AEP Reports 2012 Fourth-Quarter and Year-End Earnings

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COLUMBUS, Ohio, Feb. 15, 2013 /PRNewswire/ --

* Fourth-quarter earnings $0.05 per share GAAP and $0.50 per share
operating; difference primarily due to Ohio plant impairments and
restructuring charges
* 2012 year-end earnings $2.60 per share GAAP and $3.09 per share operating

* Continued discipline around controlling costs
* John W. Turk Jr. coal-fueled generation plant on line in December 2012

AMERICAN ELECTRIC POWER

Preliminary, unaudited results

Fourth quarter ended Dec. 31 Year-to-date ended Dec. 31
2012 2011 Variance 2012 2011 Variance
Revenue ($ in billions) 3.6 3.4 0.2 14.9 15.1 (0.2)
Earnings ($ in millions):
GAAP 21 308 (287) 1,259 1,941 (682)
Operating 242 194 48 1,497 1,504 (7)
EPS ($):
GAAP 0.05 0.64 (0.59) 2.60 4.02 (1.42)
Operating 0.50 0.40 0.10 3.09 3.12 (0.03)
EPS based on 485mm shares Q4 2012, 483mm in Q4 2011, 485mm in YTD 2012 and 482mm in YTD 2011

American Electric Power (NYSE: AEP) today reported fourth-quarter 2012 earnings,
prepared in accordance with Generally Accepted Accounting Principles (GAAP), of
$21 million or $0.05 per share, compared with $308 million or $0.64 per
share in 2011. Operating earnings (excluding special items) for fourth-quarter
2012 were $242 million or $0.50 per share, compared with fourth-quarter 2011
operating earnings of $194 million or $0.40 per share.

GAAP earnings for year-end 2012 were $1.259 billion or $2.60 per share,
compared with $1.941 billion or $4.02 per share in 2011. Operating earnings
for 2012 were $1.497 billion or $3.09 per share, compared with $1.504
billion or $3.12 per share in 2011.

For the year, operating earnings were $238 million or $0.49 per share higher
than GAAP earnings due to the following items (net of tax): Ohio plant
impairments of $184 million, or $0.38 per share; a $9 million adjustment
associated with the Texas cost cap on the construction of the John W. Turk Jr.
(Turk) coal-fueled power plant, or $0.02 per share; and a $30 million charge
associated with AEP's cost restructuring efforts, or $0.06 per share. In
addition, in 2012, AEP recognized a $15 million tax provision, or $0.03 per
share, associated with UK windfall taxes. All of the differences between 2012
operating and GAAP earnings occurred in fourth-quarter 2012 with the exception
of the Turk adjustment, which occurred in third-quarter 2012, and $8 million
of the restructuring charge recorded in second-quarter 2012.

A full reconciliation of 2012 and 2011 GAAP earnings with operating earnings for
the quarter and year to date is included in tables at the end of this news
release.

"In spite of considerable challenges in 2012, including extended regulatory
uncertainty in Ohio, lagging demand growth and several unprecedented storms, we
provided solid financial results for our shareholders and safely delivered
reliable, affordable electricity for the benefit of our customers," said
Nicholas K. Akins, president and chief executive officer. "I'm particularly
proud that our employees remained focused throughout the year and completed 2012
with no fatalities and record-low injury rates, while maintaining effective cost
controls.

"Our operating earnings for the fourth quarter and the year were in line with
results from last year despite sluggish demand growth and the negative impact of
customer switching in Ohio. AEP shareholders received an 8.22 percent total
shareholder return in 2012, including dividends - well above the total
shareholder return of negative 0.55 percent for the S&P 500 Electric Utilities
Index," Akins said. "We took advantage of available, low-priced debt capital and
replaced all of our parent debt at more attractive rates. We further
strengthened our financial position by reducing our post-employment benefit
liability and increasing the funding of our qualified pension plan to 92
percent.

"We made significant progress reducing regulatory uncertainty. With the receipt
of an Electric Security Plan order in Ohio, we have a clear path for corporate
restructuring in the state. We've filed for corporate separation and transfer of
our Ohio generation assets to our competitive generation entity and other
operating companies and expect to fully separate our Ohio generation from our
Ohio utility operations at the end of 2013," Akins said.

