $ | 69,111 |   |

| The      common stock of PSO is wholly-owned byAEP. |
|-----------------------------------------------------|

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

----

|                                                                    |   | Common      Stock |    |   | Paid-in      Capital |   |    | Retained      Earnings |   |   | Accumulated      Other Comprehensive Income (Loss) |   |   | Total  |   |
|-------------------------------------------------------------------------|--------|-------------------|---------|--------|----------------------|--------|---------|------------------------|--------|--------|----------------------------------------------------|--------|--------|--------|--------|
| TOTAL      COMMON SHAREHOLDER’S EQUITY – DECEMBER 31, 2007  |   | $                 | 157,230 |   |                 | $      | 310,016 |                   |   | $      | 174,539                                            |   |   | $      | (887   | ) |   | $ | 640,898 |   |
|                                                                    |   |              |    |   |                 |   |    |                   |   |   |                                               |   |   |   |   |   |   |   |   |   |
| EITF      06-10 Adoption, Net of Tax of $596                            |   |              |    |   |                 |   |    |                   |   |   | (1,107                                             | )      |   |   |   |   |   |   | (1,107 | ) |
| Capital      Contribution from Parent                                   |   |              |    |   |                 |   | 30,000  |                   |   |   |                                               |   |   |   |   |   |   |   | 30,000 |   |
| Preferred      Stock Dividends                                          |   |              |    |   |                 |   |    |                   |   |   | (159                                               | )      |   |   |   |   |   |   | (159 | ) |
| SUBTOTAL      – COMMON SHAREHOLDER’S EQUITY                 |   |              |    |   |                 |   |    |                   |   |   |                                               |   |   |   |   |   |   |   | 669,632 |   |
|                                                                    |   |              |    |   |                 |   |    |                   |   |   |                                               |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE      INCOME                                               |   |              |    |   |                 |   |    |                   |   |   |                                               |   |   |   |   |   |   |   |   |   |
| Other Comprehensive      Income,Net of      Taxes:                      |   |              |    |   |                 |   |    |                   |   |   |                                               |   |   |   |   |   |   |   |   |   |
| Cash      Flow Hedges, Net of Tax of $74                                |   |              |    |   |                 |   |    |                   |   |   |                                               |   |   |   | 137    |   |   |   | 137 |   |
| NET      INCOME                                                         |   |              |    |   |                 |   |    |                   |   |   | 69,270                                             |   |   |   |   |   |   |   | 69,270 |   |
| TOTAL      COMPREHENSIVE INCOME                                         |   |              |    |   |                 |   |    |                   |   |   |                                               |   |   |   |   |   |   |   | 69,407 |   |
|                                                                    |   |              |    |   |                 |   |    |                   |   |   |                                               |   |   |   |   |   |   |   |   |   |
| TOTAL      COMMON SHAREHOLDER’S EQUITY – SEPTEMBER 30, 2008 |   | $                 | 157,230 |   |                 | $      | 340,016 |                   |   | $      | 242,543                                            |   |   | $      | (750   | ) |   | $ | 739,039 |   |
|                                                                    |   |              |    |   |                 |   |    |                   |   |   |                                               |   |   |   |   |   |   |   |   |   |
| 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 |   |

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

----

|                                                 |   | 2009   |      |   | 2008   |   |
|------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| CURRENT      ASSETS                                  |   |   |      |
| Cash      and Cash Equivalents                       |   | $      | 1,307     |   |   | $      | 1,345 |   |
| Advances      to Affiliates                          |   |   | 8,450     |   |   |   | - |   |
| Accounts      Receivable:                            |   |   |      |   |   |   |   |   |
| Customers                                            |   |   | 23,043    |   |   |   | 39,823 |   |
| Affiliated      Companies                            |   |   | 69,413    |   |   |   | 138,665 |   |
| Miscellaneous                                        |   |   | 5,871     |   |   |   | 8,441 |   |
| Allowance      for Uncollectible Accounts            |   |   | (340      | )      |   |   | (20 | ) |
| Total      Accounts Receivable                       |   |   | 97,987    |   |   |   | 186,909 |   |
| Fuel                                                 |   |   | 22,367    |   |   |   | 27,060 |   |
| Materials      and Supplies                          |   |   | 44,541    |   |   |   | 44,047 |   |
| Risk      Management Assets                          |   |   | 3,905     |   |   |   | 5,830 |   |
| Deferred      Tax Benefits                           |   |   | 34,177    |   |   |   | 9,123 |   |
| Accrued      Tax Benefits                            |   |   | 503       |   |   |   | 3,876 |   |
| Prepayments      and Other Current Assets            |   |   | 7,083     |   |   |   | 3,371 |   |
| TOTAL      CURRENT ASSETS                            |   |   | 220,320   |   |   |   | 281,561 |   |
|                                                 |   |   |      |   |   |   |   |   |
| PROPERTY,      PLANT AND EQUIPMENT                   |   |   |      |   |   |   |   |   |
| Electric:                                            |   |   |      |   |   |   |   |   |
| Production                                           |   |   | 1,294,115 |   |   |   | 1,266,716 |   |
| Transmission                                         |   |   | 638,645   |   |   |   | 622,665 |   |
| Distribution                                         |   |   | 1,551,382 |   |   |   | 1,468,481 |   |
| Other      Property, Plant and Equipment             |   |   | 250,053   |   |   |   | 248,897 |   |
| Construction      Work in Progress                   |   |   | 59,356    |   |   |   | 85,252 |   |
| Total      Property, Plant and Equipment             |   |   | 3,793,551 |   |   |   | 3,692,011 |   |
| Accumulated      Depreciation and Amortization       |   |   | 1,228,141 |   |   |   | 1,192,130 |   |
| TOTAL      PROPERTY, PLANT AND EQUIPMENT – NET |   |   | 2,565,410 |   |   |   | 2,499,881 |   |
|                                                 |   |   |      |   |   |   |   |   |
| OTHER      NONCURRENT ASSETS                         |   |   |      |   |   |   |   |   |
| Regulatory      Assets                               |   |   | 277,790   |   |   |   | 304,737 |   |
| Long-term      Risk Management Assets                |   |   | 312       |   |   |   | 917 |   |
| Deferred      Charges and Other Noncurrent Assets    |   |   | 20,979    |   |   |   | 13,702 |   |
| TOTAL      OTHER NONCURRENT ASSETS                   |   |   | 299,081   |   |   |   | 319,356 |   |
|                                                 |   |   |      |   |   |   |   |   |
| TOTAL      ASSETS                                    |   | $      | 3,084,811 |   |   | $      | 3,100,798 |   |

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

----

|                                                                |   | 2009                |      |   | 2008   |   |
|---------------------------------------------------------------------|--------|---------------------|-----------|--------|--------|--------|
| CURRENT      LIABILITIES                                            |   | (in      thousands) |      |
| Advances      from Affiliates                                       |   | $                   | -         |   |   | $      | 70,308 |   |
| Accounts      Payable:                                              |   |                |      |   |   |   |   |   |
| General                                                             |   |                | 52,529    |   |   |   | 84,121 |   |
| Affiliated      Companies                                           |   |                | 69,287    |   |   |   | 86,407 |   |
| Long-term      Debt Due Within One Year – Nonaffiliated       |   |                | 150,000   |   |   |   | 50,000 |   |
| Risk      Management Liabilities                                    |   |                | 4,765     |   |   |   | 4,753 |   |
| Customer      Deposits                                              |   |                | 42,622    |   |   |   | 40,528 |   |
| Accrued      Taxes                                                  |   |                | 61,746    |   |   |   | 19,000 |   |
| Regulatory      Liability for Over-Recovered Fuel Costs             |   |                | 95,983    |   |   |   | 58,395 |   |
| Provision      for Revenue Refund                                   |   |                | -         |   |   |   | 52,100 |   |
| Other      Current Liabilities                                      |   |                | 46,878    |   |   |   | 61,194 |   |
| TOTAL      CURRENT LIABILITIES                                      |   |                | 523,810   |   |   |   | 526,806 |   |
|                                                                |   |                |      |   |   |   |   |   |
| NONCURRENT      LIABILITIES                                         |   |                |      |   |   |   |   |   |
| Long-term      Debt – Nonaffiliated                           |   |                | 718,738   |   |   |   | 834,859 |   |
| Long-term      Risk Management Liabilities                          |   |                | 473       |   |   |   | 378 |   |
| Deferred      Income Taxes                                          |   |                | 553,261   |   |   |   | 514,720 |   |
| Regulatory      Liabilities and Deferred Investment Tax Credits     |   |                | 325,694   |   |   |   | 323,750 |   |
| Deferred      Credits and Other Noncurrent Liabilities              |   |                | 137,647   |   |   |   | 146,777 |   |
| TOTAL      NONCURRENT LIABILITIES                                   |   |                | 1,735,813 |   |   |   | 1,820,484 |   |
|                                                                |   |                |      |   |   |   |   |   |
| TOTAL      LIABILITIES                                              |   |                | 2,259,623 |   |   |   | 2,347,290 |   |
|                                                                |   |                |      |   |   |   |   |   |
| Cumulative      Preferred Stock Not Subject to Mandatory Redemption |   |                | 5,258     |   |   |   | 5,262 |   |
|                                                                |   |                |      |   |   |   |   |   |
| Commitments      and Contingencies (Note 4)                         |   |                |      |   |   |   |   |   |
|                                                                |   |                |      |   |   |   |   |   |
| COMMON      SHAREHOLDER’S EQUITY                              |   |                |      |   |   |   |   |   |
| Common      Stock – Par Value – $15 Per Share:          |   |                |      |   |   |   |   |   |
| Authorized      – 11,000,000 Shares                           |   |                |      |   |   |   |   |   |
| Issued      – 10,482,000 Shares                               |   |                |      |   |   |   |   |   |
| Outstanding      – 9,013,000 Shares                           |   |                | 157,230   |   |   |   | 157,230 |   |
| Paid-in      Capital                                                |   |                | 364,231   |   |   |   | 340,016 |   |
| Retained      Earnings                                              |   |                | 299,318   |   |   |   | 251,704 |   |
| Accumulated      Other Comprehensive Income (Loss)                  |   |                | (849      | )      |   |   | (704 | ) |
| TOTAL      COMMON SHAREHOLDER’S EQUITY                        |   |                | 819,930   |   |   |   | 748,246 |   |
|                                                                |   |                |      |   |   |   |   |   |
| TOTAL      LIABILITIES AND SHAREHOLDERS’ EQUITY               |   | $                   | 3,084,811 |   |   | $      | 3,100,798 |   |

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

----

|                                                                                       |   | 2009   |     |   | 2008   |   |
|--------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
| OPERATING      ACTIVITIES                                                                  |   |   |     |   |   |   |
| Net      Income                                                                            |   | $      | 73,737   |   |   | $      | 69,270 |   |
| Adjustments      to Reconcile Net Income to Net Cash Flows from Operating      Activities: |   |   |     |   |   |   |   |   |
| Depreciation      and Amortization                                                         |   |   | 84,278   |   |   |   | 78,079 |   |
| Deferred      Income Taxes                                                                 |   |   | 13,103   |   |   |   | 70,856 |   |
| Deferral      of Ice Storm Costs                                                           |   |   | -        |   |   |   | (71,610 | ) |
| Allowance      for Equity Funds Used During Construction                                   |   |   | (1,224   | )      |   |   | (1,840 | ) |
| Mark-to-Market      of Risk Management Contracts                                           |   |   | 2,185    |   |   |   | 6,973 |   |
| Fuel      Over/Under-Recovery, Net                                                         |   |   | (14,566  | )      |   |   | (47,192 | ) |
| Change      in Other Noncurrent Assets                                                     |   |   | (4,669   | )      |   |   | 9,920 |   |
| Change      in Other Noncurrent Liabilities                                                |   |   | (2,768   | )      |   |   | (34,426 | ) |
| Changes      in Certain Components of Working Capital:                                     |   |   |     |   |   |   |   |   |
| Accounts      Receivable, Net                                                              |   |   | 86,010   |   |   |   | 21,846 |   |
| Fuel,      Materials and Supplies                                                          |   |   | 4,199    |   |   |   | (6,881 | ) |
| Margin      Deposits                                                                       |   |   | 314      |   |   |   | 8,554 |   |
| Accounts      Payable                                                                      |   |   | (38,023  | )      |   |   | (81,228 | ) |
| Accrued      Taxes, Net                                                                    |   |   | 46,119   |   |   |   | 35,624 |   |
| Other      Current Assets                                                                  |   |   | (4,136   | )      |   |   | (1,676 | ) |
| Other      Current Liabilities                                                             |   |   | (11,800  | )      |   |   | (13,883 | ) |
| Net      Cash Flows from Operating Activities                                              |   |   | 232,759  |   |   |   | 42,386 |   |
|                                                                                       |   |   |     |   |   |   |   |   |
| INVESTING      ACTIVITIES                                                                  |   |   |     |   |   |   |   |   |
| Construction      Expenditures                                                             |   |   | (134,756 | )      |   |   | (214,319 | ) |
| Change      in Advances to Affiliates, Net                                                 |   |   | (8,450   | )      |   |   | 51,202 |   |
| Other      Investing Activities                                                            |   |   | 261      |   |   |   | 1,594 |   |
| Net      Cash Flows Used for Investing Activities                                          |   |   | (142,945 | )      |   |   | (161,523 | ) |
|                                                                                       |   |   |     |   |   |   |   |   |
| FINANCING      ACTIVITIES                                                                  |   |   |     |   |   |   |   |   |
| Capital      Contribution from Parent                                                      |   |   | 20,000   |   |   |   | 30,000 |   |
| Issuance      of Long-term Debt – Nonaffiliated                                      |   |   | 33,248   |   |   |   | - |   |
| Change      in Advances from Affiliates, Net                                               |   |   | (70,308  | )      |   |   | 125,029 |   |
| Retirement      of Long-term Debt – Nonaffiliated                                    |   |   | (50,000  | )      |   |   | (33,700 | ) |
| Retirement      of Cumulative Preferred Stock                                              |   |   | (2       | )      |   |   | - |   |
| Principal      Payments for Capital Lease Obligations                                      |   |   | (1,128   | )      |   |   | (1,159 | ) |
| Dividends      Paid on Common Stock                                                        |   |   | (21,750  | )      |   |   | - |   |
| Dividends      Paid on Cumulative Preferred Stock                                          |   |   | (159     | )      |   |   | (159 | ) |
| Other      Financing Activities                                                            |   |   | 247      |   |   |   | - |   |
| Net      Cash Flows from (Used for) Financing Activities                                   |   |   | (89,852  | )      |   |   | 120,011 |   |
|                                                                                       |   |   |     |   |   |   |   |   |
| Net      Increase (Decrease) in Cash and Cash Equivalents                                  |   |   | (38      | )      |   |   | 874 |   |
| Cash      and Cash Equivalents at Beginning of Period                                      |   |   | 1,345    |   |   |   | 1,370 |   |
| Cash      and Cash Equivalents at End of Period                                            |   | $      | 1,307    |   |   | $      | 2,244 |   |
|                                                                                       |   |   |     |   |   |   |   |   |
| SUPPLEMENTARY      INFORMATION                                                             |   |   |     |   |   |   |   |   |
| Cash      Paid for Interest, Net of Capitalized Amounts                                    |   | $      | 55,152   |   |   | $      | 39,739 |   |
| Net      Cash Paid for Income Taxes                                                        |   |   | 4,423    |   |   |   | 44,559 |   |
| Noncash      Acquisitions Under Capital Leases                                             |   |   | 2,802    |   |   |   | 403 |   |
| Construction      Expenditures Included in Accounts Payable at September 30,               |   |   | 7,315    |   |   |   | 12,251 |   |

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

----

|                                                      | Footnote Reference |
|-----------------------------------------------------------|-------------------------|
|                                                      |                    |
| 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                 |

----

----

SOUTHWESTERN ELECTRIC POWER COMPANYCONSOLIDATED

| Third      Quarter of 2008                   |   |   |   |   | $      | 48     |   |
|----------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                         |   |   |   |   |   |   |   |
| Changes      in Gross Margin:                |   |   |   |   |   |   |   |
| Retail      and Off-system Sales Margins (a) |   |   | (16    | )      |   |   |   |   |
| Transmission      Revenues                   |   |   | 2      |   |   |   |   |   |
| Other                                        |   |   | 1      |   |   |   |   |   |
| Total      Change in Gross Margin            |   |   |   |   |   |   | (13    | ) |
|                                         |   |   |   |   |   |   |   |   |
| Total      Expenses and Other:               |   |   |   |   |   |   |   |   |
| Other      Operation and Maintenance         |   |   | 16     |   |   |   |   |   |
| Depreciation      and Amortization           |   |   | (1     | )      |   |   |   |   |
| Taxes      Other Than Income Taxes           |   |   | (1     | )      |   |   |   |   |
| Other      Income                            |   |   | 4      |   |   |   |   |   |
| Interest      Expense                        |   |   | 6      |   |   |   |   |   |
| Total      Expenses and Other                |   |   |   |   |   |   | 24     |   |
|                                         |   |   |   |   |   |   |   |   |
| Income      Tax Expense                      |   |   |   |   |   |   | 6      |   |
|                                         |   |   |   |   |   |   |   |   |
| Third      Quarter of 2009                   |   |   |   |   |   | $      | 65     |   |

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

| · | Retail      and Off-system Sales Margins decreased $16 million primarily due to a $12      million decrease in wholesale fuel recovery and a $7 million impairment of      a fuel regulatory asset related to deferred mining costs in      Arkansas. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Transmission      Revenues increased $2 million primarily due to higher rates in the SPP      region.                                                                                                                                                 |

| · | Other      Operation and Maintenance expenses decreased $16 million primarily due to      storm recovery costs for Hurricanes Ike and Gustav in 2008 and the      deferral in September 2009 of a portion of the January 2009 Northern      Arkansas ice storm costs.                                                                                                                                                                                                                                                                                                              |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Other      Income increased $4 million primarily due to an $8 million increase in the      equity component of AFUDC as a result of construction at the Turk Plant      and Stall Unit and the reapplication of the accounting guidance for      “Regulated Operations” for the generation portion of SWEPCo’s Texas retail      jurisdiction effective April 2009.  See “Texas Rate Matters –      Texas Restructuring – SPP” section of Note 3.  This increase was      partially offset by lower interest income. |
| · | Interest      Expense decreased $6 million primarily due to higher AFUDC debt as a      result of construction at the Turk Plant and Stall Unit and lower interest      expense on debt and other.                                                                                                                                                                                                                                                                                                                                                                                 |
| · | Income      Tax Expense decreased $6 million primarily due to changes in certain      book/tax differences accounted for on a flow-through basis, partially      offset by an increase in pretax bookincome.                                                                                                                                                                                                                                                                                                                                                                       |

| Nine      Months Ended September 30, 2008    |   |   |   |   | $      | 69     |   |
|----------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                         |   |   |   |   |   |   |   |
| Changes      in Gross Margin:                |   |   |   |   |   |   |   |
| Retail      and Off-system Sales Margins (a) |   |   | (9     | )      |   |   |   |   |
| Transmission      Revenues                   |   |   | 7      |   |   |   |   |   |
| Other                                        |   |   | (1     | )      |   |   |   |   |
| Total      Change in Gross Margin            |   |   |   |   |   |   | (3     | ) |
|                                         |   |   |   |   |   |   |   |   |
| Total      Expenses and Other:               |   |   |   |   |   |   |   |   |
| Other      Operation and Maintenance         |   |   | 30     |   |   |   |   |   |
| Taxes      Other Than Income Taxes           |   |   | 1      |   |   |   |   |   |
| Other      Income                            |   |   | 15     |   |   |   |   |   |
| Interest      Expense                        |   |   | 5      |   |   |   |   |   |
| Total      Expenses and Other                |   |   |   |   |   |   | 51     |   |
|                                         |   |   |   |   |   |   |   |   |
| Income      Tax Expense                      |   |   |   |   |   |   | (4     | ) |
|                                         |   |   |   |   |   |   |   |   |
| Nine      Months Ended September 30, 2009    |   |   |   |   |   | $      | 113    |   |

