cost allocation manual - aep.com...2019/12/31 · document number cost allocation manual date...

COST ALLOCATIONMANUAL

As Of December 31, 2019

Corporate Accounting

The manual has been written to document AEP’s approach to cost

allocation and transfer pricing of affiliate transactions. Its

purposes are to

· provide an easily referenced source of information

· state and clarify policy

· formalize procedures

· provide a basis of communication between all employees concerning

cost allocation matters

· meet all regulatory requirements for maintaining a cost allocation

manual.

The contents of the manual have been approved by management.

Responsibility for adhering to the policies and procedures rests with

every employee.

The manual is maintained in the A-Z index of AEP Now, under ‘Cost

Allocation Manual’. Maintenance of the documents incorporated in the

manual by reference is the responsibility of the individuals and

groups designated in the manual.

Errors in content and other requests for revision of this manual

should be directed to the attention of Brian T. Lysiak.

Brian T. Lysiak

Senior Manager – Corporate Accounting

Jeffrey W. Hoersdig

Assistant Controller – Corporate Accounting

CAM Amendment Record

Rev.No. Date Issued

Rev.No. Date Issued

Rev.No. Date Issued

Rev.No. Date Issued

1 01-02-01 26 03-15-13 51 76

2 10-22-01 27 08-31-13 52 77

3 05-10-02 28 03-27-14 53 78

4 10-18-02 29 09-15-14 54 79

5 05-05-03 30 02-26-15 55 80

6 08-29-03 31 09-15-15 56 81

7 03-10-04 32 03-15-16 57 82

8 08-27-04 33 09-15-16 58 83

9 03-10-05 34 03-15-17 59 84

10 08-30-05 35 09-15-17 60 85

11 03-15-06 36 03-15-18 61 86

12 08-31-06 37 08-31-18 62 87

13 03-16-07 38 03-15-19 63 88

14 09-24-07 39 09-15-19 64 89

15 04-15-08 40 03-15-20 65 90

16 09-25-08 41 66 91

17 03-31-09 42 67 92

18 07-13-09 43 68 93

19 09-10-09 44 69 94

20 03-31-10 45 70 95

21 09-16-10 46 71 96

22 03-25-11 47 72 97

23 09-09-11 48 73 98

24 03-14-12 49 74 99

25 09-14-12 50 75 100

DocumentNumber

Cost AllocationManual

DateJanuary 10, 2013

Page1

Section

ControlsSubject

TABLE OF CONTENTS

00-00-01

This table of contents is intended to give a cover-to-cover overview of thecontents and organization of the AEP Cost Allocation Manual (CAM). See HOWTO USE THIS MANUAL (00-00-02) for an explanation of the numbering system.________________________________________________________________________

TAB/SECTION SUBJECT LOCATION

CONTROLS

Controls Title PageManagement EndorsementAmendment RecordTable of Contents 00-00-01How to Use this Manual 00-00-02Alphabetic Subject Index 00-00-03

GENERAL

Introduction Overview (General) 01-01-01

Organization Chart Overview 01-02-01Corporate Chart 01-02-02

Affiliate Transactions Overview 01-03-01Services Rendered by AEPSC 01-03-02Intercompany Products andServices 01-03-03

Money Pool 01-03-04Research and Development 01-03-05Financial Transactions 01-03-06Intellectual Property 01-03-07Convenience Payments 01-03-08

GUIDELINES

Introduction Overview (Guidelines) 02-01-01

Corporate Overview 02-02-01Cost Allocation Policies andProcedures 02-02-02

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TABLE OF CONTENTS

00-00-01

The Cost Allocation Process 02-02-03Cost Pooling and Cost Assignment 02-02-04Account Designations (Regulated,Non-Regulated and Joint) 02-02-05

Federal Regulation Overview 02-03-01FERC Regulation 02-03-02

State Commission Overview 02-04-01Rules Arkansas Rules and Requirements 02-04-02

Indiana Rules and Requirements 02-04-03Kentucky Rules and Requirements 02-04-04Louisiana Rules and Requirements 02-04-05Michigan Rules and Requirements 02-04-06Ohio Rules and Requirements 02-04-07Oklahoma Rules and Requirements 02-04-08Tennessee Rules and Requirements 02-04-09Texas Rules and Requirements 02-04-10Virginia Rules and Requirements 02-04-11West Virginia Rules and Require-ments 02-04-12

PROCEDURES

Introduction Overview (Procedures) 03-01-01

Transactions Overview 03-02-01Transaction Coding 03-02-02Chartfields 03-02-03

Time Reporting Overview 03-03-01Time Records 03-03-02Labor Costing 03-03-03

AEPSC Billing Overview 03-04-01System System of Internal Controls 03-04-02

Work Order Accounting 03-04-03Billing Allocations 03-04-04Reports 03-04-05

Intercompany Overview 03-05-01Billing Billing System 03-05-02

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ControlsSubject

TABLE OF CONTENTS

00-00-01

InterUnit Overview 03-06-01Accounting Joint Payments and Journal

Transactions 03-06-02

Asset Transfers Overview 03-07-01Plant and Equipment 03-07-02Materials and Supplies 03-07-03

DOCUMENTS

Introduction Overview (Documents) 04-01-01

Affiliate Overview 04-02-01Contracts with Service Agreements 04-02-02Regulated and Coal Mining and Transportation 04-02-03Unregulated Consulting Services 04-02-04Companies Joint Operating Agreements 04-02-05

Tax Agreement 04-02-06Money Pool Agreement 04-02-07Nonutility Money Pool Agreement 04-02-08

Databases Overview 04-03-01Chartfield Values 04-03-02Affiliate Agreements 04-03-03

Job Descriptions Overview 04-04-01Shared Employees (PUCO) 04-04-02Transferred Employees (PUCO) 04-04-03

Complaint Log Overview 04-05-01Corporate Separation (PUCO) 04-05-02

Board of Directors Overview 04-06-01Minutes Copies (PUCO) 04-06-02

Tariff Provisions Overview 04-07-01Tariff Discretion Log 04-07-02

APPENDIX

Appendix Overview (Appendix) 99-00-01

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Page4

Section

ControlsSubject

TABLE OF CONTENTS

00-00-01

Glossary of Key Terms 99-00-02Record Retention Requirements 99-00-03List of FERC Accepted

Allocation Factors 99-00-04List of Primary Allocation

Factors by Function 99-00-05List of Affiliate Contracts

by Company 99-00-06

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DateOctober 4, 2000

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ControlsSubject

HOW TO USE THIS MANUAL

00-00-02

SUMMARY This Manual is divided into

TABS - major divisions within the manual

SECTIONS - divisions within a TAB

SUBJECTS - divisions within a SECTION.

DOCUMENT NUMBERING Each document (i.e., subject) has a unique 6-SYSTEM digit number. This number is divided into 3

sets of two digits which are separated bydashes.

EXAMPLE: 05 – 03 – 02TAB-SECTION-SUBJECT

INDEXES The alphabetic subject index is the key tothis manual. It appears in the “Controls”TAB following this document.

Alphabetic Subject The alphabetic subject index (00-00-03) listsevery subject in this manual in alphabeticalorder along with the document number at whicheach subject may be located. To be able toretrieve information, each subject (andimportant captions within a subject) arelisted three or more ways in the index.

Locating a Document Document numbers appear in bold print on theupper right corner of each page (see top ofthis page). To locate a Subject:

1. Refer to the Alphabetic Subject Indexand locate the SUBJECT you need.

2. Note the Document Number indicated

EXAMPLE: 05-03-02

INDEXES (Cont’d)

DocumentNumber


DateOctober 4, 2000

Page2

Section

ControlsSubject

HOW TO USE THIS MANUAL

00-00-02

Locating a Document 3. Locate TAB 5 of the manual and within(Cont’d) this TAB find SECTION 03 and SUBJECT 02.

Or, if you are viewing this manualelectronically using Acrobat Reader,simply click on the subject line listedin the table of contents.

TABLE OF CONTENTS The table of contents (00-00-01) is intendedto give a cover-to-cover overview of themanual contents and organization. It listscontents of a TAB to the SUBJECT level indocument number order. (Subjects are listedalphabetically in the Alphabetic SubjectIndex).

FORMAT The format followed for each TAB within thismanual may vary. Uniformity of format hasbeen attempted to the extent practicable.

DISTRIBUTION The AEPSC Corporate Accounting Department issolely responsible for the issuance, revisionand distribution of all copies of this manualand database.

Revisions or additions to the manual will beissued as required. If practical, suchrevisions and/or additions will beaccumulated and issued periodically as agroup. The date of the latest revision oraddition will appear at the bottom of thepage in the left-hand corner.

AMENDMENTS All users of this manual are urged tocontribute ideas and suggestions forrevisions to this manual.

Amendment Record An amendment record is kept of all revisionsto this manual. The amendment record appearsin the front of this manual as the firstdocument in the “Controls” SECTION.

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Section

ControlsSubject

ALPHABETIC SUBJECT INDEX

00-00-03

This subject index lists every subject included in this manual inalphabetical order. The location document number is given for eachsubject. To aid retrievability, subjects are listed in two or moredifferent ways.

AAEPSC

- Affiliate Transactions 01-03-02- Billing Allocations 03-04-04- Billing System (Overview) 03-04-01- Billing System Internal Controls 03-04-02- Billing System Work Order Accounting 03-04-03- Reports (Billing System) 03-04-05

Affiliate Contracts with Regulated Companies- Coal Mining and Transportation 04-02-03- Consulting Services 04-02-04- Joint Plants 04-02-05- List of Affiliate Contracts by Company 99-00-06- Overview 04-02-01- Service Agreements 04-02-02- Tax Agreement 04-02-06

Affiliate Transactions- Convenience Payments 01-03-08- Financial Transactions 01-03-06- Intercompany Products and Services 01-03-03- Intellectual Property 10-03-07- Money Pool 01-03-04- Overview 01-03-01- Research and Development 01-03-05- Services Rendered by AEPSC 01-03-02

Agreements- Coal Mining and Transportation 04-02-03- Consulting Services 04-02-04- Joint Operating Agreements 04-02-05- Money Pool Agreement 04-02-07- Nonutility Money Pool Agreement 04-02-08- Overview 04-02-01- Service Agreements 04-02-02- Tax Agreement 04-02-06

Arkansas Rules and Requirements 02-04-02Asset Transfers

- Overview 03-07-01- Materials and Supplies 03-07-03

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00-00-03

A (Cont’d)- Plant and Equipment 03-07-02

Allocation Factors- List of Approved Allocation Factors 99-00-04- List of Primary Allocation Factors by Function 99-00-05

B

Billing Allocations (AEPSC) 03-04-04Billing, Intercompany (Overview) 03-05-01Billing System

- Allocations (AEPSC) 03-04-04- AEPSC (Overview) 03-04-01- AEPSC Work Order Accounting 03-04-03- Intercompany 03-05-02- Reports (AEPSC) 03-04-05

Board of Directors Minutes (PUCO)- Copies (PUCO) 04-06-02- Overview 04-06-01

C

Chart, Corporate 01-02-02Chartfields 03-02-03Chartfield Values 04-03-02Coal Mining and Transportation Agreements 04-02-03Coding

- Chartfields 03-02-03- Transaction 03-02-02- Complaint Log- Corporate Separation (PUCO) 04-05-02- Overview 04-05-02

Convenience Payments 01-03-08Consulting Services Agreements 04-02-04Copies of Board of Directors Minutes (PUCO) 04-06-02Corporate

- Chart 01-02-02- Overview 02-02-01

Corporate Separation (Complaint Log) 04-05-02Cost Allocation

- Policies and Procedures 02-02-02- Process 02-02-03

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00-00-03

C (Con’t)

Cost Assignment 02-02-04Cost Pooling and Cost Assignment 02-02-04Costing, Labor 03-03-03

D

Database Links- Affiliate Agreements 04-03-03- Chartfield Values 04-03-02- Overview 04-03-01

Documents (Overview) 04-01-01

E

Employees- Shared (PUCO) 04-04-02- Transferred (PUCO) 04-04-03

F

Federal Regulation- Overview 02-03-01- FERC Regulation 02-03-02

FERC Regulation 02-03-02Financial Transactions 01-03-06

G

General, Overview 01-01-01Glossary of Key Terms 99-00-02Guidelines

- Cost Allocation Principles 02-02-02- Overview 02-01-01

I

Indiana Rules and Requirements 02-04-03Intellectual Property 01-03-07Intercompany

- Billing (Overview) 03-05-01- Billing System 03-05-02

I (Con’t)

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00-00-03

- Products and Services 01-03-03Internal Controls (AEPSC Billing System) 03-04-02InterUnit Accounting

- Overview 03-06-01- Joint Payments and Journal Transactions 03-06-02

J

Job Descriptions- Overview 04-04-01- Shared Employees (PUCO) 04-04-02- Transferred Employees (PUCO) 04-04-03

Joint Payments and Journal Transactions 03-06-02Joint Plants 04-02-05

K

Kentucky Rules and Requirements 02-04-04Key Terms, Glossary of 99-00-02

L

Labor Costing 03-03-03List of Affiliate Agreements by Company 99-00-06List of Approved Allocation Factors 99-00-04List of Primary Allocation Factors by Function 99-00-05Louisiana Rules and Requirements 02-04-05

M

Materials and Supplies (Asset Transfers) 03-07-03Michigan Rules and Requirements 02-04-06Money Pool 01-03-04Money Pool Agreement (AEP System) 04-02-07Money Pool Agreement (AEP System Nonutility) 04-02-08

O

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00-00-03

Ohio Rules and Requirements 02-04-07Oklahoma Rules and Requirements 02-04-08Organization Chart, Overview 01-02-01Overview

- AEPSC Billing System 03-04-01- Affiliate Contracts with Regulated Companies 04-02-01- Affiliate Transactions 01-03-01- Appendix 99-00-01- Asset Transfers 03-07-01- Complaint Log 04-05-01- Corporate 02-02-01- Database Links 04-03-01- Documents 04-01-01- Federal Regulation 02-03-02- General 01-01-01- Guidelines 02-01-01- Intercompany Billing 03-05-01- InterUnit Accounting 03-06-01- Job Descriptions 04-04-01- Organization Chart 01-02-01- Procedures 03-01-01- State Commission Rules 02-04-01- Time Reporting 03-03-01- Transactions 03-02-01

P

Plant and Equipment (Asset Transfers) 03-07-02Policies and Procedures, Cost Allocation 02-02-02Pooling, Cost 02-02-04Procedures

- Cost Allocation 02-02-02- Chartfields 03-02-03- Labor Costing 03-03-03- Overview 03-01-01- Time Records 03-03-02- Transaction Coding 03-02-02

Process, Cost Allocation 02-02-03Property, Intellectual 01-03-07

R

Records

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00-00-03

- Time Records 03-03-02- Retention Requirements 99-00-03

Reports, AEPSC Billing System 03-04-05Research and Development 01-03-05Retention Requirements, Record 99-00-03Rules

- State Commission (Overview) 02-04-01Rules and Requirements

- Arkansas 02-04-02- Indiana 02-04-03- Kentucky 02-04-04- Louisiana 02-04-05- Michigan 02-04-06- Ohio 02-04-07- Oklahoma 02-04-08- Tennessee 02-04-09- Texas 02-04-10- Virginia 02-04-11- West Virginia 02-04-12

S

Service Agreements 04-02-02Shared Employees (PUCO) 04-04-02State Commission Rules and Requirements

- Arkansas 02-04-02- Indiana 02-04-03- Kentucky 02-04-04- Louisiana 02-04-05- Michigan 02-04-06- Ohio 02-04-07- Oklahoma 02-04-08- Overview 02-04-01- Tennessee 02-04-09- Texas 02-04-10- Virginia 02-04-11- West Virginia 02-04-12

System of Internal Controls 03-04-02Systems

- AEPSC Billing System 03-04-03S (Con’t)

- Intercompany Billing System 03-05-02

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00-00-03

T

Tariff Provisions 04-07-01Tariff Discretion Log 04-07-02Tax Agreement 04-02-06Tennessee Rules and Requirements 02-04-09Terms, Key 99-00-02Texas Rules and Requirements 02-04-10The Cost Allocation Process 02-02-03Time Records 03-03-02Time Reporting

- Overview 03-03-01- Labor Costing 03-03-03- Time Records 03-03-02

Transaction- Chartfields 03-02-03- Coding 03-02-02

Transactions, Affiliate- AEPSC 01-03-02- Financial Transactions 01-03-06- Intercompany Products and Services 01-03-03- Money Pool 01-03-04- Overview 01-03-01- Research and Development 01-03-05

Transactions, Overview 03-02-01Transferred Employees (PUCO) 04-04-03

V

Virginia Rules and Requirements 02-04-11

W

West Virginia Rules and Requirements 02-04-12Work Order Accounting (AEPSC) 03-04-03

DocumentNumber


DateSeptember 10, 2009

Page1

Section

IntroductionSubject

OVERVIEW (GENERAL)

01-01-01

SUMMARY American Electric Power Company, Inc. (AEP)is a public utility holding company. Ithas subsidiaries that conduct regulatedoperations and non-regulated operations.

BUSINESS AEP is one of the United States’ largestgenerators of electricity and owns thenation’s largest electricity transmissionsystem. AEP delivers electricity tocustomers in eleven states: Arkansas,Indiana, Kentucky, Louisiana, Michigan,Ohio, Oklahoma, Tennessee, Texas, Virginiaand West Virginia.

Wholly-owned subsidiaries are involved inpower engineering and construction servicesand energy management.

ORGANIZATION CHART The ownership relationship between AEP, itssubsidiaries, and their subsidiaries atsuccessive levels is captured in AEP’scorporate chart.

AFFILIATE TRANSACTIONS AEP, its subsidiaries and certain otheraffiliates in the AEP holding companysystem conduct capital (i.e., financial)transactions among themselves. Thesubsidiaries, in certain situations, alsoperform services for one another.

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Section

Organization ChartSubject

OVERVIEW

01-02-01

SUMMARY American Electric Power Company, Inc. (AEP)is a public utility holding company. It hasdirect subsidiaries (first tier) and indirectsubsidiaries (second tier and lower).

CORPORATE CHART A listing of the direct and indirectsubsidiaries of AEP, including domestic andforeign subsidiaries, is contained in AEP’scorporate organization chart.

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DateMarch 15, 2020

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Section


CORPORATE CHART

01-02-02

SUMMARY American Electric Power Company, Inc. (AEP)is a public utility holding company. It hasno customers or employees nor does it own anyutility property. AEP does own common stockof ten operating electric utility companies.

AEP also owns common stock of AmericanElectric Power Service Corporation (AEPSC)and other domestic and foreign subsidiaries.

AEPSC is a management, professional andtechnical services organization that providessuch services, at cost, to AEP, the operatingelectric utility companies in the AEP System,and other affiliated companies. Other AEPsubsidiaries provide power engineering,energy consulting and energy managementservices.

CORPORATE ORGANIZATION The following organization chart listsCHART hierarchically all of the direct and indirect

subsidiaries of AEP. Company names areindented to identify them as subsidiaries ofthe company that is listed immediately abovethem at the next tier. Some companies aresubsidiaries of more than one company. Thefootnotes provide a general description ofthe business conducted by each company.

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DateMarch 15, 2020

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CORPORATE CHART

01-02-02

Name Notes:

American Electric Power Company, Inc. [Note A]

01. Abstract Digital, LLC [Note I]

01. AEP Coal, Inc. [Note L]

02. AEP Kentucky Coal, LLC [Note L]

02. Snowcap Coal Company, Inc. [Note L]

01. AEP Credit, Inc. [Note R],[VIE]

01. AEP Energy Supply LLC [Note I]

02. AEP Clean Energy Resources, LLC. [Note X]

03. AEP Wind Holdings, LLC [Note X]

04. AEP ABW Holdings, LLC [Note X]

05. Apple Blossom Wind Holdings, LLC [Note X],[VIE]

06. Apple Blossom Wind, LLC [Note X]

04. AEP BOGW Holdings, LLC [Note X]

05. Black Oak Getty Wind Holdings, LLC [Note X],[VIE]

06. Black Oak Wind, LLC [Note X]

04. AEP Renewables Development, LLC [Note X]

04. AEP Wind Turbine Holdings, LLC [Note X]

04. Auwahi Wind, LLC [Note X]

05. Auwahi Holdings, LLC [Note X]

06. Auwahi Wind Energy, LLC [Note X]

04. Auwahi Wind 2, LLC [Note X]

04. Cedar Creek II Wind Energy, LLC [Note X]

05. Cedar Creek II Holdings, LLC [Note X]

06. Cedar Creek II, LLC [Note X]

04. Flat Ridge 2 Wind, LLC [Note X]

05. Flat Ridge 2 Wind Holdings LLC [Note X]

06. Flat Ridge 2 Wind Energy LLC [Note X]

04. Flat Ridge 3 Wind Energy, LLC [Note X]

04. Fowler Ridge II Wind, LLC [Note X]

05. Fowler II Holdings LLC [Note X]

06. Fowler Ridge II Wind Farm, LLC [Note X]

04. Mehoopany Wind, LLC [Note X]

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DateMarch 15, 2020

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CORPORATE CHART

01-02-02

05. Mehoopany Wind Holdings LLC [Note X]

06. Mehoopany Wind Energy LLC [Note X]

04. Prairie Hills Wind, LLC [Note X]

02. AEP Energy Partners, Inc. [Note W]

02. AEP Generation Resources Inc. [Note E]

03. Cardinal Operating Company [Note E]

03. Conesville Coal Preparation Company [Note M]

03. Ohio Franklin Realty, LLC [Note T]

04. Central Coal Company (Inactive) (Inactive),[Note K]

02. AEP OnSite Partners, LLC [Note I]

03. Brainerd Solar, LLC [Note I]

03. Broad Street Fuel Cell, LLC [Note I],[VIE]

03. Century West PNL, LLC [Note I]

03. Dynasty PNL, LLC [Note I]

03. Exeter Solar Power 1, LLC [Note I]

03. Garnet Solar Partners, LLC [Note I]

03. Imboden II Solar, LLC [Note I]

03. Imboden III Solar, LLC [Note I]

03. Kamaaha PNL, LLC [Note I]

03. Kona CE, LLC [Note I]

03. Midwest Energy Finance, LLC [Note I]

03. NM Renewable Development, LLC [Note I]

04. NMRD Data Center, LLC [Note I]

04. NMRD Data Center II, LLC [Note I]

05. NMRD Data Center II-Britton, LLC [Note I]

04. NMRD Data Center III, LLC [Note I]

05. NMRD Data Center III-Encino, LLC [Note I]

03. North Smithfield Solar Power 1, LLC [Note I]

03. Northwest Jacksonville Solar Partners, LLC [Note I]

03. Ogdensburg Solar Partners, LLC [Note I]

03. Quincy II Solar Garden, LLC [Note I]

03. Rutland Renewable Energy, LLC [Note I]

03. Sunset Lakeview PNL, LLC [Note I]

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CORPORATE CHART

01-02-02

03. SoCore Sherburne 1, LLC [Note I]

03. Trout Creek Solar, LLC [Note I]

03. Twin Lantern Solar Partners, LLC [Note I]

02. AEP Renewables, LLC [Note I]

03. Boulder Solar II, LLC [Note I]

03. Jacumba Solar, LLC [Note I]

03. Pavant Solar III, LLC [Note I]

03. Santa Rita East Wind Energy Holdings, LLC [Note X],[VIE]

04. Santa Rita East Wind Energy, LLC [Note X]

02. AEP Retail Energy Partners LLC [Note I]

03. AEP Energy, Inc. [Note I]

03. BSE Solutions LLC [Note I]

02. CSW Energy, Inc. [Note I]

03. AEP Properties, LLC [Note X]

03. Desert Sky Wind Farm LLC [Note X]

03. Trent Wind Farm, LLC [Note X]

01. AEP Generating Company [Note E],[VIE]

01. AEP Investments, Inc. [Note F]

02. AEP Energy Services, Inc. [Note D]

03. AEP Energy Services Gas Holding Company [Note D]

02. Braemar Energy Ventures III, LP [Note DD]

02. Chargepoint, Inc. [Note DD]

02. ClearSky, Inc. [Note DD]

02. Columbus Collaboratory LLC [Note DD]

02. EnerBlu, Inc. [Note DD]

02. Eta Gen, Inc. [Note DD]

02. GridEdge Networks, Inc. [Note DD]

02. Utilidata, Inc. [Note DD]

02. Westly Capital Partners Fund III, L.P. [Note DD]

01. AEP Nonutility Funding LLC [Note AA]

01. AEP Pro Serv, Inc. [Note I]

02. United Sciences Testing, Inc. [Note B]

01. AEP T&D Services, LLC [Note BB]

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CORPORATE CHART

01-02-02

01. AEP Texas, Inc [Note J]

02. AEP Texas Central Transition Funding II LLC [Note AA],[VIE]

02. AEP Texas Central Transition Funding III LLC [Note AA],[VIE]

02. AEP Texas North Generation Company, LLC [Note E]

02. AEP Texas Restoration Funding, LLC [Note AA],[VIE]

02. 926 Pulliam Street [Note T]

01. AEP Transmission Holding Company, LLC [Note P]

02. AEP Storage Holding Company, LLC [Note P]

03. AEP Storage New York, LLC [Note P]

02. AEP Transmission Company, LLC [Note P]

03. AEP Appalachian Transmission Company, Inc. [Note P]03. AEP Indiana Michigan Transmission Company

Inc. [Note P]

03. AEP Kentucky Transmission Company, Inc. [Note P]

03. AEP Ohio Transmission Company Inc. [Note P]

03. AEP Oklahoma Transmission Company, Inc. [Note P]

03. AEP Southwestern Transmission Company, Inc. [Note P]

03. AEP West Virginia Transmission Company, Inc. [Note P]

02. Bold Transmission LLC [Note P]

02. Electric Transmission America, LLC [Note P]

03. Prairie Wind Transmission, LLC [Note P]

02. Electric Transmission Texas, LLC [Note P]

02. Grid Assurance LLC [Note P]

02. PATH West Virginia Series [Note P],[VIE]

03. PATH West Virginia Transmission Company, LLC [Note P]

02. Pioneer Transmission, LLC [Note P]02. Potomac-Appalachian Transmission Highline,

LLC [Note P]

02. Prairie Wind Transmission, LLC [Note P]

02. RITELine Indiana, LLC [Note P],[VIE]

02. RITELine Transmission Development, LLC [Note P],[VIE]

03. RITELine Illinois, LLC [Note P]

03. RITELine Indiana, LLC [Note P],[VIE]

02. Transource Energy, LLC [Note P],[VIE]

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DateMarch 15, 2020

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CORPORATE CHART

01-02-02

03. Golden State Transmission, LLC [Note A]

03. Transource Delaware, Inc. [Note P]

03. Transource Illinois, LLC [Note P]

03. Transource Indiana, LLC [Note P]

03. Transource Kansas, LLC [Note P]

03. Transource Kentucky, LLC [Note P]

03. Transource Maryland, LLC [Note P]

03. Transource Michigan, Inc. [Note P]

03. Transource Missouri, LLC [Note P]

03. Transource New England, LLC [Note P]

03. Transource New Jersey, LLC [Note P]

03. Transource New York, LLC [Note P]

04. Transource New York Land Company, Inc. [Note T]

03. Transource North Carolina, LLC [Note P]

03. Transource Ohio, LLC [Note P]

03. Transource Pennsylvania, LLC [Note P]

03. Transource Projectco, LLC [Note P]

03. Transource Tennessee, Inc. [Note P]

03. Transource Texas, LLC. [Note P]

03. Transource Virginia, Inc. [Note P]

03. Transource West Virginia, LLC [Note P]

03. Transource Wisconsin, LLC [Note P]

01. AEP Utility Funding, LLC [Note AA]

01. American Electric Power Service Corporation [Note B],[VIE]

02. American Electric Power Foundation [Note FF]

01. Appalachian Power Company [Note J]

02. Appalachian Consumer Rate Relief Funding LLC [Note AA],[VIE]

02. Cedar Coal Co. (Inactive) (Inactive),[Note K]

02. Center McGuire Master Tenant LLC [Note T]

03. Center Landlord LLC [Note T]

02. Center Landlord LLC [Note T]

02. Central Appalachian Coal Company (Inactive) (Inactive),[Note K]

02. Central Coal Company (Inactive) (Inactive),[Note K]

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CORPORATE CHART

01-02-02

02. Southern Appalachian Coal Company (Inactive) (Inactive),[Note K]

01. Franklin Real Estate Company [Note T]

02. Indiana Franklin Realty, Inc. [Note T]

01. Indiana Michigan Power Company [Note J]

02. Blackhawk Coal Company (Inactive) (Inactive),[Note K]

02. Price River Coal Company, Inc. (Inactive) (Inactive),[Note K]

01. Kentucky Power Company [Note J]

01. Kingsport Power Company [Note J]

01. Kyte Works, LLC [Note I]

01. Ohio Power Company [Note J]

02. NCT Ventures Fund II [Note AA]

02. Ohio Phase-In-Recovery Funding LLC [Note AA],[VIE]

02. Ohio Valley Electric Corporation [Note E],[VIE]

03. Indiana-Kentucky Electric Corporation [Note E]

02. Rev1 Ventures Fund I [Note DD]

01. Ohio Valley Electric Corporation [Note E],[VIE]

02. Indiana-Kentucky Electric Corporation [Note E]

01. Oil Casualty Insurance, Ltd. [Note I]

01. PowerTree Carbon Company, LLC [Note D]

01. Public Service Company of Oklahoma [Note J]

01. Southwestern Electric Power Company [Note J]

02. Dolet Hills Lignite Company, LLC [Note L],[VIE]

02. Mutual Energy SWEPCo, LLC [Note W]

02. Oxbow Lignite Company, LLC [Note L]

02. Southwest Arkansas Utilities Corporation [Note T]

02. 926 Pulliam Street [Note T]

01. Wheeling Power Company [Note J]

DocumentNumber


DateMarch 15, 2020

Page8

Section


CORPORATE CHART

01-02-02

Variable Interest Entity (VIE) in accordance with generally acceptedaccounting principles, no costs are allocated to this entity.

Notes:

A. Public utility holding company.

B. Management, professional and technical services.

C. Telecommunications.

D. Broker and market energy commodities.

E. Generation.

F. Investor in companies developing energy-related ideas, products andtechnologies.

G. Distributed generation products.

H. International energy-related investments, trading and other projects.

I. Non-regulated energy-related services and products.

J. Domestic electric utility.

K. Coal mining (inactive).

L. Coal mining (active).

M. Coal preparation.

N. Inactive.

O. Subsidiary public utility holding company.

P. Electric transmission.

Q. Leasing.

R. Accounts receivable factoring.

S. Independent power.

T. Real estate.

U. Staff augmentation to power plants.

V. Retail energy sales.

W. Marketing of natural gas, electricity or energy-related products.

X. Wind Power Generation.

Y. Barging Services

AA. Finance Subsidiary

BB. Energy services including operations, supply chain, transmission anddistribution

CC. Gas pipeline and processing

DocumentNumber


DateMarch 15, 2020

Page9

Section


CORPORATE CHART

01-02-02

DD. Domestic energy-related investments, trading and other projects

EE. Trust

FF. Nonprofit

DocumentNumber


DateFebruary 18, 2008

Page1

Section

Affiliate TransactionsSubject

OVERVIEW

01-03-01

SUMMARY The electric utilities in the AEP holdingcompany system conduct transactions witheach other, American Electric Power ServiceCorporation (AEPSC) and their non-regulatedaffiliates.

AEPSC Services Rendered AEPSC provides management, technical andprofessional services to other companieswithin the AEP holding company system.

01-03-02

INTERCOMPANY PRODUCTS The electric utility companies provideAND SERVICES products and services to each other and in

certain cases they provide products andservices to non-regulated affiliates andreceive products and services from non-regulated affiliates.

01-03-03

MONEY POOL The operation of the AEP Utility and Non-utility Money Pool is designed to match, ona daily basis, the available cash andborrowing requirements of its participants,thus minimizing the need to borrow fromexternal sources.

01-03-04

RESEARCH AND DEVELOPMENT Research and development (R&D) activitiesare generally performed by AEP Systemcompanies on a shared basis. AEPSC managesmost R&D projects.

01-03-05

DocumentNumber



Page2

Section


OVERVIEW

01-03-01

FINANCIAL TRANSACTIONS The AEP System companies, although legallyseparated, operate on an integrated basis,as permitted by law and regulation.Financial transactions are conducted on aregular basis in support of the integratedactivities.

01—03-06

INTELLECTUAL PROPERTY Revenues derived from non-associates for theresale and licensing of property protectedby copyright, patent or trademark laws areshared among AEP affiliates and regulatedby the Federal Regulatory Commission (FERC)under the Public Utility Holding CompanyAct of 2005.

01-03-07

CONVENIENCE PAYMENTS Payments made for the convenience of anotherassociate company within the AEP Systemneed to be kept to a minimum and bereimbursed immediately to the payingcompany.

01-03-08

DocumentNumber



Page1

Section


SERVICES RENDERED BY AEPSC

01-03-02

SUMMARY The services provided by AEPSC are regulatedby the Federal Energy Regulatory Commission(FERC) under the Public Utility HoldingCompany Act of 2005.

SUMMARY OF AEPSC The following table provides a listing ofSERVICES services AEPSC provides to affiliate

companies:

GROUP/FUNCTION DESCRIPTIONAudit Services Audit Services provides

audit and reviewservices to assistmanagement and theBoard of Directors inthe effective dischargeof theirresponsibilities toestablish, maintain,and oversee a properinternal controlenvironment.

Chief AdministrativeOfficerAdministration

Executive managementsupport of all areas ofthe ChiefAdministrative Officer.

Chief ExecutiveOfficerAdministration

Services provided bythe office of thechairman.

Chief SecurityOfficerAdministration

The Chief SecurityOfficer provides, amongother items, overalldirection andmanagement to allcompanies in the AEPsystem, and includesthe CEO and his staff.

Chief FinancialOfficerAdministration

Executive managementsupport of all areas ofFinance, Accounting andStrategic Planning aswell as miscellaneousaccounting billings and

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Page2

Section



01-03-02

GROUP/FUNCTION DESCRIPTIONadjustments.

Commercial Operations Capture maximum valuefor surplus generationand secure competitive,low-cost supplies fromthe market to meet theneeds of the AEPSystem. Operationalanalyses, responsiblefor decision supportmodeling, dispatchpricing, and positionreporting. Manage andadminister non-affiliated gasmarketing.

Corporate Accounting Corporate Accounting &Finance providesservices such asmaintaining the booksand records, preparingall monthly entries tothe ledgers, anddeveloping andmaintaining theaccounting and businesssystems that supportthe utilities.Services also includefinancial andregulatory reporting,managing financialresources, performingtax compliance andensuring compliancewith generally acceptedaccounting principlesand corporateaccounting policy.

CorporateCommunications

CorporateCommunications provideslocal corporate

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Page3

Section



01-03-02

GROUP/FUNCTION DESCRIPTIONcommunications bydistributinginformation toemployees, the media,customers, civicleaders, and the publicat large. Providefeedback to managementfrom those variousgroups.

Corporate HumanResources

Human Resourcesresponsible forinterpreting, defining,writing, andadministering theCompany’s humanresource policies andproviding humanresource services toall AEP employees.Responsible forcompliance with allrelated bodies ofregulation, includingEEO, ERISA, and OSHA.

Corporate Planningand Budgeting

Corporate Planning &Budgeting provides longand short rangefinancial planningservices, strategicplanning and analysis,and budget services..

Customer andDistribution Services

Customer Servicesresolves customerproblems and managescustomer relationships.Primarily providesupport in the areas ofcustomer operations,billing support,website development,

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Page4

Section



01-03-02

GROUP/FUNCTION DESCRIPTIONand customer solutioncenters. DistributionServices providesmapping services,contractadministration, dataanalysis andbenchmarking, systembudgeting, linetraining, projectmanagement, design anddevelopment ofconstruction projects,drafting andengineering services,and planning services.

Distribution,Customer Ops, andRegulatory ServicesAdministration

Other includes, amongother items, executivemanagement support ofall areas of theDistribution, CustomerOperations, andRegulatory Services.

Energy SupplyAdministration

Services includeadministration ofcoordinating thedispatch of AEP’scompetitive generationfleet and engage inmarketing, riskmanagement and retailactivities in ERCOT,PJM and MISO.

Environment andSafety

Support ofenvironmental andsafety concerns.

Federal Affairs Monitors andparticipates inrulemakings and otherpublic policydiscussions at variousfederal agencies.

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Page5

Section



01-03-02

GROUP/FUNCTION DESCRIPTIONFossil and HydroGeneration

Provide power plantswith engineering andtechnical resourcesnecessary to manageday-to-day operationsissues affecting unitreliability,availability, andequipment performance.

GenerationAdministration

Services provided bythe GenerationAdministration.

Generation BusinessServices

Business supportservices for operationand maintenance of AEPgenerating assets.

GenerationEngineering andTechnical Services –Engineering Services

Administration of allgeneration assets:fossil, hydro, andengineering technicalservices

GenerationEngineering andTechnical Services –Project andContstruction

Administration of allgeneration assets:fossil, hydro, andengineering technical &project andconstruction

InformationTechnology

Information processing,business unit support,applicationdevelopment, clientcomputing and technicalsoftware support andEAS solutions andtelecommunicationoperations.

Investor Relations Investment services.

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Page6

Section



01-03-02

GROUP/FUNCTION DESCRIPTIONLegal Legal counsel and

public/regulatorypolicy for questions,issues, cases, etc. forall aspects of the AEPSystem.

Real Estate andWorkplace Services

Real Estate andWorkplace Services isresponsible for areasof facilitiesmanagement, officeservices, physicalsecurity and landmanagement.

Regulated CommercialOperations

Commercial Operationsservices includecoordinating thedispatch of AEP’sgeneration fleet andengage in bulk powermarket activity inorder to serve nativeload requirements andto lower customer ratesthrough off-systemsales. Alsoresponsible for fuelprocurement, fuelcontract negotiationand administration,fuel inventorymanagement, and fuelplanning and analysis.

Regulatory Services Support of system wideregulatory and rateanalysis.

Risk and StrategicInitiatives

Coordination of riskassessment, credit riskmanagement andinsurance coverage.

Supply Chain & Fleet Supply Chain and Fleet

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Page7

Section



01-03-02

GROUP/FUNCTION DESCRIPTIONOperations Services are

responsible for fleetsupport, whichencompasses theprovision and supportof vehicles and relatedequipment. Alsoprovides materialsmanagement services,procurement andcontracting services.

TransmissionAdministration

Services provided byTransmissionAdministration.

Transmission AssetStrategy and Policy

Executive managementsupport of all areas ofTransmission.

Transmission FieldServices

Transmission FieldServices is responsiblefor the maintenance andemergency restorationof the AEP transmissionsystem and distributionstation facilities.

Transmission GridDevelopment &Portfolio Services

Transmission Strategyand BusinessDevelopment Services isresponsible fordeveloping andexecuting transmissionstrategy and businessplans in alignment withAEP's corporatestrategy.

Transmission-Engineering andProject Services

Transmission FieldServices is responsiblefor the maintenance andemergency restorationof the AEP transmissionsystem and distribution

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Page8

Section



01-03-02

GROUP/FUNCTION DESCRIPTIONstation facilities.