"We delivered earnings improvement each quarter in 2012 from our transmission
business, and we benefited from successful rate proceedings in several
jurisdictions. We also continued our legacy of generation leadership by bringing
on line two new power plants in 2012, the 580-megawatt combined-cycle natural
gas Dresden Plant and the 600-megawatt Turk Plant, the first ultra-supercritical
coal plant in the United States," Akins said.

EARNINGS GUIDANCE

Simultaneous with today's earnings release, management established 2013
operating earnings guidance of $3.05 to $3.25 per share. In providing
operating earnings guidance, there could be differences between operating
earnings and GAAP earnings for matters such as, but not limited to, divestitures
or changes in accounting principles. AEP management is not able to estimate the
impact, if any, on GAAP earnings of these items. Therefore, AEP is not able to
provide a corresponding GAAP equivalent for earnings guidance.

SUMMARY OF RESULTS BY SEGMENT

$ in millions

GAAP Earnings 4Q 12 4Q 11 Variance YTD 12 YTD 11 Variance
Utility Operations 79 289 (210) 1,296 1,914 (618)
Transmission Operations 12 11 1 43 30 13
AEP River Operations 4 22 (18) 15 45 (30)
Generation and Marketing 3 (6) 9 7 14 (7)
All Other (77) (8) (69) (102) (62) (40)
Total GAAP Earnings 21 308 (287) 1,259 1,941 (682)

Operating Earnings 4Q 12 4Q 11 Variance YTD 12 YTD 11 Variance
Utility Operations 283 175 108 1,517 1,455 62
Transmission Operations 13 11 2 44 30 14
AEP River Operations 4 22 (18) 15 45 (30)
Generation and Marketing 3 (6) 9 7 14 (7)
All Other (61) (8) (53) (86) (40) (46)
Total Operating Earnings 242 194 48 1,497 1,504 (7)
A full reconciliation of GAAP earnings with operating earnings is included in tables at the end of this news release.

Operating earnings from Utility Operations for fourth-quarter 2012 and the year
increased in comparison with the same periods in 2011 by $108 million and $62
million, respectively. This reflects the positive impact of successful rate
proceedings and lower spending as a result of cost-containment efforts, offset
by lost earnings due to customer switching in Ohio, higher storm restoration
costs and milder temperatures in relation to last year. The difference between
GAAP and operating earnings for the fourth quarter and the year relates
primarily to the Ohio plant impairments and restructuring costs discussed
above.

Operating earnings from AEP River Operations for fourth-quarter 2012 and the
year were $18 million and $30 million lower, respectively, than for the same
periods in 2011 primarily due to the 2012 drought, which had significant impacts
on river conditions and crop yields, resulting in reduced grain exports.

Operating earnings from All Other during fourth-quarter 2012 and the year
decreased primarily due to costs associated with the early retirement of parent
debt in fourth-quarter 2012. The difference between GAAP and operating earnings
for fourth-quarter 2012 and the year relates to the previously discussed UK
windfall tax provision recorded in fourth-quarter 2012.

OPERATING MARGIN FROM UTILITY OPERATIONS

$ in millions

4Q 12 4Q 11 Variance YTD 12 YTD 11 Variance
East Regulated Integrated Utilities 751 617 134 2,991 2,749 242
Ohio Power Company 605 558 47 2,456 2,657 (201)
West Regulated Integrated Utilities 291 297 (6) 1,396 1,408 (12)
Texas Wires 149 146 3 642 648 (6)
Off-System Sales 49 50 (1) 324 343 (19)
Transmission Revenue - 3rd Party 133 106 27 500 417 83
Other Operating Revenue 121 121 0 506 523 (17)
Utility Margin 2,099 1,895 204 8,815 8,745 70
Margin represents total revenues less the related direct cost of fuel, including consumption of chemicals and emissions
allowances and purchased power.

Retail Sales - Retail margins for fourth-quarter 2012 and the year were $178
million and $23 million higher, respectively, than for the same periods in
2011. In the fourth quarter of 2012, we experienced colder weather in our
eastern service territories compared with the same period last year and the
continuing favorable impact of rate decisions, offset by lost margins from
customer switching in Ohio. The increase for the year is a result of the
continued favorable impact of rate decisions, offset by customer switching in
Ohio and unfavorable weather conditions in the first nine months of 2012
compared with 2011. Retail Sales includes the East Regulated Integrated
Utilities, Ohio Power Company, West Regulated Integrated Utilities and Texas
Wires.