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

| · | Retail      and Off-system Sales Margins decreased $9 million primarily due      to:                                                                                                                                                                                                                                                                                                                                                     |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                   | An      $8 million decrease in wholesale fuel recovery. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                   | A      $9 million decrease in industrial sales due to reduced operating levels      and suspended operations by certain large industrial customers in SWEPCo’s      service territory. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                   | A      $7 million impairment of a fuel regulatory asset related to deferred      mining costs in Arkansas. |
|   | These      decreases were partially offset by:                                                                                                                                                                                                                                                                                                                                                                                           |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                   | An      $8 million increase in rate relief related to the Louisiana Formula Rate      Plan.  See “Louisiana Rate Matters – Formula Rate Filing”      section of Note 3. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                   | An      $8 million increase in wholesale and municipal revenue due to higher      prices and the annual true-up for formula rate  customers. |
| · | Transmission      Revenues increased $7 million primarily due to higher rates in the SPP      region.                                                                                                                                                                                                                                                                                                                                    |
| · | Other      revenues decreased $1 million primarily due to a decrease in revenues from      coal deliveries from SWEPCo’s mining subsidiary, Dolet Hills Lignite      Company, LLC to Cleco Corporation, a nonaffiliated entity.  The      decreased revenue from coal deliveries was offset by a corresponding      decrease in Other Operation and Maintenance expenses from mining      operations as discussed below. |

| · | Other      Operation and Maintenance expenses decreased $30 million primarily due      to:                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | An      $18 million decrease in distribution expenses related to storm recovery      costs primarily for Hurricanes Ike and Gustav in 2008. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | A      $5 million decrease in steam plant maintenance expense primarily due to a      reduction in planned and unplanned outages. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | A      $2 million decrease in expenses for coal deliveries from SWEPCo’s mining      subsidiary, Dolet Hills Lignite Company, LLC.  The decreased      expenses for coal deliveries were partially offset by a corresponding      decrease in revenues from mining operations as discussed      above. |
|   | ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | A      $2 million gain on sale of property related to the sale of percentage      ownership of Turk Plant to nonaffiliated companies. |
| · | Other      Income increased $15 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 the accounting guidance for “Regulated      Operations” for the generation portion of SWEPCo’s Texas retail      jurisdiction effective April 2009.  See “Texas Rate Matters –      Texas Restructuring – SPP” section of Note 3.  This increase was      partially offset by lower interest income. |
| · | Interest      Expense decreased $5 million primarily due to higher AFUDC debt as a      result of construction at the Turk Plant and Stall Unit, partially offset      by higher interest expense on debt.                                                                                                                                                                                                                                                                                                                                                               |
| · | Income      Tax Expense increased $4 million primarily due to an increase in pretax      book income, partially offset by changes in certain book/tax differences      accounted for on a flow-throughbasis.                                                                                                                                                                                                                                                                                                                                                             |

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

|                                                  |   | 2009                |     |   | 2008   |   |
|-------------------------------------------------------|--------|---------------------|----------|--------|--------|--------|
|                                                  |   | (in      thousands) |     |
| Cash      and Cash Equivalents at Beginning of Period |   | $                   | 1,910    |   |   | $      | 1,742 |   |
| Cash      Flows from (Used for):                      |   |                |     |   |   |   |   |   |
| Operating      Activities                             |   |                | 335,922  |   |   |   | 134,516 |   |
| Investing      Activities                             |   |                | (472,183 | )      |   |   | (619,487 | ) |
| Financing      Activities                             |   |                | 136,440  |   |   |   | 485,981 |   |
| Net      Increase in Cash and Cash Equivalents        |   |                | 179      |   |   |   | 1,010 |   |
| Cash      and Cash Equivalents at End of Period       |   | $                   | 2,089    |   |   | $      | 2,752 |   |

|                                     |   | PrincipalAmount      Paid |        | Interest |   | Due    |
|------------------------------------------|--------|---------------------------|-------------|----------|--------|--------|
| Type      of Debt                        |   |                      | Rate        |     | Date   |
|                                     |   | (in      thousands)       |        | (%)      |   |   |
| Notes      Payable – Nonaffiliated |   | $                         | 3,304  |     | 4.47   |   | 2011 |

----

|                                                        |   | MTM      Risk Management Contracts |   |   | Cash      Flow Hedge Contracts |   |   | CollateralDeposits |   |   | Total  |   |
|-------------------------------------------------------------|--------|------------------------------------|--------|--------|--------------------------------|--------|--------|--------------------|--------|--------|--------|--------|
| Current      Assets                                         |   | $                                  | 5,260  |   |                           | $      | 69     |               |   | $      | (2     | )      |   | $ | 5,327 |   |
| Noncurrent      Assets                                      |   |                               | 462    |   |                           |   | 18     |               |   |   | -      |   |   |   | 480 |   |
| Total      MTM Derivative Contract Assets                   |   |                               | 5,722  |   |                           |   | 87     |               |   |   | (2     | )      |   |   | 5,807 |   |
|                                                        |   |                               |   |   |                           |   |   |               |   |   |   |   |   |   |   |   |
| Current      Liabilities                                    |   |                               | 3,446  |   |                           |   | 25     |               |   |   | (22    | )      |   |   | 3,449 |   |
| Noncurrent      Liabilities                                 |   |                               | 233    |   |                           |   | -      |               |   |   | (19    | )      |   |   | 214 |   |
| Total      MTM Derivative Contract Liabilities              |   |                               | 3,679  |   |                           |   | 25     |               |   |   | (41    | )      |   |   | 3,663 |   |
|                                                        |   |                               |   |   |                           |   |   |               |   |   |   |   |   |   |   |   |
| Total      MTM Derivative Contract Net Assets (Liabilities) |   | $                                  | 2,043  |   |                           | $      | 62     |               |   | $      | 39     |   |   | $ | 2,144 |   |

| Total      MTM Risk Management Contract Net Assets at December 31,    2008                                            |   | $      | 2,643  |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
| (Gain)      Loss from Contracts Realized/Settled During the Period and Entered in a      Prior Period                 |   |   | (1,183 | )      |
| Fair      Value of New Contracts at Inception When Entered During the Period      (a)                                 |   |   | -      |   |
| Net      Option Premiums Paid/(Received) for Unexercised or Unexpired Option      Contracts Entered During the Period |   |   | (35    | )      |
| Change      in Fair Value Due to Valuation Methodology Changes on Forward      Contracts                              |   |   | -      |   |
| Changes      in Fair Value Due to Market Fluctuations During the Period    (b)                                        |   |   | 41     |   |
| Changes      in Fair Value Allocated to Regulated Jurisdictions (c)                                                   |   |   | 577    |   |
| Total      MTM Risk Management Contract Net Assets                                                                    |   |   | 2,043  |   |
| Cash      Flow Hedge Contracts                                                                                        |   |   | 62     |   |
| Collateral      Deposits                                                                                              |   |   | 39     |   |
| Total      MTM Derivative Contract Net Assets at September 30, 2009                                                   |   | $      | 2,144  |   |

| (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) | Market      fluctuations are attributable to various factors such as supply/demand,      weather, etc.                                                                                                                                                                                                                                                                                                              |
| (c) | “Changes      in Fair Value Allocated to Regulated Jurisdictions” relates to the net      gains (losses) of those contracts that are not reflected on the Condensed      Consolidated Statements of Income.  These net gains (losses) are      recorded as regulatoryliabilities/assets.                                                                                                      |

|                                                             |   | Remainder2009 |   |   | 2010   |   |   | 2011   |   |   | 2012 |   |   | 2013   |   |   | After2013 |   |   | Total  |   |
|------------------------------------------------------------------|--------|---------------|--------|--------|--------|--------|--------|--------|--------|--------|------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|
| Level      1 (a)                                                 |   | $             | 56     |   |   | $      | -      |   |   | $      | -    |   |   | $      | -      |   |      | $      | -      |   |   | $ | - |   |   | $ | 56 |   |
| Level      2 (b)                                                 |   |          | 412    |   |   |   | 1,996  |   |   |   | (439 | )      |   |   | 12     |   |      |   | -      |   |   |   | - |   |   |   | 1,981 |   |
| Level      3 (c)                                                 |   |          | 4      |   |   |   | 2      |   |   |   | -    |   |   |   | -      |   |      |   | -      |   |   |   | - |   |   |   | 6 |   |
| Total      MTM Risk Management Contract Net Assets (Liabilities) |   | $             | 472    |   |   | $      | 1,998  |   |   | $      | (439 | )      |   | $      | 12     |   |      | $      | -      |   |   | $ | - |   |   | $ | 2,043 |   |

| (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.                                                                                                                                                                                                                        |

| Nine      Months Ended  |   |   |   |    | Twelve      Months Ended |
|-------------------------|--------|--------|--------|---------|--------------------------|
| September      30, 2009 |   |   |   |    | December      31, 2008   |
| (in      thousands)     |   |   |   |    | (in      thousands)      |
| End                     |   | High   |   | Average |                     | Low |   |   |   |   | End |   | High |   | Average |   | Low |
| $15                     |   | $49    |   | $19     |                     | $6 |   |   |   |   | $8 |   | $220 |   | $62 |   | $8 |

----

|                                                          |   | Three      Months Ended |    |   | Nine      Months Ended |   |
|---------------------------------------------------------------|--------|-------------------------|---------|--------|------------------------|--------|
|                                                          |   | 2009                    |    |   | 2008                   |   |   | 2009 |   |   | 2008 |   |
| REVENUES                                                      |   |                    |    |   |                   |   |   |   |   |   |   |   |
| Electric      Generation, Transmission and Distribution       |   | $                       | 392,616 |   |                   | $      | 489,014 |   |   | $ | 1,021,991 |   |   | $ | 1,200,356 |   |
| Sales      to AEP Affiliates                                  |   |                    | 9,420   |   |                   |   | 11,508 |   |   |   | 23,470 |   |   |   | 42,692 |   |
| Lignite      Revenues – Nonaffiliated                   |   |                    | 12,334  |   |                   |   | 11,470 |   |   |   | 30,572 |   |   |   | 31,661 |   |
| Other      Revenues                                           |   |                    | 604     |   |                   |   | 471 |   |   |   | 1,525 |   |   |   | 1,164 |   |
| TOTAL      REVENUES                                           |   |                    | 414,974 |   |                   |   | 512,463 |   |   |   | 1,077,558 |   |   |   | 1,275,873 |   |
|                                                          |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES                                                      |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel      and Other Consumables Used for Electric Generation  |   |                    | 161,879 |   |                   |   | 197,474 |   |   |   | 405,329 |   |   |   | 462,282 |   |
| Purchased      Electricity for Resale                         |   |                    | 30,413  |   |                   |   | 50,449 |   |   |   | 85,149 |   |   |   | 145,097 |   |
| Purchased      Electricity from AEP Affiliates                |   |                    | 6,865   |   |                   |   | 36,170 |   |   |   | 30,395 |   |   |   | 108,542 |   |
| Other      Operation                                          |   |                    | 64,686  |   |                   |   | 64,377 |   |   |   | 178,456 |   |   |   | 186,713 |   |
| Maintenance                                                   |   |                    | 17,267  |   |                   |   | 33,694 |   |   |   | 67,283 |   |   |   | 88,854 |   |
| Depreciation      and Amortization                            |   |                    | 36,714  |   |                   |   | 35,842 |   |   |   | 109,065 |   |   |   | 108,875 |   |
| Taxes      Other Than Income Taxes                            |   |                    | 14,127  |   |                   |   | 12,623 |   |   |   | 44,995 |   |   |   | 45,747 |   |
| TOTAL      EXPENSES                                           |   |                    | 331,951 |   |                   |   | 430,629 |   |   |   | 920,672 |   |   |   | 1,146,110 |   |
|                                                          |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING      INCOME                                         |   |                    | 83,023  |   |                   |   | 81,834 |   |   |   | 156,886 |   |   |   | 129,763 |   |
|                                                          |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Income (Expense):                                  |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Income                                          |   |                    | 388     |   |                   |   | 5,417 |   |   |   | 1,205 |   |   |   | 7,834 |   |
| Allowance      for Equity Funds Used During Construction      |   |                    | 12,932  |   |                   |   | 4,152 |   |   |   | 31,706 |   |   |   | 10,167 |   |
| Interest      Expense                                         |   |                    | (16,605 | )      |                   |   | (22,659 | ) |   |   | (51,894 | ) |   |   | (57,071 | ) |
|                                                          |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME      BEFORE INCOME TAX EXPENSE                         |   |                    | 79,738  |   |                   |   | 68,744 |   |   |   | 137,903 |   |   |   | 90,693 |   |
|                                                          |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Income      Tax Expense                                       |   |                    | 14,680  |   |                   |   | 20,353 |   |   |   | 25,367 |   |   |   | 21,717 |   |
|                                                          |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME      BEFORE EXTRAORDINARY LOSS                         |   |                    | 65,058  |   |                   |   | 48,391 |   |   |   | 112,536 |   |   |   | 68,976 |   |
|                                                          |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| EXTRAORDINARY      LOSS, NET OF TAX                           |   |                    | -       |   |                   |   | - |   |   |   | (5,325 | ) |   |   | - |   |
|                                                          |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME                                               |   |                    | 65,058  |   |                   |   | 48,391 |   |   |   | 107,211 |   |   |   | 68,976 |   |
|                                                          |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Less:      Net Income Attributable to Noncontrolling Interest |   |                    | 1,022   |   |                   |   | 976 |   |   |   | 2,971 |   |   |   | 2,870 |   |
|                                                          |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME ATTRIBUTABLE TO SWEPCo SHAREHOLDERS           |   |                    | 64,036  |   |                   |   | 47,415 |   |   |   | 104,240 |   |   |   | 66,106 |   |
|                                                          |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Less:      Preferred Stock Dividend Requirements              |   |                    | 58      |   |                   |   | 58 |   |   |   | 172 |   |   |   | 172 |   |
|                                                          |   |                    |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS      ATTRIBUTABLE TO SWEPCo COMMON SHAREHOLDER       |   | $                       | 63,978  |   |                   | $      | 47,357 |   |   | $ | 104,068 |   |   | $ | 65,934 |   |

| The      common stock of SWEPCo is wholly-owned byAEP. |
|--------------------------------------------------------|

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

----

|                                                                       |   | SWEPCo      Common Shareholder |    |   |                 |   |    |             |   |
|----------------------------------------------------------------------------|--------|--------------------------------|---------|--------|----------------------|--------|---------|------------------|--------|
|                                                                       |   | Common      Stock              |    |   | Paid-in      Capital |   |    | RetainedEarnings |   |   | AccumulatedOtherComprehensiveIncome      (Loss) |   |   | NoncontrollingInterest |   |   | Total |   |
|                                                                       |   |                           |    |   |                 |   |    |             |   |   |   |   |   |   |   |   |   |   |
| TOTAL      EQUITY – DECEMBER 31, 2007                                |   | $                              | 135,660 |   |                 | $      | 330,003 |             |   | $ | 523,731 |   |   | $ | (16,439 | ) |   | $ | 1,687 |   |   | $ | 974,642 |   |
|                                                                       |   |                           |    |   |                 |   |    |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EITF      06-10 Adoption, Net of Tax of $622                               |   |                           |    |   |                 |   |    |             |   |   | (1,156 | ) |   |   |   |   |   |   |   |   |   |   | (1,156 | ) |
| SFAS      157 Adoption, Net of Tax of $6                                   |   |                           |    |   |                 |   |    |             |   |   | 10 |   |   |   |   |   |   |   |   |   |   |   | 10 |   |
| Capital      Contribution from Parent                                      |   |                           |    |   |                 |   | 100,000 |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 100,000 |   |
| Common      Stock Dividends – Nonaffiliated                          |   |                           |    |   |                 |   |    |             |   |   |   |   |   |   |   |   |   |   | (4,266 | ) |   |   | (4,266 | ) |
| Preferred      Stock Dividends                                             |   |                           |    |   |                 |   |    |             |   |   | (172 | ) |   |   |   |   |   |   |   |   |   |   | (172 | ) |
| SUBTOTAL      – EQUITY                                               |   |                           |    |   |                 |   |    |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,069,058 |   |
|                                                                       |   |                           |    |   |                 |   |    |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE      INCOME                                                  |   |                           |    |   |                 |   |    |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Comprehensive Income (Loss), Net of Taxes:                      |   |                           |    |   |                 |   |    |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      Flow Hedges, Net of Tax of $65                                   |   |                           |    |   |                 |   |    |             |   |   |   |   |   |   | (127 | ) |   |   | 7 |   |   |   | (120 | ) |
| Amortization      of Pension and OPEB Deferred Costs, Net of Tax of $380   |   |                           |    |   |                 |   |    |             |   |   |   |   |   |   | 706 |   |   |   |   |   |   |   | 706 |   |
| NET      INCOME                                                            |   |                           |    |   |                 |   |    |             |   |   | 66,106 |   |   |   |   |   |   |   | 2,870 |   |   |   | 68,976 |   |
| TOTAL      COMPREHENSIVE INCOME                                            |   |                           |    |   |                 |   |    |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 69,562 |   |
|                                                                       |   |                           |    |   |                 |   |    |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL      EQUITY – SEPTEMBER 30, 2008                               |   | $                              | 135,660 |   |                 | $      | 430,003 |             |   | $ | 588,519 |   |   | $ | (15,860 | ) |   | $ | 298 |   |   | $ | 1,138,620 |   |
|                                                                       |   |                           |    |   |                 |   |    |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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 |   |