Treasury Cash management, andfinancing services.

DocumentNumber



Page1

Section


Intercompany Products and Services

01-03-03

SUMMARY The non-tariffed products and servicesprovided by AEP’s regulated utilities toaffiliate companies and vice versa aregoverned by written agreements between andamong the companies (see TAB 04 in thismanual). The following tables describe thenature of the various transactions that areconducted with affiliates in threecategories:

· products and services providedby regulated utilities to non-regulated affiliates

· products and services providedto regulated utilities by non-regulated affiliates

· products and services providedby regulated utilities to eachother.

PRODUCTS AND SERVICES The following table describes the naturePROVIDED BY REGULATED of products and services provided by theUTILITIES TO NON- AEP System’s regulated utilities to non-REGULATED AFFILIATES regulated affiliates:

CATEGORY DESCRIPTIONFacilities Management Construct, operate

and maintainequipment, approvalof outside contracts& monitoring work ofcontractors.

Pole Attachments Lease poles andtowers forcommunication andother purposes.

Customer Accounting Service, administer,and collectreceivables sold toAEP Credit, Inc.

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Page2

Section



01-03-03

CATEGORY DESCRIPTIONLand Management Provide consulting

services related tothe buying andselling of realestate; includingsite appraisals andsite maintenanceservices.

Corporate Services Provide office space,furnishings, andequipment. Provideconsulting servicesrelated tomaintenance of ownedand leasedfacilities.

Building Space andOffice Services

Bill rent andcarrying charges forbuilding spaceoccupied.

Equipment Rentals Lease short-termequipment rentals.

Materials andSupplies (inventorytransfers)

Provide materialsfrom storerooms.Charges include thecost of the materialsand supplies andappropriate storesoverheads. Storesoverheads includecosts associated withpurchasing andmaintaining thematerials andsupplies inventory.

Telecom CommunicationServices &Maintenance

Effective January 1,2014, AEP GenerationResources (AGR) hascontracted with OhioPower Company (OPCo)

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Page3

Section



01-03-03

CATEGORY DESCRIPTIONto provide bandwidth,local phone serviceand maintenanceservices ontelecommunicationequipment owned byAGR. These servicesprovided by OPCo willbe billed to AGR atthe higher of cost ormarket, in compliancewith the asymmetricpricing rules.

PRODUCTS AND SERVICES The following table describes the nature ofPROVIDED TO REGULATED products and services provided to the AEPUTILITIES BY NON- System’s regulated utilities by non-REGULATED AFFILIATES regulated affiliates:

CATEGORY DESCRIPTIONTesting Services USTI provides

environmental testingservices to ourgenerationfacilities. Theseservices provided byUSTI will be billedto the regulatedgeneration facilitiesat the lower of costor market, incompliance with theasymmetric pricingrules.

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Page4

Section



01-03-03

PRODUCTS AND SERVICES The following table describes the nature ofPROVIDED BY REGULATED products and services provided by the AEPUTILITIES TO EACH System’s regulated utilities to each other:OTHER (Including CoalMining Subsidiaries)

CATEGORY DESCRIPTIONMaterials andSupplies (inventorytransfers)

Materials suppliedfrom companystorerooms shallinclude the materialcost and storesoverheads. Overheadsinclude costsassociated withpurchasing andmaintaining materialsand suppliesinventory.

Equipment Maintenance Provide personnel andservices to performregular and emergencyequipment repairs(primarily foroperating plantequipment).

Simulator Training Provide personnel andfacility to trainpower plant personnelon the operation of1300 MW units.

Building Space andOffice Services

Billing of rent andcarrying charge forbuilding spaceoccupied.

Water Transportation,Coal and ConsumablesHandling, and Gypsum

Provide barging andservices at transferterminals and othercoal handlingfacilities.

Railcar Maintenance Billing for routineinspection and repairwork on railcar hopper

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Page5

Section



01-03-03

CATEGORY DESCRIPTIONfleet.

Railcar Usage Usage of railcars byother companies.

Mining (includingmine shutdown costs)

Affiliated companiesmine and provide coaland lignite toelectric utilities ona cost reimbursementbasis.

Power CoordinationAgreement (powerpurchases and sales)

Sharing of powerproduction and off-system sales andpurchases among AEPSystem generatingcompanies.

Emergency Assistance Provide personnel torestore electricservice interrupted bynatural disasters.

EHV TransmissionSystem

Sharing of costsincurred regarding theownership, operationand maintenance ofAEP’s extra-highvoltage (EHV) trans-mission system.

Energy DistributionSystem

Provide personnel andservices to performengineering, metering,drafting, line work,customer services,right-of-waymaintenance work,design of constructionprojects, contractadministration andadministrativeplanning.

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Page6

Section



01-03-03

CATEGORY DESCRIPTIONEnergy Transmission Provide personnel and

services to performtransmission linework, protection &control, and stationand engineering work.

Energy DeliverySupport

Provide personnel andservices to performmeasurements,telecommunications,forestry and realestate work.

AdministrativeSupport

Provide personnel andservices to performenvironmental,governmental affairs,fleet management,building services andmail services.

Hydro Plant Provide supervision,maintenance andoperation of hydroplant and associatedfacilities.

Joint Facilities Share costs ofoperations andmaintenance of jointlyowned facilities(primarily generatingplants and HVDCtransmissionfacilities).

Capitalized SpareParts

Capitalized spareparts are sold by theutilities to eachother at cost.

Coal Supply Sale of Coal to theoperating companies.

Waste Disposal Provide waste handlingand landfill services

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Page7

Section



01-03-03

CATEGORY DESCRIPTIONConsumables Handling Provide Services for

transloading UREA.Coal Handling Provides trans-loading

services at CookTerminal.

Transmission Training Provide transmissionemployees withtraining.

DocumentNumber



Page1

Section


MONEY POOL

01-03-04

SUMMARY The AEP System Utility Money Pool and the AEPSystem Nonutility Money Pool are arrangementsstructured to meet the short-term cashrequirements of their participants. Theoperation of the two Money Pool arrangementsis designed to match, on a daily basis, theavailable cash and borrowing requirements ofparticipants, thereby minimizing the need toborrow from external sources.

AUTHORITY The AEP System Utility Money Pool and the AEPSystem Nonutility Money Pool operateconsistently with the terms and conditions oftheir respective agreements. The AEP SystemUtility Money Pool Agreement is filed withthe Federal Energy Regulatory Commission(FERC).

PARTICIPANTS The AEP System Utility Money Poolparticipants are certain of AEP regulateddirect and indirect subsidiaries as well ascertain nonutility subsidiaries. The AEPSystem Nonutility Money Pool Agreementparticipants are certain of AEP unregulateddirect and indirect subsidiaries. Eachparticipant may withdraw any of its fundsfrom the respective Money Pool to which itbelongs at any time upon notice to AmericanElectric Power Service Corporation (AEPSC).

AGENT AEPSC acts as the administrative agent of theUtility and Nonutility Money Pools. As ofFebruary 24, 2016 AEPSC no longerparticipates in the Utility Money Pool.

FUNDING ENTITIES AEP may engage in various types of short-termfinancings to fund the daily needs of themoney pools. AEP Utility Funding LLC wasformed to fund the Utility Money Pool and AEPNonutility Funding LLC was formed to fund theNonutility Money Pool. Any funds transferredto the Money Pool will flow through theapplicable Funding LLC. The Utility FundingLLC may obtain funds from external sources,

DocumentNumber



Page2

Section


MONEY POOL

01-03-04

or AEP. The Nonutility Funding LLC willobtain its funds from AEP. The Funding LLCsare solely financial conduits.

RULES American Electric Power Company, Inc. (AEP),AEP Utility Funding LLC, and AEP NonutilityFunding LLC will not borrow funds from theUtility or Nonutility Money Pools or theirparticipants.

Participants in the Nonutility Money Poolwill not engage in lending and borrowingtransactions with participants of the UtilityMoney Pool.

Each participant, except AEP and AEP UtilityFunding LLC, and AEP Nonutility Funding LLChas the right to borrow from its respectiveMoney Pool from time to time, subject to theavailability of funds and other limitations.No participant is obligated to borrow fromits respective Money Pool if lower cost fundscan be obtained from its own externalborrowing.

PROCESS Available funds in the treasuries of theparticipants in the individual Utility andNonutility Money Pools are individually“pooled” together. Within each money poolthe cash position of each Money Poolparticipant is determined on a daily basis.The pooled funds are either loaned to otherparticipants within the pool or invested inshort-term cash instruments.

If the cash needs of the Utility and/orNonutility Money Pools exceed the pooledfunds, additional funds are raised throughexternal borrowings from the sale ofcommercial paper notes as well as certainother means to the extent permitted by lawand regulatory orders.

DocumentNumber



Page3

Section


MONEY POOL

01-03-04

A daily interest rate is calculated for eachmoney pool and applied to all participantborrowings and investments.

The interest rate for the Utility Money Poolis the composite weighted-average dailyeffective cost incurred by AEP, and/or AEPUtility Funding LLC for short-term borrowingsfrom external sources or an equivalent ratewhen there is no external borrowing.

The interest rate for the Nonutility MoneyPool is the composite weighted-average dailyeffective cost incurred by AEP for short-termborrowings from external sources or anequivalent rate when there is no externalborrowing, plus a margin if the Participant’sinternal credit rating is lower than that ofthe Leading Parties.

If surplus funds exist in the treasuries ofthe Utility and/or Nonutility money pools, anexternal investment is made on behalf of therespective money pool with the surplus.

Interest income related to externalinvestment of surplus funds is calculateddaily and allocated back to the lendingparticipants based on their relativecontribution to the surplus.Money Pool participants are also charged apro rata cost of certain expenses associatedwith their borrowing program, including feesassociated with bank lines of credit, ratingagencies, and the issuing and paying agent.

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Page1

Section


RESEARCH AND DEVELOPMENT

01-03-05

SUMMARY Research and development (R&D) projects aregenerally managed by AEPSC on behalf of otherAEP System companies. The services performedby AEPSC are billed to the respective partiesthrough the AEPSC billing system. Everyshared project is billed using one of theapproved Allocation Factors (see the Appendixto this manual for a complete list ofapproved Allocation Factors).

In many cases, an AEP System operatingcompany provides the site for conducting theR&D activity and/or procures the equipmentand materials needed to conduct the research.In these cases, the operating company acts asthe lead company for all other participantsand is responsible for the payment of allcosts it incurs on behalf of the otherparticipants.

The costs incurred by the lead company areshared with and billed to the other AEPparticipants through a separate R&Daccounting and billing process. The R&Daccounting and billing process uses the sameAllocation Factor for each project that AEPSCuses to bill its support costs.

PROCEDURE Operating company billings for R&D areperformed on a fully-allocated cost basis(i.e., the billings include both direct andindirect costs).

Non-Productive Pay The cost of employee vacations, holidays,jury duty and other paid absences are accruedand loaded on to labor dollars.

Fringe benefits The cost of fringe benefits such as pensionProcedure expense is loaded on to labor dollars.

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Page2

Section


RESEARCH AND DEVELOPMENT

01-03-05

A&G OVERHEADS Administrative and general (A&G) overheadsare loaded to R&D projects in the R&Daccounting and billing process based on thelabor dollars charged to each project.

Direct Costs All direct costs of a R&D project, includingproductive labor, are captured along with theindirect costs described above.

BILLING The lead company of any shareable R&D projectwill bill its associates their respectiveshare of the incurred R&D costs. The costsbilled to the associate companies will beexclusive of any costs that are incurred byAEPSC since such costs are appropriatelyallocated through the AEPSC work orderbilling system. The lead company will retainits share of any incurred costs.

DocumentNumber


DateAugust 16, 2006

Page1

Section


FINANCIAL TRANSACTIONS

01-03-06

SUMMARY The AEP System companies, although legallyseparated, operate on an integrated basis aspermitted by law and regulation. Financialtransactions are conducted on a regular basisin support of the integrated activities.

FINANCIAL TRANSACTIONS The following table provides a summary of theprimary financial transactions the AEP Systemcompanies conduct with each other that arenot covered elsewhere in this Section of thismanual:

CATEGORY DESCRIPTIONLoans Debt obligations.Capital Contributions Common stock purchases

as well as paid-incapital transactions.

Accounts ReceivablesFactoring

AEP Credit, Inc.(formerly CSW Credit,Inc.) buys theaccounts receivablesof certain of theelectric utilityaffiliates.

Credit Line Fees Credit line fees areshared among AEPSystem companies.

Dividend Payments Dividend payments aremade by subsidiariesto their parentcompanies.

Real and PersonalProperty

Title to and/or rightsin real or personalproperty acquired andheld by an AEPaffiliate as Agent foranother AEP affiliate.

DocumentNumber


DateAugust 16, 2006

Page2

Section


FINANCIAL TRANSACTIONS

01-03-06

CATEGORY DESCRIPTIONEmployee Loans,Accrued Compensation,Employee RelocationExpenses and OtherEmployee-RelatedItems

When an employeetransfers from one AEPcompany to anaffiliate, thereceiving company paysthe employee’srelocation expenses.In addition, anyamounts due to or fromthe employee aretransferred to thereceiving company fromthe sending company.

Money Pool An arrangementdesigned to match theavailable cash andborrowingsrequirements ofparticipants tominimize the need forexternal borrowings.

NOTE: Also see Document Numbers 01-03-04, 01-03-05 and 01-03-08 for a discussion of theAEP Money Pool, Research & Development costsharing and Convenience Payments,respectively.

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Page1

Section


INTELLECTUAL PROPERTY

01-03-07

SUMMARY From time-to-time the unregulated companiesof the American Electric Power system mayenter into agreements with non-affiliatedthird parties for the licensing oftechnology developed by American ElectricPower Service Corporation (AEPSC) andcertain electric utility subsidiarieswithin the AEP System. These agreements,among other things, extend to the resaleand licensing of property protected bycopyright, patent or trademark laws (hereinreferred to as intellectual property).

TERMS AND CONDITIONS FOR If an unregulated company sells or licensesUSE OF INTELLECTUAL to non-affiliated intellectual propertyPROPERTY BY UNREGULATED developed by AEPSC or any other AEP SystemCOMPANIES company, such companies shall receive a

a percentage of the net profits and theunregulated company will receive acommission by having the unregulated paythe AEP System company that developed theintellectual property the amounts noted inthe following table:

REVENUE SHARING PROVISIONS

1. 70% of the revenues from theintellectual property until the AEPSystem company that developed theintellectual property recovers itsprogramming and development costs; and

2. 20% of such revenues thereafter.

TERMS AND CONDITIONS FOR Intellectual property developed by anTHE USE OF INTELLECTUAL unregulated company will be made availablePROPERTY DEVELOPED BY to all associates in the AEP holding companyUNREGULATED COMPANIES system without charge, except for actual

expenses incurred by an unregulated companyin connection with making such intellectualproperty so available.

DocumentNumber


DateJune 30, 2010

Page1

Section


SERVICE CORPORATION CONVENIENCE PAYMENTS

01-03-08

SUMMARY American Electric Power Service Corporation(AEPSC) provides services to other companiesin the AEP Holding Company System. To theextent possible, the expenditures incurred byAEPSC should pertain exclusively to theservices it performs.

AEP POLICY AEP’s policy is to minimize AEPSC conveniencepayments. However, in some situations, AEPSCmakes payments on behalf of other Systemcompanies as a matter of convenience.Generally, these convenience payments aremade in an emergency situation or for cost-saving or timesaving purposes. The requestermust recommend an allocation method for anyConvenience Payment that pertains to two ormore companies.

The distribution of the convenience paymentamong the appropriate companies will beprovided by either the requester of theconvenience payment or by AEPSC personnelacting on behalf of the requester. Thedistribution of the convenience payment canbe provided on the face of the invoice to bepaid, based upon anticipated benefits to bederived by the appropriate companies, orbased upon existing AEPSC allocation methods.The most appropriate and/or reasonable methodwill be used for each specific conveniencepayment based on the type of transaction.

REPORTING REQUIREMENTS Annually AEPSC is required to report theamount paid during the past calendar year forconvenience payments. The requiredinformation must be included in AEPSC’sannual report that is filed with the FederalEnergy Regulatory Commission(FERC)on FERCForm 60.

DocumentNumber


DateMarch 13, 2020

Page1

Section

IntroductionSubject

OVERVIEW (GUIDELINES)

02-01-01

SUMMARY AEP has internal (i.e., Corporate) guide-lines for cost allocation and inter-companybillings. Federal and state authorities,either through legislation or formal rulemaking, have established cost allocationmethods and affiliate transactionrequirements.

CORPORATE AEP has established corporate policies andprocedures for cost allocation and billing.Its cost allocation process includes bothdirect costs and indirect costs. Itsinter-company billing process includes bothdirect billings to a single company andshared billings to a group or class ofcompanies.

FEDERAL REGULATION The Federal Energy Regulatory Commission(FERC) regulates the AEP System’s costallocation process as well as thetransactions that take place among the AEPSystem companies. AEP prices alltransactions among the affiliate companiesin the AEP System in accordance with the“at cost” standard, which was carriedforward by the FERC under the PUHCA 2005.

STATE COMMISSION RULES AEP’s eleven state commissions, to somedegree, have established rules andregulations or other requirements relativeto AEP’s cost allocation practices andaffiliate transactions. State commissionauthority in these areas, for the mostpart, is based on their authority toestablish rates for retail customers.

DocumentNumber


DateMarch 13, 2020

Page1

Section

CorporateSubject

OVERVIEW

02-02-01

SUMMARY AEP’s internal guidelines applicable tocost allocations are designed to result ina fair and equitable allocation of costs.Policies and procedures have also beenformulated to meet regulatory standardsboth for cost allocation and affiliatetransactions.

COST ALLOCATION POLICIES Each AEP subsidiary maintains separateAND PROCEDURES books and records. Transactions are coded

and processed in a manner that meets allregulatory requirements. Proper audittrails are maintained so that costs can betraced from source documents all the waythrough the applicable accounting andbilling systems.

02-02-02

THE COST ALLOCATION Unless otherwise exempted, the AEPPROCESS companies allocate costs between regulated

and non-regulated operations, on a fully-distributed cost basis. Fully-distributedcosts include all direct costs plus anappropriate share of indirect costs.

02-02-03

COST POOLING AND COST Indirect costs are pooled and assigned toASSIGNMENT multiple companies or company segments in

accordance with the relative benefitsreceived or by other equitable means.

02-02-04

ACCOUNT DESIGNATIONS The operation and maintenance expenseaccounts in the Federal Energy RegulatoryCommission’s (FERC’s) uniform system ofaccounts break functionally betweenregulated and non-regulated expenses.Certain administrative and general expenses

ACCOUNT DESIGNATIONS include costs that can be attributed to

DocumentNumber


DateMarch 13, 2020

Page2

Section

CorporateSubject

OVERVIEW

02-02-01

Cont’d) both regulated and non-regulatedactivities. Some of AEP’s generation hasbeen restructured as a competitiveactivity, and therefore, the powerproduction accounts in the FERC’s system ofaccounts become non—regulated accounts.

02-02-05

DocumentNumber


DateApril 8, 2008

Page1

Section

CorporateSubject

COST ALLOCATION POLICIES AND PROCEDURES

02-02-02

SUMMARY Cost allocation is the process of assigning asingle cost to one or more company or companysegments on the basis of the relativebenefits received or other equitable basis.This document summarizes the underlying costallocation policies and procedures that areapplied on a corporate-wide basis by all AEPcompanies.

POLICIES AND PROCEDURES AEP’s cost accounting and cost allocationpolicies and procedures shall not result inany cost subsidies among or between regulatedand non-regulated operations. Unlessotherwise exempted, all affiliatetransactions for services or products will beconducted at fully allocated cost. For thetransfer of capital assets, fully allocatedcost shall equal the net book value of thecapital asset.

The term “affiliate transactions” refers toall transactions between the utility and anyseparate affiliate company, both regulatedand non-regulated, including all transactionsbetween a utility’s regulated operations(above-the-line) and non-regulated operations(below-the-line).

Basic Goal The basic goal of AEP’s cost allocationpolicies and procedures are threefold:

· to ensure a fair and equitabledistribution of costs among allbenefiting parties

· to meet pertinent regulatoryrequirements

· to minimize the time and expenseneeded to record, audit and reporttransactions.

DocumentNumber


DateApril 8, 2008

Page2

Section

CorporateSubject


02-02-02

Separate Books and Each subsidiary of AEP shall maintainRecords separate books and records and make maximum

use of common accounting and business systemswithout violating any federal or stateimposed code of conduct provisions relativeto sensitive customer or non-publicinformation.

Accounting Transactions All financial accounting transactions will berecorded in accordance with corporateaccounting policy using the appropriatechartfield values for each transaction. Eachtransaction will be recorded in accordancewith the FERC Uniform System of Accounts asapplicable to each subsidiary or affiliate.

Cross-Subsidies AEP’s cost accounting and cost allocationmethods or procedures shall not result in anycost subsidies among or between regulated andnon-regulated operations.

Cost Allocation Factors to be considered in the Allocation ofindividual items of cost include, among otherthings:

· the relationship of the individualcost to the benefiting company orcompany segments

· generally accepted accountingprinciples

· best practices· regulatory principles· reasonableness of results

Audit Trail A key requirement for allocating costs foraffiliate transactions is the maintenance ofadequate audit trails. The following audittrail standards shall be maintained for alltransactions:

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CorporateSubject


02-02-02

· vendor invoices, employee timerecords and expense accounts, generalledger journal entries and similardocumentation will be available andaccessible to adequately support theaccuracy and validity of individualtransactions

· all supporting documentation will beretained in accordance with theapplicable regulatory requirementsfor records retention

· all posting to the providers’books of account or summary ledgerswill be identifiable with theindividual transactions that make upthe total amount of the posting.

Transfer Pricing of The predominant pricing standard among AEP’sAffiliate Transactions various regulatory jurisdictions for

affiliate transactions is “fully-allocatedcost.” However, in certain jurisdictions andinstances, the substantiation of marketprices may be required because of state codeof conduct or other rules or regulations.

For billing purposes, non-tariff products andservices either purchased by or sold by oneof AEP's regulated utilities will be pricedat “fully-allocated cost”.

In the case of products and services, “fully-allocated cost” approximates market value inmost situations since the parties are simplysharing costs that reflect current marketprices.

For the transfer of capital assets between anAEP regulated utility and an affiliate,“fully-allocated cost” shall equal the netbook value of the asset (i.e., original costless depreciation).

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CorporateSubject


02-02-02

ACCESS TO BOOKS AND All lawful requests by regulators toRECORDS obtain access to the books and records of an

affiliate of a regulated utility for thepurpose of setting the utility’s cost-basedrates shall be honored in a timely manner.

DocumentNumber


DateDecember 19, 2000

Page1

Section

CorporateSubject

THE COST ALLOCATION PROCESS

02-02-03

SUMMARY AEP allocates costs to regulated and non-regulated operations on a fully-distributedcost basis. Fully distributed costs includeall direct costs plus an appropriate share ofindirect (and common) costs.

DIRECT COSTS Direct costs can be identified with aparticular activity and can be incurred onbehalf of one or more companies oraffiliates.

INDIRECT COSTS Indirect costs cannot be identified with aparticular activity and must be charged tothe appropriate activity or activities towhich they relate using relevant costallocators. Indirect costs include, but arenot limited to, corporate or business unitoverheads, general and administrativeoverheads, and certain taxes.

COMMON AND JOINT COSTS Common and joint costs, as distinguished fromindirect costs, are costs that are of jointbenefit between regulated and non-regulatedbusiness operations. These costs can includeboth direct and indirect costs.

COST EXAMPLES The following table provides examples of theexpenses included in each cost category:

Directcosts

Direct labor; direct materials

Indirectcosts

Board of Directors’ fees; FICAtax; interest expense; otherelements of Internal Support Costsand departmental overhead.

Commoncosts

Depreciation or rent expense onshared buildings; the expensesincurred in operating a commonpayroll system

BASIC PROCESS AEP allocates costs among regulated and non-

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CorporateSubject

THE COST ALLOCATION PROCESS

02-02-03

regulated business operations following threebasic steps:

1. To the maximum extent possible, withinreasonable cost benefit standards, costsare collected and classified on a directcharge basis.

2. All costs, both direct and indirect, areattributed to activities (i.e.,projects, products or services) which,by their very nature, are regulated,non-regulated, common or joint.

3. The costs of common or joint activitiesare allocated using either an outputmeasure of the activity performed or theprimary cost driver (or a relevant proxyin the absence of a primary costdriver).

BILLINGS TO AFFILIATES Any costs incurred for the benefit of onlyone client or affiliate are billed 100% tothat client or affiliate.

Any costs incurred for the benefit of morethan one client or affiliate are billed tothe clients or affiliates for which therelated service was performed using cost-causative allocation factors of the naturedescribed in Step 3 of the basic allocationprocess (see above). For example, the costaccumulated for processing payroll isallocated and billed based on the ratio ofeach client’s or affiliate’s number ofemployees to the total number of employees ofall clients or affiliates receiving theservice.

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Section

CorporateSubject

COST POOLING AND COST ASSIGNMENT

02-02-04

SUMMARY The financial accounting systems used by theAEP System companies are designed to poolallocable costs in a manner that leads to afair and equitable distribution of costsamong all affiliated companies and betweenregulated and non-regulated operations.

UNDERLYING PRINCIPLE The underlying principle in cost allocationis that the results must be fair andequitable. To meet this standard, theresults must be reasonable and take intoaccount the relative benefits received fromeach cost pool.

POOLING METHODOLOGY In order to perform fair and equitable costallocations, AEP’s financial accountingsystems are designed to capture and poolcosts at three basic levels:

· direct costs are costs which can bespecifically assigned to final costobjectives;

· common or joint costs are costs whichapply to more than one cost objectiveand can be attributed to them inreasonable proportion to the benefitsreceived; and

· overhead costs relate to the overalloperations of the business and, assuch, have no direct relationship toany particular cost objective.

Sub-Pools Common and joint costs along with overheadcosts are further accumulated in various costgroupings (sub-pools). Examples include:

· salary-related costs (also known asfringes)

· compensated absences (i.e., non-productive pay)

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CorporateSubject

COST POOLING AND COST ASSIGNMENT

02-02-04

· building costs· technology costs· general and administrative overhead· construction overhead

COST ASSIGNMENT The AEP System pools and allocates costs ateach level on a legal entity basis. That is,the costs incurred by one company do notaffect the level of costs allocated byanother company. Separate books and recordsare maintained for each company.

All companies assign direct costs on a 100%basis while common or joint costs areassigned or charged to multiple costobjectives in accordance with the relativebenefits received or by other equitablemeans. Overhead costs are charged usingrelatable, cost-causative factors such aslabor dollars, and total cost input.

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Section

CorporateSubjectACCOUNT DESIGNATIONS (Regulated, Non-Regulated and Joint)

02-02-05

SUMMARY As required by the Commonwealth of Kentucky’sHouse Bill No. 897 [Section 4(f)], the CostAllocation Manual (CAM) maintained by theelectric utility must provide a report thatidentifies whether the costs contained ineach account (or sub-account) of the UniformSystem of Accounts (i.e., the USoA) areattributable to regulated operations, non-regulated operations, or are joint costs innature. A description of the methodologyused to apportion the costs shall also beincluded. The allocation methodology must beconsistent with the provisions of Section 3of House Bill No. 897.

While this document has been preparedprimarily to satisfy Kentucky’s CAMrequirement, the account designationsincluded in the accompanying chart also applyto AEP’s other electric utilities.

ACCOUNT DESIGNATIONS The chart which begins on the following pageidentifies those USoA operation andmaintenance accounts that are considered tobe regulated, non-regulated or joint. Thechart pertains to all of AEP’s regulatedutilities to the extent that they use eachaccount. As generation becomes deregulatedin certain state jurisdictions, the accountsfor power production expenses will becomenon-regulated.

COST ALLOCATION To the extent possible, costs are chargeddirectly to either regulated or non-regulatedoperations as appropriate. Those “joint”costs that can not be directly charged areallocated between regulated and non-regulatedoperations based on the nature of the cost,using the appropriate allocation basis fromthe List of Approved Allocation Factors usedfor Service Company billings.

CHART

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02-02-05

FERCAccount Description Reg.

NonReg. Joint

Power Production Expenses

500.0 Oper Supervision &Engineering

No No Yes

501.0 Fuel No No Yes502.0 Steam Expenses No No Yes503.0 Steam from Other Sources No No Yes504.0 Steam Transferred-Credit No No Yes505.0 Electric Expenses No No Yes506.0 Misc Steam Power Expenses No No Yes507.0 Rents No No Yes508.0 Oper Supplies and Expenses No No Yes509.0 Allowances No No Yes510.0 Maint Supv & Engineering No No Yes511.0 Maintenance of Structures No No Yes512.0 Maintenance of Boiler Plant No No Yes513.0 Maintenance of Electric

PlantNo No Yes

514.0 Maintenance of Misc SteamPlt

No No Yes

515.0 Maintenance of SteamProduction Plant

No No Yes

517.0 Oper Supervision &Engineering

No No Yes

518.0 Nuclear Fuel Expense No No Yes519.0 Coolants and Water No No Yes520.0 Steam Expenses No No Yes521.0 Steam from Other Sources No No Yes522.0 Steam Transferred-Credit No No Yes523.0 Electric Expenses No No Yes524.0 Misc Nuclear Power Expenses No No Yes525.0 Rents No No Yes528.0 Maintenance Supervision and

engineeringNo No Yes

529.0 Maintenance of Structures No No Yes530.0 Maintenance of Reactor

Plant EquipmentNo No Yes

531.0 Maintenance of ElectricPlant

No No Yes

532.0 Maintenance of Misc NuclearPlant

No No Yes

535.0 Operation Supervision andEngineering

No No Yes

536.0 Water for Power No No Yes537.0 Hydraulic Expenses No No Yes

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02-02-05


NonReg. Joint

Power Production Expenses (Cont’d)538.0 Electric Expenses No No Yes539.0 Misc Hydr Power Generation

ExpNo No Yes

540.0 Rents No No Yes540.1 Operation Supplies and

ExpensesNo No Yes

541.0 Maintenance Supervision andEngineering

No No Yes

542.0 Maintenance of Structures No No Yes543.0 Maintenance of Reservoirs,

Dams and WaterwaysNo No Yes

544.0 Maintenance of ElectricPlant

No No Yes

545.0 Maintenance of MiscHydraulic Plant

No No Yes

545.1 Maintenance of HydraulicProduction Plant

No No Yes

546.0 Operation Supervision andEngineering

No No Yes

547.0 Fuel No No Yes548.0 Generation Expenses No No Yes549.0 Misc Oth Pwr Gen - Gas

TurbineNo No Yes

550.0 Rents No No Yes550.1 Operation supplies and

expensesNo No Yes

551.0 Maint Supv & Engineering No No Yes552.0 Maintenance of Structures No No Yes553.0 Maintenance of Generating

and Electric PlantNo No Yes

554.0 Maintenance of Misc OtherPower Generation Plant

No No Yes

554.1 Maintenance of Other PowerProduction Plant

No No Yes

555.0 Purchased Power No No Yes556.0 Sys Control & Load

DispatchingNo No Yes

557.0 Other Expenses No No Yes

Transmission Expenses560.0 Oper Supervision &

EngineeringYes No No

561.1 Load Dispatch--Reliability Yes No No561.2 Load dispatch—Monitor and

operate transmission systemYes No No

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02-02-05


NonReg. Joint

561.3 Load dispatch—Transmissionservice and scheduling

Yes No No

561.4 Scheduling system controland dispatch services

No No Yes

561.5 Reliability planning andstandards development

Yes No No

561.6 Transmission servicestudies

Yes No No

561.7 Generation interconnectionstudies

Yes No No

561.8 Reliability planning andstandards developmentservices

Yes No No

562.0 Station Expenses Yes No No563.0 Overhead Line Expenses Yes No No564.0 Underground Line Expenses Yes No No565.0 Transmssion of Elect by

OthersYes No No

566.0 Misc Transmission Expenses Yes No No567.0 Rents Yes No No567.1 Operation Supplies and

ExpensesYes No No

568.0 Maint Supv & Engineering Yes No No569.0 Maintenance of Structures Yes No No569.1 Maintenance of computer

hardwareYes No No

569.2 Maintenance of computersoftware

Yes No No

569.3 Maintenance ofcommunication equipment

Yes No No

569.4 Maintenance ofmiscellaneous regionaltransmission plant

Yes No No

570.0 Maint of Station Equipment Yes No No571.0 Maintenance of Overhead

LinesYes No No

572.0 Maint of Underground Lines Yes No No573.0 Maint of Misc Transmssion

PltYes No No

574.0 Maintenance of TransmssionPlant

Yes No No

Regional Market Expenses575.1 Operation Supervision Yes No No575.2 Day-ahead and real-time

market facilitationYes No No

575.3 Transmission rights market Yes No No

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02-02-05


NonReg. Joint

facilitation575.4 Capacity market

facilitationYes No No

575.5 Ancillary services marketfacilitation

Yes No No

575.6 Market monitoring andcompliance

Yes No No

575.7 Market facilitation,monitoring and complianceservices

Yes No No

575.8 Rents Yes No No576.1 Maintenance of structures

and improvementsYes No No

576.2 Maintenance of computerhardware

Yes No No

576.3 Maintenance of computersoftware

Yes No No

576.4 Maintenance ofcommunication equipment

Yes No No

576.5 Maintenance ofmiscellaneous marketoperation plant

Distribution Expenses580.0 Oper Supervision &

EngineeringYes No No

581.0 Load Dispatching Yes No No581.1 Line and Station Expense Yes No No582.0 Station Expenses Yes No No583.0 Overhead Line Expenses Yes No No584.0 Underground Line Expenses Yes No No585.0 Street Lighting & Signal

Sys ExpYes No No

586.0 Meter Expenses Yes No No587.0 Customer Installations Exp Yes No No588.0 Miscellaneous Distribution

ExpYes No No

589.0 Rents Yes No No590.0 Maint Supv & Engineering Yes No No591.0 Maintenance of Structures Yes No No592.0 Maint of Station Equipment Yes No No592.1 Maintenance of Structures

and EquipmentYes No No

593.0 Maintenance of OverheadLines

Yes No No

594.0 Maint of Underground Lines Yes No No594.1 Maintenance of Lines Yes No No

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02-02-05


NonReg. Joint

595.0 Maint of Line Transformers Yes No No

Distribution Expenses (Cont’d)596.0 Maint of Street Lighting &

Signal SystemsYes No No

597.0 Maintenance of Meters Yes No No

598.0 Maint of Misc DistributionPlt

Yes No No

Customer Accounts Expenses901.0 Supervision - Customer

AcctsYes No No

902.0 Meter Reading Expenses Yes No No903.0 Cust Records & Collection

ExpYes No No

904.0 Uncollectible Accounts Yes No No905.0 Misc Customer Accounts Exp Yes No No

Customer Services and Informational Expenses907.0 Supervision - Customer

ServiceYes No No

908.0 Customer AssistanceExpenses

Yes No No

909.0 Information & InstructAdvertising Exp

Yes No No

910.0 Misc Cust Svc &Informational Exp

Yes No No

Sales Expenses911.0 Supervision - Sales

ExpensesYes No No

912.0 Demonstrating & Selling Exp Yes No No913.0 Advertising Expenses Yes No No916.0 Miscellaneous Sales

ExpensesYes No No

Administrative and General Expenses920.0 Administrative & Gen

SalariesNo No Yes

921.0 Office Supplies andExpenses

No No Yes

923.0 Outside Services Employed No No Yes924.0 Property Insurance No No Yes925.0 Injuries and Damages No No Yes

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02-02-05


NonReg. Joint

926.0 Employee Pensions &Benefits

No No Yes

928.0 Regulatory Commission Exp No No Yes930.1 General Advertising

ExpensesNo No Yes

930.2 Misc General Expenses No No Yes931.0 Rents No No Yes935.0 Maintenance of General

PlantNo No Yes

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Page1

Section

Federal RegulationSubject

OVERVIEW

02-03-01

SUMMARY Effective February 8, 2006, the PublicUtility Holding Company Act of 1935 wasrepealed. Jurisdiction over certain holdingcompany related activities has beentransferred to the Federal Energy RegulatoryCommission under the Public Utility HoldingCompany Act of 2005.

FERC REGULATION The business of transmitting and sellingelectric energy in interstate commerce isregulated through Part II of the FederalPower Act.

02-03-02

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Federal RegulationSubject

FERC Regulation

02-03-02

SUMMARY The transmission of electric energy ininterstate commerce and the sale of electricenergy at wholesale in interstate commerce isregulated by the Federal Energy RegulatoryCommission (FERC) under the Federal PowerAct.

PUHCA 2005 The Energy Policy Act of 2005 repealed thePublic Utility Holding Company Act of 1935effective February 8, 2006 and replaced itwith the Public Utility Holding Company Actof 2005. With the repeal of PUHCA 1935, theSecurities and Exchange Commission no longerhas jurisdiction over the activities ofregistered holding companies. Jurisdictionover certain holding company relatedactivities has been transferred to theFederal Energy Regulatory Commission.Specifically, FERC has jurisdiction over theissuances of securities of our public utilitysubsidiaries, the acquisition of securitiesof utilities, the acquisition or sale ofcertain utility assets, and mergers withanother electric utility or holding company.In addition, both FERC and state regulatorswill be permitted to review the books andrecords of any company within a holdingcompany system. FERC also has jurisdictionover certain affiliate transactions. As partof the implementation of the Public UtilityHolding Company Act of 2005, FERC has adoptedrules addressing these various issues. Thepertinent rules may be found at 18 C.F.R.Part 35, Subparts H and I, and Part 366.

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State Commission RulesSubject

OVERVIEW

02-04-01

SUMMARY AEP’s state commissions have establishedcertain rules and requirements relative toaffiliate transactions. The requirementsgenerally fall into four broad categories:

· they need to maintain a costallocation manual or otherdocumentation

· transfer pricing rules· reporting requirements· audit requirements.

ARKANSAS Arkansas requirements can be found inArkansas Public Service Commission Order 7 ofDocket 06-112-R, dated May 25, 2007.

02-04-02

INDIANA Indiana’s requirements can be found in theIndiana Code as well as various orders of theIndiana Utility Regulatory Commission.

02-04-03

KENTUCKY Kentucky’s requirements are contained inKentucky Revised Statutes (KRS) 278.2201 thru278.2219; Kentucky Public Service CommissionRegulation 807KAR 5:080 and in various ordersof the Kentucky Public Service Commission.

02-04-04

LOUISIANA Louisiana’s requirements can be found in theLouisiana Public Service Commission’s OrderNo. U-23327, dated September 16, 1999,subject to the conditions set forth in theStipulation and Settlement attached asAppendix A to the Order.

02-04-05

MICHIGAN Michigan’s requirements are contained in

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OVERVIEW

02-04-01

various orders of the Michigan Public ServiceCommission, including its Order ApprovingSettlement Agreement dated December 16, 1999,in Case No. U-12204, and its Opinion andOrder, dated December 4, 2000, in Case No. U-12134.