Off-System Sales - Margins from Off-System Sales were lower in fourth-quarter
2012 and the year compared with the same periods in 2011 primarily because of
lower power prices.

Transmission Revenue - 3rd Party- Transmission Revenue for fourth-quarter 2012
and the year was $27 million and $83 million higher, respectively, than the
same periods in 2011, primarily as a result of increased revenues in ERCOT and
PJM, including revenues associated with customer switching.

Other Operating Revenue - Other Operating Revenue for fourth-quarter 2012 and
the year were comparable with the same periods last year.

SELECT OTHER OPERATING EXPENSES - UTILITY OPERATIONS

The following Utility Operations expense categories had significant fluctuations
in 2012 compared with 2011 (dollars in millions):

4Q 12 4Q 11 Variance YTD 12 YTD 11 Variance
Operations and Maintenance Expense 938 980 (42) 3,311 3,544 (233)
Depreciation and Amortization 416 387 29 1,734 1,613 121
Other Income & Deductions 31 51 (20) 139 239 (100)

Operations and Maintenance expense in fourth-quarter 2012 and the year was $42
million and $233 million less, respectively, when compared with the same
periods in 2011, primarily as a result of controlled spending measures,
partially offset by higher storm restoration costs.

Depreciation and Amortization expense in fourth-quarter 2012 and the year
increased $29 million and $121 million, respectively, when compared with the
same periods in 2011, because of higher depreciation related to shortened plant
lives for certain generating plants and higher amortization expense associated
with regulatory assets.

Other Income & Deductions decreased in fourth-quarter 2012 and the year by $20
million and $100 million, respectively, when compared with the same periods in
2011, due to carrying cost income associated with the Texas capacity auction
true-up that was recognized in July 2011 when the Supreme Court of Texas
overturned a 2006 Texas commission order. The capacity auction true-up amount,
including accrued interest, was securitized in first-quarter 2012.

WEBCAST

American Electric Power's company update and quarterly earnings meeting with
financial analysts and investors will be broadcast live over the Internet at 8
a.m. EST today at http://www.aep.com/webcasts. The webcast will include audio
of the conference call and visuals of charts and graphics referred to by AEP
management during the call. The charts and graphics will be available for
download at http://www.aep.com/webcasts.

The call will be archived on http://www.aep.com/webcasts for those unable to
listen during the live webcast. Archived calls also are available as podcasts.

---

American Electric Power is one of the largest electric utilities in the United
States, delivering electricity to more than 5 million customers in 11 states.
AEP ranks among the nation's largest generators of electricity, owning nearly
38,000 megawatts of generating capacity in the U.S. AEP also owns the nation's
largest electricity transmission system, a nearly 39,000-mile network that
includes more 765-kilovolt extra-high voltage transmission lines than all other
U.S. transmission systems combined. AEP's transmission system directly or
indirectly serves about 10 percent of the electricity demand in the Eastern
Interconnection, the interconnected transmission system that covers 38 eastern
and central U.S. states and eastern Canada, and approximately 11 percent of the
electricity demand in ERCOT, the transmission system that covers much of Texas.
AEP's utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in
Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana
Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and
Southwestern Electric Power Company (in Arkansas, Louisiana and east Texas).
AEP's headquarters are in Columbus, Ohio.

---

AEP's earnings are prepared in accordance with accounting principles generally
accepted in the United States and represent the company's earnings as reported
to the Securities and Exchange Commission. AEP's management believes that the
company's operating earnings, or GAAP earnings adjusted for certain items as
described in the news release and charts, provide a more meaningful
representation of the company's performance. AEP uses operating earnings as the
primary performance measurement when communicating with analysts and investors
regarding its earnings outlook and results. The company also uses operating
earnings data internally to measure performance against budget and to report to
AEP's board of directors.