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

----

|                                                 |   | 2009   |      |   | 2008   |   |
|------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| CURRENT      ASSETS                                  |   |   |      |   |   |   |
| Cash      and Cash Equivalents                       |   | $      | 2,089     |   |   | $      | 1,910 |   |
| Advances      to Affiliates                          |   |   | 106,662   |   |   |   | - |   |
| Accounts      Receivable:                            |   |   |      |   |   |   |   |   |
| Customers                                            |   |   | 46,018    |   |   |   | 53,506 |   |
| Affiliated      Companies                            |   |   | 48,708    |   |   |   | 121,928 |   |
| Miscellaneous                                        |   |   | 11,275    |   |   |   | 12,052 |   |
| Allowance      for Uncollectible Accounts            |   |   | (25       | )      |   |   | (135 | ) |
| Total      Accounts Receivable                       |   |   | 105,976   |   |   |   | 187,351 |   |
| Fuel                                                 |   |   | 91,641    |   |   |   | 100,018 |   |
| Materials      and Supplies                          |   |   | 53,705    |   |   |   | 49,724 |   |
| Risk      Management Assets                          |   |   | 5,327     |   |   |   | 8,185 |   |
| Regulatory      Asset for Under-Recovered Fuel Costs |   |   | 246       |   |   |   | 75,006 |   |
| Prepayments      and Other Current Assets            |   |   | 37,068    |   |   |   | 20,147 |   |
| TOTAL      CURRENT ASSETS                            |   |   | 402,714   |   |   |   | 442,341 |   |
|                                                 |   |   |      |   |   |   |   |   |
| PROPERTY,      PLANT AND EQUIPMENT                   |   |   |      |   |   |   |   |   |
| Electric:                                            |   |   |      |   |   |   |   |   |
| Production                                           |   |   | 1,817,505 |   |   |   | 1,808,482 |   |
| Transmission                                         |   |   | 838,137   |   |   |   | 786,731 |   |
| Distribution                                         |   |   | 1,451,365 |   |   |   | 1,400,952 |   |
| Other      Property, Plant and Equipment             |   |   | 716,747   |   |   |   | 711,260 |   |
| Construction      Work in Progress                   |   |   | 1,098,069 |   |   |   | 869,103 |   |
| Total      Property, Plant and Equipment             |   |   | 5,921,823 |   |   |   | 5,576,528 |   |
| Accumulated      Depreciation and Amortization       |   |   | 2,091,205 |   |   |   | 2,014,154 |   |
| TOTAL      PROPERTY, PLANT AND EQUIPMENT – NET |   |   | 3,830,618 |   |   |   | 3,562,374 |   |
|                                                 |   |   |      |   |   |   |   |   |
| OTHER      NONCURRENT ASSETS                         |   |   |      |   |   |   |   |   |
| Regulatory      Assets                               |   |   | 251,008   |   |   |   | 210,174 |   |
| Long-term      Risk Management Assets                |   |   | 480       |   |   |   | 1,500 |   |
| Deferred      Charges and Other Noncurrent Assets    |   |   | 44,090    |   |   |   | 36,696 |   |
| TOTAL      OTHER NONCURRENT ASSETS                   |   |   | 295,578   |   |   |   | 248,370 |   |
|                                                 |   |   |      |   |   |   |   |   |
| TOTAL      ASSETS                                    |   | $      | 4,528,910 |   |   | $      | 4,253,085 |   |

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

----

|                                                                |   | 2009                |      |   | 2008   |   |
|---------------------------------------------------------------------|--------|---------------------|-----------|--------|--------|--------|
| CURRENT      LIABILITIES                                            |   | (in      thousands) |      |
| Advances      from Affiliates                                       |   | $                   | -         |   |   | $      | 2,526 |   |
| Accounts      Payable:                                              |   |                |      |   |   |   |   |   |
| General                                                             |   |                | 114,990   |   |   |   | 133,538 |   |
| Affiliated      Companies                                           |   |                | 77,565    |   |   |   | 51,040 |   |
| Short-term      Debt – Nonaffiliated                          |   |                | 5,273     |   |   |   | 7,172 |   |
| Long-term      Debt Due Within One Year – Nonaffiliated       |   |                | 4,406     |   |   |   | 4,406 |   |
| Long-term      Debt Due Within One Year – Affiliated          |   |                | 50,000    |   |   |   | - |   |
| Risk      Management Liabilities                                    |   |                | 3,449     |   |   |   | 6,735 |   |
| Customer      Deposits                                              |   |                | 39,884    |   |   |   | 35,622 |   |
| Accrued      Taxes                                                  |   |                | 83,771    |   |   |   | 33,744 |   |
| Accrued      Interest                                               |   |                | 16,831    |   |   |   | 36,647 |   |
| Provision      for Revenue Refund                                   |   |                | 28,507    |   |   |   | 54,100 |   |
| Other      Current Liabilities                                      |   |                | 61,419    |   |   |   | 102,535 |   |
| TOTAL      CURRENT LIABILITIES                                      |   |                | 486,095   |   |   |   | 468,065 |   |
|                                                                |   |                |      |   |   |   |   |   |
| NONCURRENT      LIABILITIES                                         |   |                |      |   |   |   |   |   |
| Long-term      Debt – Nonaffiliated                           |   |                | 1,420,746 |   |   |   | 1,423,743 |   |
| Long-term      Debt – Affiliated                              |   |                | -         |   |   |   | 50,000 |   |
| Long-term      Risk Management Liabilities                          |   |                | 214       |   |   |   | 516 |   |
| Deferred      Income Taxes                                          |   |                | 427,181   |   |   |   | 403,125 |   |
| Regulatory      Liabilities and Deferred Investment Tax Credits     |   |                | 334,570   |   |   |   | 335,749 |   |
| Asset      Retirement Obligations                                   |   |                | 53,789    |   |   |   | 53,433 |   |
| Employment      Benefits and Pension Obligations                    |   |                | 122,309   |   |   |   | 117,772 |   |
| Deferred      Credits and Other Noncurrent Liabilities              |   |                | 166,382   |   |   |   | 147,056 |   |
| TOTAL      NONCURRENT LIABILITIES                                   |   |                | 2,525,191 |   |   |   | 2,531,394 |   |
|                                                                |   |                |      |   |   |   |   |   |
| TOTAL      LIABILITIES                                              |   |                | 3,011,286 |   |   |   | 2,999,459 |   |
|                                                                |   |                |      |   |   |   |   |   |
| Cumulative      Preferred Stock Not Subject to Mandatory Redemption |   |                | 4,697     |   |   |   | 4,697 |   |
|                                                                |   |                |      |   |   |   |   |   |
| 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   |   |   |   | 530,003 |   |
| Retained      Earnings                                              |   |                | 716,702   |   |   |   | 615,110 |   |
| Accumulated      Other Comprehensive Income (Loss)                  |   |                | (14,775   | )      |   |   | (32,120 | ) |
| TOTAL      COMMON SHAREHOLDER’S EQUITY                        |   |                | 1,512,566 |   |   |   | 1,248,653 |   |
|                                                                |   |                |      |   |   |   |   |   |
| Noncontrolling      Interest                                        |   |                | 361       |   |   |   | 276 |   |
|                                                                |   |                |      |   |   |   |   |   |
| TOTAL      EQUITY                                                   |   |                | 1,512,927 |   |   |   | 1,248,929 |   |
|                                                                |   |                |      |   |   |   |   |   |
| TOTAL      LIABILITIES AND EQUITY                                   |   | $                   | 4,528,910 |   |   | $      | 4,253,085 |   |

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

----

|                                                                                       |   | 2009   |     |   | 2008   |   |
|--------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
| OPERATING      ACTIVITIES                                                                  |   |   |     |   |   |   |
| Net      Income                                                                            |   | $      | 107,211  |   |   | $      | 68,976 |   |
| Adjustments      to Reconcile Net Income to Net Cash Flows from Operating      Activities: |   |   |     |   |   |   |   |   |
| Depreciation      and Amortization                                                         |   |   | 109,065  |   |   |   | 108,875 |   |
| Deferred      Income Taxes                                                                 |   |   | (20,571  | )      |   |   | 37,162 |   |
| Extraordinary      Loss, Net of Tax                                                        |   |   | 5,325    |   |   |   | - |   |
| Allowance      for Equity Funds Used During Construction                                   |   |   | (31,706  | )      |   |   | (10,167 | ) |
| Mark-to-Market      of Risk Management Contracts                                           |   |   | 510      |   |   |   | 7,905 |   |
| Fuel      Over/Under-Recovery, Net                                                         |   |   | 61,880   |   |   |   | (98,928 | ) |
| Change      in Other Noncurrent Assets                                                     |   |   | 13,498   |   |   |   | (211 | ) |
| Change      in Other Noncurrent Liabilities                                                |   |   | 4,539    |   |   |   | (15,619 | ) |
| Changes      in Certain Components of Working Capital:                                     |   |   |     |   |   |   |   |   |
| Accounts      Receivable, Net                                                              |   |   | 81,322   |   |   |   | 46,835 |   |
| Fuel,      Materials and Supplies                                                          |   |   | 4,396    |   |   |   | (16,665 | ) |
| Accounts      Payable                                                                      |   |   | 24,584   |   |   |   | (34,819 | ) |
| Accrued      Taxes, Net                                                                    |   |   | 50,027   |   |   |   | 29,271 |   |
| Accrued      Interest                                                                      |   |   | (19,816  | )      |   |   | 5,498 |   |
| Other      Current Assets                                                                  |   |   | (1,017   | )      |   |   | 6,929 |   |
| Other      Current Liabilities                                                             |   |   | (53,325  | )      |   |   | (526 | ) |
| Net      Cash Flows from Operating Activities                                              |   |   | 335,922  |   |   |   | 134,516 |   |
|                                                                                       |   |   |     |   |   |   |   |   |
| INVESTING      ACTIVITIES                                                                  |   |   |     |   |   |   |   |   |
| Construction      Expenditures                                                             |   |   | (470,379 | )      |   |   | (424,092 | ) |
| Change      in Advances to Affiliates, Net                                                 |   |   | (106,662 | )      |   |   | (195,628 | ) |
| Proceeds      from Sales of Assets                                                         |   |   | 105,500  |   |   |   | 483 |   |
| Other      Investing Activities                                                            |   |   | (642     | )      |   |   | (250 | ) |
| Net      Cash Flows Used for Investing Activities                                          |   |   | (472,183 | )      |   |   | (619,487 | ) |
|                                                                                       |   |   |     |   |   |   |   |   |
| FINANCING      ACTIVITIES                                                                  |   |   |     |   |   |   |   |   |
| Capital      Contribution from Parent                                                      |   |   | 142,500  |   |   |   | 100,000 |   |
| Issuance      of Long-term Debt – Nonaffiliated                                      |   |   | -        |   |   |   | 437,113 |   |
| Change      in Short-term Debt, Net – Nonaffiliated                                  |   |   | (1,899   | )      |   |   | 9,234 |   |
| Change      in Advances from Affiliates, Net                                               |   |   | (2,526   | )      |   |   | (1,565 | ) |
| Retirement      of Long-term Debt – Nonaffiliated                                    |   |   | (3,304   | )      |   |   | (45,939 | ) |
| Principal      Payments for Capital Lease Obligations                                      |   |   | (7,853   | )      |   |   | (8,424 | ) |
| Proceeds      from Sale/Leaseback                                                          |   |   | 12,222   |   |   |   | - |   |
| Dividends      Paid on Common Stock – Nonaffiliated                                  |   |   | (2,971   | )      |   |   | (4,266 | ) |
| Dividends      Paid on Cumulative Preferred Stock                                          |   |   | (172     | )      |   |   | (172 | ) |
| Other      Financing Activities                                                            |   |   | 443      |   |   |   | - |   |
| Net      Cash Flows from Financing Activities                                              |   |   | 136,440  |   |   |   | 485,981 |   |
|                                                                                       |   |   |     |   |   |   |   |   |
| Net      Increase in Cash and Cash Equivalents                                             |   |   | 179      |   |   |   | 1,010 |   |
| Cash      and Cash Equivalents at Beginning of Period                                      |   |   | 1,910    |   |   |   | 1,742 |   |
| Cash      and Cash Equivalents at End of Period                                            |   | $      | 2,089    |   |   | $      | 2,752 |   |

| SUPPLEMENTARY      INFORMATION                                               |   |   |   |   |   |   |
|------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Cash      Paid for Interest, Net of Capitalized Amounts                      |   | $      | 82,033 |   |   | $      | 44,255 |   |
| Net      Cash Received for Income Taxes                                      |   |   | (6,196 | )      |   |   | (20,835 | ) |
| Noncash      Acquisitions Under Capital Leases                               |   |   | 26,175 |   |   |   | 21,807 |   |
| Construction      Expenditures Included in Accounts Payable at September 30, |   |   | 60,219 |   |   |   | 94,837 |   |

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

----

|                                                      | Footnote      Reference |
|-----------------------------------------------------------|-------------------------|
|                                                      |                    |
| 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            |

----

|   | CONDENSED NOTES TO      CONDENSED FINANCIAL STATEMENTSOF |
|--------|----------------------------------------------------------|

| 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 |

----

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

|                                   |   | Sabine |   |   | DHLC   |   |
|----------------------------------------|--------|--------|--------|--------|--------|--------|
| ASSETS                                 |   |   |   |   |   |   |
| Current      Assets                    |   | $      | 38     |   |   | $      | 19 |   |
| Net      Property, Plant and Equipment |   |   | 133    |   |   |   | 29 |   |
| Other      Noncurrent Assets           |   |   | 30     |   |   |   | 10 |   |
| Total      Assets                      |   | $      | 201    |   |   | $      | 58 |   |
|                                   |   |   |   |   |   |   |   |   |
| LIABILITIES      AND EQUITY            |   |   |   |   |   |   |   |   |
| Current      Liabilities               |   | $      | 27     |   |   | $      | 15 |   |
| Noncurrent      Liabilities            |   |   | 174    |   |   |   | 40 |   |
| Equity                                 |   |   | -      |   |   |   | 3 |   |
| Total      Liabilities and Equity      |   | $      | 201    |   |   | $      | 58 |   |

|                                   |   | Sabine |   |   | DHLC   |   |
|----------------------------------------|--------|--------|--------|--------|--------|--------|
| ASSETS                                 |   |   |   |   |   |   |
| Current      Assets                    |   | $      | 33     |   |   | $      | 22 |   |
| Net      Property, Plant and Equipment |   |   | 117    |   |   |   | 33 |   |
| Other      Noncurrent Assets           |   |   | 24     |   |   |   | 11 |   |
| Total      Assets                      |   | $      | 174    |   |   | $      | 66 |   |
|                                   |   |   |   |   |   |   |   |   |
| LIABILITIES      AND EQUITY            |   |   |   |   |   |   |   |   |
| Current      Liabilities               |   | $      | 32     |   |   | $      | 18 |   |
| Noncurrent      Liabilities            |   |   | 142    |   |   |   | 44 |   |
| Equity                                 |   |   | -      |   |   |   | 4 |   |
| Total      Liabilities and Equity      |   | $      | 174    |   |   | $      | 66 |   |

|                                   |   | JMG    |   |
|----------------------------------------|--------|--------|--------|
| ASSETS                                 |   |   |   |
| Current      Assets                    |   | $      | 18     |   |
| Net      Property, Plant and Equipment |   |   | 407    |   |
| Other      Noncurrent Assets           |   |   | -      |   |
| Total      Assets                      |   | $      | 425    |   |
|                                   |   |   |   |   |
| LIABILITIES      AND EQUITY            |   |   |   |   |
| Current      Liabilities               |   | $      | 20     |   |
| Noncurrent      Liabilities            |   |   | 46     |   |
| Equity                                 |   |   | 359    |   |
| Total      Liabilities and Equity      |   | $      | 425    |   |

|                                   |   | JMG    |   |
|----------------------------------------|--------|--------|--------|
| ASSETS                                 |   |   |   |
| Current      Assets                    |   | $      | 11     |   |
| Net      Property, Plant and Equipment |   |   | 423    |   |
| Other      Noncurrent Assets           |   |   | 1      |   |
| Total      Assets                      |   | $      | 435    |   |
|                                   |   |   |   |   |
| LIABILITIES      AND EQUITY            |   |   |   |   |
| Current      Liabilities               |   | $      | 161    |   |
| Noncurrent      Liabilities            |   |   | 257    |   |
| Equity                                 |   |   | 17     |   |
| Total      Liabilities and Equity      |   | $      | 435    |   |

|                                   |   | DCC      Fuel |      |
|----------------------------------------|--------|---------------|-----------|
| ASSETS                                 |   |          |      |   |
| Current      Assets                    |   | $             | 38   |   |
| Net      Property, Plant and Equipment |   |          | 101  |   |
| Other      Noncurrent Assets           |   |          | 65   |   |
| Total      Assets                      |   | $             | 204  |   |
|                                   |   |          |      |   |
| LIABILITIES      AND EQUITY            |   |          |      |   |
| Current      Liabilities               |   | $             | 38   |   |
| Noncurrent      Liabilities            |   |          | 166  |   |
| Equity                                 |   |          | -    |   |
| Total      Liabilities and Equity      |   | $             | 204  |   |

|                                   |   | DCC      Fuel |    |
|----------------------------------------|--------|---------------|---------|
| ASSETS                                 |   |          |    |   |
| Current      Assets                    |   | $             | -  |   |
| Net      Property, Plant and Equipment |   |          | -  |   |
| Other      Noncurrent Assets           |   |          | -  |   |
| Total      Assets                      |   | $             | -  |   |
|                                   |   |          |    |   |
| LIABILITIES      AND EQUITY            |   |          |    |   |
| Current      Liabilities               |   | $             | -  |   |
| Noncurrent      Liabilities            |   |          | -  |   |
| Equity                                 |   |          | -  |   |
| Total      Liabilities and Equity      |   | $             | -  |   |

|    |   | Three      Months Ended September 30, |   |   | Nine      Months Ended September 30, |   |
|---------|--------|---------------------------------------|--------|--------|--------------------------------------|--------|
|    |   | 2009                                  |   |   | 2008                                 |   |   | 2009 |   |   | 2008 |   |
| Company |   | (in      millions)                    |   |
| APCo    |   | $                                     | 50     |   |                                 | $      | 62 |   |   | $ | 146 |   |   | $ | 179 |   |
| CSPCo   |   |                                  | 31     |   |                                 |   | 34 |   |   |   | 91 |   |   |   | 98 |   |
| I&M |   |                                  | 32     |   |                                 |   | 37 |   |   |   | 93 |   |   |   | 109 |   |
| OPCo    |   |                                  | 43     |   |                                 |   | 52 |   |   |   | 130 |   |   |   | 151 |   |
| PSO     |   |                                  | 21     |   |                                 |   | 28 |   |   |   | 64 |   |   |   | 87 |   |
| SWEPCo  |   |                                  | 35     |   |                                 |   | 35 |   |   |   | 94 |   |   |   | 101 |   |

|    | September      30, 2009 |   | December      31, 2008 |   |
|---------|-------------------------|--------|------------------------|--------|
|    | As      Reported in the |   | Maximum                |   | As      Reported in the |   | Maximum |   |
|    | Balance      Sheet      |   | Exposure               |   | Balance      Sheet |   | Exposure |   |
| Company | (in      millions)      |   |
| APCo    |                    | $      | 20                     |   |   | $ | 20 |   |   | $ | 27 |   |   | $ | 27 |   |
| CSPCo   |                    |   | 12                     |   |   |   | 12 |   |   |   | 15 |   |   |   | 15 |   |
| I&M |                    |   | 13                     |   |   |   | 13 |   |   |   | 14 |   |   |   | 14 |   |
| OPCo    |                    |   | 17                     |   |   |   | 17 |   |   |   | 21 |   |   |   | 21 |   |
| PSO     |                    |   | 9                      |   |   |   | 9 |   |   |   | 10 |   |   |   | 10 |   |
| SWEPCo  |                    |   | 13                     |   |   |   | 13 |   |   |   | 14 |   |   |   | 14 |   |