02-04-06

OHIO Ohio’s requirements are captured in thecorporate separation rules adopted by thePublic Utilities Commission of Ohio in OhioAdmin. Code Chapter 4901:1-37, and in variousorders of the Commission.

02-04-07

OKLAHOMA Oklahoma’s requirements are focused on theOklahoma Corporation Commission’s ability toaccess the books and records of PublicService Corporation of Oklahoma and its AEPaffiliates as stated in the Stipulation,dated as of April 16, 1999, in Cause No. PUD980000444.

02-04-08

TENNESSEE Tennessee has no specific rules andrequirements applicable to cost allocationsand affiliate transactions.

02-04-09

TEXAS Texas’ requirements to a large degree arecontained in §36.058 of the Texas PublicUtility Regulatory Act and the rules of thePublic Utility Commission of Texas.

02-04-10

VIRGINIA Virginia’s requirements can be found in theCode of Virginia and in the regulations and

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OVERVIEW

02-04-01

in orders of the Virginia State CorporationCommission.

02-04-11

WEST VIRGINIA West Virginia’s requirements can be found inthe West Virginia Code and in orders of thePublic Service Commission of West Virginia.

02-04-12

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DateAugust 6, 2007

Page1

Section


ARKANSAS RULES AND REQUIREMENTS

02-04-02

SUMMARY The Arkansas Public Service Commissionadopted Affiliate Transaction Rules May 25,2007. The purpose of the rules is to ensurethat all transactions among or between apublic utility and any affiliates ordivisions do not result in rates which areunreasonable and in violation of Arkansasstatutes; to ensure that the rates charged bypublic utilities do not provide any subsidyto affiliates or divisions of the publicutility which are involved in non-utilityactivities or which provide services to thepublic utility; to prevent anti-competitivebehavior, and market manipulation or marketpower; and to prevent financial risk to rate-regulated public utility operations which mayarise from business endeavors of anunregulated affiliate.

The following summarizes the AffiliateTransaction Rules as adopted.

DOCUMENTATION REQUIRE- The Commission’s documentation requirementsMENTS applicable to affiliate transactions are

provided in the table below:

SUBJECT REQUIREMENTRecordKeepingRule IV

A public utility is to keepbooks and records separatelyfrom the books and records ofits affiliates and tomaintain such books andrecords in accordance withapplicable rules and ordersof the Commission, and withGenerally Accepted AccountingPrinciples as amended.

Such books and records shallcontain all information

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02-04-02

SUBJECT REQUIREMENTnecessary to identify allaffiliate transactions inwhich a public utilityparticipated; and identifyand allocate or impute allrevenues and costs (bothdirect and indirect)associated with all suchaffiliate transactions.

Upon the creation of a newaffiliate that willparticipate with a publicutility, the utility shall,no later than 60 days afterthe creation of theaffiliate, notify theCommission by letter to theSecretary of the Commissionof the creation of the newaffiliate, and the noticeshall include an explanationof how the public utilitywill implement these ruleswith respect to the newaffiliate.

Each public utility shallmaintain, for at least fiveyears, records of eachaffiliate transaction inwhich it participated and therecords shall:

a. be madecontemporaneously witheach affiliatetransaction;

b. be in a readilyretrievable format; and

c. include, for eachaffiliate transaction:

1. identify of the

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DateAugust 6, 2007

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Section



02-04-02

SUBJECT REQUIREMENTaffiliate;

2. commencement andtermination datesof the transaction;

3. description of theaffiliatetransaction,including thenature and quantityof value providedand received;

4. the dollar amountof the transactionand the manner inwhich such dollaramount wascalculated;

5. all other terms ofthe transaction;

6. the direct andindirect costsassociated with thetransaction,including anyallocation formulaused to attributeindirect costs;

7. all informationnecessary to verifycompliance with therules and theaccuracy of amountsstated, i.e.invoices, vouchers,communications,journal entries,workpapers,informationsupporting theprice of eachtransaction,including but not

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02-04-02

SUBJECT REQUIREMENTlimited to the costand allocationmethod of thetransaction andwhen the cost wasthe result of acompetitive biddingprocess, the marketprice and basis forthe market price;

8. be summarized andfiled with theCommission as partof the annualreport. Unlessotherwise orderedby the Commission,a copy of FERC Form60, Annual Reportof CentralizedService Companies,may be filed.

Each public utility shallfile contemporaneously withits annual report a summaryreport indicating theaggregate dollar amount ofall transactions described inRule III.G.(1), (2), (3), and(4) which the utility hasconducted with each utility,including the name of eachsuch affiliate.Each public utility is tomaintain, update annually,train its employees in, and(within 120 days followingthe effectiveness of theserules, and thereafter, to theextent of material changes,in each annual report) filewith the Commission, written

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02-04-02

SUBJECT REQUIREMENTprocedures which ensurecompliance with the rules,such procedures shallinclude, at a minimum:

a. all internal rules,practices, financialrecord keepingrequirements, and otherpolicies governingaffiliate transactionsamong or between thepublic utility and itsaffiliates;

b. the names and addressesof all the publicutility’s affiliates;

c. an organizational chartdepicting the ownershiprelationships betweenthe public utility andthose affiliates thatparticipate in affiliatetransactions with thepublic utility;

d. a description of thetypes of assets, goodsand services provided inany existing affiliatetransaction lasting morethan one year; and

e. a cost allocation manualor other description ofthe method used todetermine compensationin affiliatetransactions

CommissionAccess

The Commission shall haveaccess to all books andrecords of a public utilityand its affiliate to theextent such access isrelevant to determining

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02-04-02

SUBJECT REQUIREMENTcompliance with allapplicable Arkansas statutesand rules or establishingrates subject to theCommission’s jurisdiction.

ALLOCATION OF COSTS The Commission’s rules for the allocation ofAND REVENUES certain costs and revenues related to

affiliate transactions are provided in thetable below:

SUBJECT REQUIREMENTSAffiliateFinancialTransactionsRule IV

Except as provided otherwisein the Rules or in otherapplicable law, a publicutility shall not engage inany affiliate transaction inwhich the public utility:

1. provides to or shareswith any affiliate anyfinancial resource orfinancial benefit,including, but notlimited to any loan,extension of credit,guarantee or assumptionof debt,indemnification, pledgeof collateral; orencumbrance of orrestriction on thedisposition of anypublic utility; or

2. incurs any debt forpurposes of investingin, or otherwisesupporting, any businessother than the provisionof public utilityservice in Arkansas.

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02-04-02

SUBJECT REQUIREMENTS

A public utility may obtainfinancial resources from anaffiliate for public utilitypurposes, provided that thecost to the public utility ofsuch financial resource doesnot exceed the lower ofmarket price or theaffiliate’s fully allocatedcost.This part of the rule shallnot apply to or prohibit anyof the following unless theCommission finds, afternotice and hearing, unlesswaived by the parties, andconsistent with applicablelaw, that the arrangement isnot consistent with thepurposes of the rules:

1. An inter-affiliatefinancial transactionintegral to an affiliatetransaction for goods orservices to andconsistent with Rule V(Affiliate TransactionsOther than FinancialTransactions);

2. Payment of dividends bya public utility toaffiliates that ownstock in such publicutility;

3. Transactions inconnection with thefactoring of accountsreceivable, the creationand use of specialpurpose financingentities, and the

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02-04-02

SUBJECT REQUIREMENTScreation and use ofmoney pool or cashmanagement arrangements,subject to safeguards toprevent cross-subsidization andunauthorized pledges orencumbrances of publicutility assets;

4. Any loan, extension ofcredit, guarantee,assumption of debt,restriction ondisposition of assets,indemnification,investment, or pledge ofassets by public utilityfor the purpose ofsupporting the utilityrelated businessactivities of anaffiliate;

5. Any debt incurred by apublic utility,including debt thatimposes any encumbranceon, or any restrictionplaced on thedisposition of anyassets of, the publicutility for the purposeof supporting theutility related businessactivities of anaffiliate;

6. Receipt by a publicutility of capitalcontributions orproceeds from the saleof common stock to itsparent holding company;

7. Receipt by a public

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DateAugust 6, 2007

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Section



02-04-02

SUBJECT REQUIREMENTSutility of financialresources from anaffiliate for any non-public utility purpose,provided that the costto the public utility ofsuch resources shall notbe recovered from thepublic utility’scustomers in Arkansas;

8. Any financingarrangement involving apublic utility and anyaffiliate that was inexistence as of theeffective date of therules; provided that thepublic utility fileswith the Commission adescription of each sucharrangement involving apublic utility and anyaffiliate having anannual value or amountin excess of $350,000and such filing isreceived within 120 daysof the effective date ofthe rules;

9. Any other affiliatetransaction proposed bya public utility,provided that the publicutility first files withthe Commission anapplication for approvalof such proposedaffiliate financialtransaction including adetailed descriptionthereof and any relevantsupporting

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DateAugust 6, 2007

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02-04-02

SUBJECT REQUIREMENTSdocumentation, and theCommission finds, afternotice and hearing,unless waived by thepartied, on suchapplication, that theproposed affiliatefinancial transaction isconsistent with thepurposes of the rules.

AffiliateTransactionsother thanFinancialTransactionsRule V

With respect to an affiliatetransaction involving assets,goods, services, informationhaving competitive value, orpersonnel, a public utilityshall not:

1. receive anything ofvalue, unless thecompensation paid by thepublic utility does notexceed the lower ofmarket price of fullyallocated cost of theitem received; and,

2. provide anything ofvalue, unless thecompensation received bythe public utility is noless than the higher ofmarket price or fullyallocated cost of theitem provided.

This rule shall not apply to:1. exchanges of information

(a)necessary to thereliable provision ofpublic utility serviceby a public utility,provided such exchangeoccurs consistently withguidelines published by

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02-04-02

SUBJECT REQUIREMENTSthe utility and appliedequally to affiliatesand non-affiliates; (b)required by or necessaryto comply with federalstatutes or regulations;or (c)between or among apublic utility, itsparent holding company, aservice company and anyaffiliated rate-regulatedutility in another State.

2. The provision of sharedcorporate support services,at fully allocated cost,between or among a publicutility and any affiliate,including a service company.

3. The provision, at fullyallocated cost, of assets,goods, services, or personnelbetween or among a publicutility and a affiliated rate-regulated utility in anotherState.

4.The provision of assets,goods, services, informationhaving competitive value, orpersonnel, at a pricedetermined by competitivebidding or pursuant to aregulatory filed or approvedtariff or contract.

5. Any other affiliatetransaction proposed by apublic utility to be exemptedfrom the rule provided thatthe public utility first

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DateAugust 6, 2007

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Section



02-04-02

SUBJECT REQUIREMENTSfiles with the Commssion anapplication for an exemptionof such proposed affiliatetransaction from therequirements of the rule,including a detaileddescription of the proposedtransaction and any relevantsupporting documentation, andthe Commission finds, afternotice and hearing, that theexemption is consistent withthe purposes of the rules.

COMPLIANCE The Commission’s compliance requirementsREQUIRIEMENTS applicable to the affiliate transactions are

provided in the table below:

SUBJECT REQUIREMENTAnnualCertification

No later than June 1 of eachyear, each public utilityshall file with theCommission a notice, signedby both the public utility’spresident or chief executiveofficer and its chieffinancial offices, certifyingthe public utility’scompliance with these rulesin the prior year; and otherannual information andreports required under therules.

The Commission may at anytime initiate a proceedingagainst a public utility todetermine whether areasonable basis exists thatthe public utility is out of

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SUBJECT REQUIREMENTcompliance with the rules.If the Commission, afternotice and hearing, makessuch determination, theCommission may require thepublic utility to engage anindependent accountant (which, at the publicutility’s election, may bethe accountant that regularlyaudits the public utility’sfinancial statements) toconduct Agreed UponProcedures to reviewidentified accountingentries, methods orprocedures used by the publicutility in connection withthese rules. A work planoutlining such Agreed UponProcedures, together withsuch letters oracknowledgements as shall bereasonably required by theaccountant in connection withsuch engagement, shall bedeveloped by the publicutility and filed with theCommission for approval.Upon review of theinformation provided by suchindependent accountant afterundertaking, the Commissionmay order the public utilityto make changes in itsaccounting methods orprocedures found by theCommission in to bereasonably necessary toensure future compliance withthese Rules.

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OTHER REQUIREMENTS – Additional requirements applicable toaffiliate transactions are provided in thetable below:

SUBJECT REQUIREMENTBond RatingDowngradesRule VII

This rule applies to anypublic utility that has aseparate, stand-alone bondrating by Standard and Poor’sor Moody’s, and that hasaffiliates, other than utilityrelated businesses, withassets whose total book valueexceeds ten percent of thebook value of the publicutility’s assets.

If a public utility’s bondratings are downgraded to aStandard and Poor’s rating ofBB+ or lower, or to a Moody’srating of Ba1 or lower, suchutility shall notify theCommission within 30 days ofsuch downgrading. The publicutility will provide theCommission a copy of publiclyreleased information aboutsuch rating downgrade and suchother information as theCommission requests.

If the Commission finds, afternotice and opportunity forhearing, that the publicutility’s downgrade would nothave occurred but for one ormore relationships betweensuch public utility and one ormore affiliates, then theCommission may impose remedies

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designed to insulate thepublic utility and itscustomers from any diminutionin the public utility’sability to carry out itsobligation to serve atreasonable rates.

UtilityOwnership ofNon-utilityBusinessRule VIII

A public utility shall notengage in a non-utilitybusiness other than a utilityrelated business if the totalbook value of the non-utilityassets owned by the utilityexceeds 10 percent of the bookvalue of the total assets ofthe public utility and all itsaffiliates.

This rule does not apply to orprohibit a public utility orany affiliate thereof fromcontinuing to engage in anynon-utility business existingas of the effective date ofthese rules; provided thepublic utility files with thecommission a description ofsuch non-utility businessexisting as of the effectivedate of these rules and suchfiling is received within 120days of the effective date ofthese rules.

Each public utility or itspublic utility holding companyshall file an annual reportwith the Commission inaccordance with the rules thatincludes:

1. a certification by thepresident of the publicutility that the public

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utility is in compliancewith this section ;and

2. all financial informationnecessary for theCommission to determinethe utility is complyingwith the requirements ofthe rules.

EXEMPTIONSRule XI

Any utility may petition forexemption from any of therules on the basis thatapplication of the rule wouldnot be in the public interest.

Any existing financialarrangements, provision ofcorporate services or otheraffiliate relationship whichcould be deemed to be inviolation of these rules willbe allowed to continue for aperiod of one year fromadoption of these rules inorder to allow the utilitiesinvolved to seek an exemptionfrom the application of theserules for those existingcircumstances

MISCELLANEOUSRule X

The costs of any affiliatetransaction found to beinconsistent with these rulesshall be adjusted in aratemaking proceeding to beconsistent with these rules.

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INDIANA RULES AND REQUIREMENTS

02-04-03

SUMMARY Indiana’s rules and requirements applicable tocost allocations and affiliate transactions canbe found in the Indiana Code and in the IndianaUtility Regulatory Commission’s (the IURC’s, orthe Commission’s) order, dated April 26, 1999,in Cause No. 41210, including the Stipulationand Settlement Agreement which is attached tothe order as Exhibit A, as well as other ordersof the Commission.

Cause No. 41210 covers the IURC’s investigationof the proposed merger of American ElectricPower Company, Inc. and Central and South WestCorporation. Section 8 of the Stipulation andSettlement Agreement provides for AffiliateStandards between the regulated and non-regulated affiliates of the merged company.

DOCUMENTATION REQUIRE- The IURC’s documentation requirements forMENTS affiliate transactions are captured in the

following table:

SUBJECT REQUIREMENTSeparate Booksand Records

Each AEP Operating Companyshall maintain, inaccordance with generallyaccepted accountingprinciples, books, recordsand accounts that areseparate from the books,records and accounts of itsaffiliates, consistent withPart 101 – Uniform System ofAccounts prescribed forPublic Utilities andLicensees subject to theprovisions of the FederalPower Act. [Section 8.B.]

CostAllocationDocumentation

An AEP operating companywhich provides bothregulated and non-regulated

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SUBJECT REQUIREMENTservices or products, or anaffiliate which providesservices or products to anAEP operating company, shallmaintain documentation inthe form of writtenagreements, an organizationchart of AEP (depicting allaffiliates and AEP operatingcompanies), accountingbulletins, procedure andwork order manuals, or otherrelated documents, whichdescribe how costs areallocated between regulatedand non-regulated servicesor products.[Section 8.P.]

EmployeeMovements

AEP shall document allemployee movement betweenand among all affiliates.Such information shall bemade available to the IURCand consumer advocate uponrequest. [Section 8. G.]

ItemizedBillingStatements

Any untariffed, non-utilityservice provided by an AEPoperating company oraffiliated service companyto any affiliate shall beitemized in a billingstatement pursuant to awritten contract or writtenarrangement. The AEPoperating company and anyaffiliated service companyshall maintain and keepavailable for inspection bythe Commission copies ofeach billing statement,contract and arrangementbetween the AEP operating

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SUBJECT REQUIREMENTItemizedBillingStatements(Cont’d)

company or affiliatedservice company and itsaffiliates that relate tothe provision of suchuntariffed non-utilityservices. [Section 8.E.]

Goods and services providedby a non-utility affiliateto an AEP operating companyshall be by itemized billingstatement pursuant to awritten contract or writtenarrangement. The operatingcompany and non-utilityaffiliate shall maintain andkeep available forinspection by theCommission copies of eachbilling statement, contractand arrangement between theoperating company and itsnon-utility affiliates thatrelate to the provision ofsuch goods and services inaccordance with theCommission’s applicableretention requirements.[Section 8.F.]

[Source: Stipulation and Settlement Agreementin Cause No. 41210]

TRANSFER PRICING Transactions between the regulated electricutility and its affiliates shall adhere to theaffiliate standards included in the followingtable:

SUBJECT REQUIREMENTGuidingPrinciples

The financial policies andguidelines for transactionsbetween the regulated

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SUBJECT REQUIREMENT

Guiding

utility and its affiliatesshall reflect the followingprinciples:

1. An AEP operatingcompany’s retailcustomers shall notsubsidize the activitiesof the operatingcompany’s non-utilityaffiliates or its utilityaffiliates. [Section8.A.1.]

2. An AEP operatingcompany’s costs forjurisdictional ratepurposes shall reflectonly those costsattributable to itsjurisdictional customers.[Section 8.A.2.]

3. These principles shall beapplied to avoid costsfound to be just andreasonable for ratemakingpurposes by theCommission being leftunallocated or strandedbetween variousregulatory jurisdictions,resulting in the failureof the opportunity fortimely recovery of suchcosts by the operatingcompany and/or itsutility affiliates;provided, however, thatno more than one hundredpercent of such costshall be allocated on anaggregate basis to thevarious jurisdictions.

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SUBJECT REQUIREMENTPrinciples(Cont’d)

[Section 8.A.3.]4.An AEP operating company

shall maintain andutilize accountingsystems and records thatidentify and appro-priately allocate costsbetween the operatingcompany and itsaffiliates, consistentwith these cross-subsidization principlesand such financialpolicies and guidelines.[Section 8.A.4.]

AssetTransfers

Asset transfers between anAEP operating company and anon-utility affiliate shallbe at fully distributedcosts in accordance withcurrent SEC issuedrequirements or otherstatutory requirements ifthe SEC has nojurisdiction. [Section8.C.]

[Source: Stipulation and Settlement Agreementin Cause No. 41210]

REPORTING REQUIREMENTS The Stipulation and Settlement Agreement inCause No. 41210 provides in part that the IURCmay establish reporting requirements regardingthe nature of inter-company transactionsconcerning the operating company and adescription of the basis upon whichcost allocations and transfer pricing havebeen established in these transactions.[Section 8.W.]

AUDIT REQUIREMENTS The independent audit requirement regarding the

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merger has expired. I&M/AEP was required toconduct biennial audits for 8 years after themerger. The final audit was submitted to theIndiana Utility Regulatory Commission onDecember 29, 2008.

OTHER REQUIREMENTS The Stipulation and Settlement Agreementcontains other requirements related toaffiliate transactions some of which are listedhere:

· Thirty days prior to filing any affiliatecontract (including service agreements)with the Securities and ExchangeCommission or the Federal EnergyRegulatory Commission the AEP operatingcompany shall submit to the Commission acopy of the proposed filing. [Section 8.T.]

· AEP will provide the Commission withnotice at least 30 days prior to anyfilings that propose new allocationfactors with the SEC. [Section 6]

· AEP shall designate an employee who willact as a contact for the Commission andconsumer advocates seeking data andinformation regarding affiliatetransactions and personnel transfers.Such employee shall be responsible forproviding data and information requestedby the Commission for any and alltransactions between the jurisdictionaloperating company and its affiliates,regardless of which affiliate(s),subsidiary(ies) or associate(s) of theAEP operating company from which theinformation is sought. [Section 8.Q.]

The Indiana Code [§8-1-2-49] states, in part,

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OTHER REQUIREMENTS that no management, construction,(con’t) engineering, or similar contract with any

affiliated interest shall be effective unlessit shall first have been filed with theCommission. If it is found that any suchcontract is not in the public interest, theCommission, after investigation and ahearing, is authorized to disapprove thecontract.

On September 28, 2016, the Indiana UtilityRegulatory Commission issued GeneralAdministrative Order GAO 2016-5 which providesthat Affiliate contract should do thefollowing:(a) Include the following terms:(1) A definite termination date, not more thanfive (5) years from the effective date of thecontract.(2) Notice that the contract, pursuant to IC 8-1-2-49(2), shall not be effective until it isfiled with the Commission.(b) Exclude the following terms:(1) A provision that provides for an automaticcontract renewal or renewal without notice toall contracting parties and the Commission.(2) A provision that provides for an effectivedate that is prior to filing with theCommission.

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KENTUCKY RULES AND REQUIREMENTS

02-04-04

SUMMARY Kentucky’s rules and requirements applicableto cost allocations and affiliatetransactions are contained in KentuckyRevised Statues, (KRS) 278.2201 thru278.2219; Kentucky Public Service CommissionRegulation 807KAR 5:08 and in certain ordersof the Kentucky Public Service Commission(the Commission).

CAM REQUIREMENTS The following table summarizes Kentucky’sCost Allocation Manual (CAM) requirements:

SUBJECT REQUIREMENTSummary Any utility that engages in

a non-regulated activity,whose revenue exceeds 2% ofthe utility’s total revenueor $1,000,000 annually,shall develop and maintain aCAM. [KRS278.2203 (4) (a)]

“CAM”Definition

CAM means a cost allocationmanual; that is, an indexedcompilation anddocumentation of a company’scost allocation policies andrelated procedures. [KRS278.010 (20)]

Contents The CAM shall contain thefollowing information for autility’s jurisdictionaloperations in theCommonwealth of Kentucky:(a) A list of regulated and

non-regulated divisionswithin the utility;

(b) A list of all regulatedand non-regulatedaffiliates of theutility to which theutility providesservices or productsand where the

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SUBJECT REQUIREMENT

Contents(Cont’d)

affiliates provide non-regulated activities asdefined in [KRS278.2205(2) (a) (b)];

(c) A list of services andproducts provided bythe utility, anidentification of eachas regulated or non-regulated, and the costallocation methodgenerally applicable toeach category;[KRS278.2205 (2) (c)];

(d) A list of incidental,non-regulatedactivities that arereported as regulatedactivities inaccordance with theprovisions pf[LRS278.2205 (2) (d)];

(e) A description of thenature of transactionsbetween the utility andthe affiliate; and[KRS278.2205 (2) (e)];

(f) For each FERC accountand sub-account, areport that identifieswhether the accountcontains costsattributable toregulated operationsand non-regulatedoperations. The reportshall also identifywhether the costs arejoint costs that cannotbe directly identified.A description of themethodology used to

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SUBJECT REQUIREMENT

Contents(Cont’d)

apportion each of thesecosts shall be includedand the allocationmethodology shall beconsistent with costallocationmethodologies set outin KRS 278.2203.

[KRS278.2205 (2) (f)]FilingRequirements

Within 270 days of theeffective date of July 14,2000, the utility shallfile:(a) A statement with the

Commission thatcertifies the CAM hasbeen developed and willbe adopted by manage-ment effective with thebeginning of the nextcalendar year. Thestatement shall besigned by an officer ofthe utility; and

(b) One copy of the CAM.[KRS278.2205 (3) (a)-(b)]

Changes Within 60 days of anymaterial change in mattersrequired to be listed in theCAM, the utility shall amendthe CAM to reflect thechange. [KRS278.2205 (4)]

PublicInspection

The CAM shall be availablefor public inspection at theutility and at the Commiss-ion. [KRS278.2205 (5)]

RateProceedings

The CAM shall be filed aspart of the initial filingrequirement in a proceedinginvolving an application foran adjustment in rates

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SUBJECT REQUIREMENTRateProceedings(Cont’d)

pursuant to KRS 278.190.[KRS278.2205(6)]

TRANSFER PRICING KRS278.2207 thru KRS278.2219 contains veryspecific instructions on the pricing ofassets, services and products transferredbetween the utility and its affiliates, ascaptured in the following table:

SUBJECT REQUIREMENTSummary A utility shall not subsidize

a non-regulated activityprovided by an affiliate orby the utility itself.Utilities must keep separateaccounts and allocate costsin accordance with proceduresestablished by theCommission. [KRS278.2201]

PricingRules

Pricing

The terms for transactionsbetween a utility and itsaffiliates shall be inaccordance with thefollowing:(a) Services and products

provided to an affiliateby the utility pursuantto a tariff shall be atthe tariffed rate, withnontariffed items pricedat the utility’s fullydistributed cost but inno event less thanmarket, or in compliancewith the utility’sexisting United StatesDepartment ofAgriculture (USDA),Securities and ExchangeCommission (SEC), or

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SUBJECT REQUIREMENTRules(Cont’d)

Federal Energy Regula-tory Commission (FERC)approved cost allocationmethodology.[KRS278.2207 (1) (a)]

(b) Services and productsprovided to the utilityby an affiliate shall bepriced at theaffiliate’s fully-distributed cost but inno event greater thanmarket or in compliancewith the utility’sexisting USDA, SEC, orFERC approved costallocation methodology.[KRS278.2207 (1) (6)]

NOTE: A utility may file anapplication with thecommission requesting adeviation from therequirements of this sectionfor a particular transactionor class of transactions.The utility shall have theburden of demonstrating thatthe requested pricing isreasonable. The commissionmay grant the deviation if itdetermines the deviation isin the public interest.Nothing in this section shallbe construed to interferewith the commission’srequirement to ensure fair,just, and reasonable ratesfor utility services.[IRS278.2219 92)]

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AFFILIATE TRANSACTION Kentucky Public Service Commission and theCommission’s orders in Case REPORTINGREQUIREMENTS Nos. 97-309 and 99-149 containvery specific reporting requirements foraffiliate transactions.

Regulation 807KAR5:080 In addition to the CAM reporting requirementsestablished by KRS 278.2201 thru 278.2219 asnoted above, PSC Regulation 807 KAR 5:080requires the utility to inform the Commissionof new non-regulated activities begun byitself or by the utility’s affiliate within atimeframe to be established by the Commission[KRS278.230 (3)].

Also, the Commission may require the utilityto file annual reports of information relatedto affiliate transactions when necessary tomonitor compliance with the transactionguidelines contained in KRS278.2205 [807KAR5:080 Section 2]

Case 97-309 In Case 97-309 involving the approval ofaffiliate transactions between KPCO and AEPC(as outlined above), the Commission hasordered KPCO to file an annual report thatlists all transactions with AEPC thatdescribes the parties involved, the assetstransferred, the services provided and thetransaction prices. The report should alsospecify for each transaction whether theprice was based on cost or market and, ifmarket, how the market price was determined.

Case 99-149 The Commission’s order in Case No. 99-149,dated June 14, 1999, related to the proposedmerger of American Electric Power Company,Inc. (AEP) and Central and South WestCorporation established specific reportingrequirements for KPCO, its parent company(i.e., AEP) and related subsidiaries. While

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the Commission’s order in Case No. 99-149 hasbeen superseded by KRS 278.2201 thruKRS278.2219 and Ky PSC Regulation807KAR5:080, dated July 14, 2000, theperiodic reports required by the Commission’sJune 1999 order remain in effect. Thefollowing table provides details of thespecific reporting requirements:

SUBJECT REQUIREMENTPeriodicReports [CaseNo. 99-149,Page 10]

1. Annual financialstatements of AEP shouldbe furnished to theCommission, includingconsolidatingadjustments of AEP andits subsidiaries with abrief explanation ofeach adjustment and allperiodic reports filedwith the SEC.

2. All subsidiaries shouldprepare and haveavailable monthly andannual financialinformation required tocompile financialstatements and to complywith other reportingrequirements.

3. The financial statementsfor any non-consolidatedsubsidiaries of AEPshould be furnished.

Annual Reports[Case No. 99-149, Page 11¶1,2]

1. A general description ofthe nature of inter-company transactionsshall be provided withspecific identificationof major transactions,and a description of the

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SUBJECT REQUIREMENT

Annual Reports[Case No. 99-149, Page 11¶1,2] (Cont’d)

basis upon which costallocations and transferpricing have beenestablished. Thisreport should discussthe use of the cost ormarket standard for thesale or transfer ofassets, the allocationfactors used, and theprocedures used todetermine these factorsif they are differentfrom the procedures usedin prior years.

2. A report that identifiesprofessional personneltransferred from KPCO toAEP or any of its non-utility subsidiariesshall be provided to theCommission. This reportshould include adescription of theduties performed by theemployee while employedby KPCO and to beperformed subsequent totransfer.

3. AEP should file on anannual basis a reportdetailing KPCO’sproportionate share ofAEP’s total operatingrevenues, operating andmaintenance expenses, andnumber of employees.

SpecialReports [CaseNo. 99-149,Pages 11-12]

1. AEP should file anycontracts or otheragreements concerning thetransfer of utility

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SUBJECT REQUIREMENTassets or the pricing ofinter-companytransactions with theCommission at the timethe transfer occurs.

2. AEP should also file thefollowing specialreports:· An annual report of

the number ofemployees of AEP andeach subsidiary on thebasis of payrollassignment.

· An annual reportcontaining years ofservice at KPCO andthe salaries ofprofessional employeestransferred from KPCoto AEP or itssubsidiaries filed inconjunction with theannual transfer ofemployees report.

· An annual report ofcost allocationfactors in use,supplemented uponsignificant change.

· Summaries of any costallocation studieswhen conducted and thebasis for the methodsused to determine thecost allocationeffect.

· An annual report ofmethods used to updateor revise the cost

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SUBJECT REQUIREMENTallocation factors inuse, supplemented uponsignificant change.

Use ofExistingReports [CaseNo. 99-149,Page 12 ¶7]

Where the same informationsought in the above notedreports has been filed withthe SEC, FERC, or anotherstate regulatorycommission, AEP may providecopies of those filingsrather than prepareseparate reports.

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LOUISIANA RULES AND REQUIREMENTS

02-04-05

SUMMARY Louisiana’s requirements applicable to costallocations and affiliate transactions arecontained in the Affiliate TransactionConditions that appear in Appendix A to theLouisiana Public Service Commission’s (theCommission’s) Order No. U-23327, datedSeptember 16, 1999, in the matter of theproposed merger of American Electric PowerCompany, Inc. (AEP) and Central and SouthWest Corporation.

DOCUMENTATION REQUIRE- The Commission’s documentation requirementsMENTS applicable to affiliate transactions, as

contained in the Affiliate TransactionConditions, are captured in the followingtable:

SUBJECT REQUIREMENTAccess toBooks andRecords

AEP and Southwestern ElectricPower Company (SWEPCO, andthe Company) will provide theCommission access to theirbooks and records, and to anyrecords of their subsidiariesand affiliates thatreasonably relate toregulatory concerns and thataffect SWEPCO’s cost ofservice and/or revenuerequirement. [¶ 2]

ServiceCompanyCosts

For ratemaking and regulatoryreporting purposes, SWEPCOshall reflect the costsassigned or allocated fromaffiliate service companieson the same basis as ifSWEPCO had incurred the costsdirectly. This conditionshall not apply to bookaccounting for affiliatetransactions. [¶ 11]

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ALLOCATION OF COSTS The Commission’s requirements for theallocation of certain costs and revenues, ascontained in the Affiliate TransactionConditions, are presented in the followingtable:

SUBJECT REQUIREMENTNotificationof Changes inCostAllocationMethodologies

The Company shall submit inwriting to the Commissionany changes it proposes tothe System Agreement, theSystem Integration Agreementand any other affiliate costallocation agreements ormethodologies that affectthe allocation or assignmentof costs to SWEPCO. Thewritten submission to theCommission shall include adescription of the changes,the reasons for suchchanges, and an estimate ofthe impact, on an annualbasis, of such changes onSWEPCO’s regulated costs.To the extent that any suchchanges are filed with theSEC or FERC, the Companyagrees to utilize its bestefforts to notify theCommission at least 30 daysprior to those filings andat least 90 days prior tothe proposed effective dateof those changes or as earlyas reasonably practicable,to allow the Commission atimely opportunity torespond to such filings. Ifthe documents to be filedwith the SEC or FERC are not

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SUBJECT REQUIREMENTNotificationof Changes inCost Alloca-tion Method-ologies(Cont’d)

finalized 30 days prior tothe filing, the informationrequired above may beprovided by letter to theCommission with a copy ofthe SEC or FERC filing to beprovided as it is prepared.The filing by the Company ofthis information with theCommission shall notconstitute acceptance of theproposed changes, theallocation or assignmentmethodologies, or thequantifications forratemaking purposes. [¶ 12]

RevenueAllocationApplicable toProduct orServiceDevelopment

If an unregulated businessmarkets a product or servicethat was developed by SWEPCOor paid for by SWEPCOdirectly or through anaffiliate, and the productor service is actually usedby SWEPCO, all profits onthe sale of such product orservice (based on Louisianaretail jurisdiction) shallbe split evenly betweenSWEPCO, which wasresponsible for or sharedthe cost or developing theproduct, and the unregulatedbusiness responsible formarketing the product orservice to third parties,after deducting allincremental costs associatedwith making such product orservice available for sale,including the direct cost ofmarketing such product or

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SUBJECT REQUIREMENTRevenueAllocationApplicable toProduct orServiceDevelopment(Cont’d)

service. However, in theevent that such product orservice developed by SWEPCOto be used in its utilitybusiness is not actually soused, and subsequently ismarketed by the unregulatedbusiness to third parties,SWEPCO shall be entitled torecover all of its costs todevelop such product orservice before any such netprofits derived from itsmarketing shall be sodivided. If SWEPCO jointlydevelops such product orservice and shares thedevelopment with otherentities, then the profitsto be so divided shall beSWEPCO’s pro rata share ofsuch net profits based onSWEPCO’s contribution to thedevelopment costs. [¶ 14]

TRANSFER PRICING The Commission’s transfer pricingrequirements for affiliate transactions, ascontained in the Affiliate TransactionConditions, are presented in the followingtable:

SUBJECT REQUIREMENTAssetTransfers

Purchases. Assets with a netbook value in excess of $1million per transaction,purchased by or transferredto the regulated electricutility (SWEPCO) from anunregulated affiliate eitherdirectly or indirectly(through another affiliate),

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SUBJECT REQUIREMENTAssetTransfers(Cont’d)

Asset

must be valued for purposesof the Louisiana retail ratebase (but not necessarily forbook accounting purposes) atthe lesser of the cost to theoriginating entity and theaffiliated group (CSW or AEP)or the fair market value,unless otherwise authorizedby applicable Commissionrules, orders, or otherCommission requirements.[¶ 4.a.]

Sales. Assets with a net bookvalue in excess of $1 millionper transaction, sold by ortransferred from theregulated electric utility(SWEPCO) to an unregulatedaffiliate either directly orindirectly (through anotheraffiliate), with theexception of accountsreceivable sold by SWEPCO toAEP Credit Inc., must bevalued for purposes of theLouisiana retail rate base(but not necessarily for bookaccounting purposes) at thegreater of the cost to SWEPCOor the fair market value,unless otherwise authorizedby applicable Commissionrules, Orders, or otherCommission requirements.[¶ 4.b.]

Reporting. The Company shallnotify the Commission inwriting at least 90 days in

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SUBJECT REQUIREMENTTransfers(Cont’d)

AssetTransfers

advance of a proposedpurchase, sale or transfer ofassets with a net book valuein excess of $1 million ifsuch proposed purchase, saleor transfer is expected atleast 90 days before theanticipated effective date ofthe transaction. With thenotice, the Company shallprovide such information asmay be necessary to enablethe Commission Staff toreview the proposedtransaction, including,without limitation, theidentity of the asset to betransferred, the proposedtransferor and transferee,the value at which the assetwill be transferred, the netbook value of the asset, andthe anticipated effect onLouisiana retail customers.When such a transactionrequires approval of afederal agency, under nocircumstances shall suchnotification be less than 60days in advance or suchlonger advance period as theapplicable federal agencyfrom time to time prescribe.If not provided with theinitial notice, the Companywill provide the Commissionwith a copy of its federalfiling at the same time it issubmitted to the federalagency. [¶ 6]

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SUBJECT REQUIREMENT(Cont’d) Burden of proof. Consistent

with Commission and legalprecedents and CommissionGeneral Orders, the Companyshall have the burden ofproof in any subsequentratemaking proceeding todemonstrate that suchpurchase, sale or transfer ofassets satisfies therequirements of applicableCommission and legalprecedent and CommissionGeneral Orders, and will notharm the ratepayers. [¶ 7]

Treatment of gains or losses.The Commission reserves theright, in accordance withCommission and legalprecedents and CommissionGeneral orders, to determinethe ratemaking treatment ofany gains or losses from thesale or transfer of assets toaffiliates. [¶ 8]

Goods andServices

Purchases. With the exceptionof transactions betweenSWEPCO and AEP Credit Inc.and AEPSC, for goods andservices, including leasecosts, purchased by SWEPCOfrom unregulated affiliateseither directly or indirectly(through another affiliate),SWEPCO agrees that it willreflect the lower of cost orfair market value inoperating expenses forratemaking purposes, unlessotherwise authorized by

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SUBJECT REQUIREMENTGoods andServices(Cont’d)

applicable Commission rules,Orders, or other Commissionrequirements. [¶ 10]Sales. For goods andservices, including leasecosts, sold by SWEPCO tounregulated affiliates eitherdirectly or indirectly(through another affiliate),SWEPCO agrees that it willreflect the higher of cost orfair value in operatingincome (or as an offset tooperating expenses) forratemaking purposes, unlessotherwise authorized byapplicable Commission rules,Orders, or other Commissionrequirements (e.g.,Commission-approved tariffedrates). [¶ 9]

REPORTING REQUIREMENTS The Commission has not established periodicreporting requirements relative to affiliatetransactions other than those noted above inconnection with the notification of changesin cost allocation methodologies and assettransfers.