---

This report made by American Electric Power and its Registrant Subsidiaries
contains forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934. Although AEP and each of its Registrant
Subsidiaries believe that their expectations are based on reasonable
assumptions, any such statements may be influenced by factors that could cause
actual outcomes and results to be materially different from those projected.
Among the factors that could cause actual results to differ materially from
those in the forward-looking statements are: the economic climate, growth or
contraction within and changes in market demand and demographic patterns in
AEP's service territory; inflationary or deflationary interest rate trends;
volatility in the financial markets, particularly developments affecting the
availability of capital on reasonable terms and developments impairing AEP's
ability to finance new capital projects and refinance existing debt at
attractive rates; the availability and cost of funds to finance working capital
and capital needs, particularly during periods when the time lag between
incurring costs and recovery is long and the costs are material; electric load,
customer growth and the impact of retail competition, particularly in Ohio;
weather conditions, including storms and drought conditions, and AEP's ability
to recover significant storm restoration costs through applicable rate
mechanisms; available sources and costs of, and transportation for, fuels and
the creditworthiness and performance of fuel suppliers and transporters;
availability of necessary generating capacity and the performance of AEP's
generating plants; AEP's ability to recover increases in fuel and other energy
costs through regulated or competitive electric rates; AEP's ability to build or
acquire generating capacity and transmission lines and facilities (including the
ability to obtain any necessary regulatory approvals and permits) when needed at
acceptable prices and terms and to recover those costs (including the costs of
projects that are cancelled) through applicable rate cases or competitive rates;
new legislation, litigation and government regulation, including oversight of
nuclear generation, energy commodity trading and new or heightened requirements
for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate
matter and other substances, or additional regulation of fly ash and similar
combustion products that could impact the continued operation and cost recovery
of AEP's plants and related assets; evolving public perception of the risks
associated with fuels used before, during and after the generation of
electricity, including nuclear fuel; a reduction in the federal statutory tax
rate that could result in an accelerated return of deferred federal income taxes
to customers; timing and resolution of pending and future rate cases,
negotiations and other regulatory decisions, including rate or other recovery of
new investments in generation, distribution and transmission service and
environmental compliance; resolution of litigation; AEP's ability to constrain
operation and maintenance costs; AEP's ability to develop and execute a strategy
based on a view regarding prices of electricity, coal, natural gas and other
energy-related commodities; prices and demand for power that AEP generates and
sells at wholesale; changes in technology, particularly with respect to new,
developing or alternative sources of generation; AEP's ability to recover
through rates or market prices any remaining unrecovered investment in
generating units that may be retired before the end of their previously
projected useful lives; volatility and changes in markets for electricity, coal,
natural gas and other energy-related commodities; changes in utility regulation,
including the implementation of Electric Security Plans and the transition to
market and expected legal separation for generation in Ohio and the allocation
of costs within regional transmission organizations, including PJM and SPP;
AEP's ability to successfully manage negotiations with stakeholders and obtain
regulatory approval to terminate the Interconnection Agreement; changes in the
creditworthiness of the counterparties with whom AEP has contractual
arrangements, including participants in the energy trading market; actions of
rating agencies, including changes in the ratings of AEP debt; the impact of
volatility in the capital markets on the value of the investments held by AEP's
pension, other postretirement benefit plans, captive insurance entity and
nuclear decommissioning trust and the impact on future funding requirements;
accounting pronouncements periodically issued by accounting standard-setting
bodies; and other risks and unforeseen events, including wars, the effects of
terrorism (including increased security costs), embargoes, cyber security
threats and other catastrophic events.

American Electric Power

Financial Results for the 4th Quarter 2012
Reconciliation of GAAP to Operating Earnings

2012
Utility Transmission AEP River Operations Generation and Marketing Parent & All Total EPS

Other
($ millions)

GAAP Earnings 79 12 4 3 (77) 21 $ 0.05

Special Items
Restructuring Program a 20 1 - - 1 22 $ 0.04
Ohio Plant Impairments c 184 - - - - 184 0.38
UK Windfall Taxes e - - - - 15 15 0.03

Total Special Items 204 1 - - 16 221 $ 0.45

Operating Earnings 283 13 4 3 (61) 242 $ 0.50

Financial Results for the 4th Quarter 2011
Reconciliation of GAAP to Operating Earnings

2011
Utility Transmission AEP River Operations Generation and Marketing Parent & All Other Total EPS
($ millions)

GAAP Earnings 289 11 22 (6) (8) 308 $ 0.64

Special Items
Texas Capacity Auction, Tax
Normalization & Carrying Charges d (133) - - - - (133) $ (0.28)
Carbon Capture & Storage a (18) - - - - (18) $ (0.04)
Turk Impairment c 32 - - - - 32 $ 0.07
Other e 5 - - - - 5 $ 0.01