|    | Three      Months Ended September 30, |   | Nine      Months Ended September 30, |   |
|---------|---------------------------------------|--------|--------------------------------------|--------|
|    | 2009                                  |   | 2008                                 |   | 2009 |   | 2008 |   |
| Company | (in      millions)                    |   |
| CSPCo   |                                  | $      | 28                                   |   |   | $ | 47 |   |   | $ | 60 |   |   | $ | 96 |   |
| I&M |                                  |   | 59                                   |   |   |   | 65 |   |   |   | 183 |   |   |   | 181 |   |

|    | September      30, 2009 |   | December      31, 2008 |   |
|---------|-------------------------|--------|------------------------|--------|
|    | As      Reported in     |   |                   |   | As      Reported in |   |   |   |
|    | the      Consolidated   |   | Maximum                |   | the      Consolidated |   | Maximum |   |
|    | Balance      Sheet      |   | Exposure               |   | Balance      Sheet |   | Exposure |   |
| Company | (in      millions)      |   |
| CSPCo   |                    | $      | 6                      |   |   | $ | 6 |   |   | $ | 5 |   |   | $ | 5 |   |
| I&M |                    |   | 20                     |   |   |   | 20 |   |   |   | 23 |   |   |   | 23 |   |

|   |    | Total      Depreciation Expense Variance |   |
|--------|---------|------------------------------------------|--------|
|   |    | Three      Months Ended                  |   |   |  Nine      Months Ended |   |
|   |    | September      30,                       |   |   |  September      30, |   |
|   |    |  2009/2008                          |   |   |  2009/2008 |   |
|   |    | (in      thousands)                      |   |
| CSPCo  |  $ |                                     | (4,430 | ) |   $ |   |   | (13,104 | ) |
| OPCo   |    |                                     |   |   |   |   | 17,810 |   |   |   |   |   |   |   | 52,040 |   |

| 2. | NEW ACCOUNTING      PRONOUNCEMENTS AND EXTRAORDINARYITEM |
|----|----------------------------------------------------------|

| · | Reclassifies      Interest Expense of $233 thousand and $1.1 million for the three and nine      months ended September 30, 2008 as Net Income Attributable to      Noncontrolling Interest below Net Income in the presentation of Earnings      Attributable to OPCo Common Shareholder in its Condensed Consolidated      Statements of Income. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Reclassifies      Minority Interest of $16.8 million as of December 31, 2008 as      Noncontrolling Interest in Total Equity on its Condensed Consolidated      Balance Sheets.                                                                                                                                                                    |
| · | Separately      reflects changes in Noncontrolling Interest in its Condensed Consolidated      Statements of Changes in Equity and Comprehensive Income      (Loss).                                                                                                                                                                               |
| · | Reclassifies      dividends paid to noncontrolling interests of $1.1 million for the nine      months ended September 30, 2008 from Operating Activities to Financing      Activities on the Condensed Consolidated Statements of Cash      Flows.                                                                                                 |

| · | Reclassifies      Minority Interest Expense of $976 thousand and $2.9 million for the three      and nine months ended September 30, 2008 as Net Income Attributable to      Noncontrolling Interest below Net Income in the presentation of Earnings      Attributable to SWEPCo Common Shareholder in its Condensed Consolidated      Statements of Income. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Reclassifies      Minority Interest of $276 thousand as of December 31, 2008 as      Noncontrolling Interest in Total Equity on its Condensed Consolidated      Balance Sheets.                                                                                                                                                                               |
| · | Separately      reflects changes in Noncontrolling Interest on the Condensed Consolidated      Statements of Changes in Equity and Comprehensive Income      (Loss).                                                                                                                                                                                          |
| · | Reclassifies      dividends paid to noncontrolling interests of $4.3 million for the nine      months ended September 30, 2008 from Operating Activities to Financing      Activities on the Condensed Consolidated Statements of Cash      Flows.                                                                                                            |

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

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

| ·   | CSPCo      should attempt to mitigate the costs of its gridSMART advanced metering      proposal that will affect portions of its service territory by seeking      funds under the American Recovery and Reinvestment Act of      2009.  As a result, a rider was established to recover $32      million related to gridSMART during the three-year ESP      period.  In August 2009, CSPCo filed for $75 million in federal      grant funding under the American Recovery and Reinvestment Act of      2009. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | CSPCo      and OPCo can recover their incremental carrying costs related to      environmental investments made from 2001 through 2008 that are not      reflected in existing rates.  Future recovery during the ESP      period of incremental carrying charges on environmental expenditures      incurred beginning in 2009 may be requested in annual    filings. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | CSPCo’s      and OPCo’s Provider of Last Resort revenues were increased by $97 million      and $55 million, respectively, to compensate for the risk of customers      changing electric suppliers during the ESP  period. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | CSPCo      and OPCo must fund a combined minimum of $15 million in costs over the ESP      period for low-income, at-risk customer programs.  In March      2009, this funding obligation was recognized as a liability and charged to      Other Operation expense.  At September 30, 2009, CSPCo’s and      OPCo’s remaining liability balances were $6 million  each. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|    |   | 2007               |   |   | 2006   |   |
|---------|--------|--------------------|--------|--------|--------|--------|
| Company |   | (in      millions) |   |
| APCo    |   | $                  | 1.7    |   |   | $      | 12.4 |   |
| CSPCo   |   |               | 0.9    |   |   |   | 6.9 |   |
| I&M |   |               | 1.0    |   |   |   | 7.3 |   |
| OPCo    |   |               | 1.3    |   |   |   | 9.4 |   |

|    |   | September      30, 2009 |   |
|---------|--------|-------------------------|--------|
| Company |   | (in      millions)      |   |
| APCo    |   | $                       | 10.7   |   |
| CSPCo   |   |                    | 5.9    |   |
| I&M |   |                    | 6.3    |   |
| OPCo    |   |                    | 8.2    |   |

|                   |   |                |          |     |               | Borrower |
|------------------------|--------|---------------------|---------------|----------|--------------------|----------|
|                   |   | Amount              |          | Maturity |               | Sublimit |
| Company                |   | (in      thousands) |          |     |               |     |   |
| $1.5      billion LOC: |   |                |          |     |               |     |   |   |
| I&M                |   | $                   | 300      |     | March      2010    |     |   |                                      N/A  |
| SWEPCo                 |   |                | 4,448    |     | December      2009 |     |   |                                      N/A  |
|                   |   |                |          |     |               |     |   |   |
| $627      million LOC: |   |                |          |     |               |     |   |   |
| APCo                   |   | $                   | 126,716  |     | June      2010     |     | $ |                                300,000  |
| I&M                |   |                | 77,886   |     | May      2010      |     |   |                                230,000  |
| OPCo                   |   |                | 166,899  |     | June      2010     |     |   |                                400,000  |

|    | Maximum             |   |
|---------|---------------------|--------|
|    | Potential           |   |
|    | Loss                |   |
| Company | (in      thousands) |   |
| APCo    |                | $      | 804 |   |
| CSPCo   |                |   | 343 |   |
| I&M |                |   | 555 |   |
| OPCo    |                |   | 750 |   |
| PSO     |                |   | 1,024 |   |
| SWEPCo  |                |   | 665 |   |

|  5. | ACQUISITION |
|----------|-------------|

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

|                                       |                                  |   | Other      Postretirement             |   |
|--------------------------------------------|---------------------------------------|--------|---------------------------------------|--------|
|                                       | Pension      Plans                    |   | Benefit      Plans                    |   |
|                                       | Three      Months Ended September 30, |   | Three      Months Ended September 30, |   |
|                                       | 2009                                  |   | 2008                                  |   | 2009 |   | 2008 |   |
|                                       | (in      millions)                    |   |
| Service      Cost                          |                                  | $      | 26                                    |   |   | $ | 25 |   |   | $ | 11 |   |   | $ | 10 |   |
| Interest      Cost                         |                                  |   | 64                                    |   |   |   | 62 |   |   |   | 27 |   |   |   | 28 |   |
| Expected      Return on Plan Assets        |                                  |   | (80                                   | )      |   |   | (84 | ) |   |   | (21 | ) |   |   | (27 | ) |
| Amortization      of Transition Obligation |                                  |   | -                                     |   |   |   | - |   |   |   | 7 |   |   |   | 7 |   |
| Amortization      of Net Actuarial Loss    |                                  |   | 14                                    |   |   |   | 10 |   |   |   | 11 |   |   |   | 3 |   |
| Net      Periodic Benefit Cost             |                                  | $      | 24                                    |   |   | $ | 13 |   |   | $ | 35 |   |   | $ | 21 |   |

|                                       |                                 |   | Other      Postretirement            |   |
|--------------------------------------------|--------------------------------------|--------|--------------------------------------|--------|
|                                       | Pension      Plans                   |   | Benefit      Plans                   |   |
|                                       | Nine      Months Ended September 30, |   | Nine      Months Ended September 30, |   |
|                                       | 2009                                 |   | 2008                                 |   | 2009 |   | 2008 |   |
|                                       | (in      millions)                   |   |
| Service      Cost                          |                                 | $      | 78                                   |   |   | $ | 75 |   |   | $ | 32 |   |   | $ | 31 |   |
| Interest      Cost                         |                                 |   | 191                                  |   |   |   | 187 |   |   |   | 82 |   |   |   | 84 |   |
| Expected      Return on Plan Assets        |                                 |   | (241                                 | )      |   |   | (252 | ) |   |   | (61 | ) |   |   | (83 | ) |
| Amortization      of Transition Obligation |                                 |   | -                                    |   |   |   | - |   |   |   | 20 |   |   |   | 21 |   |
| Amortization      of Net Actuarial Loss    |                                 |   | 44                                   |   |   |   | 29 |   |   |   | 32 |   |   |   | 8 |   |
| Net      Periodic Benefit Cost             |                                 | $      | 72                                   |   |   | $ | 39 |   |   | $ | 105 |   |   | $ | 61 |   |

|    |                                  |   | Other      Postretirement             |   |
|---------|---------------------------------------|--------|---------------------------------------|--------|
|    | Pension      Plans                    |   | Benefit      Plans                    |   |
|    | Three      Months Ended September 30, |   | Three      Months Ended September 30, |   |
|    | 2009                                  |   | 2008                                  |   | 2009 |   | 2008 |   |
| Company | (in      thousands)                   |   |
| APCo    |                                  | $      | 2,614                                 |   |   | $ | 834 |   |   | $ | 6,058 |   |   | $ | 3,797 |   |
| CSPCo   |                                  |   | 687                                   |   |   |   | (351 | ) |   |   | 2,638 |   |   |   | 1,545 |   |
| I&M |                                  |   | 3,484                                 |   |   |   | 1,821 |   |   |   | 4,359 |   |   |   | 2,496 |   |
| OPCo    |                                  |   | 2,067                                 |   |   |   | 318 |   |   |   | 5,139 |   |   |   | 2,908 |   |
| PSO     |                                  |   | 770                                   |   |   |   | 509 |   |   |   | 2,283 |   |   |   | 1,420 |   |
| SWEPCo  |                                  |   | 1,208                                 |   |   |   | 935 |   |   |   | 2,363 |   |   |   | 1,411 |   |

|    |                                 |   | Other      Postretirement            |   |
|---------|--------------------------------------|--------|--------------------------------------|--------|
|    | Pension      Plans                   |   | Benefit      Plans                   |   |
|    | Nine      Months Ended September 30, |   | Nine      Months Ended September 30, |   |
|    | 2009                                 |   | 2008                                 |   | 2009 |   | 2008 |   |
| Company | (in      thousands)                  |   |
| APCo    |                                 | $      | 7,844                                |   |   | $ | 2,503 |   |   | $ | 18,173 |   |   | $ | 11,196 |   |
| CSPCo   |                                 |   | 2,063                                |   |   |   | (1,049 | ) |   |   | 7,915 |   |   |   | 4,542 |   |
| I&M |                                 |   | 10,454                               |   |   |   | 5,462 |   |   |   | 13,075 |   |   |   | 7,342 |   |
| OPCo    |                                 |   | 6,201                                |   |   |   | 957 |   |   |   | 15,418 |   |   |   | 8,541 |   |
| PSO     |                                 |   | 2,310                                |   |   |   | 1,525 |   |   |   | 6,850 |   |   |   | 4,194 |   |
| SWEPCo  |                                 |   | 3,623                                |   |   |   | 2,806 |   |   |   | 7,090 |   |   |   | 4,163 |   |

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

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

| Notional      Volume of Derivative Instruments |
|------------------------------------------------|
| September      30, 2009                        |
| (in      thousands)                            |
|                                           |
| Primary      Risk                              |   | Unit      of |   |   |   |   |   |   |   |   |   |   |   |   |
| Exposure                                       |   | Measure |   | APCo |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |
| Commodity:                                     |   |   |   |   |
| Power                                          |   | MWHs |   | 172,458  |   | 91,400  |   | 88,122  |   | 104,830  |   | 177   |   | 211  |
| Coal                                           |   | Tons |   | 12,029  |   | 5,889  |   | 7,299  |   | 20,448  |   | 5,659   |   | 6,394  |
| Natural      Gas                               |   | MMBtus |   | 24,861  |   | 13,176  |   | 12,703  |   | 15,112  |   | 1,279   |   | 1,521  |
|         Heating Oil and Gasoline     |   | Gallons |   | 1,499  |   | 612  |   | 710  |   | 1,079  |   | 858   |   | 806  |
| Interest      Rate                             |   | USD |   | $ | 20,802  |   | $  | 10,993  |   | $ | 10,703  |   | $ | 13,455  |   | $ | 1,124   |   | $ | 1,431  |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Rate and Foreign Currency   |   | USD |   | $ | -  |   | $  | -  |   | $ | -        |   | $ | -  |   | $  | -   |   | $ | 3,847  |

|    | September      30, 2009 |   | December      31, 2008 |   |
|---------|-------------------------|--------|------------------------|--------|
|    | 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 |   |
|    | Assets                  |   | Liabilities            |   | Assets |   | Liabilities |   |
| Company | (in      thousands)     |   |
| APCo    |                    | $      | 9,679                  |   |   | $ | 32,791 |   |   | $ | 2,189 |   |   | $ | 5,621 |   |
| CSPCo   |                    |   | 5,129                  |   |   |   | 17,375 |   |   |   | 1,229 |   |   |   | 3,156 |   |
| I&M |                    |   | 4,946                  |   |   |   | 16,763 |   |   |   | 1,189 |   |   |   | 3,054 |   |
| OPCo    |                    |   | 5,883                  |   |   |   | 20,013 |   |   |   | 1,522 |   |   |   | 3,909 |   |
| PSO     |                    |   | 1                      |   |   |   | 26 |   |   |   | - |   |   |   | 105 |   |
| SWEPCo  |                    |   | 2                      |   |   |   | 41 |   |   |   | - |   |   |   | 124 |   |

| Fair      Value of Derivative Instruments                   |                |
|-------------------------------------------------------------|---------------------|
| September      30, 2009                                     |                |
|                                                        |                |
|                                                        | Risk                |   |   |   |   |   |   |   |
|                                                        | Management          |   |   |   |   |   |   |   |
| APCo                                                        | Contracts           |   | Hedging      Contracts |   |   |   |   |   |
|                                                        |                |   |   |   | Interest      Rate |   |   |   |   |   |
|                                                        | Commodity           |   | Commodity |   | and      Foreign |   |   |   |   |   |
|                                                        | (a)                 |   | (a) |   | Currency      (a) |   | Other      (a) (b) |   | Total |   |
| Balance      Sheet Location                                 | (in      thousands) |   |
| Current      Risk Management Assets                         |                | $ | 474,612 |   |   | $ | 5,253 |   |   | $ | - |   |   | $ | (396,430 | ) |   | $ | 83,435 |   |
| Long-term      Risk Management Assets                       |                |   | 200,051 |   |   |   | 1,295 |   |   |   | - |   |   |   | (143,594 | ) |   |   | 57,752 |   |
| Total      Assets                                           |                |   | 674,663 |   |   |   | 6,548 |   |   |   | - |   |   |   | (540,024 | ) |   |   | 141,187 |   |
|                                                        |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      Risk Management Liabilities                    |                |   | 435,880 |   |   |   | 4,833 |   |   |   | - |   |   |   | (409,711 | ) |   |   | 31,002 |   |
| Long-term      Risk Management Liabilities                  |                |   | 181,925 |   |   |   | 1,737 |   |   |   | - |   |   |   | (160,008 | ) |   |   | 23,654 |   |
| Total      Liabilities                                      |                |   | 617,805 |   |   |   | 6,570 |   |   |   | - |   |   |   | (569,719 | ) |   |   | 54,656 |   |
|                                                        |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      MTM Derivative Contract Net Assets (Liabilities) |                | $ | 56,858 |   |   | $ | (22 | ) |   | $ | - |   |   | $ | 29,695 |   |   | $ | 86,531 |   |

| CSPCo                                                       |                |   |                   |   |               |   |               |   |   |   |
|-------------------------------------------------------------|---------------------|--------|------------------------|--------|--------------------|--------|--------------------|--------|--------|--------|
|                                                        | Risk                |   |                   |   |               |   |               |   |
|                                                        | Management          |   |                   |   |               |   |               |   |
|                                                        | Contracts           |   | Hedging      Contracts |   |               |   |               |   |
|                                                        |                |   |                   |   | Interest      Rate |   |               |   |   |   |
|                                                        | Commodity           |   | Commodity              |   | and      Foreign   |   |               |   |   |   |
|                                                        | (a)                 |   | (a)                    |   | Currency      (a)  |   | Other      (a) (b) |   | Total  |   |
| Balance      Sheet Location                                 | (in      thousands) |   |
| Current      Risk Management Assets                         |                | $      | 249,520                |   |               | $      | 2,763              |   |   | $      | - |   |   | $ | (208,367 | ) |   | $ | 43,916 |   |
| Long-term      Risk Management Assets                       |                |   | 105,415                |   |               |   | 682                |   |   |   | - |   |   |   | (75,528 | ) |   |   | 30,569 |   |
| Total      Assets                                           |                |   | 354,935                |   |               |   | 3,445              |   |   |   | - |   |   |   | (283,895 | ) |   |   | 74,485 |   |
|                                                        |                |   |                   |   |               |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      Risk Management Liabilities                    |                |   | 229,126                |   |               |   | 2,552              |   |   |   | - |   |   |   | (215,403 | ) |   |   | 16,275 |   |
| Long-term      Risk Management Liabilities                  |                |   | 95,828                 |   |               |   | 921                |   |   |   | - |   |   |   | (84,227 | ) |   |   | 12,522 |   |
| Total      Liabilities                                      |                |   | 324,954                |   |               |   | 3,473              |   |   |   | - |   |   |   | (299,630 | ) |   |   | 28,797 |   |
|                                                        |                |   |                   |   |               |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      MTM Derivative Contract Net Assets (Liabilities) |                | $      | 29,981                 |   |               | $      | (28                | )      |   | $      | - |   |   | $ | 15,735 |   |   | $ | 45,688 |   |