AUDIT REQUIREMENTS The Commission’s audit requirementsapplicable to affiliate transactions, ascontained in the Affiliate TransactionConditions, are captured in the followingtable:

SUJECT REQUIREMENTAudits ofAffiliateTransactions

AEP will cooperate withaudits ordered by theCommission of affiliatetransactions between SWEPCOand other AEP affiliates,

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SUJECT REQUIREMENTAudits ofAffiliateTransactions(Cont’d)

including timely access tothe books and records and topersons knowledgeableregarding affiliatetransactions, and willauthorize and utilize itsbest efforts to obtaincooperation from its externalAuditor to make available theaudit workpapers coveringareas that affect the costsand pricing of affiliatetransactions. [¶ 3]

OTHER REQUIREMENTS Other requirements of the Commissionapplicable to affiliate transactions, ascontained in the Affiliate TransactionConditions, are presented in the followingtable:

SUBJECT REQUIREMENTCompetitiveBidding

SWEPCO or AEPSC on behalf ofSWEPCO may not make any non-emergency procurement inexcess of $1 million pertransaction from anunregulated affiliate otherthan from AEPSC exceptthrough a competitive biddingprocess or as otherwiseauthorized by the Commission.Transactions involving theCompany and CSW Credit, Inc.(or its successor) for thefinancing of accountsreceivables are exempt fromthis condition. Records ofall such affiliate trans-actions must be maintaineduntil the Company’s next

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SUBJECT REQUIREMENTCompetitiveBiddingCont’d)

comprehensive retail ratereview. In addition, at thetime of the next comprehen-sive rate review, all suchtransactions that were notcompetitively bid shall beseparately identified for theCommission by the Company.This identification shallinclude all transactionsbetween the Company and AEPSCin which AEPSC acquired thegoods or services fromanother unregulatedaffiliate. [¶ 13]

Mandating ofRetail Accessby theCommission

If retail access for SWEPCO-La. is mandated by theCommission, or through actionby the Federal EnergyRegulatory Commission orfederal legislation, thenSWEPCO-La. shall have theright to petition theCommission for modificationto the terms of this mergersettlement, including theaffiliate transactionconditions, that are madenecessary by the mandating ofretail access and its likelyimpact on the retail rates atSWEPCO-La. Any such petitionmust establish the necessityof the proposed modificationsand provide appropriateprotections to ensure thatthe benefits of this mergerare preserved for SWEPCO-La.regulated customers,including merger savings andthe hold harmless provisions

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DateApril 8, 2008

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SUBJECT REQUIREMENTMandating ofRetail Accessby theCommission(Cont’d)

set forth herein. TheCommission will act upon thepetition in accordance withits normal rules andprocedures. This paragraphis not intended to limitSWEPCO’s right to petitionthe Commission in the eventthat electric utilityunbundling or retail accessis ordered by a statecommission regulatingSWEPCO’s retail rates,provided that SWEPCO mustcomply with the requirementsset forth above in any suchpetition. [¶ 17]

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MICHIGAN RULES AND REQUIREMENTS

02-04-06-__-__

SUMMARY Michigan’s rules and requirements applicableto cost allocations and affiliatetransactions are included in various ordersof the Michigan Public Service Commission(the MPSC, or the Commission).

DOCUMENTATION REQUIRE- The MPSC’s documentation requirements forMENTS affiliate transactions and cost allocations

can be found in the Settlement Agreementapproved by the Commission in its Opinion andOrder in Case No. U-12204 in the matter ofthe proposed merger of American ElectricPower Company, Inc. and Central and SouthWest Corporation, and its Code of Conduct forelectric utilities and alternative electricsuppliers (Opinion and Order, dated December4, 2000, in Case No.U-12134) with Redlinechanges to October 29, 2001 Final Version.The term “alternative electric suppliers” isdefined in MCL 460.10.g, MSA 22.13(10g).

The documentation requirements found in theSettlement Agreement document are captured inthe following table:


Each AEP Operating Companyshall maintain, inaccordance with generallyaccepted accountingprinciples, books, recordsand accounts that areseparate from the books,records and accounts of itsaffiliates, consistent withPart 101 – Uniform System ofAccounts prescribed forPublic Utilities andLicensees subject to theprovisions of the FederalPower Act, [Section 8.B.]

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SUBJECT REQUIREMENTCostAllocationDocumentation

An AEP operating companywhich provides bothregulated and non-regulatedservices or products, or anaffiliate which providesservices or products to anAEP operating company, shallmaintain documentation inthe form of writtenagreements, an organizationchart of AEP (depicting allaffiliates and AEP operatingcompanies), accountingbulletins, procedure andwork order manuals, or otherrelated documents, whichdescribe how costs areallocated between regulatedand non-regulated servicesor products. [Section 8.P.]

EmployeeMovements

AEP shall document allemployee movement betweenand among all affiliates.Such information shall bemade available to theCommission upon request.[Section 8.G.]

ItemizedBillingStatements

Any untariffed, non-utilityservice provided by an AEPoperating company oraffiliate service company toany affiliate shall beitemized in a billingstatement pursuant towritten contract or writtenarrangement. The AEPoperating company and anyaffiliated service companyshall maintain and keepavailable for inspection bythe Commission copies of

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02-04-06-__-__

SUBJECT REQUIREMENTItemizedBillingStatements(cont’d)

each billing statement,contract and arrangementbetween the AEP operatingcompany or affiliatedservice company and itsaffiliates that relate tothe provision of suchuntariffed non-utilityservices. [Section 8.E.]

Goods and services providedby a non-utility affiliateto an AEP operating companyshall be by itemized billingstatement pursuant to awritten contract or writtenarrangement. The operatingcompany and non-utilityaffiliate shall maintain andkeep available forinspection by the Commissioncopies of each billingstatement, contract andarrangement between theoperating company and itsnon-utility affiliates thatrelate to the provision ofsuch goods and services inaccordance with applicableCommission retentionrequirements. [Section 8.F.]

TRANSFER PRICING The MPSC’s transfer pricing requirements canbe found in the Settlement Agreementdocument, it’s Code of Conduct for electricutilities and alternative electric suppliers,and the Company’s Code of Conduct complianceplan on file with the Commission.

SETTLEMENT AGREEMENT The transfer pricing and related requirementscontained in the Settlement Agreementdocument are captured in the following table:

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02-04-06-__-__

SUBJECT REQUIREMENTGuidingPrinciples

The financial policies andguidelines for transactionsbetween the regulatedutility and its affiliatesshall reflect the followingprinciples:

1. An AEP operatingcompany’s retailcustomers shall notsubsidize theactivities of theoperating company’snon-utility affiliatesor its utilityaffiliates. [Section8.A.1.]

2. An AEP operatingcompany’s costs forjurisdictional ratepurposes shall reflectonly those costsattributable to itsjurisdictionalcustomers. [Section8.A.2.]

3. An objective of theseprinciples shall be toavoid costs found tobe just and reasonablefor ratemakingpurposes by theCommission being leftunallocated orstranded betweenvarious regulatoryjurisdictions,resulting in thefailure of theopportunity for timelyrecovery of such costs

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02-04-06-__-__

SUBJECT REQUIREMENTGuidingPrinciples(Cont’d)

by the operatingcompany and/or itsutility affiliates;provided, however,that no more than onehundred percent ofsuch costs shall beallocated on anaggregate basis to thevarious regulatoryjurisdictions.[8.A.3.]

4. An AEP operatingcompany shall maintainand utilize accountingsystems and recordsthat identify andappropriately allocatecosts between theoperating company andits affiliates,consistent with thesecross-subsidizationprinciples and suchfinancial policies andguidelines. [Section8.A.4.]

Code of Conduct The MPSC’s Code of Conduct rules as set forthin MICH. ADMIN. CODE R 460.10102 et. seq. arecaptured in the following table:

SUBJECT REQUIREMENTR 460.10102Definitions.

As used in these rules:(a) "Affiliate" means a person or entity thatdirectly or indirectly through 1 or moreintermediates, controls, is controlled by, oris under common control with anotherspecified entity. As used in these rules,"control" means, whether through anownership, beneficial, contractual, orequitable interest, the possession, directly orindirectly, of the power to direct or to cause

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02-04-06-__-__

SUBJECT REQUIREMENTR 460.10102Definitions.(Cont’d)

the direction of the management or policiesof a person or entity or the ownership of atleast 7% of an entity either directly orindirectly.(b) "Alternative electric supplier" means aperson selling electric generation service toretail customers in this state as licensed bythe commission under section 10a of 2016PA 341, MCL 460.10a. Alternative electricsupplier does not include a person whophysically delivers electricity directly to retailcustomers in this state. An alternativeelectric supplier is not a public utility, butmay be an affiliate of a public utility.(c) "Commission" means the public servicecommission.(d) "Other entity within the corporatestructure" means a division, department,subsidiary, or similar entity within thecorporate structure of a utility.(e) "Third-party" means an entity separatefrom a utility, and separate from a utilityaffiliate, that offers value-added programsand services to a utility's customers througha contract.(f) "Utility" means an electric, steam, ornatural gas utility regulated by the publicservice commission, and an electric ornatural gas cooperative that is subject toregulation pursuant to the ElectricCooperative Member-Regulation Act, 2008PA 167, MCL 460.31to 460.39.(g) "Value-added programs and services"means programs and services that are utilityor energy related, including, but not limitedto, home comfort and protection, applianceservice, building energy performance,alternative energy options, or engineeringand construction services. Value-addedprograms and services do not include energyoptimization or energy waste reductionprograms paid for by utility customers aspart of the regulated rates.

MICH. ADMIN.CODE R460.10103Preventivemeasures.

Rule 3.(1) A utility that offers both regulated andunregulated services shall preventanticompetitive behavior, cross-subsidization, and preferential treatmentprohibited by law and these rules.

https://advance.lexis.com/document/documentslider/?pdmfid=1000516&crid=624c4160-53cd-4224-b10c-3ad0f2be65e8&pdistocdocslideraccess=true&config=&pddocfullpath=%2Fshared%2Fdocument%2Fadministrative-codes%2Furn%3AcontentItem%3A5VJ6-9480-00BN-V0HC-00000-00&pdcomponentid=261143&pdtocnodeidentifier=AALAATAAFAABAAC&ecomp=73h9k&prid=68c005c5-615d-46c0-8bbd-8eed9c1edfec

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02-04-06-__-__

SUBJECT REQUIREMENTMICH. ADMIN.CODE R460.10103Preventivemeasures.(Cont’d)

(2) A utility shall not offer unregulatedvalue-added programs and services exceptthrough an affiliate or other entity within thecorporate structure, or through a third-partycontract.(3) A utility's regulated services shall notsubsidize the business of its affiliates, otherentities within the corporate structure, orthird-party contractors offering unregulatedvalue-added programs or services.

MICH. ADMIN.CODE R460.10104Records

Rule 4.(1) A utility shall maintain its books andrecords separately from those of its affiliatesor other entities within the corporatestructure offering unregulated value-addedprograms and services.(2) The commission may review recordsrelating to any transaction between a utilityand an affiliate, or relating to the offering ofunregulated value-added programs andservices. At any time, the commission mayinitiate an investigation into transactionsbetween the utility and its affiliates, or intoits offering of value-added programs andservices.(3) A utility, its affiliates, and other entitieswithin the corporate structure shall keeptheir books in a manner consistent withgenerally accepted accounting principlesand, where applicable, with the UniformSystem of Accounts.

MICH. ADMIN.CODE R460.10105Sharing offacilities andemployees.

Rule 5.(1) A utility, its affiliates, and other entitieswithin the corporate structure may sharefacilities, equipment, operating employees,and computer hardware and software withdocumented protection to preventdiscriminatory access to competitivelysensitive information, provided that suchsharing complies with section 10ee of 2016PA 341, MCL 460.10ee, and measures areadopted to prevent cross-subsidization andpreferential treatment that is otherwiseprohibited.(2) A utility may transfer employeesbetween the utility and an affiliate

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SUBJECT REQUIREMENTMICH. ADMIN.CODE R460.10105Sharing offacilities andemployees(Cont’d)

alternative electric supplier providing theutility documents those transfers and filessemi-annually with the commission a reportof each occasion on which an employee ofthe utility became an employee of anaffiliate alternative electric supplier and/oran employee of an affiliate alternativeelectric supplier became an employee of theutility.(3) None of these rules shall be interpretedto require a utility with fewer than 60employees to maintain separate facilities,operations, or personnel used to deliverregulated services and unregulatedprograms and services. Utilities using athird-party contractor for value-addedprograms and services remain subject to theprovisions of MCL 460.10ee(12).

MICH. ADMIN.CODE R460.10106Marketing

Rule 6.(1) A utility, its affiliates, and other entitieswithin the corporate structure offeringunregulated value-added programs orservices, shall not engage in jointadvertising, marketing, or other promotionalactivities related to the provision of bothregulated and unregulated services, nor shallthey jointly sell regulated services andunregulated value-added programs andservices.(2) A utility or affiliate alternative electricsupplier shall not provide or offer to provideany customer with preferential treatment orservice for doing business with the utility, itsaffiliates, or other entities within thecorporate structure offering unregulatedvalue-added programs or services, nor shallthe utility or affiliate alternative electricsupplier provide any customer with inferiortreatment or service for doing business withan unaffiliated supplier of a similar service.(3) A utility shall not condition or otherwisetie the provision of a utility service or theavailability of discounts, rates, othercharges, fees, rebates, or waivers of termsand conditions to the taking of any goods orservices from the utility, its affiliates, orother entities within the corporate structureoffering unregulated value-added programsor services.

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SUBJECT REQUIREMENTMICH. ADMIN.CODE R460.10107Utility andaffiliate oralternativeelectricsupplierrelationship

Rule 7.(1) A utility shall not interfere in thebusiness operations of any alternativeelectric supplier. This provision includes, butis not limited to, all of the following:(a) A utility shall not give the appearancethat it speaks on behalf of any alternativeelectric supplier or affiliate.(b) A utility shall not interfere in thecontractual relationship between thealternative electric supplier and itscustomers unless the utility's action is clearlypermitted in the contract between thecustomer and the alternative electricsupplier or in tariffs approved by thecommission.(2) A utility shall not finance or co-signloans, provide loan guarantees, providecollateral, or be encumbered or allow itsassets to be encumbered by affiliates orother entities within the corporate structure.The utility and its assets shall not be thesubject of recourse in the event of default byan affiliate or other entity within thecorporate structure.

MICH. ADMIN.CODE R460.10108Discrimination

Rule 8.(1) A utility shall not discriminate in favor ofor against any person, including its affiliates.(2) A utility shall not provide any affiliate orother entity within the corporate structureoffering unregulated value-added programsor services, or any customer of an affiliate orother entity within the corporate structureoffering unregulated value-added programsor services, preferential treatment or anyother advantages that are not offered underthe same terms and conditions andcontemporaneously to other suppliersoffering programs or services within thesame service territory or to customers ofthose suppliers.(3) If a utility provides to any affiliatealternative electric supplier or customers ofan affiliate alternative electric supplier adiscount, rebate, fee waiver, or waiver of itsregulated tariffed terms and conditions forservices or products, it shallcontemporaneously offer the same discount,

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02-04-06-__-__

SUBJECT REQUIREMENTMICH. ADMIN.CODE R460.10108Discrimination(Cont’d)

rebate, fee waiver, or waiver to allalternative electric suppliers operating withinthe utility's service territory or all alternativeelectric suppliers' customers.(4) If a utility provides services or productsto any affiliate or other entity within thecorporate structure, and the cost of theservice or product is not governed by section10ee(8) of 2016 PA 341, MCL 460.10ee(8),compensation is based upon the higher offully allocated embedded cost or fair marketprice. If an affiliate or other entity within thecorporate structure provides services orproducts to a utility, and the cost of theservice or product is not governed by section10ee(8) of 2016 PA 341, MCL 460.10ee(8),compensation is at the lower of market priceor 10% over fully allocated embedded cost.Asset transfers from a utility to an affiliate orother entity within the corporate structurefor which the cost is not governed by section10ee(8) of 2016 PA 341, MCL 460.10ee(8),is at the higher of cost or fair market value.Asset transfers from an affiliate or otherentity within the corporate structure to autility for which the cost is not governed bysection 10ee(8) of 2016 PA 341, MCL460.10ee(8) is at the lower of cost or fairmarket value.

MICH. ADMIN.CODE R460.10109Disclosure ofinformation

Rule 9.(1) Notwithstanding any provision of thisrule, utilities shall comply at all times withapplicable data privacy tariffs.(2) Prior written approval of the customer isnot required for the disclosure of a customerlist to a program or service provider of anunregulated value-added program or servicein compliance with section 10ee(10)(a) of2016 PA 341, MCL 460.10ee(10)(a), or tootherwise comply with these rules. Acustomer list may include only the name andaddress of a customer.(3) Information obtained by a utility in thecourse of conducting its regulated businessshall not be shared directly or indirectly withits affiliates or other entities within thecorporate structure offering unregulatedvalue-added programs or services unless

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SUBJECT REQUIREMENTthat same information is provided uponrequest to competitors operating in theservice territory on the same terms andconditions and contemporaneously.(4) Customer specific consumption or billingdata shall not be provided to any affiliate,other entity within the corporate structureoffering unregulated value-added programsor services, or alternative electric supplierwithout prior written approval of thecustomer.(5) If a utility provides non-customerspecific, or aggregated, customerinformation to its affiliate or other entitywithin the corporate structure offeringunregulated value-added programs orservices, it must, upon request, offer thesame information on the same terms andconditions, in the same form and manner,and contemporaneously, to all competitors ofthat affiliate or other entity within thecorporate structure. The provision of suchdata must comply with all applicable dataprivacy tariffs.(6) When disclosure required in subrule (5)of this rule is otherwise allowed, a utilityshall not provide its affiliates or otherentities within the corporate structureoffering unregulated value-added programsor services with information about thedistribution system, including operation andexpansion, without providing, upon request,the same information under the same termsand conditions, in the same form andmanner, and contemporaneously, to alllicensed alternative electric suppliers andcompetitors of the affiliate or other entitywithin the corporate structure. The utilityshall keep a record of requests for suchinformation, and shall make that recordavailable to the commission upon request.(7) A utility shall not provide any informationreceived from or as a result of doingbusiness with a competitor to the utility'saffiliate or other entity within the corporatestructure offering unregulated value-addedprograms or services without the writtenapproval of the competitor.

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SUBJECT REQUIREMENTMICH. ADMIN.CODE R460.10110Notification

Rule 10.(1) Utilities that intend to offer a value-added program or service shall notify thecommission not less than 30 days beforeoffering the new program or service. Thewritten notification shall, at a minimum,provide all of the following:(a) A detailed description of the new value-added program or service and what it willoffer.(b) A list of the personnel responsible formanagement of the value-added program orservice and their location within the utility,both physically and within the corporatestructure.(c) A detailed description of how costs,including but not limited to, billing, postage,and call center costs, will be allocated to thevalue-added program or service to ensurethat there is no cross-subsidization betweenregulated and unregulated programs orservices.(d) A copy of the business plan for thevalue-added program or service.(e) Pro forma financial statements thatoutline the expected financial performancefor each value-added program or service forthe next 12 months.(2) Utilities shall request a docket for thefiling of the notification, and shall thereaftermake all annual report filings in that docket.(3) A utility that intends to sell or transfer anasset with a market value of $ 1,000,000 ormore to any affiliate or other entity withinthe corporate structure shall notify thecommission of the impending sale or transferno less than 30 days before the sale ortransfer. An affiliate or other entity withinthe corporate structure of a utility thatintends to sell or transfer an asset with amarket value of $ 1,000,000 or more to autility shall notify the commission of theimpending sale or transfer no less than 30days before the sale or transfer. Uponrequest, the utility, affiliate, or other entitywithin the corporate structure shall makeavailable to the commission information thatdemonstrates how the sale or transfer pricewas determined. Notification shall be in the

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02-04-06-__-__

SUBJECT REQUIREMENTMICH. ADMIN.CODE R460.10110Notification(Cont’d)

form of a letter to the director of theregulated energy division of the commission.

MICH. ADMIN.CODE R460.10111Oversight

Rule 11.(1) A utility, its affiliates, and other entitieswithin the corporate structure offeringunregulated value-added programs orservices shall maintain documentationneeded to investigate compliance withsection 10ee of 2016 PA 341, MCL460.10ee, and these rules. Alldocumentation shall be kept at a designatedcompany office in this state, unless theCommission by order has authorized adifferent location. The utility, its affiliates,and other entities within the corporatestructure offering unregulated value-addedprograms or services shall make thisinformation available for review uponrequest by the commission or its staff.(2) The utility, its affiliates, and otherentities within the corporate structureoffering unregulated value-added programsor services shall use a documented disputeresolution process separate from anyprocess that might be available from thecommission. This dispute resolution processshall address complaints arising fromapplication of these rules. The utility, itsaffiliates, and other entities within thecorporate structure offering unregulatedvalue-added programs or services shall keepa log of all complaints, including the name ofthe person or entity filing the complaint, thedate the complaint was filed, a writtenstatement of the nature of the complaint,and the results of the resolution process.(3) A utility, its affiliates, and other entitieswithin the corporate structure offeringunregulated value-added programs orservices may request a waiver from 1 ormore provisions of these rules by filing anapplication with the commission. Therequesting party carries the burden ofdemonstrating that such a waiver will not

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SUBJECT REQUIREMENTMICH. ADMIN.CODE R460.10111Oversight(Cont’d)

impair the development or functioning of thecompetitive market. Waivers shall begranted for entities that qualify for loans todeploy broadband services in rural areasunder the Rural Electrification Act of 1936,as amended, 7 U.S.C. § 901 et seq.

MICH. ADMIN.CODE R460.10112Reporting

Rule 12.(1) Utilities shall file the code of conductannual report information required undersection 10ee(6)(c) and (15), 2016 PA341, MCL 460.10ee, no later than April 30 ofeach year in the docket in which the utilityfiled its notification for a new program orservice, or in a new docket for an existingprogram or service. Code of conduct annualreports shall include all of the following:(a) Designation of a corporate officer of theutility who will oversee compliance withthese rules and be available to serve as thecommission's primary contact regardingcompliance.(b) An organizational chart of the parent orholding company showing all regulatedentities and affiliates and a description of allprograms and services provided between theregulated entity and its affiliates.(c) An overview of the report year, includinga detailed accounting of how costs wereapportioned between the utility and thevalue-added program or service,expectations for the following year, and any5-year projections available for each value-added program and service.(d) A table illustrating the customer count,revenue, and expense of each value-addedprogram and service.(e) A balance sheet, where available, andincome statement for each value-addedprogram and service offered by an affiliateor other entity within the corporatestructure, including revenues, less direct andindirect expenses broken out separately.Direct and indirect revenues and expensesshall be separated by category and thenaggregated at the direct and indirect levels,and the report shall include gross income,

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02-04-06-__-__

SUBJECT REQUIREMENTMICH. ADMIN.CODE R460.10112Reporting(Cont’d)

amounts flowed back to ratepayers toreduce rates, and net income. Each categoryof indirect cost should be accompanied byformulas/calculations/allocations showinghow they have been derived.(f) General ledger and trial balance for eachvalue-added program and service shall beprovided to the commission staff separatelyon a USB thumb drive or other appropriatetechnological device with formulas intact.(g) The number and type of complaintsreceived in the prior calendar year regardingcode of conduct issues from customers,alternative electric suppliers, or any otherperson or entity, and a summary of theresolution of any complaint that occurredduring the calendar year.(h) The number of times during the priorcalendar year that customer information wasprovided to an affiliate or competingprovider of an unregulated value-addedprogram or service, the identity of theaffiliate or competing provider, and adescription of the information shared.(i) A description of the nature of eachtransaction with an affiliate or other entitywithin the corporate structure and of thebasis for the cost allocation and pricingestablished in each transaction.(j) Reports of internal audits conducted bythe utility regarding transactions betweenthe utility and its affiliates, or transactionsbetween the utility and other entities withinthe corporate structure offering value-addedprograms or services.(2) The annual report shall be signed by thedesignated corporate officer or a personresponsible for each value-added programand service attesting to the accuracy of theinformation in the annual report andcertifying that there is no cross-subsidizationbetween regulated and non-regulated utilityprograms and services.(3) Copies of federal income tax returns forutilities, affiliates, and, where applicable,other entities within the corporate structurewho offer a value-added program or service,shall be available to the commission forinspection and review.

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02-04-06-__-__

AUDIT REQUIREMENTS The independent audit requirement regardingthe merger has expired. I&M/AEP was requiredto conduct biennial audits for 8 years afterthe merger. The final audit was submitted tothe Michigan Public Service Commission onDecember 29, 2008.

OTHER REQUIREMENTS The MPSC’s Code of Conduct (MICH. ADMIN. CODER 460.10103) provides a utility’s regulatedservices shall not subsidize the business ofits affiliates, other entities within thecorporate structure, or third-partycontractors offering unregulated value-addedprograms or services. AEP’s cost allocationpolicies and procedures are consistent withMichigan’s requirements relative to cross-subsidization.

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OHIO RULES AND REQUIREMENTS

02-04-07

SUMMARY Ohio’s requirements applicable to costallocations and affiliate transactions are,for the most part, captured in the corporateseparation rules adopted by the PublicUtilities Commission of Ohio (the PUCO, orthe Commission) in Ohio Admin. Code Chapter4901:1-37, and in the regulations and ordersof the PUCO.

CAM REQUIREMENTS The following table details the Commission’sCost Allocation Manual (CAM) requirements:

SUBJECT REQUIREMENTSummary Each electric utility’s

affiliate, which providesproducts and/or services tothe electric utility, and/orreceives products and/orservices from the electricutility, shall maintaininformation in the CAM,documenting how costs areallocated between theaffiliates and its regulatedand non-regulated operations.[Source: 4901:1-37-08(A)]

Maintenance The CAM will be maintained bythe electric utility. [Source:4901:1-37-08(B)]

Assurances The CAM is intended to ensurethe commission that no cross-subsidization is occurringbetween the electric utilityand its affiliates. [Source:4901:1-37-08(C)]

Contents

Contents(Cont’d)

The CAM will include:(1) An organization chart of

the holding company,depicting all affiliates,as well as a descriptionof activities in whichthe affiliates are

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02-04-07

SUBJECT REQUIREMENTinvolved.

(2) A description of allassets, services, andproducts provided to andfrom the electric utilityand its affiliates.

(3) All documentationincluding writtenagreements, accountingbulletins, procedures,work order manuals, orrelated documents, whichgovern how costs areallocated betweenaffiliates.

(4) A copy of the jobdescription of eachshared employee.

(5) A list of names and jobsummaries for sharedconsultants and sharedindependent contractors.

(6) A copy of all transferredemployees’ (from theelectric utility to anaffiliate or vice versa)previous and new jobdescription.

(7) A log detailing eachinstance in which theelectric utilityexercised discretion inthe application of itstariff provisions.

(8) A log of all complaintsbrought to the utilityregarding this chapter.

(9) A copy of the minutes ofeach board of directorsmeeting, where it shall

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SUBJECT REQUIREMENTbe maintained for aminimum of three years.

Method forChargingCosts

The method for charging costsand transferring assets shallbe based on fully allocatedcosts. [Source: 4901:1-37-08(E)]

Audit Trail The costs shall be traceableto the books of the applicableentity. [Source: 4901:1-37-08(F)]

RecordRetentionRequirements

The electric utility andaffiliates shall maintain allunderlying affiliatetransaction information for aminimum of three years.[Source: 4901:1-37-08 (G)]

Summary ofChanges

Following approval of acorporate separation plan, anelectric utility shall providethe director of the utilitiesdepartment (or their designee)with a summary of any changesin the CAM at least everytwelve months. [Source:4901:1-37-08 (H)]

CompanyContact

The compliance officerdesignated by the electricutility will act as thecontact for the staff whenstaff seeks data regardingaffiliate transactions,personnel transfers, and thesharing of employees.[Source: 4901: 1-37-08 (I)]

CommissionInspection

The staff may perform an auditof the CAM in order to ensurecompliance with thisrule.[Source: 4901:1-37-08(J)]

TRANSFER PRICING The Commission’s corporate separation rule,as expressed in the CAM requirements

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02-04-07

themselves (see above), provides that “themethod for charging costs and transferringassets shall be based on fully allocatedcosts.” [Source: 4901:1-37-08 (E)]

REBUTTABLE PRESUMPTION Transactions made in accordance with rules,regulations, or service agreements, approvedby the Federal Energy Regulatory Commission,and the Securities and Exchange Commission,and the Commission which rules the electricutility shall maintain in its CAM, and filewith the Commission shall provide arebuttable resumption of compliance with thecosting principles contained in Ohio’scorporate separation rules.[Source: 4901:1-37-04 (A) (6)]

REPORTING REQUIREMENTS The Commission’s corporate separation rule,as expressed in the CAM requirementsthemselves (see above), provides that “anelectric utility shall provide the directorof the utilities department (or theirdesignee) with a summary of any changes inthe CAM at least every twelve months.”

AUDITS The staff of the PUCO will perform audits totest compliance with the CAM requirements andother provisions of the commission’scorporate separation rules.

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OKLAHOMA RULES AND REGULATIONS

02-04-08

SUMMARY Oklahoma’s requirements applicable to affil-iate transactions are focused on the OklahomaCorporation Commission’s (the Commission’s orthe OCC’s) ability to access the books andrecords of Public Service Corporation ofOklahoma (PSO) and its AEP affiliates asstated in the Stipulation approved by the OCCin Cause No. PUD 980000444, dated April 16,1999. Other requirements are contained inorders issued by the OCC.

ACCESS TO BOOKS AND Section 5 of the Stipulation in Cause No.RECORDS 980000444 concerning the proposed merger of

American Electric Power Company, Inc. andCentral and South West Corporation addressesthe issue of access to books and records ascaptured in the following table:

SUBJECT REQUIREMENTAccess toBooks andRecords ofAEP and ItsAffiliates

Subject to regulatoryauthority, the OCC andAttorney General will eitherhave access in Oklahoma tocopies of books and recordsof AEP and its affiliates andsubsidiaries (including theirparticipation in jointventures) with respect tomatters and activities thatrelate to Oklahoma retailrates or AEP will payreasonable and prudentlyincurred travel expenses toconduct on-site review of thebooks and records.

Access toBooks andRecords ofPSO

The OCC and Attorney Generalwill have access to the booksand records of PSO to thedegree required to fullyaudit, examine, or otherwiseinvestigate transactions be-tween PSO and AEP affiliates.

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STANDARDS FOR TRANS- The Oklahoma’s rules and requirementsACTIONS BETWEEN applicable to Affiliate Transactions areUTILITIES AND contained in the Oklahoma CorporationAFFILIATE(S) Commission’s (OCC) Electric Utility Rules

adopted May 2, 2005, and effective July 1,2005.

The applicable rules and requirements arecaptured in the following table:

SUBJECT REQUIREMENTSTransactionswithAffiliates

(1) Electric utilities mustapply any tariff provision inthe same manner to the same orsimilarly situated persons ifthere is discretion in theapplication of the provision.(2) Electric utilities muststrictly enforce a tariffprovision for which there is nodiscretion in the applicationof the provision.(3) Except as necessary forphysical operational reasons,electric utilities may not,through a tariff provision orotherwise, give theiraffiliates or knowingly givecustomers of their affiliatespreference over other utilitycustomers in matters relatingto any service offeredincluding, but not limited to:generation, transmission,distribution and ancillaryservices, scheduling,balancing, or curtailmentpolicy.(4) Unless such disclosure ismade public simultaneously oras near to the event aspossible, electric utilitiesshall not disclose to their

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SUBJECT REQUIREMENTSTransactionswithAffiliates(Cont’d)

affiliates any informationwhich they receive from, a non-affiliated customer, apotential customer, any agentof such customer, or potentialcustomer, or other entityseeking to supply electricityto a customer or potentialcustomer.(5) An electric utility’soperating employees and theoperating employees of itsaffiliate must functionindependently of each other andshall be employed by separatecorporate entities.(6) Electric utilities andtheir affiliates shall keepseparate books and records.(7) Electric utilities shallestablish a complaintprocedure. In the event of theelectric utility and thecomplainant are unable toresolve a complaint, thecomplainant may address thecomplaint to the Commission.(8) With respect to anytransaction or agreementrelating in any way to electricgeneration, transmission,distribution and ancillaryservices, an electric utilityshall conduct all suchtransactions with any of itsaffiliates on an arm’s lengthbasis.(9) The Commission shallresolve affiliate transactionsdisputes or abuses on a case-by-case basis. Any aggrievedparty may file a complaint with

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the Commission alleging theparticulars giving rise to thealleged dispute or abuse.(10) Electric utilities mustprocess all similar requestsfor electric services in thesame manner and within the sameperiod of time.(11) Electric utilities shallnot provide leads to theiraffiliates and shall refrainfrom giving any appearance thatthe electric utility speaks onbehalf of its affiliate(s). Norshall the affiliate trade upon,promote or advertise itsaffiliation or suggest that itreceives preferential treatmentas a result of its affiliation.The use of a common corporateor parent holding company nameshall not be a violation ofthis provision so long as theregulated utility and theaffiliate entities can bedistinguished.(12) Electric utilities, exceptfor billing and collectionservices and customer service,or by order of the Commission,shall not share their customerlist or related customerinformation with affiliatesunless the information issimultaneously shared with non-affiliate entities.(13) The electric utility shallnot communicate with any thirdparty that any advantage in theprovision of electric servicesmay accrue to such third partyas a result of that third

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party’s dealings with theelectric utility’s affiliate.

[165:35-31-19]

TRANSFER PRICING The OCC’s rules contain very specificAND OTHER TRANSACTION requirements for transactions between aREQUIREMENTS utility and its affiliates including the

pricing of such transactions. The applicablerequirements are captured in the followingtable:

SUBJECT REQUIREMENTSTransferPricing andOther

· Transactions between autility and its affiliates. Autility shall not subsidizethe business activities ofany affiliate with revenuesfrom a regulated service. Autility cannot recover morethat its reasonable fairshare of the fully allocatedcosts for any transaction orshared services.

· Contemporaneous recordrequirement. A utility shallmaintain a contemporaneouswritten record of allindividual transactions witha value equal to or over onemillion dollars with itsaffiliates, excluding thoseinvolving shared services orcorporate support servicesand those transactionsgoverned by tariffs orspecial contracts. Suchrecords, which shall includeat a minimum, the date of thetransactions, name ofaffiliate(s) involved, nameof a utility employee

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SUBJECT REQUIREMENTSTransferPricing andOther(Cont’d)

knowledgeable about thetransaction, and a detaileddescription of thetransaction with appropriatesupport documentation forreview purposes, shall bemaintained by the utility forthree years.

· Transfer of assets. Exceptas otherwise required byfederal statute orregulation or pursuant toCommission authorizedcompetitive bidding,tariffs, special contract,or as otherwise ordered bythe Commission; costrecovery for propertytransferred from a utilityto its affiliate shall bepriced at the “higher ofcost or fair market value.”Except as otherwise requiredby federal statute orregulation, or pursuant toCommission authorizedcompetitive bidding,tariffs, special contract oras otherwise ordered by theCommission; asset valuationand transfers of propertytransferred from anaffiliate to its utilityshall be priced at the“lower of cost or fairmarket value.” No matter theorigin of the transaction,all transfers between autility and an affiliatewill be individuallyscrutinized by the

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Commission on a case-by-casebasis.

· Sale of products orservices. Except asotherwise required byfederal or state statute orregulation, or pursuant toCommission authorizedcompetitive bidding,tariffs, special contract oras otherwise ordered by theCommission; any sale ofproducts and servicesprovided from the affiliateto the utility shall bepriced at the “lower of costor fair market value.”Except as otherwise requiredby federal statute orregulation, or pursuant toCommission authorizedcompetitive bidding,tariffs, special contract oras otherwise ordered by theCommission; any sale ofjurisdictional products andservices provided from theutility to the affiliateshall be priced at “higherof cost or fair marketvalue.”

· Joint purchases. A utilitymay make a joint purchasewith its affiliates of goodsand services involving goodsand/or services necessaryfor utility operations. Theutility must ensure that all

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joint purchases are priced,reported, and conducted in amanner that permits clearidentification of theutility’s and theaffiliate’s allocations ofsuch purchases.

· Tying arrangementsprohibited. Unless otherwiseallowed by the Commissionthrough a rule, order ortariff, a utility shall notcondition the provision ofany product, service,pricing benefit, waivers oralternative terms orconditions upon the purchaseof any other good or servicefrom the utility’saffiliate.

[165:35-31-20]SeparateBooks andFinancialTransactions

SeparateBooks andFinancial

A utility shall keep separatebooks of accounts and recordsfrom its affiliates. TheCommission may review recordsrelating to any transactionbetween a utility and anaffiliate to ensure compliancewith this Subchapter includingthe records of both the utilityand the affiliate relating toany transaction.(1)In accordance with

generally acceptedaccounting principles, autility shall record alltransactions with itsaffiliates, whether theyinvolve direct or indirectexpenses.

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SUBJECT REQUIREMENTSTransactions(Cont’d)

SeparateBooks andFinancial

(2)A utility shall preparenon-GAAP financialstatements that are notconsolidated with those ofits affiliates.

(3)A utility shall have a costallocation manual or uponCommission request, be ableto provide its costallocation methodology inwritten form withsupporting documentation.Such records shall reflectthe transaction and theallocated costs, withsupporting documentation,to justify the valuation.

· Limited credit, investment orfinancing support by autility. A utility may sharecredit, investment, orfinancing arrangements withits affiliates if it complieswith paragraphs (1) and (2)of this Subsection.(1)The utility shall

implement adequatesafeguards precludingemployees of an affiliatefrom gaining access toinformation in a mannerthat would allow orprovide a means totransfer confidentialinformation from a utilityto an affiliate, create anopportunity forpreferential treatment orunfair competitiveadvantage, lead tocustomer confusion, or

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SUBJECT REQUIREMENTSTransactions(Cont’d)

create an opportunity forpreferential treatment orunfair competitiveadvantage, lead tocustomer confusion, orcreate opportunities forsubsidization ofaffiliates.

(2)Where an affiliate obtainscredit under anyarrangement that wouldinclude a pledge of anyassets in the rate base ofthe utility or a pledge ofcash necessary for utilityoperations thetransactions shall bereviewed by the Commissionon a case-by-case basis.

· Cost of financingtransactions of anyaffiliate. The cost of anyfinancial transactions, inpart or in full, or anydebt, equity, tradingactivity, or derivative, ofany parent company, holdingcompany or any affiliate,which has a direct orindirect financial or costimpact upon the utilityshall be reviewed by theCommission on a case-by-casebasis.

[165:35-31-21]

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TENNESSEE RULES AND REQUIREMENTS

02-04-09

SUMMARY Tennessee has no specific rules andrequirements applicable to cost allocationsand affiliate transactions. In 1999, theConsumer Advocate Division of the Office ofthe Attorney General made a request for arulemaking concerning proposed rules forcost allocations and affiliate transactionsbefore the Tennessee Regulatory Authority.

COMMISSION ACTION The request for rulemaking by the ConsumerAdvocate Division was placed on theTennessee Regulatory Authority’s docket in1999 and comments and reply comments werefiled by Kingsport Power Company and theConsumer Advocate Division as well as otherparties (Docket No. 98-00690).

Any rules or requirements of the TennesseeRegulatory Authority applicable to costallocations and affiliate transactions willbe summarized in this document when and ifthey are adopted.

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TEXAS RULES AND REQUIREMENTS

02-04-10

SUMMARY Texas’ rules and requirements applicable toaffiliate transactions are contained inPublic Utility Regulatory Act (PURA) Sections36.058 and 39.157(d), as well as the PublicUtility Commission (PUC) rules under TexasAdministrative Code (TAC), Title 16, Part IIChapter 25 – Electric – Rules Applicable toService Providers.

