1 American Electric Power Company Transmission Formula Rate AEP East Companies Annual Formula Rate Update June 2012

2 TRUE-UP PROCESS Annual update for the Rate Year beginning July 1, 2012 through June 30, 2013 True-up –Rates effective July 1, 2010 (billed January – June 2011) -- $65.88/MW Day –Rates effective July 1, 2011 (billed July – December 2011) -- $74.89/MW Day –Trued-up to Actual 2011 Cost Data with Average ending Ratebase Balances ( ) -- $70.69/MW Day

3 Regulatory Changes July 2011 FERC issued an order approving the internal corporate reorganization consummated on December 31, 2011 under which Columbus Southern Power Company (“CSP”) merged into Ohio Power Company (“Reorganization Transaction”). March 2012 AEP submitted for filing amendments to Attachments H-14A, H-14B of the PJM Interconnection, L.L.C. (“PJM”) Open Access Transmission Tariff (“PJM Tariff”) to incorporate proposed revisions to make changes necessitated by the internal corporate reorganization.

4 Annual Update OASIS/TariffFilings / Annual Update Notice of Annual Filing (PDF) Notice of Annual Filing Annual Update Customer Meeting Notice (DOC) Annual Update Customer Meeting Notice Formula Rate Update AEP Operating Companies Summary (DOC) Formula Rate Update AEP Operating Companies Summary PJM ATRR Formula Rate Summary (XLS) PJM ATRR Formula Rate Summary Appalachian Power Company (XLS) Appalachian Power Company Indiana Michigan Power Company (XLS) Indiana Michigan Power Company Kentucky Power Company (XLS) Kentucky Power Company Kingsport Power Company (XLS) Kingsport Power Company Ohio Power Company (XLS) Ohio Power Company Wheeling Power Company (XLS) Wheeling Power Company NITS Attach C True-Up (XLS) NITS Attach C True-Up RTEP Attach C True-Up (XLS) RTEP Attach C True-Up Schedule 1A Attach C True-Up (XLS) Schedule 1A Attach C True-Up AEP Actuarial Report Non-UMWA YE 2011 (PDF) AEP Actuarial Report Non-UMWA YE 2011 AEP Actuarial Report UMWA YE 2011 (PDF) AEP Actuarial Report UMWA YE 2011 ADIT Detail Historical (XLS) ADIT Detail Historical Docket No. ER , OATT Formula Rate

5 Summary of Rates Charge July 1, FERC Form 1 (projected plant 2012) July 1, FERC Form 1 (projected plant 2011) % Change Point-to Point Rate $/MW Month $2,194.98$2,348.65(7%) Schedule 12 $5,385,840$5,890,993(9%) Schedule 1A $.0643/MWh$.0918/MWh(30%) AEP East Zone Network Service Peak Load 24,530.8 MW23,492.3 MW4%

6 Primary Drivers Decreasing Rate Projected 2011 investment within 2% of actual 2011 capital spend 4% increase in the East Zone Network Service Peak Load Decrease in O&M Expense for 2011

7 Revenue Requirement (including revenue credits) used to calculate the Existing Zonal ATRR for PJM OATT

8 Gross Plant Investment – 2011 Projected vs Actual Average Balance Gross Plant Investment Includes allocated general and intangible plant investment.

9 O&M Expense Comparison 2011 Projected Cost of Service includes 2010 actual expense 2011 True-up Cost of Service includes 2011 actual expense.

Projected Plant Capital Spend

11 Revenue Requirement For PJM Socialized ‘Schedule 12’ Investment Company/ Project Investment $ In-ServiceRTEP Revenue Requirement $ I&M/ Twin Branch 8,288, ,319,695 I&M/ Rockport Jefferson 580, ,584 OPC/ Hanging Rock 5,491, ,057,666 OPC/ WMoulton 4,486, ,082 OPC/ East Lima 1,941, ,752 APC/ Amos 13,706, ,906,118

12 Summary Comparison 2011 Projected – 2011 True-up

13 Summary Comparison 2011 Projected – 2011 True-up (cont.)

14 Summary Comparison 2011 Projected – 2011 True-up (cont.)

15 Schedule 1A

16 NITS True-Up

17 Actual Revenue compared to True-Up Revenue

18 Questions ?