| I&M                                                     |                |   |                   |   |               |   |               |   |   |   |
|-------------------------------------------------------------|---------------------|--------|------------------------|--------|--------------------|--------|--------------------|--------|--------|--------|
|                                                        | Risk                |   |                   |   |               |   |               |   |
|                                                        | Management          |   |                   |   |               |   |               |   |
|                                                        | Contracts           |   | Hedging      Contracts |   |               |   |               |   |
|                                                        |                |   |                   |   | Interest      Rate |   |               |   |   |   |
|                                                        | Commodity           |   | Commodity              |   | and      Foreign   |   |               |   |   |   |
|                                                        | (a)                 |   | (a)                    |   | Currency      (a)  |   | Other      (a) (b) |   | Total  |   |
| Balance      Sheet Location                                 | (in      thousands) |   |
| Current      Risk Management Assets                         |                | $      | 247,098                |   |               | $      | 2,678              |   |   | $      | - |   |   | $ | (206,656 | ) |   | $ | 43,120 |   |
| Long-term      Risk Management Assets                       |                |   | 103,663                |   |               |   | 660                |   |   |   | - |   |   |   | (74,731 | ) |   |   | 29,592 |   |
| Total      Assets                                           |                |   | 350,761                |   |               |   | 3,338              |   |   |   | - |   |   |   | (281,387 | ) |   |   | 72,712 |   |
|                                                        |                |   |                   |   |               |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      Risk Management Liabilities                    |                |   | 226,991                |   |               |   | 2,465              |   |   |   | - |   |   |   | (213,445 | ) |   |   | 16,011 |   |
| Long-term      Risk Management Liabilities                  |                |   | 94,356                 |   |               |   | 889                |   |   |   | - |   |   |   | (83,124 | ) |   |   | 12,121 |   |
| Total      Liabilities                                      |                |   | 321,347                |   |               |   | 3,354              |   |   |   | - |   |   |   | (296,569 | ) |   |   | 28,132 |   |
|                                                        |                |   |                   |   |               |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      MTM Derivative Contract Net Assets (Liabilities) |                | $      | 29,414                 |   |               | $      | (16                | )      |   | $      | - |   |   | $ | 15,182 |   |   | $ | 44,580 |   |

| OPCo                                                        |                |   |                   |   |               |   |               |   |   |   |
|-------------------------------------------------------------|---------------------|--------|------------------------|--------|--------------------|--------|--------------------|--------|--------|--------|
|                                                        | Risk                |   |                   |   |               |   |               |   |
|                                                        | Management          |   |                   |   |               |   |               |   |
|                                                        | Contracts           |   | Hedging      Contracts |   |               |   |               |   |
|                                                        |                |   |                   |   | Interest      Rate |   |               |   |   |   |
|                                                        | Commodity           |   | Commodity              |   | and      Foreign   |   |               |   |   |   |
|                                                        | (a)                 |   | (a)                    |   | Currency      (a)  |   | Other      (a) (b) |   | Total  |   |
| Balance      Sheet Location                                 | (in      thousands) |   |
| Current      Risk Management Assets                         |                | $      | 342,276                |   |               | $      | 3,215              |   |   | $      | - |   |   | $ | (286,497 | ) |   | $ | 58,994 |   |
| Long-term      Risk Management Assets                       |                |   | 137,788                |   |               |   | 790                |   |   |   | - |   |   |   | (102,253 | ) |   |   | 36,325 |   |
| Total      Assets                                           |                |   | 480,064                |   |               |   | 4,005              |   |   |   | - |   |   |   | (388,750 | ) |   |   | 95,319 |   |
|                                                        |                |   |                   |   |               |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      Risk Management Liabilities                    |                |   | 319,115                |   |               |   | 2,944              |   |   |   | - |   |   |   | (294,615 | ) |   |   | 27,444 |   |
| Long-term      Risk Management Liabilities                  |                |   | 127,345                |   |               |   | 1,057              |   |   |   | - |   |   |   | (112,268 | ) |   |   | 16,134 |   |
| Total      Liabilities                                      |                |   | 446,460                |   |               |   | 4,001              |   |   |   | - |   |   |   | (406,883 | ) |   |   | 43,578 |   |
|                                                        |                |   |                   |   |               |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      MTM Derivative Contract Net Assets (Liabilities) |                | $      | 33,604                 |   |               | $      | 4                  |   |   | $      | - |   |   | $ | 18,133 |   |   | $ | 51,741 |   |

| PSO                                                         |                |   |                   |   |               |   |               |   |   |   |
|-------------------------------------------------------------|---------------------|--------|------------------------|--------|--------------------|--------|--------------------|--------|--------|--------|
|                                                        | Risk                |   |                   |   |               |   |               |   |
|                                                        | Management          |   |                   |   |               |   |               |   |
|                                                        | Contracts           |   | Hedging      Contracts |   |               |   |               |   |
|                                                        |                |   |                   |   | Interest      Rate |   |               |   |   |   |
|                                                        | Commodity           |   | Commodity              |   | and      Foreign   |   |               |   |   |   |
|                                                        | (a)                 |   | (a)                    |   | Currency      (a)  |   | Other      (a) (b) |   | Total  |   |
| Balance      Sheet Location                                 | (in      thousands) |   |
| Current      Risk Management Assets                         |                | $      | 21,839                 |   |               | $      | 107                |   |   | $      | - |   |   | $ | (18,041 | ) |   | $ | 3,905 |   |
| Long-term      Risk Management Assets                       |                |   | 5,178                  |   |               |   | 23                 |   |   |   | - |   |   |   | (4,889 | ) |   |   | 312 |   |
| Total      Assets                                           |                |   | 27,017                 |   |               |   | 130                |   |   |   | - |   |   |   | (22,930 | ) |   |   | 4,217 |   |
|                                                        |                |   |                   |   |               |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      Risk Management Liabilities                    |                |   | 22,283                 |   |               |   | 536                |   |   |   | - |   |   |   | (18,054 | ) |   |   | 4,765 |   |
| Long-term      Risk Management Liabilities                  |                |   | 5,327                  |   |               |   | 47                 |   |   |   | - |   |   |   | (4,901 | ) |   |   | 473 |   |
| Total      Liabilities                                      |                |   | 27,610                 |   |               |   | 583                |   |   |   | - |   |   |   | (22,955 | ) |   |   | 5,238 |   |
|                                                        |                |   |                   |   |               |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      MTM Derivative Contract Net Assets (Liabilities) |                | $      | (593                   | )      |               | $      | (453               | )      |   | $      | - |   |   | $ | 25 |   |   | $ | (1,021 | ) |

| SWEPCo                                                      |                |   |                   |   |               |   |               |   |   |   |
|-------------------------------------------------------------|---------------------|--------|------------------------|--------|--------------------|--------|--------------------|--------|--------|--------|
|                                                        | Risk                |   |                   |   |               |   |               |   |
|                                                        | Management          |   |                   |   |               |   |               |   |
|                                                        | Contracts           |   | Hedging      Contracts |   |               |   |               |   |
|                                                        |                |   |                   |   | Interest      Rate |   |               |   |   |   |
|                                                        | Commodity           |   | Commodity              |   | and      Foreign   |   |               |   |   |   |
|                                                        | (a)                 |   | (a)                    |   | Currency      (a)  |   | Other      (a) (b) |   | Total  |   |
| Balance      Sheet Location                                 | (in      thousands) |   |
| Current      Risk Management Assets                         |                | $      | 31,905                 |   |               | $      | 102                |   |   | $      | - |   |   | $ | (26,680 | ) |   | $ | 5,327 |   |
| Long-term      Risk Management Assets                       |                |   | 8,004                  |   |               |   | 16                 |   |   |   | 6 |   |   |   | (7,546 | ) |   |   | 480 |   |
| Total      Assets                                           |                |   | 39,909                 |   |               |   | 118                |   |   |   | 6 |   |   |   | (34,226 | ) |   |   | 5,807 |   |
|                                                        |                |   |                   |   |               |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      Risk Management Liabilities                    |                |   | 30,092                 |   |               |   | 33                 |   |   |   | 25 |   |   |   | (26,701 | ) |   |   | 3,449 |   |
| Long-term      Risk Management Liabilities                  |                |   | 7,774                  |   |               |   | 4                  |   |   |   | - |   |   |   | (7,564 | ) |   |   | 214 |   |
| Total      Liabilities                                      |                |   | 37,866                 |   |               |   | 37                 |   |   |   | 25 |   |   |   | (34,265 | ) |   |   | 3,663 |   |
|                                                        |                |   |                   |   |               |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      MTM Derivative Contract Net Assets (Liabilities) |                | $      | 2,043                  |   |               | $      | 81                 |   |   | $      | (19 | ) |   | $ | 39 |   |   | $ | 2,144 |   |

| (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 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, 2009               |                |
|                                                             |                |   |   |   |   |   |   |   |   |   |   |   |
|                                                             | APCo                |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |   |
|                                                             | (in      thousands) |   |
| Location      of Gain (Loss)                                     |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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                                           |                |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (600 | ) |   |   | 5 |   |
| Regulatory      Liabilities                                      |                |   | 24,750 |   |   |   | 7,800 |   |   |   | 6,917 |   |   |   | 8,775 |   |   |   | (497 | ) |   |   | (16 | ) |
| Total      Gain (Loss) on Risk Management Contracts              |                | $ | 26,753 |   |   | $ | 14,113 |   |   | $ | 13,752 |   |   | $ | 12,232 |   |   | $ | (812 | ) |   | $ | 269 |   |

| Amount      of Gain (Loss) Recognized                            |                |
|------------------------------------------------------------------|---------------------|
| on      Risk Management Contracts                                |                |
| For      the Nine Months Ended September 30, 2009                |                |
|                                                             |                |   |   |   |   |   |   |   |   |   |   |   |
|                                                             | APCo                |   | CSPCo |   | I&M |   | OPCo |   | PSO |   | SWEPCo |   |
|                                                             | (in      thousands) |   |
| Location      of Gain (Loss)                                     |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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                                           |                |   | (755 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (600 | ) |   |   | (98 | ) |
| Regulatory      Liabilities                                      |                |   | 75,108 |   |   |   | 18,876 |   |   |   | 13,285 |   |   |   | 21,811 |   |   |   | (1,379 | ) |   |   | 233 |   |
| Total      Gain (Loss) on Risk Management Contracts              |                | $ | 80,001 |   |   | $ | 40,726 |   |   | $ | 39,908 |   |   | $ | 48,073 |   |   | $ | (1,471 | ) |   | $ | 658 |   |

| Accumulated      Other Comprehensive Income (Loss) Activity for Cash Flow      Hedges                 |   |
|-------------------------------------------------------------------------------------------------------|--------|
| For      the Three Months Ended September 30, 2009                                                    |   |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   | APCo |   |   | CSPCo |   |   | I&M |   |   | OPCo |   |   | PSO |   |   | SWEPCo |   |
|                                                                                                  |   | (in      thousands) |   |
| Commodity      Contracts                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning      Balance in AOCI as of  July      1, 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 Statements/within      Balance Sheets: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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 |   |   |   | - |   |   |   | - |   |
| Property,      Plant and Equipment                                                                    |   |   | (23 | ) |   |   | (9 | ) |   |   | (12 | ) |   |   | (17 | ) |   |   | (12 | ) |   |   | (9 | ) |
| Regulatory      Assets                                                                                |   |   | 1,664 |   |   |   | - |   |   |   | 226 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Regulatory      Liabilities                                                                           |   |   | (2,709 | ) |   |   | - |   |   |   | (369 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Ending      Balance in AOCI as of  September      30, 2009                                  |   | $ | 462 |   |   | $ | 232 |   |   | $ | 235 |   |   | $ | 323 |   |   | $ | (282 | ) |   | $ | 65 |   |

|                                                                                                  |   |                |   |   |   |   |   |    |   |   |    |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------------------|--------|---------------------|--------|--------|--------|--------|--------|---------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                  |   | APCo                |   |   | CSPCo  |   |   | I&M |   |   | OPCo    |   |   | PSO    |   |   | SWEPCo |   |
|                                                                                                  |   | (in      thousands) |   |
| Interest      Rate and Foreign Currency                                                               |   |                |   |   |   |   |   |    |   |   |    |   |   |   |   |   |   |   |
| Contracts                                                                                             |   |                |   |   |   |   |   |    |   |   |    |   |   |   |   |   |   |   |
| Beginning      Balance in AOCI as of  July      1, 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 Statements/within      Balance Sheets: |   |                |   |   |   |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation      and Amortization Expense                                                            |   |                | -      |   |   |   | -      |    |   |   | (2      | )      |   |   | 1      |   |   |   | - |   |   |   | - |   |
| Interest      Expense                                                                                 |   |                | 418    |   |   |   | -      |    |   |   | 253     |   |   |   | (113   | )      |   |   | 46 |   |   |   | 208 |   |
| Ending      Balance in AOCI as of  September      30, 2009                                  |   | $                   | (6,867 | )      |   | $      | -      |    |   | $      | (9,766  | )      |   | $      | 12,512 |   |   | $      | (567 | ) |   | $ | (5,207 | ) |

|                                                                                                  |   |                |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------------------|--------|---------------------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                  |   | APCo                |   |   | CSPCo  |   |   | I&M |   |   | OPCo   |   |   | PSO    |   |   | SWEPCo |   |
|                                                                                                  |   | (in      thousands) |   |
| TOTAL      Contracts                                                                                  |   |                |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |
| Beginning      Balance in AOCI as of  July      1, 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 Statements/within      Balance Sheets: |   |                |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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  |   |   |   | - |   |   |   | - |   |
| 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                                                                                |   |                | 1,664  |   |   |   | -      |    |   |   | 226    |   |   |   | -      |   |   |   | - |   |   |   | - |   |
| Regulatory      Liabilities                                                                           |   |                | (2,709 | )      |   |   | -      |    |   |   | (369   | )      |   |   | -      |   |   |   | - |   |   |   | - |   |
| Ending      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, 2009                                                     |   |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   | APCo |   |   | CSPCo |   |   | I&M |   |   | OPCo |   |   | PSO |   |   | SWEPCo |   |
|                                                                                                  |   | (in      thousands) |   |
| Commodity      Contracts                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning      Balance in AOCI as of January 1, 2009                                                  |   | $ | 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 Statements/within      Balance Sheets: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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 |   |   |   | - |   |   |   | - |   |
| Property,      Plant and Equipment                                                                    |   |   | (26 | ) |   |   | (11 | ) |   |   | (13 | ) |   |   | (19 | ) |   |   | (13 | ) |   |   | (10 | ) |
| Regulatory      Assets                                                                                |   |   | 3,800 |   |   |   | - |   |   |   | 457 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Regulatory      Liabilities                                                                           |   |   | (5,324 | ) |   |   | - |   |   |   | (693 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Ending      Balance in AOCI as of  September      30, 2009                                  |   | $ | 462 |   |   | $ | 232 |   |   | $ | 235 |   |   | $ | 323 |   |   | $ | (282 | ) |   | $ | 65 |   |

|                                                                                                  |   |                |   |   |   |   |   |    |   |   |    |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------------------|--------|---------------------|--------|--------|--------|--------|--------|---------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                  |   | APCo                |   |   | CSPCo  |   |   | I&M |   |   | OPCo    |   |   | PSO    |   |   | SWEPCo |   |
|                                                                                                  |   | (in      thousands) |   |
| Interest      Rate and Foreign Currency                                                               |   |                |   |   |   |   |   |    |   |   |    |   |   |   |   |   |   |   |
| Contracts                                                                                             |   |                |   |   |   |   |   |    |   |   |    |   |   |   |   |   |   |   |
| Beginning      Balance in AOCI as of January 1, 2009                                                  |   | $                   | (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 Statements/within      Balance Sheets: |   |                |   |   |   |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation      and Amortization Expense                                                            |   |                | -      |   |   |   | -      |    |   |   | (4      | )      |   |   | 3      |   |   |   | - |   |   |   | - |   |
| Interest      Expense                                                                                 |   |                | 1,251  |   |   |   | -      |    |   |   | 759     |   |   |   | (158   | )      |   |   | 137 |   |   |   | 622 |   |
| Ending      Balance in AOCI as of  September      30, 2009                                  |   | $                   | (6,867 | )      |   | $      | -      |    |   | $      | (9,766  | )      |   | $      | 12,512 |   |   | $      | (567 | ) |   | $ | (5,207 | ) |

|                                                                                                  |   |                |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------------------|--------|---------------------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                  |   | APCo                |   |   | CSPCo  |   |   | I&M |   |   | OPCo   |   |   | PSO    |   |   | SWEPCo |   |
|                                                                                                  |   | (in      thousands) |   |
| TOTAL      Contracts                                                                                  |   |                |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |
| Beginning      Balance in AOCI as of January 1, 2009                                                  |   | $                   | (5,392 | )      |   | $      | 1,531  |    |   | $      | (9,039 | )      |   | $      | 3,650  |   |   | $      | (704 | ) |   | $ | (5,924 | ) |
| Changes      in Fair Value Recognized in AOCI                                                         |   |                | (278   | )      |   |   | (257   | )       |   |   | (233   | )      |   |   | 10,590 |   |   |   | (246 | ) |   |   | 195 |   |
| Amount      of (Gain) or Loss Reclassified from AOCI to Income Statements/within      Balance Sheets: |   |                |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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  |   |   |   | - |   |   |   | - |   |
| 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                                                                                |   |                | 3,800  |   |   |   | -      |    |   |   | 457    |   |   |   | -      |   |   |   | - |   |   |   | - |   |
| Regulatory      Liabilities                                                                           |   |                | (5,324 | )      |   |   | -      |    |   |   | (693   | )      |   |   | -      |   |   |   | - |   |   |   | - |   |
| Ending      Balance in AOCI as of  September      30, 2009                                  |   | $                   | (6,405 | )      |   | $      | 232    |    |   | $      | (9,531 | )      |   | $      | 12,835 |   |   | $      | (849 | ) |   | $ | (5,142 | ) |

|    | Hedging      Assets (a) |   | Hedging      Liabilities (a) |   | AOCI      Gain (Loss) Net of Tax |   |
|---------|-------------------------|--------|------------------------------|--------|----------------------------------|--------|
|    |                    |   | Interest      Rate           |   |                             |   | Interest      Rate |   |   |   | Interest      Rate |   |
|    |                    |   | and      Foreign             |   |                             |   | and      Foreign |   |   |   | and      Foreign |   |
|    | Commodity               |   | Currency                     |   | Commodity                        |   | Currency |   | Commodity |   | Currency |   |
| Company | (in      thousands)     |   |
| APCo    |                    | $      | 3,371                        |   |                             | $      | - |   |   | $ | (3,393 | ) |   | $ | - |   |   | $ | 462 |   |   | $ | (6,867 | ) |
| CSPCo   |                    |   | 1,770                        |   |                             |   | - |   |   |   | (1,798 | ) |   |   | - |   |   |   | 232 |   |   |   | - |   |
| I&M |                    |   | 1,718                        |   |                             |   | - |   |   |   | (1,734 | ) |   |   | - |   |   |   | 235 |   |   |   | (9,766 | ) |
| OPCo    |                    |   | 2,066                        |   |                             |   | - |   |   |   | (2,062 | ) |   |   | - |   |   |   | 323 |   |   |   | 12,512 |   |
| PSO     |                    |   | 85                           |   |                             |   | - |   |   |   | (538 | ) |   |   | - |   |   |   | (282 | ) |   |   | (567 | ) |
| SWEPCo  |                    |   | 81                           |   |                             |   | 6 |   |   |   | - |   |   |   | (25 | ) |   |   | 65 |   |   |   | (5,207 | ) |

|    | Expected      to be Reclassified to |   |               |   |
|---------|-------------------------------------|--------|--------------------|--------|
|    | Net      Income During the Next     |   |               |   |
|    | Twelve      Months                  |   |               |   |
|    |                                |   |               |   | Maximum      Term for |   |
|    |                                |   | Interest      Rate |   | Exposure      to |   |
|    |                                |   | and      Foreign   |   | Variability      of Future |   |
|    | Commodity                           |   | Currency           |   | Cash      Flows |   |
| Company | (in      thousands)                 |   | (in      months)   |   |
| APCo    |                                | $      | 751                |   |   | $ | (1,459 | ) |   |   | 17 |   |
| CSPCo   |                                |   | 388                |   |   |   | - |   |   |   | 17 |   |
| I&M |                                |   | 381                |   |   |   | (1,007 | ) |   |   | 17 |   |
| OPCo    |                                |   | 497                |   |   |   | 1,359 |   |   |   | 17 |   |
| PSO     |                                |   | (267               | )      |   |   | (142 | ) |   |   | 15 |   |
| SWEPCo  |                                |   | 57                 |   |   |   | (829 | ) |   |   | 38 |   |