DOCUMENTATION The PUC’s documentation requirements forREQUIREMENTS affiliate transactions are contained in its

Electric Substantive Rules, as captured inthe following table:


· A utility and itsaffiliates shall keepseparate books of accountsand records, and theCommission may reviewrecords relating totransactions between autility and an affiliate.

· In accordance withgenerally acceptedaccounting principles orstate and federalguidelines, asappropriate, a utilityshall record alltransactions with itsaffiliates, whether theyinvolve direct or indirectexpenses.

· A utility shall preparefinancial statements thatare not consolidated withthose of its affiliates.

[§25.272(d)(6)(A)-(B)]

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TRANSFER PRICING The PUCT’s substantive rules contain veryAND OTHER TRANSACTION specific requirements for transactionsREQUIREMENTS between a utility and its affiliates,

including the pricing of such transactions.The applicable requirements are captured inthe following table:

SUBJECT REQUIREMENTTransactionswith AllAffiliates

Transactions

· General. A utility shallnot subsidize the businessactivities of anyaffiliate with revenuesfrom a regulated service.In accordance with PURAand the Commission’srules, a utility and itsaffiliates shall fullyallocate costs for anyshared services, includingcorporate supportservices, offices,employees, property,equipment, computersystems, informationsystems, and any othershared assets, services,or products.[§25.272(e)(1)]

· Sale of products orservices by a utility.Unless otherwise approvedby the Commission andexcept for corporatesupport services, any saleof a product or service bya utility shall begoverned by a tariffapproved by theCommission. Products andservices shall be madeavailable to any thirdparty entity on the same

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SUBJECT REQUIREMENTwith AllAffiliates(Cont’d)

Transactionswith All

terms and conditions asthe utility makes thoseproducts and servicesavailable to itsaffiliates.[§25.272(e)(1)(A)]

· Purchase of products,services, or assets by autility from itsaffiliate. Products,services, and assets shallbe priced at levels thatare fair and reasonable tothe customers of theutility and that reflectthe market value of theproduct, service, orasset. [§25.272(e)(1)(B)]

· Transfers of assets.Except for asset transfersimplementing unbundlingpursuant to PURA §39.051,asset valuation inaccordance with PURA§39.262, and transfers ofproperty pursuant to afinancing order issuedunder PURA, Chapter 39,Subchapter G, assetstransferred from a utilityto its affiliates shall bepriced at levels that arefair and reasonable to thecustomers of the utilityand that reflect themarket value of the assetsor the utility’s fullyallocated cost to providethose assets.[§25.272(e)(1)(C)]

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SUBJECT REQUIREMENTAffiliates(Cont’ · Transfer of assets

implementing restructuringlegislation. The transferfrom a utility to anaffiliate of assetsimplementing unbundlingpursuant to PURA §39.051,asset valuation inaccordance with PURA§39.262, and transfers ofproperty pursuant to afinancing order issuedunder PURA, Chapter 39,Subchapter G will bereviewed by the Commissionpursuant to the applicableprovisions of PURA, andany rules implementingthose provisions.[§25.272(e)(1)(D)]

TransactionswithCompetitiveAffiliates

· General. Unless otherwiseallowed in this sub-section on transactionsbetween a utility and itsaffiliates, transactionsbetween a utility and itscompetitive affiliatesshall be at arm’s length.A utility shall maintain acontemporaneous writtenrecord of all transactionswith its competitiveaffiliates, except thoseinvolving corporatesupport services and thosetransactions governed bytariffs. Such records,which shall include thedate of the transaction,name of the affiliate

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SUBJECT REQUIREMENTTransactionswithCompetitiveAffiliates(Cont’d)

Transactions

involved, name of autility employeeknowledgeable about thetransaction, and adescription of thetransaction, shall bemaintained by the utilityfor three years. Inaddition to therequirements specifiedabove for transactionswith all affiliates, theprovisions cited in thefollowing bullets apply totransactions betweenutilities and theircompetitive affiliates.[§25.272(e)(2)]

· Provision of corporatesupport services. Autility may engage intransactions directlyrelated to the provisionof corporate supportservices with itscompetitive affiliates.Such provision ofcorporate support servicesshall not allow or providea means for the transferof confidentialinformation from theutility to the competitiveaffiliate, create theopportunity forpreferential treatment orunfair competitiveadvantage, lead tocustomer confusion, orcreate significantopportunities for cross-

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SUBJECT REQUIREMENTwithCompetitiveAffiliates(Cont’d)

Transactionswith

subsidization of thecompetitive affiliate(emphasis added).[§25.272(e)(2)(A)]

· Purchase of products orservices by a utility fromits competitive affiliate.Except for corporatesupport services, autility may not enter intoa transaction to purchasea product or service froma competitive affiliatethat has a per unit valueof $75,000 or more, or atotal value of $1 millionor more, unless thetransaction is the resultof a fair, competitivebidding process formalizedin a contract subject tothe provisions of §25.273of this title (relating toContracts Between ElectricUtilities and TheirCompetitive Affiliates).[§25.272(e)(2)(B)]

· Transfers of assets.Except for asset transfersfacilitating unbundlingpursuant to PURA §39.051,asset valuation inaccordance with PURA§39.262, and transfers ofproperty pursuant to afinancing order issuedunder PURA, Chapter 39,Subchapter G, any transferfrom a utility to itscompetitive affiliates ofassets with a per unit

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SUBJECT REQUIREMENTCompetitiveAffiliates(Cont’d)

value of $75,000 or more,or a total value of $1million or more, must bethe result of a fair,competitive biddingprocess formalized in acontract subject to theprovisions of §25.273 ofthis title.[§25.272(e)(2)(C)]

REPORTING REQUIREMENTS The PUCT’s requirements applicable to thereporting of affiliate transactions byelectric utilities are contained in itssubstantive rules, as captured in thefollowing table:

SUBJECT REQUIUREMENTAnnualReport ofAffiliateTransactions

A “Report of AffiliateActivities” shall be filedannually with the Commission.Using forms approved by theCommission, a utility shallreport activities amongitself and its affiliates.The report shall be filed byJune 1, and shall encompassthe period from January 1through December 31 of thepreceding year. [§25.84 (d)]

Copies ofContracts orAgreements

A utility shall reduce towriting and file with theCommission copies of anycontracts or agreements ithas with its affiliates.This requirement is notsatisfied by the filing of anearnings report. Allcontracts or agreements shallbe filed by June 1 of eachyear as attachments to the

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SUBJECT REQUIUREMENTCopies ofContracts orAgreements(Cont’d)

annual “Report of AffiliateActivities.” In subsequentyears, if no significantchanges have been made to thecontract or agreement, anamendment sheet may be filedin lieu of refiling theentire contract or agreement.[§25.84 (e)]

TrackingMigration ofEmployees

A utility shall track anddocument the movement betweenthe utility and itscompetitive affiliates of allemployees engaged intransmission and distributionsystem operations, includingpersons employed by a servicecompany affiliated with theutility who are engaged intransmission or distributionsystem operations on a day-to-day basis or haveknowledge of transmission ordistribution systemoperations. Employeemigration information shallbe included in the utility’sannual “Report of AffiliateActivities.” The trackinginformation shall include anidentification code for themigrating employee, therespective titles held whileemployed at each entity, andthe effective dates of themigration. [§25.84 (f)]

REPORTING REQUIREMENTS Section 25.84 of the Commission’s substantiverules requires that informal code of conductcomplaints, deviations from the code of

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conduct and updates to the utility’scompliance plan be filed at the PUCT.

AUDIT REQUIREMENTS The PUCT’s audit requirements applicable toaffiliate transactions by electric utilitiesare contained in its substantive rules, ascaptured in the following table:

SUBJECT REQUIREMENTGeneral A utility and its affiliates

shall maintain sufficientrecords to allow for an auditof the transactions betweenthe utility and itsaffiliates. At any time, theCommission may, at itsdiscretion, require a utilityto initiate, at the utility’sexpense, an audit oftransactions between theutility and its affiliatesperformed by an independentthird party. [§25.272(d)(6)(C)]

ComplianceAudits

ComplianceAudits(Cont’d)

No later than one year afterthe utility has unbundledpursuant to PURA §39.051, oracquires a competitiveaffiliate, and, at a minimum,every third year thereafter,the utility shall have anaudit prepared by independentauditors that verifies thatthe utility is in compliancewith this section. For autility that has nocompetitive affiliates, theaudit may consist solely ofan affidavit stating that theutility has no competitiveaffiliates. The utilityshall file the results of

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SUBJECT REQUIREMENTeach said audit with thecommission within one monthof the audit’s completion.The cost of the audits shallnot be charged to utilityratepayers. [§25.272 (i)(3)]

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VIRGINIA RULES AND REQUIREMENTS

02-04-11

SUMMARY The Code of Virginia requires approval ofcontracts between a public service companyand any affiliated interests. Virginia’srules and requirements applicable to costallocations and affiliate transactions can befound in the Code and in the regulations andorders of the Virginia State CorporationCommission (the SCC, or the Commission),particularly the Final Orders in Case Nos.PUA000029 and PUE010013.

SCC APPROVAL No contract or arrangement providing for thefurnishing of management, supervisory,construction, engineering, accounting, legal,financial or similar services, and nocontract or arrangement for the purchase,sale, lease or exchange of any property,right or thing, other than those aboveenumerated, or for the purchase or sale oftreasury bonds or treasury capital stock madeor entered into between a public servicecompany and any affiliated interest shall bevalid or effective unless and until it shallhave been filed with and approved by theCommission [Code of VA §56-77].

DOCUMENTATION The Commission’s documentation requirementsrelated to affiliate transactions arecaptured in the following table:

SUBJECT REQUIREMENTSeparateBooks andRecords

Each affiliated competitiveservice provider shallmaintain separate books ofaccounts and records. [20 VAC5-312-30 C]

Access toBooks andRecords

The Commission may inspectthe books, papers, recordsand documents of, and requirespecial reports andstatements from, everygeneration company affiliated

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SUBJECT REQUIREMENTAccess toBooks andRecords(Cont’d)

with a local distributioncompany regardingtransactions with its localdistribution companyaffiliate. Upon complaint oron its own initiative, theCommission may also (I)investigate allegedviolations of this charter,and (ii) seek to resolve anycomplaints filed with theCommission against any suchaffiliated generationcompany. [20 VAC 5-202-30 B7]

EmployeeTransfers

An affiliated competitiveservice provider shalldocument each occasion thatan employee of its affiliatedlocal distribution company,or of the transmissionprovider that serves itsaffiliated local distributioncompany, becomes one of itsemployees and each occasionthat one of its employeesbecomes an employee of itsaffiliated local distributioncompany or the transmissionprovider that serves itsaffiliated local distributioncompany. Upon staff’srequest, such informationshall be filed with the SCCthat identifies each suchoccasion. Such informationshall include a listing ofeach employee transferred anda brief description of eachassociated position andresponsibility. [20 VAC 5-

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SUBJECT REQUIREMENTEmployeeTransfers(Cont’d)

312-30 B 3]

TRANSFER PRICING The SCC’s transfer pricing rules applicableto affiliate transactions between the localdistribution company (LDC) and certainaffiliate are contained in various orders ofthe Commission.

Rules Applicable to The SCC’s rules applicable to the functionalFunctional Separation separation of incumbent electric utilitiesof Incumbent Electric under the Virginia Electric UtilityUtilities under the Restructuring Act contain specific transferVirginia Restructuring pricing requirements for transactions betweenAct(Case No. PUA000029) the LDC and an affiliated generation company

as captured in the following table:

SUBJECT REQUIREMENTSale of Non-TariffedServices,Facilitiesand Products

LDCs shall be compensated atthe greater of fully distrib-uted cost or market price forall non-tariffed services,facilities, and productsprovided to an affiliatedgeneration company.

Purchase ofNon-TariffedServices,Facilitiesand Products

An affiliated generationcompany shall be compensatedat the lower of fullydistributed cost or marketprice for all non-tariffedservices, facilities, andproducts provided to the LDC.

UnavailableMarketPrices

If market price data areunavailable for purposes ofsuch calculations, non-tariffed services, facilitiesand products shall becompensated at fully distrib-uted costs. In such event,the LDC shall document its

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SUBJECT REQUIREMENTUnavailableMarketPrices(Cont’d)

efforts to determine marketprice data and its basis forconcluding that such pricedata are unavailable.

[Source: 20 VAC 5-202-30 B 5 a]

Rules Applicable to The SCC’s rules for retail access containRetail Access (Case No. specific transfer pricing requirementsPUE010013) concerning transactions between the local

distribution company and its affiliatedcompetitive service providers as captured inthe following table:

SUBJECT REQUIREMENTSale of Non-TariffedServices,Facilitiesand Products

The local distributioncompany shall be compensatedat the greater of fullydistributed cost or marketprice for all non-tariffedservices, facilities, andproducts provided to anaffiliated competitiveservice provider.

Purchase ofNon-TariffedServices,Facilitiesand Products

An affiliated competitiveservice provider shall becompensated at the lower offully distributed cost prmarket price for all non-tariffed services,facilities, and productsprovided to the localdistribution company.

UnavailableMarketPrices

If market price data areunavailable, non-tariffedservices, facilities andproducts shall be compensatedat fully distributed cost andthe local distributioncompany shall document itsefforts to determine marketprice data and its basis for

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SUBJECT REQUIREMENTUnavailableMarketPrices(Cont’d)

concluding that such pricedata are unavailable.Notification of adetermination of theunavailability of marketprice data shall be includedwith the annual report ofaffiliate transactions thatis required to be filed bythe local distributioncompany with the SCC.

[Source: 20 VAC 5-312-30 I. 1.]

AFFILIATE TRANSACTION Virginia’s general reporting requirements forREPORTING REQUIREMENTS affiliate transactions have evolved through

several recent affiliate agreement approvalorders and are summarized in the followingtable:

SUBJECT REQUIREMENTAnnualReport ofAffiliateTransactions

An annual report of affiliatetransactions shall be filed byMay 1 of each year with theSCC’s Director of PublicUtility Accounting fortransactions for the priorcalendar year. The annualreport shall include allaffiliate agreements/arrangements regardless ofamount involved and shallsupersede all previousreporting requirements foraffiliate transactions(except, see Statement ofUtility Assets Sold, Purchasedor Acquired below).

The report shall contain the

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SUBJECT REQUIREMENT

AnnualReport ofAffiliateTransactions(Cont’d)

following information:

1. Affiliate’s name2. Description of each affil-

iate arrangement/agreement3. Dates of each affiliate

arrangement/agreement4. Total dollar amount of each

affiliate arrangement/agree-ment

5. Component costs of eacharrangement/agreement whereservices are provided to anaffiliate (i.e.,direct/indirect labor,fringe benefits,travel/housing, materials,supplies, indirectmiscellaneous expenses,equipment/facilitiescharges, and overhead)

6. Profit component of eacharrangement/agreement whereservices are provided to anaffiliate and how suchcomponent is determined

7. Comparable market values anddocumentation related toeach arrangement/ agreement

8. Percent/dollar amount ofeach affiliatearrangement/agreementcharged to expense and/orcapital accounts, and

9. Allocation bases/factors forallocated costs.

Transfers of assets betweenAPCO and AEPC with values of$100,000 or less must bereported in the annual reportof affiliated transactions.All transfers of assets

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SUBJECT REQUIREMENTbetween APCO and AEPC with avalue exceeding $100,000require prior Commissionapproval. [Source: SCC Order,dated March 4, 1998, in CaseNo. PUA970035]The Annual Report of AffiliateTransactions shall alsoinclude copies of all executedGreenfield Site Agreementsbetween APCO and AEPC alongwith a description of theparticulars of each site aswell as the book value of theunderlying land relative tothe proposed per site licensefee of $10,200/year (less anyvolume discount for multiplesites). [Source: SCC Order,dated December 6, 199, in CaseNo. PU990053]

AnnualReport Underthe VirginiaElectricUtilityRestructur-ing Act

Local distribution companies(LDCs) shall file annually,with the Commission, a reportthat shall, at a minimum,include: (i) the amount anddescription of each type ofnon-tariffed service providedto or by an affiliatedgeneration company; (ii)accounts debited or credited;and (iii) the compensationbasis used (i.e., market priceor fully distributed cost).

The LDC shall make availableto the Commission’s staff,upon request, the followingdocumentation for eachagreement and arrangementwhere services are provided to

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SUBJECT REQUIREMENTor by an affiliated generationcompany: (i) component costs(i.e., direct or indirectlabor, fringe benefits, travelor housing, materials,supplies, indirectmiscellaneous expenses,equipment or facilitiescharges, and overhead); (ii)profit component; and (iii)comparable market values anddocumentation. [Source: 20VAC 5=202-30 B 6]

AnnualReportRequired bythe RulesGoverningRetailAccess toCompetitiveEnergyServices

The local distribution company(LDC) shall file annually,with the SCC, a report thatshall, at a minimum, include:the amount and description ofeach type of non-tariffedservice provided to or by anaffiliated competitive serviceprovider; accounts debited orcredited; and the compensationbasis used, i.e., market priceor fully distributed cost.The LDC shall maintain thefollowing documentation foreach agreement and arrangementwhere such services areprovided to or by anaffiliated competitive serviceprovider and make suchdocumentation available tostaff upon request: (i)component costs (i.e., director indirect labor, fringebenefits, travel or housing,materials, supplies, indirectmiscellaneous expenses,equipment or facilitiescharges, and overhead; (ii)

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SUBJECT REQUIREMENTprofit component; and (iii)comparable market values, withsupporting documentation. [20VAC 5-312-30 I 2]

Schedule ofUtilityAssetsPurchased orSold

APCO must file annually aschedule of purchases fromaffiliates and sales toaffiliates, if any, of utilityassets, amounting to less than$25,000 for each suchtransaction, made during thepreceding calendar year.[Source: SCC Order, datedAugust 29, 1956, in Case No.13162, and SCC order, datedFebruary 20, 1981, in CasePUA810009]

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WEST VIRGINIA RULES AND REQUIREMENTS

02-04-12

SUMMARY The West Virginia Code requires approval ofcontracts between a public utility and itsaffiliates. The orders issued by the PublicService Commission of West Virginia (PSC, orCommission) concerning such matters containrequirements related to affiliatetransactions.

PSC APPROVAL Unless the consent and approval of the PSC isobtained, no public utility in West Virginiamay, by any means, direct or indirect, enterinto any contract or arrangement formanagement, construction, engineering, supplyor financial services or for the furnishingof any other service, property or thing withany affiliated corporation, person orinterest [West Virginia Code § 24-2-12]. Theindividual orders issued by the Commissionapproving such contracts establishrequirements applicable to specifictransactions with affiliates.

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IntroductionSubject

OVERVIEW (PROCEDURES)

03-01-01

SUMMARY At AEP, cost allocations between regulatedand non-regulated operations take placethrough intercompany billings and affiliatetransactions. The intercompany billingprocess and related procedures move costsbetween AEP System’s regulated electricutilities and their non-regulatedaffiliates. The cost allocation processrecognizes the nature of the work performedfor the respective parties and their use ofservices and facilities.

TRANSACTIONS The financial transaction coding processused by AEP is the first step in separatingcosts between regulated and non-regulatedoperations.

TIME REPORTING Labor cost is a large component of the totalcost allocated between regulated and non-regulated operations. Time reporting andlabor costing procedures are in place toensure that labor costs are properlyallocated and billed to the companies thatbenefit from the services which areperformed.

AEPSC BILLING SYSTEM AEPSC performs services for AmericanElectric Power Company, Inc., the parentholding company, and most subsidiaries inthe AEP System. AEPSC uses a work ordersystem to collect and bill costs to itsAfflilate companies for the services thatit performs.

INTERCOMPANY BILLING Other AEP System companies share costs withtheir affiliates through an intercompanybilling process. This process transfersthe cost of performing services andconducting projects for affiliates in theAEP System.

INTERUNIT ACCOUNTING Certain transactions are allocated between

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IntroductionSubject

OVERVIEW (PROCEDURES)

03-01-01

companies through inter-unit accountingwhereby transactions are recorded in thefirst instance by the companies for whichthe transactions have been incurred.

ASSET TRANSFERS Plant and equipment as well as materials andsupplies are transferred among the AEPSystem companies based on who uses theitems. Procedures are in place to properlyaccount for the transfer and sale of thoseitems.

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Page1

Section

TransactionsSubject

OVERVIEW

03-02-01

SUMMARY The process of cost allocation betweenregulated and non-regulated operationsbegins with the coding of expenses andother transactions.

RESPONSIBILITY Transaction coding is the responsibility ofthe business units that budget for andinitiate the transactions.

03-02-02

CODING BLOCKS Various coding blocks, also known aschartfields, are used to code financialtransactions for accounting and costallocation purposes.

03-02-03

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DateAugust 17, 2010

Page1

Section

TransactionsSubject

CODING

03-02-02

SUMMARY Proper chartfield coding is mandatory toensure accurate financial reports and inter-company billings.

CODING Chartfield coding is the responsibility ofRESPONSIBILITY the business units who incur various

expenditures, and who report their laborhours. These expenses are initiated andapproved by the business units in accordancewith their operating plans and financialbudgets.

MAINTENANCE OF The Service Corporation Accounting group isCHARTFIELD VALUES primarily responsible for maintaining

chartfield values. The business unitsrequest changes to the chartfield valuesbased on their need to track and managecosts, bill affiliated companies and complywith external reporting requirements. Thisgroup evaluates all requests in connectionwith its oversight responsibilities relatedto internal budgeting, cost allocations, andexternal reporting. Approved changes areimplemented on a timely basis.

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TransactionsSubject

CHARTFIELDS

03-02-03

SUMMARY AEP’s accounting systems use chartfields orcoding blocks to classify and accumulatetransactions for financial and managerialaccounting and reporting. Eachchartfield/coding block is used for aspecific purpose.

CODING BLOCKS GENERAL LEDGER CHARTFIELDS:

GeneralLedger

BusinessUnit

AccountNumber

DepartmentID

ProductCode

AffiliateCode

OperatingUnitCode

PROJECTS CHARTFIELDS:

ProjectCostingBusinessUnit

ProjectID

WorkOrder

(ProjectActivity)

CostComponent(Resource

Type)

ActivityCode

(ResourceCategory)

TrackingCode

(ResourceSubcategory)

General Ledger The General Ledger Business Unit identifiesBusiness Unit the AEP System company or company segment for

which the transaction is recorded. Each AEPSystem Company is assigned a unique code.For example, American Electric Power Company,Inc. is Business Unit 100 and AEP TexasCentral-Distribution is Business Unit 211.

Account Number The Account Number records the transaction inthe appropriate balance sheet or incomestatement account using the FERC System ofAccounts.

Department ID The Department ID connects the transaction tothe responsible organization for reportingand budgeting purposes.

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TransactionsSubject

CHARTFIELDS

03-02-03

Product Code The Product Code describes the product orservice supplied. It is primarily used byentries providing services to other AEPgroups.

Affiliate Code The Affiliate Code identifies transactionsconducted with an affiliate. The GeneralLedger Business Unit code of the affiliate isentered in this coding block, if applicable.The codes in this chartfield are used inpreparing consolidated financial statements.

Operating Unit Code The Operating Unit code sub-dividestransactions for special reporting purposeslargely related to tax reporting, rate case,and other matters. Valid values include,among others, state abbreviations.

Project Costing The Project Costing Business Unit connectsBusiness Unit the transaction with the responsible

budgeting group or area for project reportingpurposes.

Project ID The Project ID connects the transaction witha budget project. A budget project allowsbudgeted and actual costs to be captured formanagerial reporting purposes.

Work Order The Work Order is the billing mechanism usedto capture and bill like costs, and connectsthe transaction with a planned project thatgenerally has a set beginning date, aprojected end date and an estimated cost tocomplete. Work Orders include constructionand retirement work, R&D work, IT projects,non-regulated activities, and other specialprojects and transactions.

Attached to each Work Order, as an attribute,is a Benefiting Location Code that identifiesthe location or area that benefits from thework (i.e., the activity or project that is

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TransactionsSubject

CHARTFIELDS

03-02-03

being performed). A benefiting location candefine, among other things, a power plant, agenerating unit at a power plant, or aregion. Each benefiting location furtherdefines the company or group of companiesthat operate in the particular location orarea. For example, benefiting location code1358 is only applicable to Amos Plant Unit 1and pertains to the Generation ledger forAppalachian Power Company; and, benefitinglocation code 1178 pertains to theTransmission ledgers of Appalachian PowerCompany, Kentucky Power Company and KingsportPower Company.

Cost Component The Cost Component relates the transaction toa specific type of cost such as labor,travel, materials, or outside services.

Activity Code The Activity Code identifies the activitybeing performed. Examples of defined workactivities are: “Respond to CustomerInquiries,” “Process Payroll” and“Coordinate Federal Income Tax Returns &Reports.” The Activity code directs thebilling allocation formula for some workorders.

Resource Sub-Category The Resource Sub-Category sub-dividesaccounting transactions for cost trackingpurposes. Among other things, the resourcesub-category is used to track vehicle andbuilding expenditures by vehicle number orbuilding number. Certain equipmentmaintenance costs are also tracked.

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Section

Time ReportingSubject

OVERVIEW

03-03-01

SUMMARY AEP’s time reporting systems are designed tocollect the chartfield information needed toapportion costs between regulated and non-regulated activities.

TIME RECORDS Each AEP employee, or a responsibletimekeeper, must complete a time record foreach pay period.

03-03-02

LABOR COSTING The cost of labor makes up a high percentageof the service cost which is apportionedbetween regulated and non-regulatedactivities.

03-03-03

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DateApril 8, 2008

Page1

Section


TIME RECORDS

03-03-02

SUMMARY AEP follows a system of positive timereporting whereby all employees, arerequired, either personally or through anappointed timekeeper, to provide Payroll witha full accounting of their productive andnon-productive time classifications. Timerecords are prepared for each pay period.Examples of non-productive time includevacation time, holidays, jury duty and otherpaid absences.

FEATURES Positive time reporting is the process bywhich each employee accounts for the totalnumber of hours in each pay period, includingovertime and paid absences. The positivetime reporting process used by AEPencompasses the following features:

· Forms the basis for assigning laborcosts by accounting for all activitiesand time spent by activity on a payperiod basis

· Accounts for time in hourly incrementsas small as a one-tenth of an hour

· Accumulates and summarizes time spenton a reported line-item basis

· Requires all chartfield values neededto account for the time spent and toreport labor costs

· Requires the amount of time reportedfor a given pay period to at leastequal the total hours in the payperiod

· Does not assume employees are workingonly on regulated activities or onlyon non-regulated activities. The

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TIME RECORDS

03-03-02

FEATURES (Cont’d) actual time spent must be reported andclassified to the applicableactivities and/or projects based onthe work performed.

· As employees spend and report time,the cost of the time is directlyattributable to regulated and non-regulated operations based onbenefiting location or it could applyto an indirect cost pool.

APPROVALS All time records must be approved by theemployee’s immediate supervisor or thesupervisor’s designee. Audit Servicesperforms periodic studies to determine thatthe time reported by group supervisors has areasonable relationship to the time reportedby their direct reports.

ELECTRONIC PROCESSING In most cases, time is reported and approvedelectronically. The reported time isavailable to be viewed on-line for a periodof time before it is archived.

Employees can view their accrued and usedvacation hours on-line using AEP’s intranet.

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Section


LABOR COSTING

03-03-03

SUMMARY Labor costing is the process of pricing thetime reported by employees for the purpose ofapportioning their labor cost to theactivities that they perform. The cost oflabor is a high percentage of the totalservice cost apportioned among AEP’sregulated and non-regulated affiliates.

FEATURES AEP’s labor costing process, in conjunctionwith time reporting, has been designed tomeet the following four criteria:

· it must be practical and costeffective to apply

· it must contain safeguards againstmaterial misclassifications betweenregulated and non-regulated operationsand between regulated and non-regulated products and services

· it must be adequately documented· it must provide an audit trail thatcan be used for procedural testing andfor determining the accuracy ofresults.

The labor costing process used by AEP employsthe following features:

· productive time is priced using theemployee’s hourly rate of pay which,for salaried employees, is derived byusing one of two methods: (i) bydividing the employee’s annual salaryby 2,080 hours, or (ii) by dividingthe employee’s current pay periodsalary by the total number of hoursworked during the pay period(including non-compensated overtimehours worked by exempt employees)

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LABOR COSTING

03-03-03

FEATURES (Cont’d)· non-productive pay is accrued,expensed and distributed as apercentage of labor dollars

· where applicable, the cost ofincentive pay and severance pay isalso accrued and expensed; and it toofollows the distribution of labordollars.

CONTROLS Where applicable, appropriate controls aremaintained for balancing the total amount oflabor cost distributed to the total costincurred or paid.

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AEPSC Billing SystemSubject

OVERVIEW

03-04-01

SUMMARY AEPSC is a wholly-owned subsidiary of AEP, aregistered public utility holding company.AEPSC provides certain managerial andprofessional services including administra-tive and engineering services to affiliatedcompanies in the AEP holding company systemand periodically to unaffiliated companies.

As a subsidiary service company, AEPSC andits billings are subject to the regulationof the Federal Energy Regulatory Commission(FERC) under the Public Utility HoldingCompany Act of 2005.

SYSTEM OF INTERNAL Effective operation of the AEPSC work orderCONTROLS billing system is tied to AEP’s overall

system of internal controls.

03-04-02

WORK ORDER ACCOUNTING AEPSC maintains a work order system forallocating and billing costs in accordancewith the applicable Uniform System ofAccounts for centralized service companies.

03-04-03

BILLING ALLOCATIONS Billing allocations are performed usingAttribution Bases (i.e., Allocation Factors)approved by the SEC under PUHCA 1935 andcontinued after its repeal.

03-04-04

REPORTS AEPSC prepares a monthly billing report forall billed costs.

03-04-05

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SYSTEM OF INTERNAL CONTROLS

03-04-02

SUMMARY Effective operation of AEPSC’s work order andbilling system is tied to AEP’s overallsystem of internal controls. The morerelevant controls and administrativeprocedures include accountability,allocability, budgeting, time-reportingreview and approval, billing review, disputeresolution, periodic service evaluations, andinternal auditing.

RESPONSIBILITIES The business units and process owners whocode and approve transactions for processingthrough the AEPSC billing system areresponsible for final results. Employees canaccess electronic databases that containtitles and descriptions of all applicablecodes.

Changes in facts and circumstances thataffect the billing process must be addressedin a rapid and responsible manner.

The Corporate Planning and Budgeting groupalong with Corporate Accounting areresponsible for assisting the business unitsand AEPSC’s client companies in evaluatingthe monthly billing results on a company bycompany basis. Also see “Billing Review”below.

ALLOCABILITY Through the transaction coding process,clients are billed only for the services andcosts that pertain to them. Shareable costsare billed using allocation factors. Theapproved billing system is designed to resultin a fair and equitable allocation of costamong all client companies, regulated andnon-regulated. AEPSC employees are providedinformation and trained to achieve theseresults relative to their areas ofresponsibility.

BUDGETING Each year AEPSC prepares an annual budget for

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03-04-02

the services it will provide during the nextcalendar year. The budgets are prepared byeach AEPSC department.

Corporate Planning & Budgeting and BusinessUnit Budget Coordinators generate monthlyperformance reports that compare actual costagainst the budget. Performance results canbe viewed by Department, by Account, or byActivity, and also by Affiliate company.

AEPSC’s managers are primarily responsiblefor analyzing and explaining cost variancesincurred while performing their work.Additionally, AEPSC and its affiliates arejointly responsible for analyzing andexplaining the cost variances incurredthrough the AEPSC billings.

AEPSC’s annual budgets are consistent withand support AEP’s corporate-wide strategicperformance objectives. AEP’s Board ofDirectors, with the assistance of executivemanagement, approves the annual budgets forAEPSC, the utility companies and other AEPaffiliates.

WORK ORDER The Accounting department reviews requestsPROCESSING REVIEW for new AEPSC Work Orders. The review

includes (1) Appropriate descriptions – toensure that the users will understand thetype of costs to be accumulated in each workorder. (2) Appropriate benefiting location –to ensure that the proper affiliated companyor group of companies will be billed (3)Appropriate billing allocation factor – toverify (based on the work being performed)that the appropriate cost drivers are beingused for the type of service being performedsuch as Number of Employees, TransmissionPole Miles, Number of Retail ElectricCustomers, or Total Assets.

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03-04-02

BILLING SYSTEM Specific controls related to the billingCONTROLS system include (1) The Accounting department

reviews the reasonableness of the statistics,by affiliate company, that are used toallocate costs by comparing them to otherstatistics, amounts used in prior periods,etc. (2) Reports are generated by thebillings system to reconcile/confirm that allamounts were allocated and the total dollarsreceived for processing were billed out. (3)An automatic e-mail is sent to the Accountingdepartment which identifies any errorscreated during Journal Generation of theAEPSC Bill. (4) The Accounting departmentconfirms the AEPSC net income is zero eachmonth-end to ensure that all expensesincurred were billed. (5) The Accountingdepartment reviews the list of AEP affiliatecompanies every month to assure billingstatistics are accumulated and postedproperly for a newly created affiliatecompanies, or removed for inactivatedaffiliate companies.

Please see Appendix 99-00-04 for informationregarding the billing allocation factors thatare used by AEPSC and their update frequency.

PRE-BILLING TRANS- Various controls exist surrounding theACTIONS REVIEW detailed accounting transactions that are

processed by the AEPSC billing system,including: (1) Numerous edits/validationsare performed mechanically at the timetransactions are entered into the accountingsystem. For example, the validation routineswill not permit a labor expense Account to beused in conjunction with non-labor costs.(2) Prior to running the monthly AEPSCbilling process, Accounting reviews certainaccounting transactions to ascertain if anyitems are misclassified based on certaincriteria. Correction entries are prepared,

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03-04-02

if necessary, prior to the bill processing,For example, transactions charges to incometax FERC expense account should be charged tothe income tax work order. (3) An“unbillable” report is run numerous timesprior to processing of the bill. This reportidentifies transactions that will not billdue to recently inactivated Work Orders,invalid combinations of statistics, etc.Correction entries are made as necessaryprior to running the bill.

ALLOCATION Shared costs are billed using approvedallocation factors. The billing systems isdesigned to result in a fair and equitableallocation of cost amount all affiliatecompanies. As mentioned above under“Responsibilities”, information is readilyavailable to employees to assist with theproper coding of transactions in order toachieve these results relative to their areasof responsibility.

TIME REPORTING REVIEW AEPSC uses positive time reporting wherebyAND APPROVAL time records are submitted by each AEPSC

employee, on a bi-weekly basis. Supervisors,or their designated delegates, review andapprove the time records for the employees intheir respective groups.

In addition to the normal approval process,periodically the Accounting departmentprovides reports to each AEPSC manager forreview and validation of their employees;labor charges. The report indicates thecompanies that each employee billed, the workperformed for the company, the labor hourscharged, and the work orders(s) used to billthe hours. This report provides anadditional control to ensure employees werebilling correctly and that their managersconcurred with the billing. Managers wererequired to sign the report indicating their

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03-04-02

review and approval, and return the signedcopy to Accounting. If a manager hasquestions about an employee’s time charges,or believes a correction is required, themanager communicates those concerns toAccounting.

AFFILIATED BILLING Monthly, Regulated Accounting sends reportsREVIEW to the State Operating Companies Regional

Presidents (and/or their staff), and othermembers of management, for their review andapproval of the AEPSC Work Order billing byaffiliate company.

The services performed and the amounts billedare reviewed for accuracy on behalf of theregulated utilities and AEPSC’s other affil-iated clients. The performing organizationsinitiate all needed corrections and CorporateAccounting processes the corrections.

DISPUTE RESOLUTION The monthly AEPSC billings to the affiliateOperating companies are submitted to the AEPstate Business Operations Support groups fortheir review and approval. The AEPSC billapproval process for the Business OperationsSupport groups includes various steps.Monthly, Directors review the AEPSCdepartments allocating costs to theircompanies to determine whether it appearsreasonable for each department to beallocating to that operating company. Alsomonthly, Directors notify AEPSC of theirapproval of the monthly AEPSC billing, notingany issues needing resolved as a result oftheir monthly review. Any issues arisingfrom the above reviews are coordinatedthrough the affected AEPSC department and theAEPSC Controllers department, which will beresponsible for resolving issues raised bythe operating companies and makingappropriate adjustments. Each of the abovesteps is documented, including approvals,

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explanations of variances, and anyadjustments resulting from this review andapproval process. Directors are responsiblefor retaining documentation for a minimum oftwo years.

If a resolution cannot be reached among theparties, the dispute is referred to the ChiefFinancial Officer or another appropriatemember of executive management.

SERVICE EVALUATIONS Internal customer input and an internalcustomer-oriented philosophy are necessary inorder to keep AEPSC operating efficiently andat cost-competitive levels.

Internal customer surveys are used to measureperformance and internal customer satis-faction. The internal customer surveys,along with the budgeting process and servicelevel agreements, are used to seek customerinput relative to the quantity, quality andvalue of the various services being providedby AEPSC to other groups within the AEPholding company system.

Whenever feasible, and to the extentnecessary, cost levels and business practicesare benchmarked against other companies bothwithin and outside the electric utilityindustry.

INTERNAL AUDITING The AEPSC Audit Services department performsperiodic audits of the AEPSC billing system.The purpose of the audits is to examine theinternal controls over the billing processand to ascertain that billing allocations arebeing performed in accordance with theapproved Allocation Factors and in accordancewith the Service Agreements AEPSC has withits affiliated clients.

EXTERNAL AUDITING Annually, AEPSC provides unaudited financial

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statements to various banks and leasingcompanies. In addition, the applicable banksand leasing companies have access to AEPConsolidated financial statements, which areaudited by Price Waterhouse Cooper. Theaudited AEP Consolidated financial statementsinclude an audit of various transactionsthrough the billing system to verify accuracyof the procedures and amounts billed toaffiliates.

STATE AND FEDERALAUDITS AND REPORTING

STATE AUDITS: AEPSC is subject to periodic state affiliateand code of conduct audits, in order tocomply with certain state regulatoryrequirements. For example, Texas requires anaffiliated code of conduct audit every threeyears.

FERC AUDITS: Effective with the passage of the PublicUtility Holding Company Act of 2005 (whichbecame effective February 6, 2006) AEPSC isnow regulated by the Federal EnergyRegulatory Commission, and as such is subjectto FERC oversight and audit.

FERC REPORTING: The FERC requires a detailed annual financialreport for services companies, the FERC Form60. This report contains detailed AEPSCinformation, including amounts billed to eachaffiliate company.

These periodic audits and annual reportingrequirements provide additional controlsgoverning AEPSC’s accounting routines,financial transactions, and billing toaffiliates.

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03-04-02

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DateMarch 7, 2019

Page1

Section

AEPSC Billing SystemSubjectWork Order Accounting

03-04-03

SUMMARY AEPSC uses a work order system for theaccumulation of cost on a job, projector functional basis. It includesschedules and worksheets used to accountfor charges billed to single and groupsof associate and nonassociate companies.