Total Special Items (114) - - - - (114) $ (0.24)

Operating Earnings 175 11 22 (6) (8) 194 $ 0.40

a Reflected in Maintenance and Other Operation, and Income Tax Expense
b Reflected in Loss(Gain) of Sale of Property, and Income Tax Expense
c Reflected in Asset Impairments and Other Related Charges and Income Tax Expense
d Reflected in Interest Income, Extraordinary Item and Income Tax Expense
e Reflected in Income Tax Expense

American Electric Power
Summary of Selected Sales Data

(Data based on preliminary, unaudited results)

Three Months Ending December 31,
ENERGY & DELIVERY SUMMARY 2012 2011 Change

Retail Electric (in millions of kWh):
Residential 13,163 12,965 1.5%
Commercial 12,020 11,935 0.7%
Industrial 14,356 14,979 (4.2%)
Miscellaneous 748 745 0.4%
Total Retail (a) 40,287 40,624 (0.8%)

Wholesale Electric (in millions of kWh): (b) 11,483 7,987 43.8%

Total KWHs 51,770 48,611 6.5%

(a) Represents energy delivered to distribution customers

(b) Includes Off-System Sales, Municipalities and Cooperatives, Unit Power, and
Other Wholesale Customers.

American Electric Power

Financial Results for Year-to-Date 2012
Reconciliation of GAAP to Operating Earnings

2012
Utility Transmission AEP River Operations Generation and Marketing Parent & All Total EPS

Other
($ millions)

GAAP Earnings 1,296 43 15 7 (102) 1,259 $ 2.60

Special Items
Restructuring Program a 28 1 - - 1 30 0.06
Turk Plant Impairment c 9 - - - - 9 0.02
Ohio Plant Impairments c 184 - - - - 184 0.38
UK Windfall Taxes e - - - - 15 15 0.03

Total Special Items 221 1 - - 16 238 $ 0.49

Operating Earnings 1,517 44 15 7 (86) 1,497 $ 3.09

Financial Results for Year-to-Date 2011
Reconciliation of GAAP to Operating Earnings

2011
Utility Transmission AEP River Operations Generation and Marketing Parent & All Other Total EPS
($ millions)

GAAP Earnings 1,914 30 45 14 (62) 1,941 $ 4.02

Special Items
Texas Capacity Auction, Tax
Normalization & Carrying Charges d (558) - - - - (558) (1.16)
Sporn Unit 5 Retirement c 31 - - - - 31 0.06
Muskingum River Unit 5 -
Suspended Scrubber Project c 27 - - - - 27 0.06
Turk Impairment c 32 - - - - 32 0.07
Carbon Capture & Storage a 13 - - - - 13 0.03
Litigation Settlement - Enron Bankruptcy b - - - - 22 22 0.05
Other a (4) - - - - (4) (0.01)

Total Special Items (459) - - - 22 (437) $ (0.90)

Operating Earnings 1,455 30 45 14 (40) 1,504 $ 3.12

a Reflected in Maintenance and Other Operation, and Income Tax Expense
b Reflected in Loss(Gain) of Sale of Property, and Income Tax Expense
c Reflected in Asset Impairments and Other Related Charges and Income Tax Expense
d Reflected in Interest Income, Extraordinary Item and Income Tax Expense
e Reflected in Income Tax Expense

American Electric Power
Summary of Selected Sales Data

(Data based on preliminary, unaudited results)

Twelve Months Ending December 31,
ENERGY & DELIVERY SUMMARY 2012 2011 Change

Retail Electric (in millions of kWh):
Residential 58,780 61,655 (4.7%)
Commercial 50,464 50,767 (0.6%)
Industrial 59,154 59,667 (0.9%)
Miscellaneous 3,072 3,100 (0.9%)
Total Retail (a) 171,470 175,189 (2.1%)

Wholesale Electric (in millions of kWh): (b) 41,892 40,519 3.4%

Total KWHs 213,362 215,708 (1.1%)

(a) Represents energy delivered to distribution customers

(b) Includes Off-System Sales, Municipalities and Cooperatives, Unit Power, and
Other Wholesale Customers.

SOURCE American Electric Power

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