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

|    |                 |                | Amount      of Collateral the |   | Amount               |   |
|---------|----------------------|---------------------|-------------------------------|--------|----------------------|--------|
|    |                 |                | Registrant      Subsidiaries  |   | Attributable      to |   |
|    | Aggregate      Fair  |                | Would      Have Been          |   | RTO      and ISO     |   |
|    | Value      Contracts |                | Required      to Post         |   | Activities           |   |
| Company |                 | (in      thousands) |                          |
| APCo    |                 | $                   | 9,340                         |   |                 | $      | 9,340 |   |   | $ | 8,699 |   |
| CSPCo   |                 |                | 4,950                         |   |                 |   | 4,950 |   |   |   | 4,610 |   |
| I&M |                 |                | 4,772                         |   |                 |   | 4,772 |   |   |   | 4,445 |   |
| OPCo    |                 |                | 5,677                         |   |                 |   | 5,677 |   |   |   | 5,288 |   |
| PSO     |                 |                | 3,180                         |   |                 |   | 3,180 |   |   |   | 2,259 |   |
| SWEPCo  |                 |                | 3,782                         |   |                 |   | 3,782 |   |   |   | 2,687 |   |

|    |   | Liabilities      of Contracts with Cross Default Provisions prior to Contractual      Netting Arrangements |    |   | Amount      of Cash Collateral Posted |   | Additional      Settlement Liability if Cross Default Provision is    Triggered |   |
|---------|--------|-----------------------------------------------------------------------------------------------------------------|---------|--------|---------------------------------------|--------|---------------------------------------------------------------------------------|--------|
| Company |   | (in      thousands)                                                                                             |    |
| APCo    |   | $                                                                                                               | 239,073 |   |                                  | $      | 3,315                                                                           |   |   | $ | 43,244 |   |
| CSPCo   |   |                                                                                                            | 126,514 |   |                                  |   | 1,757                                                                           |   |   |   | 22,841 |   |
| I&M |   |                                                                                                            | 122,614 |   |                                  |   | 1,694                                                                           |   |   |   | 22,281 |   |
| OPCo    |   |                                                                                                            | 158,388 |   |                                  |   | 2,015                                                                           |   |   |   | 35,933 |   |
| PSO     |   |                                                                                                            | 6,760   |   |                                  |   | -                                                                               |   |   |   | 3,151 |   |
| SWEPCo  |   |                                                                                                            | 5,664   |   |                                  |   | -                                                                               |   |   |   | 1,027 |   |

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

|    |   | September      30, 2009 |      |   | December      31, 2008 |   |
|---------|--------|-------------------------|-----------|--------|------------------------|--------|
|    |   | Book      Value         |      |   | Fair      Value        |   |   | Book      Value |   |   | Fair      Value |   |
| Company |   | (in      thousands)     |      |
| APCo    |   | $                       | 3,372,360 |   |                   | $      | 3,605,111 |   |   | $ | 3,174,512 |   |   | $ | 2,858,278 |   |
| CSPCo   |   |                    | 1,536,291 |   |                   |   | 1,613,545 |   |   |   | 1,443,594 |   |   |   | 1,410,609 |   |
| I&M |   |                    | 2,077,699 |   |                   |   | 2,187,235 |   |   |   | 1,377,914 |   |   |   | 1,308,712 |   |
| OPCo    |   |                    | 3,242,299 |   |                   |   | 3,366,787 |   |   |   | 3,039,376 |   |   |   | 2,953,131 |   |
| PSO     |   |                    | 868,738   |   |                   |   | 913,767 |   |   |   | 884,859 |   |   |   | 823,150 |   |
| SWEPCo  |   |                    | 1,475,152 |   |                   |   | 1,555,651 |   |   |   | 1,478,149 |   |   |   | 1,358,122 |   |

|                                                    | September      30, 2009 |   | December      31, 2008 |   |
|---------------------------------------------------------|-------------------------|--------|------------------------|--------|
|                                                    | Estimated               |   | Gross                  |   | Other-Than- |   | Estimated |   | Gross |   | Other-Than- |   |
|                                                    | Fair                    |   | Unrealized             |   | Temporary |   | Fair |   | Unrealized |   | Temporary |   |
|                                                    | Value                   |   | Gains                  |   | Impairments |   | Value |   | Gains |   | Impairments |   |
|                                                    | (in      millions)      |   |
| Cash                                                    |                    | $      | 19                     |   |   | $ | - |   |   | $ | - |   |   | $ | 18 |   |   | $ | - |   |   | $ | - |   |
| Debt      Securities                                    |                    |   | 780                    |   |   |   | 35 |   |   |   | (2 | ) |   |   | 773 |   |   |   | 52 |   |   |   | (3 | ) |
| Equity      Securities                                  |                    |   | 565                    |   |   |   | 223 |   |   |   | (135 | ) |   |   | 469 |   |   |   | 89 |   |   |   | (82 | ) |
| Spent      Nuclear Fuel and Decommissioning Trusts |                    | $      | 1,364                  |   |   | $ | 258 |   |   | $ | (137 | ) |   | $ | 1,260 |   |   | $ | 141 |   |   | $ | (85 | ) |

|                    |                  |   |                |   |                      |   | Gross      Realized   |   |
|-------------------------|-----------------------|--------|---------------------|--------|---------------------------|--------|-----------------------|--------|
|                    | Proceeds      From    |   | Purchases           |   | Gross      Realized Gains |   | Losses      on        |   |
|                    | Investment      Sales |   | of      Investments |   | on      Investment Sales  |   | Investment      Sales |   |
|                    | (in      millions)    |   |
| Three      Months Ended |                  | $      | 113                 |   |                      | $      | 129                   |   |   | $ | 1 |   |   | $ | - |   |
| Nine      Months Ended  |                  |   | 524                 |   |                      |   | 571                   |   |   |   | 10 |   |   |   | (1 | ) |

|                          | Fair      Value    |   |
|-------------------------------|--------------------|--------|
|                          | of      Debt       |   |
|                          | Securities         |   |
|                          | (in      millions) |   |
| Within      1 year            |               | $      | 27 |   |
| 1      year – 5 years   |               |   | 217 |   |
| 5      years – 10 years |               |   | 241 |   |
| After      10 years           |               |   | 295 |   |
| Total                         |               | $      | 780 |   |

| APCo                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |
|-------------------------------------------------|--------|---------------------|--------|--------|--------------|--------|---------|--------------|--------|--------|--------|--------|--------|--------|----------|
|                                            |   | Level      1        |   |   | Level      2 |   |    | Level      3 |   |   | Other  |   |   | Total  |     |
| Assets:                                         |   | (in      thousands) |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |
| Other      Cash Deposits (d)                    |   | $                   | 421    |   |         | $      | -       |         |   | $      | -      |   |   | $      | 51       |   |   | $ | 472 |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Assets                     |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Contracts (a)              |   |                | 5,625  |   |         |   | 637,506 |         |   |   | 27,559 |   |   |   | (542,921 | ) |   |   | 127,769 |   |
| Cash      Flow and Fair Value Hedges (a)        |   |                | -      |   |         |   | 6,518   |         |   |   | -      |   |   |   | (3,147   | ) |   |   | 3,371 |   |
| Dedesignated      Risk Management Contracts (b) |   |                | -      |   |         |   | -       |         |   |   | -      |   |   |   | 10,047   |   |   |   | 10,047 |   |
| Total      Risk Management Assets               |   |                | 5,625  |   |         |   | 644,024 |         |   |   | 27,559 |   |   |   | (536,021 | ) |   |   | 141,187 |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Total      Assets                               |   | $                   | 6,046  |   |         | $      | 644,024 |         |   | $      | 27,559 |   |   | $      | (535,970 | ) |   | $ | 141,659 |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Liabilities:                                    |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Liabilities                |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Contracts (a)              |   | $                   | 6,116  |   |         | $      | 603,805 |         |   | $      | 3,911  |   |   | $      | (566,033 | ) |   | $ | 47,799 |   |
| Cash      Flow and Fair Value Hedges (a)        |   |                | -      |   |         |   | 6,540   |         |   |   | -      |   |   |   | (3,147   | ) |   |   | 3,393 |   |
| DETM      Assignment (c)                        |   |                | -      |   |         |   | -       |         |   |   | -      |   |   |   | 3,464    |   |   |   | 3,464 |   |
| Total      Risk Management Liabilities          |   | $                   | 6,116  |   |         | $      | 610,345 |         |   | $      | 3,911  |   |   | $      | (565,716 | ) |   | $ | 54,656 |   |

| APCo                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |
|-------------------------------------------------|--------|---------------------|--------|--------|--------------|--------|---------|--------------|--------|--------|--------|--------|--------|--------|----------|
|                                            |   | Level      1        |   |   | Level      2 |   |    | Level      3 |   |   | Other  |   |   | Total  |     |
| Assets:                                         |   | (in      thousands) |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |
| Other      Cash Deposits (d)                    |   | $                   | 656    |   |         | $      | -       |         |   | $      | -      |   |   | $      | 52       |   |   | $ | 708 |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Assets                     |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Contracts (a)              |   |                | 16,105 |   |         |   | 667,748 |         |   |   | 11,981 |   |   |   | (597,676 | ) |   |   | 98,158 |   |
| Cash      Flow and Fair Value Hedges (a)        |   |                | -      |   |         |   | 6,634   |         |   |   | -      |   |   |   | (1,413   | ) |   |   | 5,221 |   |
| Dedesignated      Risk Management Contracts (b) |   |                | -      |   |         |   | -       |         |   |   | -      |   |   |   | 12,856   |   |   |   | 12,856 |   |
| Total      Risk Management Assets               |   |                | 16,105 |   |         |   | 674,382 |         |   |   | 11,981 |   |   |   | (586,233 | ) |   |   | 116,235 |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Total      Assets                               |   | $                   | 16,761 |   |         | $      | 674,382 |         |   | $      | 11,981 |   |   | $      | (586,181 | ) |   | $ | 116,943 |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Liabilities:                                    |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Liabilities                |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Contracts (a)              |   | $                   | 18,808 |   |         | $      | 628,974 |         |   | $      | 3,972  |   |   | $      | (601,108 | ) |   | $ | 50,646 |   |
| Cash      Flow and Fair Value Hedges (a)        |   |                | -      |   |         |   | 2,545   |         |   |   | -      |   |   |   | (1,413   | ) |   |   | 1,132 |   |
| DETM      Assignment (c)                        |   |                | -      |   |         |   | -       |         |   |   | -      |   |   |   | 5,230    |   |   |   | 5,230 |   |
| Total      Risk Management Liabilities          |   | $                   | 18,808 |   |         | $      | 631,519 |         |   | $      | 3,972  |   |   | $      | (597,291 | ) |   | $ | 57,008 |   |

| CSPCo                                           |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |
|-------------------------------------------------|--------|---------------------|--------|--------|--------------|--------|---------|--------------|--------|--------|--------|--------|--------|--------|----------|
|                                            |   | Level      1        |   |   | Level      2 |   |    | Level      3 |   |   | Other  |   |   | Total  |     |
| Assets:                                         |   | (in      thousands) |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |
| Other      Cash Deposits (d)                    |   | $                   | 20,056 |   |         | $      | -       |         |   | $      | -      |   |   | $      | 21       |   |   | $ | 20,077 |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Assets                     |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Contracts (a)              |   |                | 2,981  |   |         |   | 335,327 |         |   |   | 14,603 |   |   |   | (285,521 | ) |   |   | 67,390 |   |
| Cash      Flow and Fair Value Hedges (a)        |   |                | -      |   |         |   | 3,429   |         |   |   | -      |   |   |   | (1,659   | ) |   |   | 1,770 |   |
| Dedesignated      Risk Management Contracts (b) |   |                | -      |   |         |   | -       |         |   |   | -      |   |   |   | 5,325    |   |   |   | 5,325 |   |
| Total      Risk Management Assets               |   |                | 2,981  |   |         |   | 338,756 |         |   |   | 14,603 |   |   |   | (281,855 | ) |   |   | 74,485 |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Total      Assets                               |   | $                   | 23,037 |   |         | $      | 338,756 |         |   | $      | 14,603 |   |   | $      | (281,834 | ) |   | $ | 94,562 |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Liabilities:                                    |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Liabilities                |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Contracts (a)              |   | $                   | 3,241  |   |         | $      | 317,618 |         |   | $      | 2,071  |   |   | $      | (297,767 | ) |   | $ | 25,163 |   |
| Cash      Flow and Fair Value Hedges (a)        |   |                | -      |   |         |   | 3,457   |         |   |   | -      |   |   |   | (1,659   | ) |   |   | 1,798 |   |
| DETM      Assignment (c)                        |   |                | -      |   |         |   | -       |         |   |   | -      |   |   |   | 1,836    |   |   |   | 1,836 |   |
| Total      Risk Management Liabilities          |   | $                   | 3,241  |   |         | $      | 321,075 |         |   | $      | 2,071  |   |   | $      | (297,590 | ) |   | $ | 28,797 |   |

| CSPCo                                           |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |
|-------------------------------------------------|--------|---------------------|--------|--------|--------------|--------|---------|--------------|--------|--------|--------|--------|--------|--------|----------|
|                                            |   | Level      1        |   |   | Level      2 |   |    | Level      3 |   |   | Other  |   |   | Total  |     |
| Assets:                                         |   | (in      thousands) |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |
| Other      Cash Deposits (d)                    |   | $                   | 31,129 |   |         | $      | -       |         |   | $      | -      |   |   | $      | 1,171    |   |   | $ | 32,300 |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Assets                     |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Contracts (a)              |   |                | 9,042  |   |         |   | 366,557 |         |   |   | 6,724  |   |   |   | (328,027 | ) |   |   | 54,296 |   |
| Cash      Flow and Fair Value Hedges (a)        |   |                | -      |   |         |   | 3,725   |         |   |   | -      |   |   |   | (794     | ) |   |   | 2,931 |   |
| Dedesignated      Risk Management Contracts (b) |   |                | -      |   |         |   | -       |         |   |   | -      |   |   |   | 7,218    |   |   |   | 7,218 |   |
| Total      Risk Management Assets               |   |                | 9,042  |   |         |   | 370,282 |         |   |   | 6,724  |   |   |   | (321,603 | ) |   |   | 64,445 |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Total      Assets                               |   | $                   | 40,171 |   |         | $      | 370,282 |         |   | $      | 6,724  |   |   | $      | (320,432 | ) |   | $ | 96,745 |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Liabilities:                                    |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Liabilities                |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Contracts (a)              |   | $                   | 10,559 |   |         | $      | 344,860 |         |   | $      | 2,227  |   |   | $      | (329,954 | ) |   | $ | 27,692 |   |
| Cash      Flow and Fair Value Hedges (a)        |   |                | -      |   |         |   | 1,429   |         |   |   | -      |   |   |   | (794     | ) |   |   | 635 |   |
| DETM      Assignment (c)                        |   |                | -      |   |         |   | -       |         |   |   | -      |   |   |   | 2,937    |   |   |   | 2,937 |   |
| Total      Risk Management Liabilities          |   | $                   | 10,559 |   |         | $      | 346,289 |         |   | $      | 2,227  |   |   | $      | (327,811 | ) |   | $ | 31,264 |   |

| I&M                                                 |   |                |    |   |         |   |      |         |   |   |   |   |   |   |     |
|---------------------------------------------------------|--------|---------------------|---------|--------|--------------|--------|-----------|--------------|--------|--------|--------|--------|--------|--------|----------|
|                                                    |   | Level      1        |    |   | Level      2 |   |      | Level      3 |   |   | Other  |   |   | Total  |     |
| Assets:                                                 |   | (in      thousands) |    |
|                                                    |   |                |    |   |         |   |      |         |   |   |   |   |   |   |     |
| Risk      Management Assets                             |   |                |    |   |         |   |      |         |   |   |   |   |   |   |     |
| Risk      Management Contracts (a)                      |   | $                   | 2,874   |   |         | $      | 331,776   |         |   | $      | 14,087 |   |   | $      | (282,877 | ) |   | $ | 65,860 |   |
| Cash      Flow and Fair Value Hedges (a)                |   |                | -       |   |         |   | 3,323     |         |   |   | -      |   |   |   | (1,605   | ) |   |   | 1,718 |   |
| Dedesignated      Risk Management Contracts (b)         |   |                | -       |   |         |   | -         |         |   |   | -      |   |   |   | 5,134    |   |   |   | 5,134 |   |
| Total      Risk Management Assets                       |   |                | 2,874   |   |         |   | 335,099   |         |   |   | 14,087 |   |   |   | (279,348 | ) |   |   | 72,712 |   |
|                                                    |   |                |    |   |         |   |      |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Spent      Nuclear Fuel and Decommissioning Trusts      |   |                |    |   |         |   |      |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Cash      and Cash Equivalents (e)                      |   |                | -       |   |         |   | 9,597     |         |   |   | -      |   |   |   | 9,136    |   |   |   | 18,733 |   |
| Debt      Securities (f)                                |   |                | -       |   |         |   | 780,227   |         |   |   | -      |   |   |   | -        |   |   |   | 780,227 |   |
| Equity      Securities (g)                              |   |                | 565,482 |   |         |   | -         |         |   |   | -      |   |   |   | -        |   |   |   | 565,482 |   |
| TotalSpent Nuclear Fuel and      Decommissioning Trusts |   |                | 565,482 |   |         |   | 789,824   |         |   |   | -      |   |   |   | 9,136    |   |   |   | 1,364,442 |   |
|                                                    |   |                |    |   |         |   |      |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Total      Assets                                       |   | $                   | 568,356 |   |         | $      | 1,124,923 |         |   | $      | 14,087 |   |   | $      | (270,212 | ) |   | $ | 1,437,154 |   |
|                                                    |   |                |    |   |         |   |      |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Liabilities:                                            |   |                |    |   |         |   |      |         |   |   |   |   |   |   |     |   |   |   |   |   |
|                                                    |   |                |    |   |         |   |      |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Liabilities                        |   |                |    |   |         |   |      |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Contracts (a)                      |   | $                   | 3,125   |   |         | $      | 314,195   |         |   | $      | 2,002  |   |   | $      | (294,694 | ) |   | $ | 24,628 |   |
| Cash      Flow and Fair Value Hedges (a)                |   |                | -       |   |         |   | 3,339     |         |   |   | -      |   |   |   | (1,605   | ) |   |   | 1,734 |   |
| DETM      Assignment (c)                                |   |                | -       |   |         |   | -         |         |   |   | -      |   |   |   | 1,770    |   |   |   | 1,770 |   |
| Total      Risk Management Liabilities                  |   | $                   | 3,125   |   |         | $      | 317,534   |         |   | $      | 2,002  |   |   | $      | (294,529 | ) |   | $ | 28,132 |   |