COST IDENTIFICATION As a subsidiary service company, AEPSCidentifies billable costs using twoseparate chartfields (i.e., transactioncoding blocks); namely,

· Activity (through General “G”Work Orders) and

· Work Order.

Each of these chartfields is definedelsewhere in this manual (look up“Chartfields” in the Table of Contentsor the Alphabetic Subject Index todetermine the applicable DocumentNumber).

General (i.e., “G”) work orders havebeen established to assign thebenefiting location to general servicesthat are billed by “Activity”.

FUNCTION AND TYPES OF A billable cost is derived by using aWORK ORDERS Work Order or Activity with a Benefiting

Location (including “G” Work Orders).While Work Order and Activity define thenature of the service performed, theBenefiting Location identifies thecompany or group of companies for whichthe service is performed. BenefitingLocation is not a chartfield, but it isan attribute of each billable WorkOrder. AEPSC uses the following types ofWork Orders(billable and non-billable):

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FUNCTION AND TYPES OF Direct – A Direct Work Order is usedWORK ORDER (Cont’d) when the service being provided benefits

a single company or company segment.The monthly cost accumulated for aDirect Work Order is billed 100% to thecompany for which the service wasperformed as designated by thebenefiting Location code associated withthe service.

Allocated – An Allocated Work Order isused when the service being performedbenefits two or more companies orcompany segments. The monthly costaccumulated for an Allocated Work Orderis allocated and billed to the companiesfor which the service is performed asdesignated by the Benefiting Locationcode associated with the service.

The AEPSC billing system uses specificcompany cost-causative AllocationFactors to allocate costs that areaccumulated under Allocated Work Orders.

SCFringe – The SCFringe Work Order isused to accumulate the cost of labor-related overhead. Labor-related overheadincludes, among other things, payrolltaxes and employee benefits such aspension and medical expense.

SCFringe is charged to client companiesin proportion to the distribution ofAEPSC’s labor dollars.

While not part of SCFringe, it should benoted that the cost of compensatedabsences such as vacation and holidaypay is also charged to client companiesbased on the distribution of AEPSC’slabor dollars.

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03-04-03

FUNCTION AND TYPES OF AEPSC Departmental Overhead –WORK ORDER (Cont’d) Information Technology, Human Resources,

and Real Estate and Workplace Servicesall provide services to AEPSCDepartments. Therefore, the portion ofan Information Technology, HumanResources, or Real Estate and WorkplaceServices work orders that relate toAEPSC is allocated to the AEPSCdepartments that benefit from theservice based on number of workstations(Information Technology), number ofemployees (Human Resources), andoccupancy (Real Estate and WorkplaceServices). The AEPSC departments’ shareof the costs is then allocated to theclient companies in proportion to thelabor charged by each AEPSC departmentto the client companies.

Internal Support Costs Overhead – TheInternal Support Costs (ISC) OverheadWork Order is used to identify theexpenses incurred in support of AEPSC’soverall operations. ISC includes allexpenses identified with work orderG0000103, which has an attribute ofBenefiting Location 103 (the code forAEPSC). For example, the expensesincurred in processing the payroll forAEPSC’s employees and in paying AEPSC’svendors are included in ISC overhead isallocated to client companies inproportion to the total cost charged toeach company.

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03-04-03

ACTIVITY AND Service requests fall into two majorWORK ORDER REQUESTS categories:

· Activity, and· Work Order.

As the overseer of the budgetingprocess, AEPSC’s Corporate Planning andBudgeting group is responsible forapproving all requests for adding ordeleting Activities. The CorporatePlanning and Budgeting group processesall requests for opening or closing newActivities while the RegulatedAccounting group processes all requestsfor new AEPSC Work Orders.

The ABM Activity Request Form – Thisform requires the following information:

Line Item InformationRequested By Name of requestor.

Electronic requests areautomatically populatedwith requestor’s requiredinformation, date and time.

Effective Date The requesting businessunit recommends aneffective date for use ofthe new activity.

ActivityNumber

The requesting businessunit provides the ActivityNumber only when anexisting activity is beingchanged.

ActivityDescription

The requesting businessunit provides the proposedtitle of the new activity(e.g., “Develop CoalDelivery Forecast”).

Process Group The requesting businessunit provides the name of

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Line Item Informationthe high-level processgroup to which the newactivity is related (e.g.,“Generate Energy”).

Major Process The requesting businessunit provides the name ofthe high-level majorprocess to which the newactivity is related (e.g.,“Procure, Produce & DeliverFuel”).

BusinessProcess

The requesting businessunit provides the name ofthe high-level businessprocess to which theactivity is related (e.g.,“Procure Coal”).

Purpose andUse

The requesting businessunit provides a descriptionof the new activity, itspurpose and use.

Task List Provide a list of all thesteps and preparationundertaken to arrive at therequest.

Suggested FERCAccounts

The requesting businessunit provides the suggestedFERC account.

Service CorpAttributionBasis

The requesting businessunit recommends anAllocation Factor for use.

Cost Drivers The requesting businessunit provides the reasonsfor the request.

See the ILLUSTRATIONS at the end of thisdocument for a copy of the ActivityRequest Change Form.

Work Order Request Form – This formrequires the following information:

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Line Item InformationRecommendedTitle

The requesting businessunit provides the recom-mended work order title.

ProjectCostingBusiness Unit

The requesting businessunit provides the ProjectCosting Business Unitidentification.

Budget Project The requesting businessunit provides theapplicable Budget Projectcode.

Work OrderType

The requesting businessunit provides the WorkOrder type.

EstimatedTotal Costs tobe incurred byAEPSC

The requesting businessunit supplies theestimated cost of the workperformed.

EstimatedDuration

The requesting businessunit provides the startand the estimatedcompletion date.

Description ofService(s) ToBe Rendered

The requesting businessunit supplies a descrip-tion of the work orderbased on the nature andscope of the project to beperformed.

BenefitingLocation

The requesting business unit supplies t The requesting businessunit supplies theapplicable benefitinglocation code based on thecompany or class ofcompanies that willbenefit from the workorder. The requester canselect the benefitinglocation code either byName or by Number. Thebenefiting location will

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Line Item Informationbecome an attribute of thework order.

RecommendedAllocationFactor

The requesting businessunit supplies therecommended AllocationFactor code for the workorder. The AllocationFactor code identifies theproposed method ofallocation for Allocatedwork orders. TheAllocation Factor becomesan attribute of the workorder. Work orders thatpertain to a singlecompany should be assignedan Allocation Factor codeof “39, Direct”.

SharedServices

The requesting businessunit must indicate if thisis a work order to be usedby Human Resources,Information Technology andReal Estate and WorkplaceServices. If “Yes” isselected, then therequestor is required toselect the appropriatedepartment for the sharedservice organization.This will be used as partof the AEPSC DepartmentalOverhead.

AdditionalRemarks

The requesting businessunit provides any specialproject or accountinginstructions related tothe work order or makesreference to anyattachments.

Others To BeNotified When

The requesting businessunit provides a list of

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Line Item InformationRequest IsApproved

employees to be notifiedwhen the work order isopened for charges.

Are you theSponsoringSupervisor forThis Request?

The requester mustindicate if he or she isthe sponsoring supervisorfor this work orderrequest.

OtherReviewers

The sponsoring supervisormust approve the request.In addition, the CorporateAccounting group mustaccept or decline eachrequest.

See the ILLUSTRATIONS at the end of thisdocument for a copy of the Work OrderRequest Form.

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DateMarch 7, 2019

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03-04-03

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DateMarch 7, 2019

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03-04-03

DocumentNumber


DateAugustS 20, 2015

Page1

Section


BILLING ALLOCATIONS

03-04-04

SUMMARY Each Allocated Service ID, whether related toan Activity or a Work Order, is assigned anappropriate Allocation Factor code that,along with the Benefiting Location code,ultimately determines the dollars of costthat will be charged to each client company.Allocation Factor codes are assignedaccording to the nature of the servicesperformed.

Each Direct Service ID is assigned anAllocation Factor code of “39” which is fixedat 100%.

FUNCTION OF THE The Allocation Factor code identifies theALLOCATION FACTOR CODE statistical factor that will be used to

calculate the percentage of cost applicableto each client company. The assigned codepoints to a table that includes the company-specific values needed to calculate theallocation percentages.

ROLE OF REGULATED An accounting administrator in the RegulatedACCOUNTING Accounting group has primary responsibility

for ensuring that the Allocation Factor codeassigned to each Allocated Service ID isrelevant to the service being performed.Regulated Accounting is also responsible forensuring that the company-specificstatistical values needed for each AllocationFactor are accurate and kept up to date. Thevalues are refreshed according to theintervals determined for each AllocationFactor (e.g., monthly, quarterly, semi-annually and annually).

The Allocation Factor assigned to eachAllocated Service ID should be the mostrelevant cost-causative cost driver.

PROCESS The requestor of a new Activity or Work Orderis required to recommend an appropriateAllocation Factor code. Requestors are inthe best position to recommend an appropriate

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BILLING ALLOCATIONS

03-04-04

Allocation Factor code since they areintimately familiar with the work to beperformed and with the inherent cost drivers.Regulated Accounting reviews all AllocationFactor code selections for reasonableness.

EXAMPLES Examples of the appropriate use of AllocationFactors are captured in the following table:

Activity/Shared Service Allocation Factor

191. Maintain TransmissionRight-of-Way

28. Number of TransmissionPole Miles

340. Process payroll 09. Number of employees

663. Perform Stores Accounting 26. Number of StoresTransactions

LIST OF APPROVED The APPENDIX to this manual contains a listALLOCATION FACTORS of all the approved Allocation Factors.

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DateMarch 2, 2012

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Section


REPORTS

03-04-05

SUMMARY An electronic journal entry is created by theAEPSC billing system as part of the billingprocess to record the accounts receivable andrevenue on AEPSC’s books, and to record thecorresponding distribution and accountspayable on the associate companies’ books(billing interface).

BILL FORMAT The following represents a view of themonthly bill for services rendered by AEPSCto an associate company:

AUDIT TRAIL An audit trail is maintained for all AEPSCbilling system transactions starting with thesource documents all the way through generalledger posting.

The AEPSC billing system produces a journalentry that is posted to each respectivecompany’s general ledger on a monthly basis.The mask for this journal entry is“SCBBILxxxx”. The alpha section of the maskis constant. The numeric section of the maskis assigned the next available journal entrynumber each month for each company.

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DateJuly 16, 2019

Page1

Section

Intercompany BillingSubject

OVERVIEW

03-05-01

SUMMARY The PeopleSoft general ledger system used byAEP allows transactions to be coded forintercompany billing.

BILLING SYSTEM AEP’s intercompany billing process automatesthe accounting for costs incurred by one AEPSystem company for the exclusive or mutualbenefit of one or more affiliates.

03-05-02

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DateJuly 24, 2012

Page1

Section


BILLING SYSTEM

03-05-02

SUMMARY Intercompany billing of O&M and capital costsautomates the accounting for work performedby one company for the exclusive or mutualbenefit of one or more affiliates. Thisprocess allows the performing company toincur the cost and bill it to the appropriatebenefiting company or companies. Allintercompany billing transactions betweencompanies are summarized on a monthly basis,resulting in one net billing betweencompanies.

USES Intercompany billing is used most often toshare operating expenses or when one companyperforms services for another company. TheAffiliate Transaction Agreement, datedDecember 31, 1996, and the Mutual AssistanceAgreement, dated July 30, 1987 provide thebasis of the intercompany billing.

Costs incurred which are subject tointercompany billing can include, among othercosts, O&M or capital company labor includingappropriate transportation and labor fringes,purchased materials or services, materialsissued from company storerooms, and rentalcharges for use of another company’sfacilities.

CODING REQUIREMENTS The initiation of the intercompany billingprocess requires the proper use of chartfieldvalues. An intercompany billing transactionis initiated whenever a benefiting locationnumber is different than the performingcompany’s business unit code. Benefitinglocation numbers can be either 100% billed orshared among multiple companies. A 100%billed and a multiple company benefitinglocation example follow:

CODING REQUIREMENTS Example: 100% billed Benefiting Location

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BILLING SYSTEM

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(Cont’d) The duties performed by the West VirginiaRates Department benefit the AEP customerswithin the state of West Virginia. BothAppalachian Power Company and Wheeling PowerCompany - Distribution serve customers inWest Virginia. All Rates Departmentemployees serving West Virginia are on thepayroll of Appalachian Power Company.

Whenever the Rates Department performs workexclusively on a Wheeling Power Company -Distribution rate case, their labor andexpenses are classified to benefitinglocation 210. The use of 210 benefitinglocation results in a 100% billing toWheeling Power Company - Distribution. Thisintercompany billing establishes an accountsreceivable entry for Appalachian PowerCompany, the performing company, and acorresponding accounts payable entry forWheeling Power Company - Distribution, thecompany benefiting from the work.

Example: Shared Benefiting LocationAn invoice is received for aerial patrolservices performed for the CentralTransmission Region. Since this work hasbeen performed for the benefit of all fivecompanies served by the Central TransmissionRegion, the processing company charges amultiple company benefiting location. Thismulti-company benefiting location shares thecost among the five companies served by theCentral Transmission Region.

Since the invoice pertains to transmissionservices, the cost incurred will be allocatedamong the five companies using an AllocationFactor of transmission pole miles. Thisintercompany billing establishes an accountsreceivable entry for the performing companyand a corresponding accounts payable entryfor the four remaining benefiting companies.

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BILLING SYSTEM

03-05-02

INTERCOMPANY BILLING All intercompany billing allocations areCOST ALLOCATIONS either direct (i.e., 100%) or are allocated

among the appropriate companies based on theapplicable multi-company benefiting locationcode. Every multi-company transaction isallocated using one of the approvedAllocation Factors for service companybillings. The Allocation Factor must beappropriate for the function for which thecost is incurred. For example, cost incurredfor the performance of transmission serviceswould be allocated using an Allocation Factorof number of transmission pole miles.

AUDIT TRAIL An audit trail is maintained for allintercompany billing transactions startingwith the source documents all the way throughgeneral ledger posting.

The intercompany billing procedure producesjournal entries that are posted to eachrespective company’s general ledger on amonthly basis. The journal entry mask forthe intercompany billing process is“INTCOMxxxx”. The alpha section in each maskis constant. The numeric section of themasks is assigned the next available journalentry number each month for each company.

Any given intercompany journal entry cancontain several thousand lines of data eachmonth.

The accounts receivable and accounts payabletransactions created by the intercompanybilling process are assigned account numbers1460006 and 2340027, respectively.

CASH SETTLEMENT Intercompany billing transactions are settledthrough the AEP money pool among money pool

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BILLING SYSTEM

03-05-02

participants. Non-money pool participantssettle-up through cash disbursements.

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Page1

Section

InterUnit AccountingSubject

OVERVIEW

03-06-01

SUMMARY The PeopleSoft general ledger and accountspayable systems used by AEP allowtransactions to be recorded that pertain totwo or more companies.

JOINT PAYMENTS AND InterUnit accounting can be applied toJOURNAL TRANSACTIONS accounts payable processing or general ledger

journal entry processing.

03-06-02

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JOINT PAYMENTS AND JOURNAL TRANSACTIONS

03-06-02

SUMMARY InterUnit accounting automates the process ofaccounting for transactions that affect twoor more affiliated companies. The processautomatically generates the general ledgertransactions applicable to each company. AllInterUnit accounting transactions aresummarized on a daily basis, resulting in anet amount due to and from each company, byaffiliated company.

USES InterUnit accounting can be applied toaccounts payable processing, accountsreceivable processing, or to general ledgerjournal entry processing.

InterUnit accounting is used whenever onecompany (i.e., business unit) processes avendor invoice, deposits funds, or classifiesjournal entry transactions that pertain toone or more other affiliated companies.

The InterUnit accounting feature within thePeopleSoft software saves time, reducesprocessing costs, accurately createsreciprocal transactions, and provides for anefficient settlement routine. It simplifiesthe intercompany billing process byeliminating the need to prepare and handlepaper billings. A complimentary process alsosummarizes and nets the daily InterUnitactivity that occurs between companies.

CODING REQUIREMENTS InterUnit accounting requires the proper useof business unit codes. An InterUnittransaction is initiated by entering abusiness unit code on a transactionclassification line that is different fromthe processing company’s business unit code.

The uses of InterUnit accounting and therelated coding requirements are illustratedby the following three examples:

CODING REQUIREMENTS Example of invoice processing through

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03-06-02

(Cont’d) accounts payable:____________________________

An invoice is received for legal servicesperformed for six of AEP’s generatingcompanies. Since the invoice pertains tomore than one company, the invoice can beprocessed by one of the companies using atleast six lines of accounting classification;that is, one line for each company.InterUnit accounting will be triggered forall the lines of classification that have abusiness unit code that is different from theprocessing company’s business unit code.

For each line of classification with adifferent business unit code, the InterUnitaccounting process will establish areceivable from associated companies on theprocessing company’s books and a payable toassociated companies on the applicableaffiliate companies’ books. In addition, thebalance sheet and expense transactionsactually coded on the original accountspayable voucher will automatically be postedto the books of the applicable companiesbased on the business unit codes that areused.

Example of receipt processed through accountsreceivable:__________________________________

A single wire transfer is received formaterials sold by three of AEP’s distributioncompanies. The customer received threeseparate invoices, one from each distributioncompany, but chose to wire funds to only oneof AEP’s distribution companies for fullpayments to eliminate incurring multiple wirefees.

CODING REQUIREMENTS The Billing and Accounts Receivable section

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03-06-02

(Cont’d) will apply payment to each distributioncompany invoice by reflecting the depositcompany (i.e.: business unit), whichreceipted for the wire transfer. Two of thecompany invoices will have an invoicingbusiness unit different than the depositbusiness unit. For these two invoices, theInterUnit accounting process will establish areceivable from associated companies on thecompany rendering the invoice, and a payableto associated companies on the company thatdeposited the funds. In addition, the billclassification will be relieved on thecompany that issued the bill to the customer.

Example of general ledger journal entryprocessing:__________________________________

A single company (i.e., business unit)operates a messenger delivery service foritself and several affiliates. CorporateServices provides Accounting Services withthe amounts to be billed each month to theother companies based on their actual use ofthe services.

Since this is a recurring transaction, anInterUnit journal entry can be pre-codedwith the appropriate chartfield codes,including the applicable business unitcodes. The dollar amounts to be billed tothe business units and the date of thetransaction are the only variables requiredfor journal entry preparation.

When processed, the InterUnit journal entrywill record the charges on the benefitingaffiliated companies’ books and establish anassociated company accounts payable. The

CODING REQUIREMENTS journal entry will also record the

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03-06-02

(Cont’d) appropriate associated company accountsreceivable entries and offset the originalcharges on the performing company’s books.The debits to accounts receivable fromassociated companies and the credits toaccounts payable to associated companies areautomatically generated for each journalentry line item that has a business unit codethat is different from the performingcompany’s business unit code.

INTERUNIT ACCOUNTING For InterUnit accounting purposes, the amountapplicable to each company must be codedusing separate detail lines. The amount forany transaction that pertains to two or morecompanies should be allocated using one ofthe approved Allocation Factors for servicecompany billings. The Allocation Factorselected must be appropriate for the type ofcost being allocated based on the nature ofthe activity or project for which the cost isincurred.

AUDIT TRAIL FEATURES An audit trail is maintained for allInterUnit transactions starting with thesource documents all the way through to thegeneral ledger postings.

The InterUnit transactions processed throughAccounts Payable and Billing and AccountsReceivable are posted to the generalledger through the daily distributioninterfaces. InterUnit journal entries areposted directly to the general ledger.

InterUnit transactions can be viewed on-linethrough simple queries where the “BusinessUnit does not equal Business Unit_GL” foraccounts payable transactions, where the“Business Unit does not equal Deposit_BU” foraccounts receivable, or where the “Business

AUDIT TRAIL FEATURES Unit does not equal Business Unit_IU” for(Cont’d) general ledger journal entries.

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03-06-02

InterUnit accounting creates the affiliatedaccounts receivable and accounts payabletransactions. Account numbers are assigned asfollows:

1) if the accounting is generated by eitherjournal entries or Billing and AccountsReceivable, accounts 1460001 and 2340001reflect the reciprocal receivable andpayable, or

2) if InterUnit accounting is generated byAccounts Payable, accounts 1460009 and2340030 reflect the reciprocal receivableand payable.

AFFILIATED SETTLEMENTS A settlement process is initiated daily forall InterUnit transactions. Corporate andGeneral Accounting supplies a file toTreasury summarizing each company’s netaffiliated position for InterUnittransactions. A net payable position resultsin either increased short-term borrowings ordecreased short-term investments in the AEPmoney pool among money pool participants. Anet receivable position results in eitherincreased short-term investments or decreasedshort-term borrowings in the AEP money poolamong money pool participants. Non-moneypool participants settle through cashdisbursements.

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DateJuly 16, 2019

Page1

Section

Asset TransfersSubject

OVERVIEW

03-07-01

SUMMARY AEP companies, especially AEP’s electricutilities, sell plant and equipment amongthemselves. AEP companies also sellmaterials and supplies to each other.

PLANT AND EQUIPMENT Plant and equipment generally is sold “atcost” (i.e., net book value) to associatecompanies in the AEP holding companysystem.

03-07-02

MATERIALS AND SUPPLIES Materials and supplies are generally sold toassociate companies “at cost” using theselling company’s average unit inventorycost.

03-07-03

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DatePage

1

Section


PLANT AND EQUIPMENT

August 15, 2018

03-07-02

SUMMARY The physical integration of AEP’s powerplants and its many circuit miles oftransmission and distribution lines and theuse of common parts and equipment allow theAEP companies to achieve cost savings bycombining their purchasing needs andimproving their ability to respond rapidlyto emergency situations throughout theentire network.

Such benefits are achieved in part throughexchanges of plant and equipment amongaffiliated utility companies as conditionswarrant. The exchanges take place eitherthrough rental arrangements (i.e., loans)or through direct sales.

GUIDELINES

Sales Sales between affiliated regulated utilitycompanies will be transacted at originalcost less depreciation, except as permittedby any other applicable order filed withFERC or required by state rule. Sales fromregulated affiliates to non-regulatedaffiliates are priced at higher of cost ormarket. Sales from non-regulatedaffiliates to regulated affiliates arepriced at lower of cost or market. Asallowed by FERC waiver, capitalized spareparts will continue to be transferredbetween AEP East Utility Companies and AGRat net book value.

AEP Legal-Regulatory is to be informed forthe purpose of determining whether anyregulatory approvals must be sought.

LoansRental fees for loaned property shall coverall applicable costs. Such costs includecost of capital, depreciation, and taxes.

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MATERIALS AND SUPPLIES

03-07-03

SUMMARY AEP’s material management groups along withprocurement personnel can initiate requeststo transfer materials and supplies (M&S)from one AEP storeroom to another. M&Ssent from one company’s storeroom to anassociate company’s storeroom results in asale between companies.

MONTHLY BILLS TO The company owning the part generates aASSOCIATE COMPANIES Monthly bill for M&S shipped during the

month to an associate company. This methodis used very rarely since most transfersoccur through the inter-company journalentries. Each item sold is priced “at cost”using the seller’s average unit inventorycost. Stores expense is added asappropriate. All sales are recordedthrough associated company accountsreceivable and accounts payable (i.e.,Accounts 146 and 234, respectively).

DocumentNumber


DateJuly 13, 2009

Page1

Section

IntroductionSubject

OVERVIEW (DOCUMENTS)

04-01-01

SUMMARY AEP’s state regulatory commissions requirecertain documents to be maintained inconnection with the transactions AEP’sregulated utilities have with theiraffiliates. In some cases, the documentsneed to be maintained as part of theutility company’s Cost Allocation Manual(CAM).

AFFILIATE CONTRACTS This manual provides a brief description ofall contracts and agreements AEP’sregulated utilities have with theiraffiliates.

04-02-01

DATABASES Certain databases have been established forreference purposes. The databasesdescribed in this manual provide additionalinformation concerning certain subjects inthe manual.

04-03-01

JOB DESCRIPTIONS The Public Utilities Commission of Ohiorequires the job descriptions of certainshared and transferred employees to bemaintained as part of the electricutility’s CAM.

04-04-01

COMPLAINT LOG The Public Utilities Commission of Ohiorequires each electric utility to maintaina log of the complaints the utilityreceives in connection with theCommission’s corporate separation rules.The Commission requires the electricutility to include the complaint log in itsCAM.

04-05-01

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DateJuly 13, 2009

Page2

Section

IntroductionSubject

OVERVIEW (DOCUMENTS)

04-01-01

BOARD OF DIRECTORS The Public Utilities Commission of Ohiorequires each electric utility in Ohio tokeep a copy of the minutes from its boardof directors meetings in its CAM.

04-06-01

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SectionAffiliate Contracts with RegulatedCompaniesSubject

OVERVIEW

04-02-01

SUMMARY The AEP System’s regulated utilities provideproducts and services to affiliates andreceive products and services from affiliatesunder various contracts and agreements.Copies of the contracts and agreements aremaintained in an electronic database that isincorporated in this manual by reference.

SERVICE AGREEMENTS AEP’s electric utilities receive servicesfrom AEPSC. The electric utilities provideincidental services to each other as well asto AEPSC.

04-02-02

MINING AND AEP System affiliates provide coal mining,TRANSPORTATION coal preparation and coal handling services

as well as transportation services to AEP’sregulated utilities.

04-02-03

CONSULTING SERVICES Engineering and consulting services areprovided by AEP’s regulated utilities tocertain non-regulated affiliates and viceversa.

04-02-04

JOINT OPERATING Certain AEP facilities are jointly owned andAGREEMENTS operated.

04-02-05

TAX AGREEMENT American Electric Power Company, Inc. and itsAEP System affiliates file a consolidatedFederal income tax return and share theconsolidated tax liability.

04-02-06

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OVERVIEW

04-02-01

MONEY POOL AGREEMENT AEP and certain of its regulated subsidiariesparticipate in the AEP System Money Pool.The Money Pool is designed to efficientlymatch the available cash and short-termborrowing requirements of their participants,minimizing the need for them to borrow fromexternal sources.

04-02-07NONUTILITY MONEY POOLAGREEMENT AEP, and certain of its unregulated

subsidiaries participate in the AEP SystemNonutility Money Pool. The Nonutility MoneyPool is designed to efficiently match theavailable cash and short-term borrowingrequirements of their participants,minimizing the need for them to borrow fromexternal sources.

04-02-08

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DateAugust 18, 2016

Page1


SERVICE AGREEMENTS

04-02-02

SUMMARY AEPSC provides various services to the AEPSystem’s regulated utilities and non-regulated affiliates under a standard serviceagreement with each of the companies served.The regulated utilities also provide servicesto each other and to AEPSC under otheragreements.

AEPSC SERVICE AGREEMENT AEPSC has a service agreement, in a standardformat, with each of the AEP System companiesit serves. All agreements are dated June 15,2000, unless the client company was formedafter that date. In addition APCO andWheeling have updated service agreementsdated May 15, 2008. The types of servicesprovided by AEPSC are listed in DocumentNumber 01-03-02 by category and description.

AEPSC SERVICE AGREEMENT AEPSC has a service agreement, in a standardWITH TRANSMISSION format, with each of the AEP TransmissionCOMPANIES companies it serves. The agreements have

various effective dates depending on when theclient company was formed. The types ofservices provided by AEPSC are included inthe list in Document Number 01-03-02 bycategory and description.

AFFILIATED TRANSACTIONS The Affiliated Transactions Agreement, datedAGREEMENT December 31, 1996, is among Appalachian Power

Company, Columbus Southern Power Company(Which was merged into Ohio Power Companyeffective December 31, 2011), IndianaMichigan Power Company, Kentucky PowerCompany, Kingsport Power Company, Ohio PowerCompany, Wheeling Power Company and AEPSC.

This agreement covers the provision ofincidental services, the sale of goods, anduse of facilities and vehicles among theparticipating companies.

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OPERATING COMPANY Each Transmission company has a standardSERVICE AGREEMENT affiliate service agreement with theWITH TRANSMISSION operating company in its jurisdiction. TheCOMPANIES agreements have various effective dates

depending on when the Transmission Companywas formed.

This agreement covers services in connectionwith the operation of each TransmissionCompany’s transmission assets. Theagreements also contain a provisionappointing the operating company as agent forlicensing space on the transmission company’sfacilities.

CSW SYSTEM GENERAL The CSW System General Agreement, effectiveAGREEMENT June 1, 1999, is among AEPSC, Central Power

and Light, now AEP Texas Central, PublicService Company of Oklahoma, SouthwesternElectric Power Company, West Texas UtilitiesCompany, now AEP Texas North and other CSWsubsidiaries including CSW Energy, Inc., CSWInternational, Inc., CSW Credit, Inc., CSWLeasing, Inc., C3 Communications, Inc., CSWEnergy Services, Inc., and EnerShop Inc.AEPSC is the successor of Central and SouthWest Services, Inc.

CSW SYSTEM GENERAL This agreement is intended to provide writtenAGREEMENT (Cont’d) documentation governing certain transactions

between the CSW electric operating companiesand by and between the CSW electric operatingcompanies and other CSW subsidiaries to theextent such matters are not addressed inother written agreements.

MUTUAL ASSISTANCE The Mutual Assistance Agreement, dated JulyAGREEMENT 30, 1987, is among Appalachian Power Company,

Columbus Southern Power Company (Which wasmerged into Ohio Power Company effectiveDecember 31, 2011), Indiana Michigan PowerCompany, Kentucky Power Company, KingsportPower Company, Ohio Power Company, and

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Wheeling Power Company.

This agreement allows any participatingcompany to request emergency aid from any oneor more of the other participating companiesfor the purpose of restoring electricservice caused by natural disasters and otheremergencies.

CENTRAL MACHINE SHOP The Central Machine Shop Agreement, datedAGREEMENT January 1, 1979, is among Appalachian Power

Company and the Companies affiliated withAmerican Electric Power, Inc.

This agreement covers machine shop servicesprovided by Appalachian Power Company toaffiliates within the AEP System.

SYSTEM INTEGRATION The System Integration Agreement, as amended,AGREEMENT is among Appalachian Power Company, Kentucky

Power Company, Ohio Power Company, ColumbusSouthern Power Company (Which was merged intoOhio Power Company effective December 31,2011), Indiana Michigan Power Company, andtheir agent AEPSC; Public Service Company ofOklahoma, Southwestern Electric PowerCompany, and AEPSC.

This agreement provides the contractual basisfor coordinated planning, operation,maintenance of the power supply resources ofthe AEP East Zone and the AEP West Zone toachieve economies consistent with theprovision of reliable electric service and anequitable sharing of the benefits and costsof such coordinated arrangements. Thisagreement is intended to apply in addition toand not in lieu of the AEP InterconnectionAgreement and [CSW] Operating Agreement.

Power Coordination The Power Coordination Agreement (“PCA”),Agreement effective 1/1/2014, is among Appalachian

Power Company (“APCo”), Indiana Michigan

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Power Company (“I&M”), Kentucky Power Company(“KPCo”), and, effective 6/1/2015, WheelingPower Company (“WPCo” and, collectively withAPCo, I&M, and KPCo, the “OperatingCompanies”), and American Electric PowerService Corporation ("AEPSC") as agent toAPCo, I&M, KPCo, and WPCo.

This agreement provides for a contractualbasis for coordinating the power supplyresources of the Operating Companies toachieve economies and efficiencies consistentwith the provision of reliable electricservice and an equitable sharing of thebenefits and costs of such coordinatedarrangements. This Agreement is based on thepremise that each Operating Company willmaintain sufficient long-term power supplyresources to meet its Internal Loadrequirements. Further, the PCA allows, butdoes not obligate, the Operating Companies toparticipate collectively under a common fixedresource requirement capacity plan in PJM andto participate in specified collective off-system sales and purchase activities.

Bridge Agreement The Bridge Agreement, effective 1/1/2014, isamong Appalachian Power Company (“APCo”),Indiana Michigan Power Company (“I&M”),Kentucky Power Company (“KPCo”), Ohio PowerCompany (“OPCo” and, collectively with APCo,I&M and KPCo, the “Operating Companies”), AEPGeneration Resources Inc. (“AEP GenerationResources”) and American Electric PowerService Corporation ("Agent" and,collectively with APCo, I&M, KPCo, OPCo andAEP Generation Resources, the “Parties”).

This agreement is an interim arrangement to:(a) address the treatment of purchases andsales made by AEPSC on behalf of theOperating Companies that extend beyondtermination of the Interconnection Agreement

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04-02-02

OPERATING AGREEMENT The [CSW] Operating Agreement (CSW no longerexists), dated January 1, 1997, is amongCSWS, Central Power and Light Company, PublicService Company of Oklahoma, SouthwesternElectric Power Company and West TexasUtilities Company.

A restated and amended operating agreementfor Public Service Company of Oklahoma andSouthwestern Electric Power Company wassigned December 21, 2001.

This agreement provides the contractual basisfor a single interconnected electric systemthrough the coordinated planning, construc-tion, operation, and maintenance of the abovementioned companies’ electric supplies.CSWS has been designated to act as Agent forthis agreement.

SYSTEM TRANSMISSION The System Transmission IntegrationINTEGRATION AGREEMENT Agreement, dated June 15, 2000, is among

Appalachian Power Company, Kentucky PowerCompany, Ohio Power Company, ColumbusSouthern Power Company (Which was merged intoOhio Power Company effective December 31,2011), Indiana Michigan Power Company, andtheir agent AEPSC; and Public Service Companyof Oklahoma, Southwestern Electric PowerCompany, Central Power and Light, now AEPTexas Central, West Texas Utilities, now AEPTexas North, and their agent CSWS (succeededby AEPSC).

This agreement provides the contractual basisfor coordinated planning, operation andmaintenance of the AEP East Zone and the AEPWest Zone System Transmission Facilities toachieve economies consistent with theprovision of reliable electric service and anequitable sharing of the benefits and costsof such coordinated arrangements.

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DateAugust 18, 2016

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04-02-02

TRANSMISSION The Transmission Agreement, dated April 1,AGREEMENT 1984, is among Appalachian Power Company,

Columbus Southern Power Company (Which wasmerged into Ohio Power Company effectiveDecember 31, 2011), Indiana Michigan PowerCompany, Kentucky Power Company, and OhioPower Company (Members) and AEPSC (Agent).

This agreement provides for the equitablesharing of costs incurred among the Membersfor their respective high-voltage and extrahigh-voltage transmission facilities. Thisagreement is administered by AEPSC.

AEP SYSTEM TRANSMISSION AEP SYSTEM TRANSMISSION AGREEMENT, datedCENTER AGREEMENT December 1, 2009 between Ohio Power Company

and the AEP West operating companies (AEPTexas Central Company, AEP Texas NorthCompany, Public Service Company of Oklahoma,and Southwestern Electric Power Company).

This agreement provides for the WestOperating Companies to make use of the AEPTransmission Training Center facilitieslocated in Pataskala, OH and owned by AEPPower for the training of transmission linepersonnel employed by the West OperatingCompanies.

TRANSMISSION This agreement, dated January 1, 1997 andCOORDINATION AGREEMENT revised October 29, 1999, is among Central

Power and Light Company, West Texas UtilitiesCompany, Public Service Company of Oklahoma,and Southwestern Electric Power Company.

This agreement provides for the equitablesharing of costs incurred and revenues earnedamong the members for their respectivetransmission systems.

THIRD AMENDED AND This agreement, dated August 25, 2004 as

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04-02-02

RESTATED AGENCY amended March 22, 2006 and January 30, 2008,AGREEMENT (ACCOUNTS is among AEP Credit, Inc. and certain AEPRECEIVABLE) electric companies.

This agreement provides for the sale by theoperating companies to AEP Credit, Inc. ofaccounts receivables arising from the saleand delivery of electricity, gas and otherrelated services in the normal course ofbusiness.

THIRD AMENDED AND This agreement, dated August 25, 2004 asRESTATED PURCHASE amended March 22, 2006 and January 30, 2008AGREEMENT (ACCOUNTS is among AEP Credit, Inc. and certain AEPRECEIVABLE) electric companies.

This agreement provides for the agent(Operating Companies) to take any and allsteps on behalf of AEP Credit to collect allamounts due under any or all of thereceivables arising from the sale anddelivery of electricity, gas and otherrelated services in the normal course ofbusiness.

ENERGY CONSERVATION This agreement, dated December 22, 1997, isMEASURE UTILITY/ENERGY between West Texas Utilities, Inc. andSERVICE COMPANY AGENCY EnerShop, Inc (EnerShop not longer exists).AGREEMENT

West Texas Utilities, Inc. (WTU) has signedan Energy Conservation Measures Agreementwith the United States Government relating tothe refurbishing and upgrading of USGovernment facilities located within theservice territory of WTU. EnerShop isauthorized as the agent for WTU in completingany Delivery/Task Orders agreed to by WTU andthe US Government. These Orders are forenergy conservation projects.

FRANKLIN AND INDIANA Franklin Real Estate Company (Franklin) and

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04-02-02

FRANKLIN PURCHASE Indiana Franklin Realty, Inc. (IndianaCONTRACTS Franklin) have purchase contracts with AEP’s

electric utilities (various dates).

The contracts provide that Franklin andIndiana Franklin (Sellers) may buy,sell,holdtitle to, or lease real estate as agents forthe benefit of the respective electricutilities (i.e., each Purchaser).

INDIAN MESA The Interconnection Agreements dated MarchINTERCONNECTION 19, 2001, are between West Texas Utilities,AGREEMENT now AEP Texas North and Indian Mesa Power

Partners, LP (Generator). These twoagreements provide for the interconnection ofWTU, now AEP Texas North’s transmissionsystem to the Generator’s electric generatingfacilities (Plant) built in two (2) phases.The interconnection of each phase of thePlant is provided by the separate agreements.

ELECTRIC TRANSMISSION This agreement, dated December 21, 2007 isTEXAS SERVICE AGREEMENT between Electric Transmission Texas (ETT) and

AEPSC.

This agreement covers the provision ofservices by AEPSC for ETT related to (i)theevaluation and permitting of electrictransmission projects by ETT; (ii) budgetingand scheduling services, the preparation ofconstruction documents, land acquisitionservices, engineering services, procurementservices, construction services, and thecompilation of project records, relating tothe construction of electric transmissionprojects by ETT; (iii) operation andmaintenance of its electric transmissionprojects; (iv) legal, human resources,environmental services, payroll, cashmanagement, financial, billing, collection,accounts-payable, risk management,regulatory affairs, accounting, tax, and

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04-02-02

other business functions.

PATH WEST VIRGINIA This agreement, dated September 1, 2007TRANSMISSION COMPANY PATH) is between PATH West VirginiaSERVICE AGREEMENT Transmission Company, LLC and AEP T&D

Services, LLC.

This agreement covers the provision ofservices by AEP T&D Services, LLC for PATHrelating to designing, engineering, siting,acquiring right-of-way for procuring,permitting, construction, commissioning,financing, owning, operating, and maintainingcertain electric transmission andinterconnection facilities.

DocumentNumber


DateMarch 31, 2014

Page1


MINING AND TRANSPORTATION

04-02-03

SUMMARY AEP System affiliates acquire coal for andprovide for transporting coal to AEP'sregulated utilities. With respect to certainaffiliated power plants, AEP Systemaffiliates may provide coal mining, coalpreparation and/or coal transloadingservices.

COAL MINING The following table lists the mining(including lignite) agreements between AEP’s electric utilities

and their mining subsidiaries:

DATE PARTIES05-31-01 Southwestern Electric Power

Company and Dolet Hills LigniteCompany LLC.

This agreement provides that the abovementioned mining company agree to mine,extract, remove, prepare and sell the coal orlignite they mine from their lands and, insome cases, from lands owned by the electricutility. The electric utility, in turn,agrees to purchase the coal and lignite.Certain AEP mines have been closed butcontinue to incur mine shutdown costs.

COAL TRANSPORTATION There are several contracts under which AEP’selectric utilities receive coaltransportation services from affiliates.

BARGE TRANSPORTATION The Barge Transportation Agreement, dated May1, 1986 and amended September 12, 2013, isamong Appalachian Power Company, Ohio PowerCompany, AEP Generating Company and KentuckyPower Company (Shippers) and the RiverTransportation Division of Indiana MichiganPower Company (Division).

This agreement provides for the Shippers tofurnish and deliver coal to the Division atloading points along certain rivers and toaccept delivery of such coal at designated

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04-02-03

delivery points and pay for the services ofthe Division in receiving, transporting anddelivering such coal.

COAL TRANSFER-COOK The Amended and Restated Cook Coal TransferCOAL TERMINAL Agreement – Cook Coal Terminal, dated

December 16, 2013, is betweenAEP Generating Company (Operator) and OhioPower Company, Indiana Michigan PowerCompany, Kentucky Power Company andAppalachian Power Company (Users).

This agreement provides for the Operator tounload coal for the Users from unit trains,transfer such coal from the unloading pointat the terminal, re-load such coal on barges,and perform other related services at theterminal.

RAIL CAR USE The AEP System Rail Car Use Agreement, datedApril 1, 1982, is among Indiana MichiganPower Company, Appalachian Power Company andOhio Power Company. It was amended effectiveJuly 1, 2006 to add Public Service Company ofOklahoma and Southwestern Electric PowerCompany as parties to the agreement. It wasamended again effective September 12, 2013 toadd Kentucky Power Company as a party to theagreement.

This agreement provides that coal hopper carsleased or otherwise deployed by the aboveparties be made available for the mutualbenefit of each party without regard to leaseownership by a specific party but on thebasis of proximity and availability for use,and other dispatching considerations.

RAILCAR MAINTENANCE The Rail Car Maintenance Agreement, datedAugust 1, 2013, is among AEP GeneratingCompany (Provider), Ohio PowerCompany, Appalachian Power Company, KentuckyPower Company, Public Service of Oklahoma

DocumentNumber


DateMarch 31, 2014

Page3



04-02-03

Southwestern Electric Power Company andIndiana Michigan Power Company.

This agreement provides for AEP GeneratingCompany to furnish routine, preventive andother maintenance to the railroad hopper carsowned or leased by Appalachian Power Company,Kentucky Power Company, Public Service ofOklahoma Southwestern Electric Power Companyand Indiana Michigan Power Company.

The Rail Car Maintenance Facility Agreement,dated July 29, 1997, is among SWEPCO, CPL,now AEP Texas Central, PSO.

A unit train rail car maintenance facilitynear Alliance, Nebraska has been established.SWEPCO is the majority owner and operates thefacility. The actual cost of inspection andmaintenance of individual rail cars and otherexpenses directly assignable to a specificrail car shall be paid by the party owningthe rail car. Non-assignable costs areshared based on the direct labor charges forrail cars actually repaired or inspected perparty in ratio to the total direct laborcharges for all cars owned by the partiesrepaired at the facility during the month.

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Page1


CONSULTING SERVICES

04-02-04

SUMMARY This document identifies the consultingservices agreements AEP’s regulatedutilities have with certain non-regulatedaffiliates.

AEP PRO SERV, INC. The following table lists the consultingformerly AEP Resources agreements between the AEP electricService Company, AEP utilities and AEP Pro Serv, Inc. referred toResources Engineering as the “Client”. These agreements allow the& Services Company Client to utilize certain services,and AEP Energy Services, properties and resources of the AEPInc.) electric utilities to sell management,

technical and training services andexpertise to non-affiliate companies.

DATE PARTIES04-08-1983 Indiana Michigan Power Company

and AEP Pro Serv, Inc.04-08-1983 Ohio Power Company and AEP Pro

Serv, Inc.07-07-1983 Kingsport Power Company and

AEP Pro Serv, Inc.07-07-1983 Kentucky Power Company and AEP

Pro Serv, Inc.10-03-1983 Appalachian Power Company and

AEP Pro Serv, Inc.10-03-1983 Wheeling Electric Company and

AEP Pro Serv, Inc.

AEP ENERGY SERVICES, The table which starts on the next pageINC. (formerly AEP lists the consulting agreements between theEnergy Solutions, Inc.) AEP electric utilities and AEP Energy

Services, Inc. (Client). These agreementsallow the Client to utilize certainservices, properties and resources of theelectric utilities to broker and marketenergy commodities.

DATE PARTIES09-27-1996 Ohio Power Company and AEP

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Page2


CONSULTING SERVICES

04-02-04

Energy Services, Inc.09-27-1996 Kingsport Power Company and

AEP Energy Services, Inc.09-27-1996 Kentucky Power Company and AEP

Energy Services, Inc.09-27-1996 Indiana Michigan Electric

Company and AEP EnergyServices, Inc.

01-09-1997 Wheeling Power Company and AEPEnergy Services, Inc.

03-06-1997 Appalachian Power Company andAEP Energy Services, Inc.

DocumentNumber 04-02-05


SectionAffiliated Contracts with RegulatedCompaniesSubject

JOINT OPERATING AGREEMENTS

Date PageSeptember 15, 2019 1

SUMMARY Certain other AEP facilities are jointlyowned and/or operated.

PHILIP SPORN PLANT The Sporn Plant Operating Agreement, datedAGREEMENT January 1, 2014, is between Appalachian

Power Company and AEP Generation ResourcesInc. (“Owners”) and American Electric PowerService Corporation (“Agent”).

Appalachian Power Company (“APCO”)owns SpornUnit Nos. 1 and 3) and AEP GenerationResources Inc. (“AEPGR”)owns Sporn units 2,4 and 5). The Sporn Plant retired in May2015. Under the Agreement, APCO bills AEPGRfor its share of the post-retirement coststhat APCO incurs at Sporn Plant.

MITCHELL PLANT The Mitchell Plant Operating Agreement,dated January 31, 2015, is between KentuckyPower Company and Wheeling Power Company(“Owners”) and American Electric PowerService Corporation (“Agent”).

Kentucky Power Company and Wheeling PowerCompany have an undivided ownership interestin Mitchell Plant which consists of two 800megawatt generating units. The Ownersdesire that Kentucky Power Company operateand maintain Mitchell Plant.

DocumentNumber 04-02-05


SectionAffiliated Contracts with RegulatedCompaniesSubject

JOINT OPERATING AGREEMENTS

Date PageSeptember 15, 2019 2

EAST HVDC This agreement, dated August 3, 1995, isINTERCONNECTION AGREEMENT among Southwestern Electric Power

Company, CSW,now AEP Texas, Houston Lightingand Power Company (now Reliant Energy, HLP)and Texas Utilities Electric Company.

This agreement covers certain high voltagedirect current (HVDC) conversion and relatedalternating current transmission defined asthe HVDC Interconnection located in TitusCounty.

SWEPCO operates the facility. Itowns certain of the alternating currentfacilities and charges the other partici-pants a facility charge based on theirownership interest in the HVDC Project.SWEPCO also bills operational andmaintenance charges it incurs as theoperator based on ownership interest.

OKLAUNION UNIT NO.1 This agreement, dated April 26, 1985 (asCONSTRUCTION, OWNERSHIP amended on August 14, 1985) is among PublicAND OPERATING AGREEMENT Service Company of Oklahoma, AEP Texas(Also known as the North, now AEP Texas, the OklahomaParticipation Agreement) Municipal Power Authority and the City of

Brownsville, Texas.

The Oklaunion Power Unit No. 1 is a 720 MWwestern coal fired steam generator. It islocated on 1937.2 acres in Wilbarger County,Texas. This agreement is for theconstruction, ownership and operation ofOklaunion Power Unit 1.

OKLAUNION HVDC PROJECT This agreement, dated September 14,1988,CONSTRUCTION, OWNERSHIP is among PSO, AEP Texas North CompanyAND OPERATING AGREEMENT now AEP Texas and Central and South West

Services, Inc.

PSO and TNC own, and PSO operates theproject known as the Oklaunion HVDC Tielocated in Wilbarger County, Texas.

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Page1


TAX AGREEMENT

04-02-06

SUMMARY American Electric Power Company, Inc. (AEP)joins in filing a consolidated federal incometax return with its affiliates in the AEPholding company system.

TAX AGREEMENT The AEP System tax agreement, among otherthings, sets forth the companies’ agreementto annually join in the filing of aconsolidated federal income tax return andthe method under which to allocate theconsolidated tax to the system companies.This agreement permits the allocation of thebenefit of current tax losses utilized to theSystem companies giving rise to them indetermining their current tax expense.

The tax loss of AEP is allocated to itssubsidiaries with taxable income. With theexception of the loss of AEP, the method ofallocation approximates a separate returnresult for each company in the consolidatedgroup.

DocumentNumber


Date

Page1

SectionAffiliate Contracts with RegulatedCompaniesSubjectAEP SYSTEM AMENDED AND RESTATED MONEY POOLAGREEMENT

February 22, 2018

04-02-07

SUMMARY The AEP System Utility Money Pool Agreementis an arrangement whereby the participantsin the Utility Money Pool lend to and borrowfrom each other on a short-term basis.

DESCRIPTION The AEP System Amended and Restated MoneyPool Agreement, dated November 3, 2017,isamong and between AEP, American ElectricPower Service Corporation, and AEP UtilityFunding LLC and regulated direct andindirect operating and certain othersubsidiaries each of which are signatoriesto the Agreement or have become signatories.

The Agreement gives participants the rightto borrow from the pool and invest theirexcess funds in the pool.

A further description of the Utility MoneyPool is contained in another section of thismanual (see the Table of Contents or theAlphabetic Subject Index to find theapplicable Document Number).

DocumentNumber


DatePage

1

SectionAffiliate Contracts with RegulatedCompaniesSubjectAEP SYSTEM AMENDED AND RESTATED NONUTILITYMONEY POOL AGREEMENT

February 22, 2018

04-02-08

SUMMARY The AEP System Nonutility Money PoolAgreement is an arrangement whereby theparticipants in the Nonutility Money Poollend to and borrow from each other on ashort-term basis.

DESCRIPTION OF THE The AEP System Fourth Amended and RestatedAGREEMENT Nonutility Money Pool Agreement, dated May

1, 2012, is between AEP, and AmericanElectric Power Service Corp., AEP NonutilityFunding LLC certain and unregulated directand indirect subsidiaries of AEP each ofwhich are signatories to the Agreement orhave become signatories.

The Agreement gives each pool participantthe right to borrow from the pool and toinvest excess funds in the pool.

A further description of the NonutilityMoney Pool is contained in another sectionof this manual (see the Table of Contents orthe Alphabetic Subject Index to find theapplicable Document Number).

DocumentNumber


DateMarch 7, 2019

Page1

Section

DatabasesSubject

OVERVIEW

04-03-01

SUMMARY Certain databases have been established foremployee reference purposes.

CHARTFIELD VALUES A separate database can be used to viewcertain chartfield values. The chartfielddatabase contains the most currentinformation regarding the various chartfieldvalues and descriptions.

04-03-02

AFFLIATE AGREEMENTS Copies of all agreements between AEPregulated utilities and their affiliates arekept in Company files.

04-03-03

DocumentNumber


DateMarch 7, 2019

Page1

Section

DatabasesSubject

CHARTFIELD VALUES

04-03-02

SUMMARY Several chartfield databases have beenestablished for employee reference purposes.A web link provides a menu for accessing theseparate databases and tools. The chartfielddatabases contain the most currentinformation regarding the various chartfieldvalues and descriptions and links to the sameinformation regarding work ordrs.

INSTRUCTIONS FORVIEWING

https://sharenow2.sp.aepsc.com/shsvcs/cfieldport/SitePages/ChartFieldHome.aspx

https://sharenow2.sp.aepsc.com/shsvcs/cfieldport/SitePages/

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Page1

Section

DatabasesSubject

AFFILIATE AGREEMENTS

04-03-03

SUMMARY An affiliated contracts Sharepoint siteexists for reference purposes. A SharePointweb-link provides a method for accessing thisinformation. The affiliated contractsSharepoint site contains copies of theaffiliated contracts.

INSTRUCTIONS FOR Enter the below address into web browser:ACCESSING SHAREPOINT

https://sharenow2.sp.aepsc.com/shsvcs/ACA/SitePages/Home.aspx

INSTRUCTIONS FOR To view the appropriate affiliate contract,VIEWING use the category groups on the left panel and

click on the name of the contract.

SECURITY ACCESS The CAM Administrator grants access to theaffiliated contracts SharePoint site on an asneeded basis.



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Page1

Section

Job DescriptionsSubject

OVERVIEW

04-04-01

SUMMARY The corporate separation rules adopted bythe Public Utilities Commission of Ohio(PUCO) require the electric utility, asdefined in the rules, to maintain a copy ofeach shared employee’s job description inits Cost Allocation Manual (CAM). Inaddition, the CAM shall include a copy ofall transferred employees' previous and newjob descriptions.

The corporate separation rules define“employees” as “all full-time or part-timeemployees of an electric utility or itsaffiliates, as well as consultants,independent contractors or any otherpersons, performing various duties orobligations on behalf of or for an electricutility or its affiliates.”

Job descriptions are not required, nor arethey maintained, for consultants,independent contractors or any otherpersons who are not actual employees of theelectric utility or its AEP affiliates.

SHARED EMPLOYEES Job descriptions for all employees who areshared between AEP’s PUCO regulatedelectric utilities and any affiliate thatprovides a competitive retail electricservice, or that provides a non-electricproduct or service to customers, areincorporated in this manual by reference.

04-04-02

TRANSFERRED EMPLOYEES The required previous and current jobdescriptions for employees transferred fromAEP’s PUCO regulated electric utilities toany affiliate that provides a competitiveretail electric service, or that provides anon-electric product or service to

TRANSFERRED EMPLOYEES customers, are incorporated in this manual

DocumentNumber



Page2

Section


OVERVIEW

04-04-01

(Cont’d) by reference.

O4-04-03

DocumentNumber


DateJuly 31, 2013

Page1

Section


SHARED EMPLOYEES (PUCO)

04-04-02

SUMMARY 4901:1-37-04 (A)(4) of the Public UtilitiesCommission of Ohio’s (PUCO’s) corporateseparation rules states that an electricutility may not share employees and/orfacilities with any affiliate, if thesharing, in any way, violates the code ofconduct provisions contained in its corporateseparation rules.In addition, 4901:1-37-08 (D)(4) and 4901:1-37-04 (A) (5) of the corporate separationrules require the electric utility tomaintain a copy of each shared employee’s jobdescription in its Cost Allocation Manual andto ensure that all shared employeesappropriately record and charge their timebased on fully allocated costs.

DEFINITION OF SHARED In the corporate separation plans filed byEMPLOYEE Columbus Southern Power Company (Which was

merged into Ohio Power Company effectiveDecember 31, 2011) (Case No. 99-1730-EL-ETP),the respondents defined a “shared employee”as:

Any employee of the electric utility, orany affiliate which provides acompetitive retail electric service orwhich provides a non-electric product orservice to customers (i.e., the SeparateAEP Companies), or a consultant, indepen-dent contractor, or any other personperforming various duties or obligationson behalf of the electric utility or theSeparate AEP Companies, whose more thanincidental job duties and responsi-bilities are divided between the electricutility and any Separate AEP Companiesfor other than emergency purposes.

PROCEDURE For purposes of this manual,job descriptionsfor shared employees who are true employeesof the electric utility or any Separate AEP

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DateJuly 31, 2013

Page2

Section


SHARED EMPLOYEES (PUCO)

04-04-02

PROCEDURE (Cont’d) Company are included in this manual byreference and, as such, are part of thismanual.

Job descriptions are not maintained forconsultants, independent contractors or otherpersons who are shared but are not actualemployees of the electric utility or theSeparate AEP Companies. However, a list ofsuch persons will be maintained. The listwill identify the name of each such personand the name of the person’s actual employer.The list, which will be prepared at leastevery six months, is incorporated in thismanual by reference and, as such, is part ofthis manual.

RESPONSIBILITY AEP Service Corporation’s Human ResourcesDepartment, working with AEP’s variousbusiness units, will prepare, on behalf ofAEP’s PUCO regulated electric utilities, therequired job descriptions for all sharedemployees; and it will also maintain therequired list of other shared persons who arenot actual employees.

TIME CHARGES AEP’s time reporting systems are designed toensure that salary and salary-related costsare properly allocated by requiringemployees, using positive time reporting, tocharge their time to the appropriateaccounting codes. All time charges areallocated and billed on a fully allocatedcost basis as defined in the PUCO’s CorporateSeparation rules.____________________________________________[NOTE: Other state commissions haveestablished requirements relative to sharedemployees. See TAB 02, Section 04 of thismanual for further information.]

DocumentNumber


DateJuly 13, 2009

Page1

Section


TRANSFERRED EMPLOYEES (PUCO)

04-04-03

SUMMARY 4901:1-37-08 (D)(6) of the Public UtilitiesCommission of Ohio’s (PUCO’s) corporateseparation rules require electric utilities,as defined in the rules, to add to their CostAllocation Manuals (CAMs) a copy of alltransferred employees’ previous and new jobdescriptions.

DEFINITION OF TRANS- A “transferred employee” is any full-time orFERRED EMPLOYEE part-time employee of the electric utility,

as well as any consultant, independentcontractor or any other person, who performsvarious duties or obligations for or onbehalf of the electric utility, thattransfers from the electric utility to anyaffiliate which provides a competitive retailelectric service or which provides a non-electric product or service to customers(i.e., the Separate AEP Companies).

PROCEDURE For purposes of this manual, previous and newjob descriptions for all true employees ofthe electric utility that transfer to aSeparate AEP Company are included in thismanual by reference and, as such, are part ofthis manual.

Job descriptions are not maintained forconsultants, independent contractors or otherpersons who are not true employees of the AEPSystem. However, a list of all such personswho transfer from the electric utility to aSeparate AEP Company will be maintained. Thelist will identify the name of each suchperson and the name of the person’s actualemployer. The list, which will be preparedat least every six months, is incorporated inthis manual by reference and, as such, ispart of this manual.

RESPONSIBILITY AEP Service Corporation’s Human Resources

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DateJuly 13, 2009

Page2

Section


TRANSFERRED EMPLOYEES (PUCO)

04-04-03

Department, working with AEP’s variousbusiness units, will prepare, on behalf ofany AEP electric utility regulated by thePUCO, the required job descriptions for allemployees who transfer from the electricutility to a Separate AEP company. A list ofall such persons who transfer from theelectric utility to a separate AEP Companywill be maintained electronically.Information stored will include the name ofeach such person and the name of the person’sactual employer. The list, which can beprepared at any time upon request, isincorporated in this manual by reference and,as such, is part of this manual. HumanResources will also maintain the requiredlist of other transferred persons who are notactual employees of the AEP System.

_____________________________________________[NOTE: Other state commissions haveestablished requirements relative totransferred employees. See TAB 02, Section04 of this manual for further information.]

DocumentNumber


DateJuly 31, 2013

Page1

Section

Complaint LogSubject

OVERVIEW

04-05-01

SUMMARY The corporate separation rules adopted by thePublic Utilities Commission of Ohio requireColumbus Southern Power Company (Which wasmerged into Ohio Power Company effectiveDecember 31, 2011) to establish a complaintprocedure for issues related to theirrespective corporate separation plans.

COMPLAINT LOG A log of complaints brought to the electricutility must be maintained as part of theelectric utility’s Cost Allocation Manual.

04-05-02

DocumentNumber


DateMarch 10, 2014

Page1

Section

Complaint LogSubject

CORPORATE SEPARATION (PUCO)

04-05-02

SUMMARY 4901:1-37-05 (B) (14) and 4901:1-37-08 (D)(8)of the Public Utilities Commission of Ohio’s(the PUCO’s) corporate separation rulesrequire the electric utilities, as defined inthe rules, to establish a complaint procedurefor issues concerning compliance with thePUCO’s corporate separation rules and a logof complaints brought to the utility to beincluded in its CAM.

RESPONSIBILITY AEP’s Chief Compliance Officer will followthe procedures for handling such complaintsas set forth in the PUCO’s rules and asstated in the corporate separation plansfiled by Columbus Southern Power Company(Which was merged into Ohio Power Companyeffective December 31, 2011) and Ohio PowerCompany.

CAM REQUIREMENTS The required complaint log is incorporated inthis manual by reference and, as such, ispart of this manual.

DocumentNumber


DateJuly 31, 2013

Page1

Section

Board of Directors MinutesSubject

OVERVIEW

04-06-01

SUMMARY The corporate separation rules adopted by thePublic Utilities Commission of Ohio (PUCO)require Columbus Southern Power Company(Which was merged into Ohio Power Companyeffective December 31, 2011), or anysuccessor electric utility company operatingin the state of Ohio, to incorporate a copyof the minutes of each of their board ofdirectors meetings in their Cost AllocationManual (CAM).

COPIES The required minutes are incorporated in thismanual by reference.

04-06-02

DocumentNumber


DateJuly 31, 2013

Page1

Section

Board of Directors MinutesSubject

COPIES (PUCO)

04-06-02

SUMMARY 4901:1-37-08(D)(9) of the PUCO’s corporateseparation rules require electric utilitiesto incorporate their minutes of each board ofdirectors meeting in their Cost AllocationManual (CAM) as a structural safeguard for aminimum period of three years.

RESPONSIBILITY AEP’s Legal Department maintains the requiredminutes as described in the corporateseparation plans filed by Columbus SouthernPower Company (Which was merged into OhioPower Company effective December 31, 2011)and Ohio Power Company.

CAM REQUIREMENTS The required minutes are incorporated in thismanual by reference and, as such, are part ofthis manual.

DocumentNumber


DateJanuary 8, 2013

Page1

Section

Tariff ProvisionsSubject

Overview

04-07-01

SUMMARY The corporate separation rules adopted by thePublic Utilities Commission of Ohio requiresOhio Power Company to establish a proceduredetailing each instance in which the electricutility exercised discretion in theapplication of its tariff provisions.

TARIFF DISCRETION LOG A log detailing each instance when theelectric utility exercised discretion inapplication of its tariff provisions must bemaintained as part of the electric utility’sCost Allocation Manual.

DocumentNumber


DateJanuary 8, 2013

Page1

Section

Tariff ProvisionsSubject

04-07-02

SUMMARY 4901:1-37-08 (D) (7) of the Public UtilitiesCommission of Ohio’s (the PUCO’s) corporateseparation rules require the electricutilities, as defined in the rules, toestablish a procedure detailing each instancein which the electric utility exerciseddiscretion in the application of its tariffprovisions and a log of such instances to beincluded in its CAM.

RESPONSIBILITY AEP Ohio’s VP of Regulatory and Financemaintains the required procedure and relatedTariff Discretion Log.

CAM REQUIREMENTS The required log is incorporated in thismanual by reference and, as such, is part ofthis manual.

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Page1

Section

AppendixSubject

OVERVIEW (APPENDIX)

99-00-01

SUMMARY This appendix contains tables and othersupplementary information that can be usedfor reference purposes.

GLOSSARY OF KEY A glossary of key terms and acronyms isTERMS provided to assist the reader.

99-00-02

RECORD RETENTION A summary of the record retentionREQUIREMENTS requirements prescribed by AEP’s various

commissions for transactions withaffiliates is maintained as part of thismanual.

99-00-03

LIST OF APPROVED An Allocation Factor defines the factor(s)ALLOCATION FACTORS that will be used to derive the percentages

of cost to be billed to each companywhenever costs are shared among AEP Systemcompanies through the billing process.

A list of approved Allocation Factors ismaintained as part of this manual.

99-00-04

LIST OF PRIMARY Allocation Factors are assigned to finalALLOCATION FACTORS BY cost objectives generally based on theFUNCTION nature (i.e., function) of the work

performed.

A list of the primary Allocation Factorsfor each function is maintained as part ofthis manual.

99-00-05

LIST OF AFFILIATE AEP’s regulated utilities have entered intoCONTRACTS BY COMPANY various agreements with their affiliates.

TAB 04, Section 02 of this manual contains

DocumentNumber



Page2

Section

AppendixSubject

OVERVIEW (APPENDIX)

99-00-01

LIST OF AFFILIATE a description of each contract.CONTRACTS BY COMPANY(Cont’d) A list of the various contracts with each

regulated utility is maintained as part ofthis manual.

99-00-06

DocumentNumber



Page1

Section

AppendixSubject

GLOSSARY OF KEY TERMS

99-00-02

SUMMARY This glossary provides definitions for keyterms and abbreviations used in this manual.Unless the context in which the terms andabbreviations as used in this manual clearlyindicate a different meaning as indicated inthis glossary

AEP American Electric Power Company, Inc.

AEPSC American Electric Power Service Corporation

AEP holding company American Electric Power Company, Inc. (parentsystem holding company) together with all of its

subsidiaries.

AEP System The electric utility companies, subsidiariesof American Electric Power Company, Inc.together with their subsidiary coal-miningand power generating companies as well asAEPSC.

Affiliates While each regulatory commission has its ownunique definition of the term “affiliates,”as used in this manual the term generallyincludes American Electric Power Company,Inc. and all companies that are owned orcontrolled by American Electric PowerCompany, Inc.

Affiliate transactions Transactions between or among affiliates forthe sale and purchase of products, servicesand capital assets.

Allocation Factors The cost allocation methods, factors andpercentages used in the billing process toallocate costs among AEP companies.

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Page2

Section

AppendixSubject


99-00-02

Chartfields The distinctive fields used to affix codes to(or coding blocks) transaction records generally for the purpose

of identification, classification andretrieval.

Common costs Costs that benefit both regulated and non-regulated products and services. Also see,Joint costs.

Cost allocator The method or ratio used to apportion cost.A cost allocator can be based on the originof costs, as in the case of cost drivers;cost-causative linkage of an indirect nature;or one or more overall factors (also known asgeneral allocators).

Cost driver A measurable event or quantity whichinfluences the level of cost incurred andwhich can be directly traced to the origin ofthe costs themselves.

Primary cost driver The dominant driver of a given cost or costpool.

Cross-subsidy The amount of cost recovered from one classof customers or business unit that isattributable to another.

Direct costs Costs that can be identified specificallywith a given cost objective.

FERC Federal Energy Regulatory Commission.

Fully-allocated costs Direct costs plus an appropriate share of(or fully-distributed indirect costs attributed to a given costcosts) objective.

General allocator See Cost allocator.

Indirect costs Costs that cannot be identified specifically

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Page3

Section

AppendixSubject


99-00-02

with a given cost objective. Indirect costsinclude, but are not limited to overheadcosts, and some taxes.

Joint costs Costs that benefit two or more costobjectives.

Non-regulated Activities which produce products or servicesoperations that are not subject to price regulation by

regulatory authorities.

Regulated operations Activities which produce products or servicesthat are subject to price regulation bygovernment authorities.

SEC Securities and Exchange Commission.

Shareable costs Costs that are billable to two or morecompanies (affiliated and non-affiliated) bymutual agreement using fixed or variablepercentages.

Transfer pricing The price or method used to transfer (or billfor) products or services delivered by onedivision of a company to another division, orby one affiliate to another affiliate.Transfer pricing also pertains to assettransfers and sales.

USoA The Uniform System of Accounts adopted byeach regulatory commission (usually theUniform System of Accounts prescribed by theFERC for public utilities and licenseessubject to the provisions of the FederalPower Act).

DocumentNumber


DateJuly 28, 2016

Page1

Section

AppendixSubject

RECORD RETENTION REQUIREMENTS

99-00-03

SUMMARY Some of AEP’s commissions have prescribedminimum record retention requirements forthose records that are specifically relatedto transactions with certain affiliates.

ARKANSAS Arkansas Rule 4.04 requires an electricutility to maintain a record of alltransactions with its competitiveaffiliates for at least three yearsfollowing the date of each transaction.

Arkansas requirements can be found inArkansas Public Service Commission Order 7of Docket 06-112-R, dated May 25, 2007.

LOUISIANA As prescribed in the Louisiana MergerStipulation Appendix A – AffiliateTransaction Conditions 13, SWEPCO or AEPSCon behalf of SWEPCO may not make any non-emergency procurement in excess of $1million per transaction from an unregulatedaffiliate other than from AEPSC exceptthrough a competitive bidding process or asotherwise authorized by this Commission.Transactions involving the Company and CSWCredit, Inc. (or its successor) for thefinancing of accounts receivables areexempt from this condition. Records of allsuch affiliate transactions must bemaintained until the Company’s nextcomprehensive retail review. In addition,at the time of the next comprehensive ratereview, all such affiliate transactionsthat were not competitively bid shall beseparately identified for the Commission bythe Company. This identification shallinclude all transactions between theCompany and AEPSC in which AEPSC acquiredthe goods or services from anotherunregulated affiliate.

OHIO The corporate separation rules adopted bythe Public Utilities Commission of Ohio

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DateJuly 28, 2016

Page2

Section

AppendixSubject


99-00-03

(PUCO) contain a minimum retention periodof three years for all information relativeto transactions between the electricutility and its affiliates [4901:1-37-08(G].

As prescribed by the PUCO, all of AEP’sOhio-based electric utilities and theiraffiliates shall maintain all underlyingaffiliate transaction information for aminimum of five years.

OKLAHOMA The Oklahoma Corporation Commission rulesrequire utility to keep records in the formand for a period of time not less than thatspecified by the applicable rules of FERC orthe RUS; or in the absence thereof, for two(2) years. [Chapter 165:35-1-4(a)].

TEXAS Transactions with competitive affiliates.Unless otherwise allowed in this subsection,transactions between a utility and itscompetitive affiliates shall be at arm’slength. A utility shall maintain acontemporaneous written record of alltransactions with its competitiveaffiliates, except those involving corporatesupport services and those transactionsgoverned by tariffs. Such records, whichshall include the date of the transaction,name of affiliate involved, name of autility employee knowledgeable about thetransaction, and a description of thetransaction, shall be maintained by theutility for three years. In addition to therequirements specified in paragraph (1) ofthis subsection, the following provisionsapply to transactions between utilities andtheir competitive affiliates.[§25.272(e)(2)].

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DateJuly 28, 2016

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Section

AppendixSubject


99-00-03

TEXAS (Cont’d) Discounts, rebates, fee waivers, oralternative tariff terms and conditions. Ifa utility offers its competitive affiliateor grants a request from its competitiveaffiliate for a discount, rebate, feewaiver, or alternative tariff terms andconditions for any product or service, itmust make the same benefit contemporaneouslyavailable, on a non-discriminatory basis, toall similarly situated non-affiliates. Theutility shall post a conspicuous notice onits Internet site or public electronicbulletin board for at least 30 consecutivecalendar days providing the followinginformation: the name of the competitiveaffiliate involved in the transaction; therate charged; the normal rate or tariffcondition; the period for which the benefitapplies; the quantities and the deliverypoints involved in the transaction (if any);any conditions or requirements applicable tothe benefit; documentation of any costdifferential underlying the benefit; and theprocedures by which non-affiliates mayobtain the same benefit. The utility shallmaintain records of such information for aminimum of three years, and shall make suchrecords available for third party reviewwithin 72 hours of a written request, or ata time mutually agreeable to the utility andthe third party. A utility shall not createany arrangement with its competitiveaffiliate that is so unique that nocompetitor could be similarly situated tobenefit from the discount, rebate, feewaiver, or alternative tariff terms andconditions. [§25.272(f)(B)].

A competitive affiliate is an affiliate thatprovides services or sells products in acompetitive energy-related market in Texas,including telecommunications services; tothe extent those services are energy-

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DateJuly 28, 2016

Page4

Section

AppendixSubject


99-00-03

related.

DocumentNumber


DateMay 15, 2017

Page1

Section

AppendixSubject

LIST OF FERC ACCEPTED ALLOCATION FACTORS

99-00-04

SUMMARY The following table provides a complete list of approvedAllocation Factors along with a description of the numeratorand the denominator applicable to each calculation.

_________________________________________________________________________________

NO. ALLOCATIONFACTORS

NUMERATOR/DENOMINATOR UPDATEDFrequency

MonthUpdated

01 Number of BankAccounts

Number of Bank Accounts by CompanyTotal Number of Bank Accounts Inactive

02 Number of CallCenter Telephones

Number of Call Center Phone Calls Per CompanyTotal Number of Call Center Telephones

Inactive

03 Number of CellPhones/Pagers

Number of Cell Phones/Pagers Per CompanyTotal Number of Cell Phones/Pagers

Inactive

04 Number of ChecksPrinted

Number of Checks Printed Per Company Per MonthTotal Number of Checks Printed Per Month

Inactive

05 Number of CISCustomer Mailings

Number of Customer Information System (CIS)Customer Mailings Per CompanyTotal Number of CIS Customer Mailings

Monthly

06 Number ofCommercialCustomers

Number of Commercial Customers Per CompanyTotal Number of Commercial Customers

Semi-Annually

Jan & Jul

07 Number ofCredit Cards

Number of Credit Cards Per CompanyTotal Number of Credit Cards Number of Commercial

Inactive

08 Number ofElectric RetailCustomers

Number of Electric Retail Customers Per CompanyTotal Number of Electric Retail Customers

Semi-Annually

Jan & Jul

09 Number ofEmployees

Number of Full-Time and Part-Time Employees PerCompanyTotal Number of Full-Time and Part-Time Employees

Monthly

10 Number ofGenerating PlantEmployees

Number of Generating Plant Employees Per CompanyTotal Number of Generating Plant Employees

Inactive

11 Number of GeneralLedger(GL)Transactions

Number of GL Transactions Per CompanyTotal Number of GL Transactions

Monthly

12 Number of HelpDesk Calls

Number of Help Desk Calls Per CompanyTotal Number of Help Desk Calls

Inactive

13 Number ofIndustrialCustomers

Number of Industrial Customers Per CompanyTotal Number of Industrial Customers

Semi-Annually

Jan & Jul

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AppendixSubject


99-00-04

14 Number of JCATransactions

Number of Lines of Accounting Distribution onJob Cost Accounting (JCA) Sub-System Per CompanyTotal Number of Lines of Accounting Distributionon JCA Sub-System

Inactive

15 Number of Non-UMWA Employees

Number of Non-UMWA or All Non-Union Employees PerCompanyTotal Number of Non-UMWA or All Non-UnionEmployees

Inactive

16 Number of PhoneCenter Calls

Number of Phone Calls Per Phone Center PerCompanyTotal Number of Phone Center Phone Calls

Monthly

17 Number ofPurchase OrdersWritten

Number of Purchase Orders Written Per CompanyTotal Number of Purchase Orders Written

Monthly

18 Number of Radios(Base/Mobile/Handheld)

Number of Radios (Base/Mobile/Handheld) PerCompanyTotal Number of Radios (Base/Mobile/ Handheld)

Inactive

19 Number ofRailcars

Number of Railcars Per CompanyTotal Number of Railcars

Inactive

20 Number ofRemittance Items

Number of Electric Bill Payments ProcessedPer Company Per Month (non-lockbox)Total Number of Electric Bill Payments ProcessedPer Month (non-lockbox)

Monthly

21 Number of RemoteTerminal Units

Number of Remote Terminal Units Per CompanyTotal Number of Remote Terminal Units

Inactive

22 Number of RentedWater Heaters

Number of Rented Water Heaters Per CompanyTotal Number of Rented Water Heaters

Inactive

23 Number ofResidentialCustomers

Number of Residential Customers Per CompanyTotal Number of Residential Customers Inactive

24 Number ofRouters

Number or Routers Per CompanyTotal Number of Routers

Inactive

25 Number ofServers

Number of Servers Per CompanyTotal Number of Servers

Inactive

26 Number of StoresTransactions

Number of Stores Transactions Per CompanyTotal Number of Stores Transactions

Monthly

27 Number ofTelephones

Number of Telephones Per Company (Includes allphone lines)Total Number of Telephones (Includes all phonelines)

Semi-Annually

Jan & Jul

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28 Number ofTransmissionPole Miles

Number of Transmission Pole Miles Per CompanyTotal Number of Transmission Pole Miles

Annually Apr or May(FERC Form)

29 Number ofTranstextCustomers

Number of Expected Transtext Customers PerCompanyTotal Number of Expected Transtext Customers

Inactive

30 Number of TravelTransactions

Number of Travel Transactions Per Company PerMonthTotal Number of Travel Transactions Per Month

Inactive

31 Number ofVehicles

Number of Vehicles Per Company Includes Fleet andPool Cars)Total Number of Vehicles Per Company (Includes Fleetand Pool Cars)

AnnuallyJan

32 Number of VendorInvoice Payments

Number of Vendor Invoice Payments Per Company PerMonthTotal Number of Vendor Invoice Payments Per Month

Monthly

33 Number ofWorkstations

Number of Workstations (PCs) Per CompanyTotal Number of Workstations (PCs)

Monthly

34 Active Owned orLeasedCommunicationChannels

Number of Active Owned/Leased Communication ChannelsPer CompanyTotal Number of Active Owned/Leased CommunicationChannels

Inactive

35 Avg Peak LoadFor Past ThreeYears

Average Peak Load for Past Three Years PerCompanyTotal of Average Peak Load for Past Three Years

Inactive

36 Coal CompanyCombination

The Sum of Each Coal Company’s Gross Payroll,Original Cost of Fixed Assets, Original Cost ofLeased Assets, and Gross Revenues for Last TwelveMonthsThe Sum of the Same Factors for All CoalCompanies

Inactive

37 AEPSC Past 3Months TotalBill Dollars

AEPSC Past Three Months Total Bill Dollars PerCompanyTotal AEPSC Past Three Months Bill Dollars

Monthly

38 AEPSC PriorMonth Total BillDollars

Total Bill Dollars AEPSC Prior Month Per CompanyAEPSC Total Prior Month Bill Dollars

Inactive

39 Direct 100% to One Company Monthly

40 Equal ShareRatio

One Company (1) _Total Number of Companies

Monthly

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99-00-04

41 Fossil PlantCombination

The Sum of (a) the Percentage Derived by Dividingthe Total Megawatt Capability of All FossilGenerating Plants Per Company by the TotalMegawatt Capability of All Fossil GeneratingPlants and (b) the Percentage Derived by Dividingthe Total Scheduled Maintenance Outages of AllFossil Generating Plants Per Company for the LastThree Years by the total Scheduled Maintenance ofAll Fossil Generating Plants During the SameThree YearsTwo (2)

Inactive

42 FunctionalDepartment’sPast 3 MonthsTotal BillDollars

Functional Department’s Past 3 Months Total BillDollars PerCompany________________________________Total Functional Department’s Past 3 Months TotalBill Dollars