| I&M                                                 |   |                |    |   |         |   |      |         |   |   |   |   |   |   |     |
|---------------------------------------------------------|--------|---------------------|---------|--------|--------------|--------|-----------|--------------|--------|--------|--------|--------|--------|--------|----------|
|                                                    |   | Level      1        |    |   | Level      2 |   |      | Level      3 |   |   | Other  |   |   | Total  |     |
| Assets:                                                 |   | (in      thousands) |    |
|                                                    |   |                |    |   |         |   |      |         |   |   |   |   |   |   |     |
| Risk      Management Assets                             |   |                |    |   |         |   |      |         |   |   |   |   |   |   |     |
| Risk      Management Contracts (a)                      |   | $                   | 8,750   |   |         | $      | 357,405   |         |   | $      | 6,508  |   |   | $      | (319,857 | ) |   | $ | 52,806 |   |
| Cash      Flow and Fair Value Hedges (a)                |   |                | -       |   |         |   | 3,605     |         |   |   | -      |   |   |   | (768     | ) |   |   | 2,837 |   |
| Dedesignated      Risk Management Contracts (b)         |   |                | -       |   |         |   | -         |         |   |   | -      |   |   |   | 6,985    |   |   |   | 6,985 |   |
| Total      Risk Management Assets                       |   |                | 8,750   |   |         |   | 361,010   |         |   |   | 6,508  |   |   |   | (313,640 | ) |   |   | 62,628 |   |
|                                                    |   |                |    |   |         |   |      |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Spent      Nuclear Fuel and Decommissioning Trusts      |   |                |    |   |         |   |      |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Cash      and Cash Equivalents (e)                      |   |                | -       |   |         |   | 7,818     |         |   |   | -      |   |   |   | 11,845   |   |   |   | 19,663 |   |
| Debt      Securities (f)                                |   |                | -       |   |         |   | 771,216   |         |   |   | -      |   |   |   | -        |   |   |   | 771,216 |   |
| Equity      Securities (g)                              |   |                | 468,654 |   |         |   | -         |         |   |   | -      |   |   |   | -        |   |   |   | 468,654 |   |
| TotalSpent Nuclear Fuel and      Decommissioning Trusts |   |                | 468,654 |   |         |   | 779,034   |         |   |   | -      |   |   |   | 11,845   |   |   |   | 1,259,533 |   |
|                                                    |   |                |    |   |         |   |      |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Total      Assets                                       |   | $                   | 477,404 |   |         | $      | 1,140,044 |         |   | $      | 6,508  |   |   | $      | (301,795 | ) |   | $ | 1,322,161 |   |
|                                                    |   |                |    |   |         |   |      |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Liabilities:                                            |   |                |    |   |         |   |      |         |   |   |   |   |   |   |     |   |   |   |   |   |
|                                                    |   |                |    |   |         |   |      |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Liabilities                        |   |                |    |   |         |   |      |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Contracts (a)                      |   | $                   | 10,219  |   |         | $      | 336,280   |         |   | $      | 2,156  |   |   | $      | (321,722 | ) |   | $ | 26,933 |   |
| Cash      Flow and Fair Value Hedges (a)                |   |                | -       |   |         |   | 1,383     |         |   |   | -      |   |   |   | (768     | ) |   |   | 615 |   |
| DETM      Assignment (c)                                |   |                | -       |   |         |   | -         |         |   |   | -      |   |   |   | 2,842    |   |   |   | 2,842 |   |
| Total      Risk Management Liabilities                  |   | $                   | 10,219  |   |         | $      | 337,663   |         |   | $      | 2,156  |   |   | $      | (319,648 | ) |   | $ | 30,390 |   |

| OPCo                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |
|-------------------------------------------------|--------|---------------------|--------|--------|--------------|--------|---------|--------------|--------|--------|--------|--------|--------|--------|----------|
|                                            |   | Level      1        |   |   | Level      2 |   |    | Level      3 |   |   | Other  |   |   | Total  |     |
| Assets:                                         |   | (in      thousands) |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |
| Other      Cash Deposits (d)                    |   | $                   | 1,075  |   |         | $      | -       |         |   | $      | -      |   |   | $      | 24       |   |   | $ | 1,099 |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Assets                     |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Contracts (a)              |   |                | 3,419  |   |         |   | 456,035 |         |   |   | 16,801 |   |   |   | (389,110 | ) |   |   | 87,145 |   |
| Cash      Flow and Fair Value Hedges (a)        |   |                | -      |   |         |   | 3,987   |         |   |   | -      |   |   |   | (1,921   | ) |   |   | 2,066 |   |
| Dedesignated      Risk Management Contracts (b) |   |                | -      |   |         |   | -       |         |   |   | -      |   |   |   | 6,108    |   |   |   | 6,108 |   |
| Total      Risk Management Assets               |   |                | 3,419  |   |         |   | 460,022 |         |   |   | 16,801 |   |   |   | (384,923 | ) |   |   | 95,319 |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Total      Assets                               |   | $                   | 4,494  |   |         | $      | 460,022 |         |   | $      | 16,801 |   |   | $      | (384,899 | ) |   | $ | 96,418 |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Liabilities:                                    |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Liabilities                |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Contracts (a)              |   | $                   | 3,717  |   |         | $      | 436,519 |         |   | $      | 2,415  |   |   | $      | (403,240 | ) |   | $ | 39,411 |   |
| Cash      Flow and Fair Value Hedges (a)        |   |                | -      |   |         |   | 3,983   |         |   |   | -      |   |   |   | (1,921   | ) |   |   | 2,062 |   |
| DETM      Assignment (c)                        |   |                | -      |   |         |   | -       |         |   |   | -      |   |   |   | 2,105    |   |   |   | 2,105 |   |
| Total      Risk Management Liabilities          |   | $                   | 3,717  |   |         | $      | 440,502 |         |   | $      | 2,415  |   |   | $      | (403,056 | ) |   | $ | 43,578 |   |

| OPCo                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |
|-------------------------------------------------|--------|---------------------|--------|--------|--------------|--------|---------|--------------|--------|--------|--------|--------|--------|--------|----------|
|                                            |   | Level      1        |   |   | Level      2 |   |    | Level      3 |   |   | Other  |   |   | Total  |     |
| Assets:                                         |   | (in      thousands) |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |
| Other      Cash Deposits (d)                    |   | $                   | 4,197  |   |         | $      | -       |         |   | $      | -      |   |   | $      | 2,431    |   |   | $ | 6,628 |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Assets                     |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Contracts (a)              |   |                | 11,200 |   |         |   | 575,415 |         |   |   | 8,364  |   |   |   | (515,162 | ) |   |   | 79,817 |   |
| Cash      Flow and Fair Value Hedges (a)        |   |                | -      |   |         |   | 4,614   |         |   |   | -      |   |   |   | (983     | ) |   |   | 3,631 |   |
| Dedesignated      Risk Management Contracts (b) |   |                | -      |   |         |   | -       |         |   |   | -      |   |   |   | 8,941    |   |   |   | 8,941 |   |
| Total      Risk Management Assets               |   |                | 11,200 |   |         |   | 580,029 |         |   |   | 8,364  |   |   |   | (507,204 | ) |   |   | 92,389 |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Total      Assets                               |   | $                   | 15,397 |   |         | $      | 580,029 |         |   | $      | 8,364  |   |   | $      | (504,773 | ) |   | $ | 99,017 |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Liabilities:                                    |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
|                                            |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Liabilities                |   |                |   |   |         |   |    |         |   |   |   |   |   |   |     |   |   |   |   |   |
| Risk      Management Contracts (a)              |   | $                   | 13,080 |   |         | $      | 550,278 |         |   | $      | 2,801  |   |   | $      | (517,548 | ) |   | $ | 48,611 |   |
| Cash      Flow and Fair Value Hedges (a)        |   |                | -      |   |         |   | 1,770   |         |   |   | -      |   |   |   | (983     | ) |   |   | 787 |   |
| DETM      Assignment (c)                        |   |                | -      |   |         |   | -       |         |   |   | -      |   |   |   | 3,637    |   |   |   | 3,637 |   |
| Total      Risk Management Liabilities          |   | $                   | 13,080 |   |         | $      | 552,048 |         |   | $      | 2,801  |   |   | $      | (514,894 | ) |   | $ | 53,035 |   |

| PSO                                      |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |
|------------------------------------------|--------|---------------------|--------|--------|--------------|--------|--------|--------------|--------|--------|--------|--------|--------|--------|---------|
|                                     |   | Level      1        |   |   | Level      2 |   |   | Level      3 |   |   | Other  |   |   | Total  |    |
| Assets:                                  |   | (in      thousands) |   |
|                                     |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |
| Risk      Management Assets              |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |
| Risk      Management Contracts (a)       |   | $                   | 818    |   |         | $      | 25,801 |         |   | $      | 16     |   |   | $      | (22,503 | ) |   | $ | 4,132 |   |
| Cash      Flow and Fair Value Hedges (a) |   |                | -      |   |         |   | 125    |         |   |   | -      |   |   |   | (40     | ) |   |   | 85 |   |
| Total      Risk Management Assets        |   | $                   | 818    |   |         | $      | 25,926 |         |   | $      | 16     |   |   | $      | (22,543 | ) |   | $ | 4,217 |   |
|                                     |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |   |   |   |   |   |
| Liabilities:                             |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |   |   |   |   |   |
|                                     |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |   |   |   |   |   |
| Risk      Management Liabilities         |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |   |   |   |   |   |
| Risk      Management Contracts (a)       |   | $                   | 771    |   |         | $      | 26,446 |         |   | $      | 11     |   |   | $      | (22,528 | ) |   | $ | 4,700 |   |
| Cash      Flow and Fair Value Hedges (a) |   |                | -      |   |         |   | 578    |         |   |   | -      |   |   |   | (40     | ) |   |   | 538 |   |
| Total      Risk Management Liabilities   |   | $                   | 771    |   |         | $      | 27,024 |         |   | $      | 11     |   |   | $      | (22,568 | ) |   | $ | 5,238 |   |

| PSO                                    |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |
|----------------------------------------|--------|---------------------|--------|--------|--------------|--------|--------|--------------|--------|--------|--------|--------|--------|--------|---------|
|                                   |   | Level      1        |   |   | Level      2 |   |   | Level      3 |   |   | Other  |   |   | Total  |    |
| Assets:                                |   | (in      thousands) |   |
|                                   |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |
| Risk      Management Assets            |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |
| Risk      Management Contracts (a)     |   | $                   | 3,295  |   |         | $      | 39,866 |         |   | $      | 8      |   |   | $      | (36,422 | ) |   | $ | 6,747 |   |
|                                   |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |   |   |   |   |   |
| Liabilities:                           |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |   |   |   |   |   |
|                                   |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |   |   |   |   |   |
| Risk      Management Liabilities       |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |   |   |   |   |   |
| Risk      Management Contracts (a)     |   | $                   | 3,664  |   |         | $      | 37,835 |         |   | $      | 10     |   |   | $      | (36,527 | ) |   | $ | 4,982 |   |
| DETM      Assignment (c)               |   |                | -      |   |         |   | -      |         |   |   | -      |   |   |   | 149     |   |   |   | 149 |   |
| Total      Risk Management Liabilities |   | $                   | 3,664  |   |         | $      | 37,835 |         |   | $      | 10     |   |   | $      | (36,378 | ) |   | $ | 5,131 |   |

| SWEPCo                                   |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |
|------------------------------------------|--------|---------------------|--------|--------|--------------|--------|--------|--------------|--------|--------|--------|--------|--------|--------|---------|
|                                     |   | Level      1        |   |   | Level      2 |   |   | Level      3 |   |   | Other  |   |   | Total  |    |
| Assets:                                  |   | (in      thousands) |   |
|                                     |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |
| Risk      Management Assets              |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |
| Risk      Management Contracts (a)       |   | $                   | 972    |   |         | $      | 38,392 |         |   | $      | 24     |   |   | $      | (33,668 | ) |   | $ | 5,720 |   |
| Cash      Flow and Fair Value Hedges (a) |   |                | -      |   |         |   | 237    |         |   |   | -      |   |   |   | (150    | ) |   |   | 87 |   |
| Total      Risk Management Assets        |   | $                   | 972    |   |         | $      | 38,629 |         |   | $      | 24     |   |   | $      | (33,818 | ) |   | $ | 5,807 |   |
|                                     |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |   |   |   |   |   |
| Liabilities:                             |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |   |   |   |   |   |
|                                     |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |   |   |   |   |   |
| Risk      Management Liabilities         |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |   |   |   |   |   |
| Risk      Management Contracts (a)       |   | $                   | 916    |   |         | $      | 36,411 |         |   | $      | 18     |   |   | $      | (33,707 | ) |   | $ | 3,638 |   |
| Cash      Flow and Fair Value Hedges (a) |   |                | -      |   |         |   | 175    |         |   |   | -      |   |   |   | (150    | ) |   |   | 25 |   |
| Total      Risk Management Liabilities   |   | $                   | 916    |   |         | $      | 36,586 |         |   | $      | 18     |   |   | $      | (33,857 | ) |   | $ | 3,663 |   |

| SWEPCo                                   |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |
|------------------------------------------|--------|---------------------|--------|--------|--------------|--------|--------|--------------|--------|--------|--------|--------|--------|--------|---------|
|                                     |   | Level      1        |   |   | Level      2 |   |   | Level      3 |   |   | Other  |   |   | Total  |    |
| Assets:                                  |   | (in      thousands) |   |
|                                     |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |
| Risk      Management Assets              |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |
| Risk      Management Contracts (a)       |   | $                   | 3,883  |   |         | $      | 61,471 |         |   | $      | 14     |   |   | $      | (55,710 | ) |   | $ | 9,658 |   |
| Cash      Flow and Fair Value Hedges (a) |   |                | -      |   |         |   | 107    |         |   |   | -      |   |   |   | (80     | ) |   |   | 27 |   |
| Total      Risk Management Assets        |   | $                   | 3,883  |   |         | $      | 61,578 |         |   | $      | 14     |   |   | $      | (55,790 | ) |   | $ | 9,685 |   |
|                                     |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |   |   |   |   |   |
| Liabilities:                             |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |   |   |   |   |   |
|                                     |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |   |   |   |   |   |
| Risk      Management Liabilities         |   |                |   |   |         |   |   |         |   |   |   |   |   |   |    |   |   |   |   |   |
| Risk      Management Contracts (a)       |   | $                   | 4,318  |   |         | $      | 58,390 |         |   | $      | 17     |   |   | $      | (55,834 | ) |   | $ | 6,891 |   |
| Cash      Flow and Fair Value Hedges (a) |   |                | -      |   |         |   | 265    |         |   |   | -      |   |   |   | (80     | ) |   |   | 185 |   |
| DETM      Assignment (c)                 |   |                | -      |   |         |   | -      |         |   |   | -      |   |   |   | 175     |   |   |   | 175 |   |
| Total      Risk Management Liabilities   |   | $                   | 4,318  |   |         | $      | 58,655 |         |   | $      | 17     |   |   | $      | (55,739 | ) |   | $ | 7,251 |   |

| (a) | Amounts      in “Other” column primarily represent counterparty netting of risk      management contracts and associated cash collateral under the accounting      guidance for “Derivatives and Hedging.”                                                                                                                                                                                                     |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | “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      contract. |
| (c) | See      “Natural Gas Contracts with DETM” section of Note 15 in the 2008 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 corporate, municipal and treasury bonds.                                                                                                                                                                                                                                                                                                                                                                        |
| (g) | Amounts      represent publicly traded equity securities and equity-based mutual      funds.                                                                                                                                                                                                                                                                                                                                           |

|                                                                                                                                       |   | APCo                |         | CSPCo  |   | I&M      |   | OPCo   |         | PSO    |   | SWEPCo       |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|--------------|--------|--------|--------------|--------|--------|--------------|--------|--------|--------------|
| Three      Months Ended September 30, 2009                                                                                                 |   | (in      thousands) |
| Balance      as of July 1, 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 (b)                                                                                                |   |                | 2,322   |   |   | 1,231   |   |   | 1,192   |   |   | 1,525   |   |   | -  |   |   | -  |
| Changes      in Fair Value Allocated to Regulated Jurisdictions (c)                                                                        |   |                | 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  |

|                                                                                                                                       |   | APCo                |         | CSPCo  |   | I&M      |   | OPCo   |         | PSO    |   | SWEPCo       |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|--------------|--------|--------|--------------|--------|--------|--------------|--------|--------|--------------|
| Nine      Months Ended September 30, 2009                                                                                                  |   | (in      thousands) |
| Balance      as of January 1, 2009                                                                                                         |   | $                   | 8,009   |   | $      | 4,497   |   | $      | 4,352   |   | $      | 5,563   |   | $ | (2) |   | $ | (3) |
| Realized      (Gain) Loss Included in Net Income (or Changes in Net Assets)      (a)                                                       |   |                | (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 (b)                                                                                                |   |                | (328)        |   |   | (184)        |   |   | (178)        |   |   | (228)        |   |   | -  |   |   | -  |
| Changes      in Fair Value Allocated to Regulated Jurisdictions (c)                                                                        |   |                | 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  |

| Three      Months Ended September 30, 2008                                                                                                      |   | APCo                |        | CSPCo  |   | I&M     |   | OPCo   |        | PSO    |   | SWEPCo      |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|-------------|--------|--------|-------------|--------|--------|-------------|--------|--------|-------------|--------|
|                                                                                                                                            |   | (in      thousands) |        |
| Balance      as of July 1, 2008                                                                                                                 |   | $                   | (18,560)    |   | $      | (11,122)    |   | $      | (10,675)    |   | $      | (13,245)    |   | $ | (23) |   | $ | (45) |   |
| Realized      (Gain) Loss Included in Net Income   (or Changes in        Net Assets) (a)                                    |   |                | 4,466  |   |   | 2,670  |   |   | 2,561  |   |   | 3,287  |   |   | 4  |   |   | 13  |   |
| Unrealized      Gain (Loss) Included in Net Income (or Changes in Net Assets)      Relating to Assets Still Held at the Reporting Date (a) |   |                | -      |   |   | (1,317)     |   |   | -      |   |   | (1,574)     |   |   | -  |   |   | 26  |   |
| Realized      and Unrealized Gains (Losses)   Included in Other         Comprehensive Income                                |   |                | -      |   |   | -      |   |   | -      |   |   | -      |   |   | -  |   |   | -  |   |
| Purchases,      Issuances and Settlements                                                                                                       |   |                | -      |   |   | -      |   |   | -      |   |   | -      |   |   | -  |   |   | -  |   |
| Transfers      in and/or out of Level 3 (b)                                                                                                     |   |                | 5,595  |   |   | 3,360  |   |   | 3,228  |   |   | 3,914  |   |   | (1,249) |   |   | (1,471) |   |
| Changes      in Fair Value Allocated to Regulated   Jurisdictions      (c)                                                            |   |                | 3,858  |   |   | 3,814  |   |   | 2,373  |   |   | 4,285  |   |   | 61  |   |   | 49  |   |
| Balance      as of September 30, 2008                                                                                                           |   | $                   | (4,641)     |   | $      | (2,595)     |   | $      | (2,513)     |   | $      | (3,333)     |   | $ | (1,207) |   | $ | (1,428) |   |

| Nine      Months Ended September 30, 2008                                                                                                       |   | APCo                |      | CSPCo  |   | I&M   |   | OPCo   |      | PSO    |   | SWEPCo      |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-------------|--------|
|                                                                                                                                            |   | (in      thousands) |      |
| Balance      as of January 1, 2008                                                                                                              |   | $                   | (697)     |   | $      | (263)     |   | $      | (280)     |   | $      | (1,607)     |   | $ | (243) |   | $ | (408) |   |
| Realized      (Gain) Loss Included in Net Income   (or Changes in        Net Assets) (a)                                    |   |                | 332  |   |   | 88   |   |   | 105  |   |   | 1,063  |   |   | 170  |   |   | 290  |   |
| Unrealized      Gain (Loss) Included in Net Income (or Changes in Net Assets)      Relating to Assets Still Held at the Reporting Date (a) |   |                | -    |   |   | 190  |   |   | -    |   |   | 126    |   |   | -  |   |   | 56  |   |
| Realized      and Unrealized Gains (Losses)   Included in Other         Comprehensive Income                                |   |                | -    |   |   | -    |   |   | -    |   |   | -      |   |   | -  |   |   | -  |   |
| Purchases,      Issuances and Settlements                                                                                                       |   |                | -    |   |   | -    |   |   | -    |   |   | -      |   |   | -  |   |   | -  |   |
| Transfers      in and/or out of Level 3 (b)                                                                                                     |   |                | (731)     |   |   | (454)     |   |   | (430)     |   |   | (244)       |   |   | (1,249) |   |   | (1,472) |   |
| Changes      in Fair Value Allocated to Regulated   Jurisdictions      (c)                                                            |   |                | (3,545)   |   |   | (2,156)   |   |   | (1,908)   |   |   | (2,671)     |   |   | 115  |   |   | 106  |   |
| Balance      as of September 30, 2008                                                                                                           |   | $                   | (4,641)   |   | $      | (2,595)   |   | $      | (2,513)   |   | $      | (3,333)     |   | $ | (1,207) |   | $ | (1,428) |   |

| (a) | Included      in revenues on the Statements of Income.                                                                                                                                                                                                                                                                                                                              |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | “Transfers      in and/or out of Level 3” represent 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. |
| (c) | “Changes      in Fair Value Allocated to Regulated Jurisdictions” relates to the net      gains (losses) of those contracts that are not reflected on the Statements      of Income.  These net gains (losses) are recorded as regulatory      liabilities/assets.                                                                                            |

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

|       |   |                         |   | Principal           |          | Interest |   | Due    |
|------------|--------|------------------------------|--------|---------------------|---------------|----------|--------|--------|
| Company    |   | Type      of Debt            |   | Amount              |          | Rate     |   | Date   |
|       |   |                         |   | (in      thousands) |          | (%)      |   |   |
| Issuances: |   |                         |   |                |          |     |   |   |   |
| APCo       |   | Senior      Unsecured Notes  |   | $                   | 350,000  |     | 7.95   |   | 2020 |
| CSPCo      |   | Pollution      Control Bonds |   |                | 60,000   |     | 3.875  |   | 2038 |
| CSPCo      |   | Pollution      Control Bonds |   |                | 32,245   |     | 5.80   |   | 2038 |
| I&M    |   | Senior      Unsecured Notes  |   |                | 475,000  |     | 7.00   |   | 2019 |
| I&M    |   | Notes      Payable           |   |                | 102,300  |     | 5.44   |   | 2013 |
| I&M    |   | Pollution      Control Bonds |   |                | 50,000   |     | 6.25   |   | 2025 |
| I&M    |   | Pollution      Control Bonds |   |                | 50,000   |     | 6.25   |   | 2025 |
| OPCo       |   | Senior      Unsecured Notes  |   |                | 500,000  |     | 5.375  |   | 2021 |
| PSO        |   | Pollution      Control Bonds |   |                | 33,700   |     | 5.25   |   | 2014 |

|                                          |   |                         |   | Principal           |          | Interest |     | Due    |
|-----------------------------------------------|--------|------------------------------|--------|---------------------|---------------|----------|----------|--------|
| Company                                       |   | Type      of Debt            |   | Amount      Paid    |          | Rate     |     | Date   |
|                                          |   |                         |   | (in      thousands) |          | (%)      |     |   |
| Retirements      and Principal Payments: |   |                         |   |                |          |     |     |   |   |
| APCo                                          |   | Senior      Unsecured Notes  |   | $                   | 150,000  |     | 6.60     |   | 2009 |
| APCo                                          |   | Land      Note               |   |                | 12       |     | 13.718   |   | 2026 |
| OPCo                                          |   | Pollution      Control Bonds |   |                | 218,000  |     | Variable |   | 2028-2029 |
| OPCo                                          |   | Notes      Payable           |   |                | 1,000    |     | 6.27     |   | 2009 |
| OPCo                                          |   | Notes      Payable           |   |                | 6,500    |     | 7.21     |   | 2009 |
| OPCo                                          |   | Notes      Payable           |   |                | 70,000   |     | 7.49     |   | 2009 |
| PSO                                           |   | Senior      Unsecured Notes  |   |                | 50,000   |     | 4.70     |   | 2009 |
| SWEPCo                                        |   | Notes      Payable           |   |                | 3,304    |     | 4.47     |   | 2011 |

|    | September      30, 2009 |   |
|---------|-------------------------|--------|
| Company | (in      thousands)     |   |
| APCo    |                    | $      | 17,500 |   |
| OPCo    |                    |   | 303,000 |   |

|    |                |   |            |   |              |   |               |   | Loans                   |   |       |   |
|---------|---------------------|--------|-----------------|--------|-------------------|--------|--------------------|--------|-------------------------|--------|------------|--------|
|    | Maximum             |   | Maximum         |   | Average           |   | Average            |   | (Borrowings)            |   | Authorized |   |
|    | Borrowings          |   | Loans      to   |   | Borrowings        |   | Loans      to      |   | to/from      Utility    |   | Short-Term |   |
|    | from      Utility   |   | Utility         |   | from      Utility |   | Utility      Money |   | Money      Pool as of   |   | Borrowing  |   |
|    | Money      Pool     |   | Money      Pool |   | Money      Pool   |   | Pool               |   | September      30, 2009 |   | Limit      |   |
| Company | (in      thousands) |   |
| APCo    |                | $      | 420,925         |   |              | $      | -                  |   |                    | $      | 203,296    |   |   | $ | - |   |   | $ | (231,788 | ) |   | $ | 600,000 |   |
| CSPCo   |                |   | 203,306         |   |              |   | 9,029              |   |                    |   | 124,804    |   |   |   | 5,666 |   |   |   | (20,095 | ) |   |   | 350,000 |   |
| I&M |                |   | 491,107         |   |              |   | 161,072            |   |                    |   | 109,469    |   |   |   | 46,765 |   |   |   | 160,749 |   |   |   | 500,000 |   |
| OPCo    |                |   | 522,934         |   |              |   | 367,743            |   |                    |   | 255,870    |   |   |   | 94,655 |   |   |   | 367,743 |   |   |   | 600,000 |   |
| PSO     |                |   | 77,976          |   |              |   | 87,443             |   |                    |   | 56,378     |   |   |   | 36,404 |   |   |   | 8,450 |   |   |   | 300,000 |   |
| SWEPCo  |                |   | 62,871          |   |              |   | 158,843            |   |                    |   | 18,530     |   |   |   | 48,420 |   |   |   | 106,662 |   |   |   | 350,000 |   |

|                       |   | Nine      Months Ended September 30, |
|----------------------------|--------|--------------------------------------|
|                       |   | 2009                                 |   | 2008 |
| Maximum      Interest Rate |   | 2.28%                                |   | 5.37% |
| Minimum      Interest Rate |   | 0.27%                                |   | 2.91% |

|    |   | 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, |   |
|    |   | 2009                                 |   |   | 2008                                 |   |   | 2009 |   |   | 2008 |   |
| Company |   |                                 |   |
| APCo    |   |                                 | 1.14   | %      |                                 |   | 3.62 | % |   |   | - | % |   |   | 3.25 | % |
| CSPCo   |   |                                 | 1.13   | %      |                                 |   | 3.66 | % |   |   | 0.57 | % |   |   | 2.99 | % |
| I&M |   |                                 | 1.46   | %      |                                 |   | 3.19 | % |   |   | 0.49 | % |   |   | - | % |
| OPCo    |   |                                 | 1.21   | %      |                                 |   | 3.24 | % |   |   | 0.38 | % |   |   | 3.62 | % |
| PSO     |   |                                 | 2.01   | %      |                                 |   | 3.04 | % |   |   | 1.04 | % |   |   | 4.53 | % |
| SWEPCo  |   |                                 | 1.66   | %      |                                 |   | 3.36 | % |   |   | 0.77 | % |   |   | 3.01 | % |

|    |   |                                                  |   | September      30, 2009 |        | December      31, 2008 |   |
|---------|--------|-------------------------------------------------------|--------|-------------------------|-------------|------------------------|--------|
|    |   |                                                  |   | Outstanding             |        | Interest               |   | Outstanding |   | Interest |   |
|    |   | Type      of Debt                                     |   | Amount                  |        | Rate      (b)          |   | Amount |   | Rate      (b) |   |
| Company |   |                                                  |   | (in      thousands)     |        |                   |   | (in      thousands) |   |   |   |
| SWEPCo  |   | Line      of Credit – Sabine Mining Company (a) |   | $                       | 5,273  |                   | 1.60%  |   | $ | 7,172  |   | 1.54% |   |

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

|    |   | Amount              |
|---------|--------|---------------------|
| Company |   | (in      thousands) |
| APCo    |   | $                   | 126,716  |
| I&M |   |                | 77,886  |
| OPCo    |   |                | 166,899  |

----

COMBINEDMANAGEMENT’S DISCUSSION AND ANALYSIS OF REGISTRANTSUBSIDIARIES

| ·   | Margins from      Off-system Sales –  Margins from off-system sales for the      AEP System continue to decrease due to reductions in sales volumes and      weak market power prices, reflecting reduced overall demand for      electricity.  For the first nine months of 2009 in comparison to      the first nine months of 2008, off-system sales volumes decreased by 58%      for the AEP System. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Industrial KWH      Sales – The AEP System’s industrial KWH sales for both the three      and nine months ended September 30, 2009 were down      17%.  Approximately half of the decrease for the first nine      months of 2009 was due to cutbacks or closures by customers who produce      primary metals served by APCo, CSPCo, I&M, OPCo, PSO and      SWEPCo.  The Registrant Subsidiaries also experienced additional      significant decreases in KWH sales to customers in the transportation,      plastics, rubber and paper manufacturing  industries. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Risk of Loss of Major      Industrial Customers – The Registrant Subsidiaries maintain close      contact with each of their major industrial customers individually with      respect to expected electric needs.  The Registrant Subsidiaries      factor industrial customer analyses into their operational      planning.  In September 2009, CSPCo’s and OPCo’s largest      customer, Ormet, a major industrial customer currently operating at a      reduced load of approximately 330 MW, (Ormet operated at an approximate      500 MW load in 2008), announced that it will continue operations at this      reduced level at least through the end of 2009.  In February      2009, Century Aluminum, a major industrial customer (325 MW load) of APCo,      announced the curtailment of operations at its Ravenswood, WV      facility. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|    |   | Issuance           |   |
|---------|--------|--------------------|--------|
| Company |   | (in      millions) |   |
| APCo    |   | $                  | 350    |   |
| CSPCo   |   |               | 92     |   |
| I&M |   |               | 677    |   |
| OPCo    |   |               | 500    |   |
| PSO     |   |               | 34     |   |

|    | Budgeted           |   |
|---------|--------------------|--------|
|    | Construction       |   |
|    | Expenditures       |   |
| Company | (in      millions) |   |
| APCo    |               | $      | 356 |   |
| CSPCo   |               |   | 256 |   |
| I&M |               |   | 258 |   |
| OPCo    |               |   | 300 |   |
| PSO     |               |   | 157 |   |
| SWEPCo  |               |   | 444 |   |

|    |                 |   | LOC      Amount         |   |
|---------|----------------------|--------|-------------------------|--------|
|    |                 |   | Outstanding             |   |
|    | $627      million    |   | Against                 |   |
|    | Credit      Facility |   | $627      million       |   |
|    | Borrowing/LOC        |   | Agreement      at       |   |
|    | Limit                |   | September      30, 2009 |   |
| Company | (in      millions)   |   |
| APCo    |                 | $      | 300                     |   |   | $ | 127 |   |
| CSPCo   |                 |   | 230                     |   |   |   | - |   |
| I&M |                 |   | 230                     |   |   |   | 78 |   |
| OPCo    |                 |   | 400                     |   |   |   | 167 |   |
| PSO     |                 |   | 65                      |   |   |   | - |   |
| SWEPCo  |                 |   | 230                     |   |   |   | - |   |

|       |   |            |   |               |   |               |   |               |   |           |   |            |   |                |    |        | Commercial |
|------------|--------|-----------------|--------|--------------------|--------|--------------------|--------|--------------------|--------|----------------|--------|-----------------|--------|---------------------|---------|-------------|------------|
|       |   |            |   |               |   | Total              |   |               |   |           |   |            |   |                | Nominal |        | Operation  |
| Operating  |   | Project         |   |               |   | Projected          |   |               |   |           |   |            |   |                | MW      |        | Date       |
| Company    |   | Name            |   | Location           |   | Cost      (a)      |   | CWIP      (b)      |   | Fuel      Type |   | Plant      Type |   | Capacity            |    | (Projected) |
|       |   |            |   |               |   | (in      millions) |   | (in      millions) |   |           |   |            |   |                |    |        |
| AEGCo      |   | Dresden         | (c)    | Ohio               |   | $                  | 321    | (d)                | $      | 199            | (d)    | Gas             |   | Combined-cycle      |    | 580         |       | 2013 |
| SWEPCo     |   | Stall           |   | Louisiana          |   |               | 386    |               |   | 364            |   | Gas             |   | Combined-cycle      |    | 500         |       | 2010 |
| SWEPCo     |   | Turk            | (e)    | Arkansas           |   |               | 1,633  | (e)                |   | 622            | (f)    | Coal            |   | Ultra-supercritical |    | 600         | (e)        | 2012 |
| APCo       |   | Mountaineer     | (g)    | West      Virginia |   |               |   | (g)                |   |           |   | Coal            |   | IGCC                |    | 629         |       |   | (g) |
| CSPCo/OPCo |   | Great      Bend | (g)    | Ohio               |   |               |   | (g)                |   |           |   | Coal            |   | IGCC                |    | 629         |       |   | (g) |

| (a) | Amount      excludes AFUDC.                                                                                                                                                                                                                                 |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Amount      includes AFUDC.                                                                                                                                                                                                                                 |
| (c) | In      September 2007, AEGCo purchased the partially completed Dresden plant from      Dresden Energy LLC, a subsidiary of Dominion Resources, Inc., for $85      million, which is included in the “Total Projected Cost” section      above. |
| (d) | During      2009, AEGCo suspended construction of the Dresden Plant.  As a      result, AEGCo has stopped recording AFUDC and will resume recording AFUDC      once construction is resumed.                                                      |
| (e) | SWEPCo      owns approximately 73%, or 440 MW, totaling $1.2 billion in capital      investment.  See “Turk Plant” section below.                                                                                                     |
| (f) | Amount      represents SWEPCo’s CWIP balance only.                                                                                                                                                                                                    |
| (g) | Construction      of IGCC plants is subject to regulatory  approvals.                                                                                                                                                                                       |

| Company |   | Amount             |   |
|---------|--------|--------------------|--------|
|    |   | (in      millions) |   |
| APCo    |   | $                  | 53     |   |
| CSPCo   |   |               | 38     |   |
| I&M |   |               | 54     |   |
| OPCo    |   |               | 38     |   |
| PSO     |   |               | 27     |   |
| SWEPCo  |   |               | 25     |   |

|  Company |  Proposed      Project                                                               | Federal      Stimulus Funds Requested |   |
|---------------|-------------------------------------------------------------------------------------------|---------------------------------------|--------|
|          |                                                                                      | (in      millions)                    |   |
| APCo          | Carbon      Capture and Sequestration Demonstration Project at the Mountaineer      Plant |                                  | $      | 334 |   |
| APCo          | Hydro      Generation Modernization Project in London, W.V.                               |                                  |   | 2 |   |
| CSPCo         | gridSMART                                                                                 |                                  |   | 75 |   |

| · | Requirements      under the CAA to reduce emissions of SO2,      NOx,      particulate matter and mercury from fossil fuel-fired power plants;      and |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Requirements      under the Clean Water Act to reduce the impacts of water intake structures      on aquatic species at certain powerplants.            |

|    | Estimated          |   |
|---------|--------------------|--------|
|    | Compliance         |   |
|    | Investments        |   |
| Company | (in      millions) |   |
| APCo    |               | $      | 21 |   |
| CSPCo   |               |   | 19 |   |
| I&M |               |   | 118 |   |
| OPCo    |               |   | 31 |   |

| · | 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. |

----

----

PART II.  OTHER INFORMATION

| 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 |   |
|--------------------------------|--------|------------------------------------------|--------|---------------------------------------|--------|--------|--------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------|--------|
| 07/01/09      – 07/31/09 |   |                                     | -      |                                  | $      | -      |                                                                                       |   |                                                                                                                   | -      |   | $ | - |   |
| 08/01/09      – 08/31/09 |   |                                     | -      |                                  |   | -      |                                                                                       |   |                                                                                                                   | -      |   |   | - |   |
| 09/01/09      – 09/30/09 |   |                                     | 2      | (a)                                   |   | 69.50  |                                                                                       |   |                                                                                                                   | -      |   |   | - |   |

| (a) | APCo      purchased 2 shares of its 4.50% cumulative preferred stock in a      privately-negotiated transaction outside of an announced      program. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------|

----

SIGNATURE