Inactive

43 KWH Sales KWH Sales Per CompanyTotal KWH Sales

Inactive

44 Level ofConstruction –Distribution

Construction Expenditures for All DistributionPlant Accounts Except Land and Land Rights,Services, Meters and Leased Property on CustomersPremises, and Exclusive of ConstructionExpenditures Accumulated on Direct Work Ordersfor Which Charges by AEPSC Are Being MadeSeparately, Per Company/During the Last TwelveMonthsTotal of the Same for All Companies

Semi-Annually Jan & Jul

45 Level ofConstruction -Production

Construction Expenditures for All ProductionPlant Accounts Except Land and Land Rights,Nuclear Accounts, and Exclusive of ConstructionExpenditures Accumulated on Direct Work Ordersfor Which Charges by AEPSC are Being MadeSeparately, Per Company During the Last TwelveMonths______________________Total of the Same for All Companies

Semi-Annually

Jan & Jul

46 Level ofConstruction –Transmission

Construction Expenditures for All TransmissionPlant Accounts Except Land and Land Rights andExclusive of Construction ExpendituresAccumulated on Direct Work Orders for WhichCharges by AEPSC are Being Made Separately, PerCompany During the Last Three MonthsTotal of the Same for All Companies

Quarterly Jan – Apr –Jul - Oct

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47 Level ofConstruction –Total

Construction Expenditures for All Plant AccountsExcept Land and Land Rights, Line TransformersServices, Meters and Leased Property onCustomers’ premises; and the Following GeneralPlant Accounts: Structures and Improvements,Shop Equipment, Laboratory Equipment andCommunication Equipment; and Exclusive ofConstruction Expenditures Accumulated on DirectWork Orders for Which Charges by AEPSC are BeingMade Separately, Per Company During the LastTwelve MonthsTotal of the Same for All Companies

Inactive

48 MW GeneratingCapability

MW Generating Capability Per CompanyTotal MW Generating Capability


49 MWH’s Generated Number of MWH’s Generated Per CompanyTotal Number of MWH’s Generated

Semi-Annually

Jan & Jul

50 Current YearBudgeted SalaryDollars

Current Year Budgeted AEPSC PayrollDollars Billed Per CompanyTotal Current Year Budgeted AEPSC Payroll DollarsBilled

Inactive

51 Past 3 Mo.MMBTU’s Burned(All Fuel Types)

Past Three Months MMBTU’s Burned PerCompany (All Fuel Types)______________Total Past Three Months MMBTU’s Burned (All FuelTypes)


52 Past 3 Mo.MMBTU’s Burned(Coal Only)

Past Three Months MMBTU’s Burned Per Company(Coal Only)Total Past Three Months MMBTU’s Burned (CoalOnly)


53 Past 3 Mo.MMBTU’s Burned(Gas Type Only)

Past Three Months MMBTU’s Burned Per Company (GasType Only)Total Past Three Months MMBTU’s Burned (Gas TypeOnly)


54 Past 3 Mo.MMBTU’s Burned(Oil Type Only)

Past Three Months MMBTU’s Burned Per Company (OilType Only)Total Past Three Months MMBTU’s Burned (Oil TypeOnly)

Inactive

55 Past 3 Mo.MMBTU’s Burned(Solid FuelsOnly)

Past Three Months MMBTU’s Burned Per Company(Solid Fuels OnlyTotal Past Three Months MMBTU’s Burned (SolidFuels Only)


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AppendixSubject


99-00-04

56 Peak Load/Avg #Cust/KWH SalesCombination

Average of Peak Load, # of Retail Customers, andKWH Sales to Retail Customers Per CompanyTotal of Average of Peak Load, # of RetailCustomers, and KWH Sales to Retail Customers

Inactive

57 Tons of FuelAcquired

Number of Tons of Fuel Acquired Per CompanyTotal Number of Tons of Fuel Acquired

Semi-Annually

Jan & Jul

58 Total Assets Total Assets Amount Per CompanyTotal Assets Amount

Monthly

59 Total AssetsLess NuclearPlant

Total Assets Amount Less Nuclear Assets PerCompanyTotal Assets Amount Less Nuclear Assets

Inactive

60 Total AEPSC BillDollars LessInterest and/orIncome Taxesand/or OtherIndirect Costs

Total AEPSC Bill Dollars Less Interest and/orIncome Taxes and/or Other Indirect Costs PerCompanyTotal AEPSC Bill Dollars Less Interest and/orIncome Taxes and/or Other Indirect Costs

Annually

61 Total FixedAssets

Total Fixed Assets Amount Per CompanyTotal Fixed Assets Amount

Monthly

62 Total GrossRevenue

Total Gross Revenue Last Twelve Months PerCompanyTotal Gross Revenue Last Twelve Months

Inactive

63 Total GrossUtilityPlant (IncludingCWIP)

Total Gross Utility Plant AmountPer Company (Including CWIP)Total Gross Utility Plant Amount (Including CWIP)

Monthly

64 Total Peak Load Total Peak Load Per CompanyTotal Peak Load

Monthly

65 Hydro MWGeneratingCapability

Hydro MW Generating Capability per CompanyTotal Hydro MW Generating Capability


66 Number of ForestAcres

Number of Forest Acres Per CompanyTotal Number of Forest Acres

Inactive

67 Number ofBankingTransactions

Number of Banking Transactions Per CompanyTotal Number of Banking Transactions


68 Number of Dams Number of Dams Per CompanyTotal Number of Dams

Inactive

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69 Number ofLicensesObtained

Number of Licenses Obtained per CompanyTotal Number of Licenses

Inactive

70 Number of Non-Electric OARInvoices

Number of Non-Electric OAR Invoices Per CompanyTotal Number of Non-Electric OAR Invoices

Semi-Annually Jan & Jul

71 Number ofTransformerTransactions

Number of Transformer Transactions Per CompanyTotal Number of Transformer Transactions

Inactive

72 Tons of FGDMaterial

Tons of FGD Material Per CompanyTotal Tons of FGD Material

Inactive

73 Tons ofLimestoneReceived

Tons of Limestone Received Per CompanyTotal Tons of Limestone Received

Inactive

74 TotalAssets/TotalRevenues/TotalPayroll

Total Assets + Total Revenues + Total Payroll PerCompanyTotal Assets + Total Revenues + Total Payroll

Inactive

75 Total LeasedAssets

Total Leased Assets Per CompanyTotal Leased Assets

Inactive

76 Number ofBankingTransactions

Number of Banking Transactions by CompanyTotal Number of Banking Transactions

Inactive

77 PowerTransactions toAll Markets

Power Transactions by CompanyTotal Number of Power Transactions

Monthly

78 PowerTransactions toERCOT Market

Power Transactions to ERCOT Market by CompanyTotal Number of Power Transactions to ERCOTMarket

Inactive

79 Trans (commdts)to All Markets

Trans (commdts) to all Markets by CompanyTotal Number of Trans (commdts) to all Markets

Inactive

80 Trans (commdts)to ERCOT Market

Trans (commdts) to ERCOT Markets by CompanyTotal Number of Trans (commdts) to ERCOT Markets

Inactive

DocumentNumber


DateMarch 14, 2016

Page1

Section

AppendixSubjectLIST OF PRIMARY ALLOCATION FACTORSBY FUNCTION

99-00-05

SUMMARY The following table identifies the primaryAllocation Factors that are associated withthe listed functions.

GROUP/FUNCTIONPRIMARY ALLOCATION FACTORS

Audit Services Total Assets, 100% to One CompanyChief AdministrativeOfficer Administration

Total Assets

Chief Executive OfficerAdministration

Total Assets, 100% to One Company

Chief Security OfficerAdministration

Total Assets, Number of Employees

Chief Financial OfficerAdministration


Commercial Operations Total Peak Load, 100% to One CompanyCorporate Accounting Total Assets, 100% to One Company,

Number of GL Transactions, Total FixedAssets, Total Gross Utility Plant

Corporate Communications Total AssetsCorporate Human Resources Number of Employees, 100% to One

Company, AEPSC Past 3 Month Total BillCorporate Planning andBudgeting

Total Assets, 100% to One Company,Number of Electric Retail Customers, MWGenerating Capability

Customer & DistributionServices

100% to One Company, Number of ElectricRetail Customers, Number of PhoneCenter Calls, Number of CIS CustomerMailings

Distribution, Customer Ops,and Regulatory ServicesAdministration


Energy SupplyAdministration

100% to One Company

Environment and Safety MW Generating Capability, 100% to OneCompany, Number of Employees, TotalAssets

Federal Affairs Total AssetsFossil & Hydro Generation 100% to One Company, MW Generating

CapabilityGeneration Administration MW Generating Capability, 100% to One

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CompanyGeneration BusinessServices

MW Generating Capability, 100% to OneCompany, Level of Construction-Production

Generation Engineering andTechnical Services -Engineering Services

100% to One Company, MW GeneratingCapability

Generation Engineering andTechnical Services –Project and Construction

100% to One Company, Level ofConstruction-Production

Information Technology 100% to One Company, Number ofWorkstations, Number of Electric RetailCustomers, Total Assets, AEPSC BillLess Indirect and Interest, Level ofConstruction-Transmission

Investor Relations Total AssetsLegal 100% to One Company, Total Assets,

Total Fixed Assets, Number of EmployeesReal Estate & WorkplaceServices

Total Assets, 100% to One Company,Number of Electric Retail Customers,Number of Employees, Level ofConstruction-Transmission

Regulated CommercialOperations

Total Peak Load, MWH’s Generation, 100%to One Company

Regulatory Services Total Assets, 100% to One Company,Number of Trans Pole Miles

Risk and StrategicInitiatives

100% to One Company, Total Assets,AEPSC Past 3 Months Total Bill, TotalFixed Assets

Security and Aviation Number of Employees, AEPSC Past 3Months Total Bill, Total Gross UtilityPlant, 100% to One Company

Supply Chain & FleetOperations

Number of Purchase Orders, 100% to OneCompany. Total Assets, Number of StoresTransactions, MW Generating Capability

Transmission Administration 100% to One Company, Number ofTransmission Poles Miles

Transmission Asset Strategyand Policy

Number of Transmission Pole Miles, 100%to One Company, Level of Construction-

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TransmissionTransmission Field Services 100% to One Company, Number of

Transmission Pole MilesTransmission GridDevelopment & PortfolioServices

Level of Construction-Transmission,Number of Transmission Pole Miles, 100%to One Company, Total Assets

Transmission-Engineeringand Project Services

100% to One Company, Level ofConstruction-Transmission

Treasury Total Assets, AEPSC Past 3 Months TotalBill, 100% to One Company

DocumentNumber


DateMarch 15, 2020

Page1

Section

AppendixSubject

LIST OF AFFILIATE CONTRACTS BY COMPANY

99-00-06

SUMMARY The following table is a listing of theaffiliate contracts with each electricutility in the AEP System.

______________________________________________________________________

COMPANY NAME DATE CONTRACTAEP Texas(formerlyAEP TexasCentral Companyand AEP TexasNorth Company)

04/26/85

09/14/88

07/01/9301/01/9707/29/97

12/22/97

03/26/99

03/30/99

06/01/9910/29/99

06/15/00

06/15/00

06/15/00

06/16/00

06/26/01

10/30/0112/18/0211/16/04

Oklaunion Unit No. 1 Construction ownershipand Operating Agreement

Oklaunion HVDC Project Construction,Ownership and Operating Agreement

Rail Car Lease Agreement(West)CSW Operating AgreementRail Car Maintenance Facility Agreement

(West)Energy Conservation Measure Utility/Energy

Service Company Agency AgreementElectric Service Contract between Frontera

General Limited Partners and Central Powerand Light.

Interconnection Agreement Between CP&L andFrontera Generation Limited

CSW System General AgreementTransmission Coordination Agreement (West)

Regulated CompaniesAmerican Electric Power Company, Inc. and its

Consolidated Affiliated Tax Agreementregarding methods of allocated ConsolidatedIncome Tax

AEPSC Service Agreement with Central Powerand Light

AEPSC Service Agreement with West TexasUtilities Company

Amended and Restated Purchase AgreementBetween CSW Credit, Inc. and Affiliate(West) Companies

Interconnection Agreement (ERCOT Generation)between AEPTN & PSO

Construction Agreement/Trent Wind Farm LPAEP System Utility Money Pool AgreementInterconnection Agreement Between AEP Texas

North and PSO

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COMPANY NAME DATE CONTRACTAEP Texas(formerlyAEP TexasCentral Companyand AEP TexasNorth Company)(Cont’d)

12/09/04

01/01/0501/01/05

05/25/07

12/01/0903/29/10

03/29/10

04/02/19

AEP System Amended and Restated Utility MoneyPool Agreement

AEP System Tax AgreementAmerican Electric Power Company, Inc. and

it’s Consolidated Affiliated Tax Agreementregarding methods of allocated consolidatedIncome Tax

Power Purchase and Sale Agreement between AEPTexas North and AEP Energy Partners (fnaCSW Power Marketing Inc.)

AEP System Transmission Center AgreementAmended and Restated Interconnection

Agreement (AEP Texas North)Amended and Restated Interconnection

Agreement (AEP Texas Central)Amended and Restated Subscription Agreement

with Grid Assurance LLCAppalachianPowerCompany

08/11/41

09/14/48

11/25/70

12/01/7603/01/78

06/01/7801/01/7904/01/8204/01/8210/03/83

04/01/8405/01/8607/30/8712/31/96

03/06/97

Land Purchase Contract between APCo and theFranklin Real Estate Company

Coal Supply Agreement Between APCo andCentral Appalachian Coal

Purchase Agreement between APCO and IndianaFranklin Realty Inc.

Indenture Between APCo and Cedar CoalIndenture Between APCo and Southern

Appalachian Coal CompanyRacine Hydro Operating AgreementCentral Machine Shop AgreementAEP Railcar Use AgreementRailcar Maintenance AgreementAgreement Between Appalachian Power and AEP

Pro Service (Formerly AEP Energy ServicesTransmission AgreementBarge Transportation Agreement and Appendix AMutual Assistance AgreementAffiliated Transactions Agreement (East

Companies)Agreement Between Appalachian Power and AEP

Energy Services Inc.

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AppendixSubject


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COMPANY NAME DATE CONTRACTAppalachianPowerCompany(Cont’d)

06/15/00

06/16/00

12/18/0205/04/0408/25/04

08/25/04

12/09/04

01/01/05

03/22/06

03/22/06

07/01/06

01/30/08

01/30/08

11/13/08

02/12/12

01/22/13

04/24/13

American Electric Power and its consolidatedAffiliated Tax Agreements regarding methodsof allocating consolidated income taxes

Purchase Agreement Between CSW Credit and itsaffiliate client companies

AEP System Utility Money Pool AgreementArrangement for the use of the Amos SimulatorThird Amended and Restated Purchase Agreement

between AEP Credit and Appalachian PowerThird Amended and Restated Agency Agreement

Between AEP Credit and Appalachian PowerAEP System Amended and Restated Utility Money

Pool AgreementAEP Co, Inc. and its Consolidated Affiliate

Tax agreement regarding methods ofAllocating Consolidated Income Taxes.

Amendment No. 1 to the Third Amended andRestated Purchase Agreement between AEPCredit and Appalachian Power

Amendment No. 1 to the Third Amended andRestated Agency Agreement between AEPCredit and Appalachian Power

Amendment No. 1 and Consent to AEP SystemRail Car Use Agreement

Amendment No. 2 to the Third Amended andRestated Purchase Agreement between AEPCredit and Appalachian Power

Amendment No. 2 to the Third Amended andRestated Agency Agreement between AEPCredit and Appalachian Power

Amended and Restated InterconnectionAgreement Between Appalachian Power Companyand Kingsport Power Company

Executed Notice of Intent by Ohio PowerCompany to Terminate Sporn Plant OperatingAgreement

Service Agreement between Appalachian Powerand AEP Appalachian Transmission Company,Inc.Appalachian Power and AEP West Virginia

Transmission Service Agreement “2013Agreement”

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08/01/1309/12/13

09/12/1309/12/13

12/16/13

12/31/1301/01/14

01/01/14

01/01/1401/01/1401/01/14

01/01/1412/31/14

10/29/15

04/21/1611/21/16

12/20/16

10/16/1711/29/17

10/19/18

04/02/19

05/09/19

05/09/19

05/09/19

Railcar Maintenance AgreementAmendment No. 2 to AEP System Rail Car Use

AgreementAmended and Restated Urea Handling AgreementAmendment No. 1 to Barge Transportation

AgreementAmended and Restated Cook Coal Terminal

Transfer AgreementTermination of Racine Hydro Project OperatingAffiliated Transactions Agreement for Sharing

Capitalized Spare PartsAffiliated Transactions Agreement for Sharing

Materials and SuppliesSporn Plant Operating AgreementSimulator Lease AgreementAssignment of Central Machine Shop Agreement

date January 1, 1979Power Coordination AgreementAssignment & Assumption Agreement For 287

Railcars from Ohio Power and AppalachianPower

Homeserve Service Agreement between AEPSC andAppalachian Power

APCo sale of Caterpillar Backhoe to SWEPCOServices and Property Use Agreement between

Appalachian Power and Transource WVJoint License Agreement between Appalachian

Power and AEP Appalachian TransmissionCompany, Inc.

AEPSC and APCO Services AgreementAPCO and AEP Ohio Transmission Company

Transmission Asset Sharing AgreementService Agreement with Appalachian Power and

AEP West Virginia Transmission CompanyAmended and Restated Subscription Agreement

with Grid Assurance LLCAmended and Restated Urea Handling Agreement

Amendment No.1Amended and Restated Rail Car Maintenance

Agreement Amendment No.1Affiliated Transactions Agreement for Sharing

Capitalized Spare Parts Amendment No.1

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05/09/1905/09/19

05/09/19

Barge Transportation Agreement Amendment No.2Amended and Restated Cook Coal Terminal

Transfer Agreement Amendment No.1Affiliated Transactions Agreement for Sharing

Materials and Supplies Amendment No.1

IndianaMichiganPowerCompany

04/30/48

04/04/50

01/01/79

01/01/8204/01/8204/01/8204/08/83

04/01/8410/21/85

05/01/8607/30/8709/27/96

06/21/96

12/31/9606/15/00

06/16/00

04/21/04

05/04/04

05/04/04

08/25/0408/25/04

Purchase Contract between Indiana FranklinRealty, Inc.

Purchase Contract between The Franklin RealEstate Company.

Central Machine Shop Agreement/AppalachianPower

Coal Supply Agreement/Blackhawk CoalAEP Railcar Use AgreementRailcar Maintenance AgreementAgreement Between Indiana Michigan Power and

AEP ProServTransmission AgreementAmendment to Coal Supply Agreement/Blackhawk

CoalBarge Transportation Agreement & Appendix AMutual Assistance AgreementAgreement Between Indiana Michigan Power and

AEP Energy Services, Inc.(Formerly AEPEnergy Solutions

AEP Modification No. 1 AEP System InterminAllowance Agreement

Affiliated Transactions Agreement 1996AEPSC Service Agreement with Indiana Michigan

Power CompanyPurchase Agreement Between CSW Credit and

it’s Affiliate Client CompaniesIndiana Michigan Power Company

Agency Agreement between CSW Credit, Inc. andIndian Michigan Power Company

Unit Power Agreement Amendment No 1 betweenI&M and AEP

Unit 2 Operating Agreement between I&M andAEG

Third Amended and Restated Purchase AgreementThird Amended and Restated Agency Agreement

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AppendixSubject


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COMPANY NAME DATE CONTRACTIndianaMichiganPowerCompany(Cont’d)

12/09/04

01/01/05

07/01/06

05/16/07

02/15/11

02/15/11

08/01/1309/12/13

09/12/1312/16/1312/16/13

01/01/14

01/01/14

01/01/14

01/01/1405/22/14

04/02/19

05/09/19

05/09/19

05/09/19

05/09/19


AEP Co. Inc. and it’s Consolidated AffiliatedTax Agreement regarding methods ofAllocating Consolidated Income Taxes

Amendment No 1 & Consent to AEP SystemRailcar Use Agreement

Indiana Michigan Power Company & AEPGenerating Company Operation andMaintenance Agreement

Transmission Service Agreement betweenIndiana Michigan Power Company and AEPIndiana Michigan Transmission Company

Joint License Agreement between IndianaMichigan Power Company and AEP IndianaMichigan Transmission Company

Rail Car Maintenance AgreementAmendment No. 1 to Barge Transportation

AgreementAmendment No. 2 to AEP System Rail Car UseAmended and Restated Urea Handling AgreementAmended and Restated Cook Coal Terminal

Transfer AgreementAffiliated Transactions Agreement for Sharing


Materials and SuppliesUrea Handling Agreement (AEP Generation

Resources)Power Coordination AgreementSystem Transmission Integration Agreement

TerminationAmended and Restated Subscription Agreement

with Grid Assurance LLCAmended and Restated Urea Handling Agreement

Amendment No.1Amended and Restated Rail Car Maintenance

Agreement Amendment No.1Affiliated Transactions Agreement for Sharing

Capitalized Spare Parts Amendment No.1Barge Transportation Agreement Amendment No.2

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AppendixSubject


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COMPANY NAME DATE CONTRACTIndianaMichiganPowerCompany(Cont’d)

05/09/19

05/09/19

Amended and Restated Cook Coal TerminalTransfer Agreement Amendment No.1

Affiliated Transactions Agreement for SharingMaterials and Supplies Amendment No.1

KentuckyPowerCompany

06/07/63

03/31/75

01/01/79

04/01/8407/30/8709/27/96

12/31/96

11/18/97

01/01/98

06/15/00

06/15/0006/16/00

12/18/0205/04/0408/25/04

08/25/04

12/09/04

01/01/05

08/01/13

Purchase Contract between KPCO and TheFranklin Real Estate Company

Purchase Contract between KPCO and IndianaFranklin Realty, Inc.

Central Machine Shop Agreement/AppalachianPower

Transmission AgreementMutual Assistance AgreementAgreement between Kentucky Power and

AEP Energy Services, Inc.Affiliated Transactions Agreement (East

Companies)Agreement between Kentucky Power and AEP

Communications, LLCMaster Site Agreements (East) With AEP

Operating CompaniesAEP Co. Inc. and it’s Consolidated Affiliated

Tax Agreement regarding methods ofAllocating Consolidated Income Taxes

AEPSC Service Agreement with Kentucky PowerPurchase Agreement between AEP Credit and

it’s Affiliate Client CompaniesAEP System Utility Money Pool AgreementArrangement for the Use of the Amos SimulatorThird Amended and Restated Purchase Agreement

Between AEP Credit and Kentucky PowerThird Amended and Restated Agency Agreement

Between AEP Credit and Kentucky PowerAEP System Amended and Restated Money Pool

AgreementAmerican Electric Power Company, Inc. and

it’s Consolidated Affiliated Tax Agreementregarding methods of AllocatingConsolidated Income Taxes

Railcar Maintenance Agreement

DocumentNumber


DateMarch 15, 2020

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Section

AppendixSubject


99-00-06

COMPANY NAME DATE CONTRACTKentuckyPowerCompany(Cont’d)

09/12/13

09/12/1312/16/1312/16/13

01/01/14

01/01/14

01/01/1401/01/1401/31/15

02/27/15

02/27/15

04/02/19

05/09/19

05/09/19

05/09/19

05/09/1905/09/19

05/09/19

Amendment No. 1 to Barge TransportationAgreement

Amendment No. 2 to AEP System Rail Car UseAmended and Restated Urea Handling AgreementAmended and Restated Cook Coal Terminal

Transfer AgreementAffiliated Transactions Agreement for Sharing


Materials and SuppliesMitchell Coal Pile Run-Off AgreementPower Coordination AgreementMitchell Plant Operating Agreement between

Wheeling Power, Kentucky Power, and AEPSCService Agreement between Kentucky Power

Company and AEP Kentucky TransmissionCompany, Inc.

Joint License Agreement between KentuckyPower Company and AEP Kentucky TransmissionCompany, Inc.

Amended and Restated Subscription Agreementwith Grid Assurance LLC

Amended and Restated Urea Handling AgreementAmendment No.1

Amended and Restated Rail Car MaintenanceAgreement Amendment No.1

Affiliated Transactions Agreement for SharingCapitalized Spare Parts Amendment No.1

Barge Transportation Agreement Amendment No.2Amended and Restated Cook Coal Terminal

Transfer Agreement Amendment No.1Affiliated Transactions Agreement for Sharing

Materials and Supplies Amendment No.1KingsportPowerCompany

01/01/72

07/30/8709/27/96

12/31/96

Purchase Contract Between KGPCO and IndianaFranklin Realty, Inc.

Mutual Assistance AgreementAgreement Between Kingsport Power Company and

AEP Energy ServicesAffiliate Transactions Agreement (East

Companies)

DocumentNumber


DateMarch 15, 2020

Page9

Section

AppendixSubject


99-00-06

COMPANY NAME DATE CONTRACTKingsportPowerCompany(Cont’d)

01/01/98

06/15/00

06/15/0006/16/00

12/18/0208/25/04

08/25/04

12/09/04

01/01/05

11/13/08

04/02/19

Master Site Agreement (East) with AEPOperating Companies

AEP Co, Inc and it’s Consolidated AffiliateTax Agreement regarding methods ofAllocating Consolidated Income Tax

AEPSC Service Agreement with Kingsport PowerPurchase Agreement Between CSW Credit and

Affiliate Client CompaniesAEP System Utility Money Pool AgreementThird Amended and Restated Purchase Agreement

Between AEP Credit and Kingsport PowerThird Amended and Restated Agency Agreement

Between AEP Credit and Kingsport PowerAEP System Amended and Restated Utility Money

Pool AgreementAmerican Electric Power Company, Inc. and

it’s Consolidated Affiliate Tax AgreementRegarding methods of AllocatingConsolidated Income Taxes

Amended and Restated InterconnectionAgreement Between Appalachian Power Companyand Kingsport Power Company


Ohio PowerCompany

08/11/41

11/25/70

04/01/8407/30/8706/21/96

09/27/96

12/31/96

01/01/98

Land Purchase Contract/Franklin Real EstateCompany

Purchase Contract/Indiana Franklin Realty,Inc.

Transmission AgreementMutual Assistance AgreementAEP Modifications No. 1 AEP System Interim

Allowance AgreementAgreement between Ohio Power Company and AEP

Energy ServicesAffiliated Transactions Agreement (East

Companies)Master Site Agreement (East) with AEP

Operating Companies

DocumentNumber


DateMarch 15, 2020

Page10

Section

AppendixSubject


99-00-06

COMPANY NAME DATE CONTRACTOhio PowerCompany(Cont’d)

06/15/00

06/15/0006/16/00

12/18/0208/25/0408/25/0412/09/04

01/01/05

12/01/0901/01/11

01/01/11

02/12/12

03/27/13

12/31/14

01/01/1401/01/14

01/01/1404/02/19

05/09/1905/09/19

American Electric Power Company, Inc. and itsConsolidated Affiliate Tax Agreementregarding Methods of AllocatingConsolidated Income Taxes

AEPSC Service Agreement with Ohio PowerPurchase Agreement Between AEP Credit Inc.

and Affiliate Client CompaniesAEP System Utility Money Pool AgreementThird Amended and Restated Purchase AgreementThird Amended and Restated Agency AgreementAEP System Amended and Restated Utility Money

Pool AgreementAEP Co, Inc and It’s Consolidated Affiliate

Tax Agreement regarding methods ofAllocating Consolidated Income Taxes

Transmission Center AgreementTransmission Service Agreement between Ohio

Power Company and AEP Ohio TransmissionCompany

Joint License Agreement between Ohio PowerCompany and AEP Ohio Transmission Company

Executed Notice of Intent by Ohio PowerCompany to Terminate Sporn Plant OperatingAgreement

Service Agreement between Ohio Power Companyand AEP West Virginia Transmission Company

Affiliated Transactions Agreement for SharingMaterials and Supplies

Telecommunications Service AgreementAssignment of Central Machine Shop Agreement

dated January 1, 1979Telecommunications Services AgreementAmended and Restated Subscription Agreement

with Grid Assurance LLCBarge Transportation Agreement Amendment No.2Affiliated Transactions Agreement for Sharing

Materials and Supplies Amendment No.1PublicServiceCompany ofOklahoma

04/26/85

09/14/88

Oklaunion Unit No. 1 Construction, Ownershipand Operating Agreement

Oklaunion HVDC Project Construction,Ownership and Operating Agreement

DocumentNumber


DateMarch 15, 2020

Page11

Section

AppendixSubject


99-00-06

COMPANY NAME DATE CONTRACTPublicServiceCompany ofOklahoma(Cont’d)

07/01/9308/03/95

01/01/9706/01/9910/29/9906/15/00

06/15/00

06/16/00

06/16/00

12/21/0107/25/03

07/25/03

08/25/0408/25/0411/16/04

12/09/04

01/01/05

02/10/0507/01/06

12/01/0901/01/10

01/01/10

08/01/13

Rail Car Lease Agreement(West)East HVDC Interconnection Agreement/West

Regulated CompaniesCSW Operating AgreementCSW System General AgreementTransmission Coordination Agreement(West)American Electric Power Company, Inc. and its

Consolidated Affiliate Tax AgreementsAEPSC Service Agreement with Public Service

Company of OklahomaAmended and Restated Agency Agreement Between

CSW Credit and its AffiliatesAmended and Restated Purchase Agreement

Between CSW Credit and it’s AffiliatesOperating Agreement-PSO, SWEPCO, AEPSC

AEP System Utility Money Pool AgreementSecond Amended and Restated Agency Agreement

between AEP Credit and Public ServiceCompany of Oklahoma

Second Amended and Restated PurchaseAgreement between AEP Credit and PublicService Company of Oklahoma

Third Amended and Restated Purchase AgreementThird Amended and Restated Agency AgreementInterconnection Agreement (ERCOT Generation)

between AEPTN & PSO.AEP System Amended and Restated Money Pool

AgreementAmerican Electric Power Company, and it’s

Consolidated Tax AffiliatesOperating Agreement PSO, SWEPCO and AEPSCAmendment No 1 and consent to AEP System Rail

Car Use AgreementAmendment No. 2 to Third AEP System Transmission Center Agreement

Transmission Service Agreement between PublicService Company of Oklahoma and AEPOklahoma Transmission Company

Joint License Agreement between PublicService Company of Oklahoma and AEPOklahoma Transmission Company

Rail Car Maintenance Agreement

DocumentNumber


DateMarch 15, 2020

Page12

Section

AppendixSubject


99-00-06

COMPANY NAME DATE CONTRACTPublicServiceCompany ofOklahoma(Cont’d)

09/12/13

04/02/19

05/09/19

Amendment No. 2 to AEP System Rail Car UseAgreement


Amended and Restated Rail Car MaintenanceAgreement Amendment No.1

SouthwesternElectricPowerCompany

07/01/9308/03/95

01/01/9706/01/9907/08/99

10/29/9906/15/00

06/15/00

06/16/00

05/31/0112/21/0108/06/02

12/18/0207/25/03

07/25/03

08/25/04

08/25/04

12/09/04

01/01/05

02/10/05

Rail Car Lease Agreement (West)East HVDC Interconnection Use and Maintenance

AgreementCSW Operating AgreementCSW System General AgreementMemorandum of Understanding (West) Between C3

Communications, Public Service Company,Transmission Coordination Agreement (West)American Electric Power Company, Inc. and its

Consolidated Affiliates Tax AgreementsAEPSC Service Agreement with Southwest Power

ElectricAmended and Restated Purchase Agreement

Between CSW and Affiliate (West) CompaniesLignite Mining AgreementOperating Agreement PSO, SWEPCo, AEPSCInterconnection Agreement Between SWEPCo and

Eastex Cogeneration LPAEP System Utility Money Pool AgreementSecond Amended and Restated Agency Agreement

Between AEP Credit and SWEPCoSecond Amended and Restated Purchase

Agreement Between AEP Credit and SWEPCoThird Amended and Restated Purchase Agreement

Between AEP Credit and SouthwesternElectric Power

Third Amended and Restated Agency AgreementBetween AEP Credit and SouthwesternElectric Power


American Electric Power Company, Inc. and ItsConsolidated Affiliated Tax Agreements

Operating Agreement PSO, SWEPCO, AEPSC

DocumentNumber


DateMarch 15, 2020

Page13

Section

AppendixSubject


99-00-06

COMPANY NAME DATE CONTRACTSouthwesternElectricPowerCompany(Cont’d)

07/01/06

12/01/0912/29/0905/06/11

05/06/11

08/01/1309/12/1312/31/13

04/02/19

05/09/19

Amendment No 1 and Consent to AEP System RailCar Use

AEP System Transmission Center AgreementAmended and Restated Lignite Mining AgreementTransmission Service Agreement between

Southwestern Electric Power Company and AEPSouthwestern Transmission Company

Joint License Agreement between SouthwesternElectric Power Company and AEP SouthwesternTransmission Company

Rail Car Maintenance AgreementAmendment No. 2 to AEP System Rail Car UseAssignment, Assumption and Consent Agreement

of Rail Car AssetsAmended and Restated Subscription Agreement

with Grid Assurance LLCAmended and Restated Rail Car Maintenance

Agreement Amendment No.1WheelingPowerCompany

08/11/41

07/30/8712/31/96

01/09/97

03/01/98

06/15/0012/18/0212/09/04

01/01/05

05/15/08

01/22/13

12/18/14

Land Purchase Contract/The Franklin RealEstate Company

Mutual Assistance AgreementAffiliated Transactions Agreement (EastCompanies)

Agreement between Wheeling Power Company andAEP Energy Services, Inc.

Pole Attachment License Agreement/AEPCommunications LLC

AEP System Tax AgreementAEP System Utility Money Pool AgreementAEP System Amended and Restated UtilityMoney Pool Agreement

American Electric Power Company, and it’sConsolidated Tax Affiliates

Agreement between Wheeling Power Companyand AEPSC

Service Agreement between Wheeling PowerCompany and AEP West Virginia TransmissionCompany, Inc.

Agreement of Representation for EPAAllowances between AEPSC and Wheeling Power

DocumentNumber


DateMarch 15, 2020

Page14

Section

AppendixSubject


99-00-06

COMPANY NAME DATE CONTRACTWheelingPowerCompany(Cont’d)

01/31/15

06/01/1504/02/19

Mitchell Plant Operating Agreement betweenWheeling Power, Kentucky Power and AEPSC

Power Coordination AgreementAmended and Restated Subscription Agreementwith Grid Assurance LLC

ElectricTransmissionTexas

12/21/07

03/29/10

03/29/10

04/02/19

Electric Transmission Texas ServiceAgreement (AEPSC)

Amended and Restated InterconnectionAgreement (AEP Texas North)

Amended and Restated InterconnectionAgreement (AEP Texas Central)

Amended and Restated Subscription Agreementwith Grid Assurance.

PATH WestVirginiaTransmissionCompany

09/01/07 PATH West Virginia Transmission CompanyService Agreement

AEPAppalachianTransmissionCompany,Inc.

01/22/13

12/20/16

04/02/19

Service Agreement between Appalachian PowerCompany and AEP Appalachian TransmissionCompany, Inc.

Joint License Agreement between AppalachianPower Company and AEP AppalachianTransmission Company, Inc.


AEP IndianaMichiganTransmissionCompany

02/15/11

02/15/11

02/15/11

04/02/19

Transmission Company Services Agreementbetween AEP Indiana Michigan TransmissionCompany and Indiana Michigan Power Company

Joint License Agreement between AEP IndianaMichigan Transmission Company and IndianaMichigan Power Company

Service Agreement between AEP IndianaMichigan Transmission Company and AmericanElectric Power Service Corporation


AEP KentuckyTransmissionCompany,Inc.

02/27/15 Service Agreement between Kentucky PowerCompany and AEP Kentucky TransmissionCompany, Inc.

DocumentNumber


DateMarch 15, 2020

Page15

Section

AppendixSubject


99-00-06

COMPANY NAME DATE CONTRACTAEP KentuckyTransmissionCompany,Inc.(Cont’d)

02/27/15

04/02/19

Joint License Agreement between KentuckyPower Company and AEP Kentucky TransmissionCompany, Inc.


AEP OhioTransmissionCompany

01/01/11

01/01/11

01/01/11

01/01/11

01/01/11

11/29/17

04/02/19

Transmission Company Services Agreementbetween AEP Ohio Transmission Company andOhio Power Company

Transmission Company Services Agreementbetween AEP Ohio Transmission Company andColumbus Southern Power Company

Joint License Agreement between AEP OhioTransmission Company and Ohio Power Company

Joint License Agreement between AEP OhioTransmission Company and Columbus SouthernPower Company

Service Agreement between AEP OhioTransmission Company and American ElectricPower Service Corporation

APCO and AEP Ohio Transmission CompanyTransmission Asset Sharing Agreement


AEP OklahomaTransmissionCompany

01/01/10

01/01/10

10/27/10

04/02/19

Transmission Company Services Agreementbetween AEP Oklahoma Transmission Companyand Public Service Company of Oklahoma

Joint License Agreement between AEP OklahomaTransmission Company and Public ServiceCompany of Oklahoma

Service Agreement between AEP OklahomaTransmission Company and American ElectricPower Service Corporation


AEPSouthwesternTransmissionCompany

05/06/11

05/06/11

Transmission Company Services Agreementbetween AEP Southwestern TransmissionCompany and Southwestern Electric Power

Joint License Agreement between AEPSouthwestern Transmission Company andSouthwestern Electric Power Company

DocumentNumber


DateMarch 15, 2020

Page16

Section

AppendixSubject


99-00-06

COMPANY NAME DATE CONTRACTAEPSouthwesternTransmissionCompany(Cont’d)

05/06/11 Service Agreement between AEP SouthwesternTransmission Company and AEPSC

AEP WestVirginiaTransmissionCompany,Inc.

01/22/13

03/27/13

04/24/13

01/22/13

10/19/18

04/02/19

Service Agreement between Wheeling Power andAEP West Virginia Transmission Company,Inc.

Service Agreement between Ohio Power and AEPWest Virginia Transmission Company

Service Agreement with Appalachian Power andAEP West Virginia Transmission Company“2013 Agreement”

Service Agreement between AEPSC and AEP WestVirginia Transmission Company, Inc.

Service Agreement with Appalachian Power andAEP West Virginia Transmission Company


TransourceEnergy, LLC

04/03/12

07/01/16

09/26/16

01/23/18

Service Agreement between Transource Energy,LLC and AEPSC

Service Agreement between Transource WestVirginia, LLC and Transource Energy

Service Agreement between Transource Energy,LLC and Transource Maryland, LLC

Service Agreement between TransourcePennsylvania, LLC and Transource Energy,LLC

TransourceMaryland,LLC

09/26/16 Service Agreement between Transource Energy,LLC and Transource Maryland, LLC

TransourceMissouri,LLC

12/27/13 Service Agreement between TransourceMissouri, LLC and Transource Energy, LLC.

TransourcePennsylvania, LLC

01/23/18 Service Agreement between TransourcePennsylvania, LLC and Transource Energy,LLC

DocumentNumber


DateMarch 15, 2020

Page17

Section

AppendixSubject


99-00-06

COMPANY NAME DATE CONTRACTTransourceWestVirginia,LLC

07/01/16

11/21/16

Service Agreement between Transource WV andTransource Energy

Services and Property Use Agreement betweenAppalachian Power and Transource WV