VERTICALLY INTEGRATED UTILITIES
AEP’s vertically integrated utility operations are engaged in the generation,
transmission and distribution of electricity for sale to retail and wholesale
customers through assets owned and operated by AEGCo, APCo, I&M, KGPCo,
KPCo, PSO, SWEPCo and WPCo. AEPSC, as agent for AEP’s public utility subsidiaries,
performs marketing, generation dispatch, fuel procurement and power-related
risk management and trading activities on behalf of each of these subsidiaries.
ELECTRIC DELIVERY
Other than AEGCo, AEP’s vertically integrated public utility subsidiaries
own and operate transmission and distribution lines and other facilities to
deliver electric power. Most of the transmission and distribution services are
sold to retail customers of AEP’s vertically integrated public utility
subsidiaries in their service territories. These sales are made at rates approved
by the state utility commissions of the states in which they operate, and in
some instances, approved by the FERC.
TRANSMISSION AND DISTRIBUTION UTILITIES
This business segment consists of the transmission and distribution of electricity
for sale to retail and wholesale customers through assets owned and operated
by OPCo, TCC and TNC. OPCo is engaged in the transmission and distribution of
electric power to approximately 1,464,000 retail customers in Ohio. TCC is engaged
in the transmission and distribution of electric power to approximately 806,000
retail customers through REPs in southern Texas. TNC is engaged in the transmission
and distribution of electric power to approximately 188,000 retail customers
through REPs in west and central Texas.
AEP’s transmission and distribution utility subsidiaries own and operate
transmission and distribution lines and other facilities to deliver electric
power. Most of the transmission and distribution services are sold to retail
customers of AEP’s transmission and distribution utility subsidiaries
in their service territories. These sales are made at rates approved by the
PUCT for TCC and TNC and by the PUCO and the FERC for OPCo. The FERC regulates
and approves the rates for wholesale transmission transactions. As discussed
below, some transmission services also are separately sold to non-affiliated
companies.
AEP’s transmission and distribution utility subsidiaries hold franchises
or other rights to provide electric service in various municipalities and regions
in their service areas. In some cases, these franchises provide the utility
with the exclusive right to provide electric service. These franchises have
varying provisions and expiration dates. In general, the operating companies
consider their franchises to be adequate for the conduct of their business.
The use and the recovery of costs associated with the transmission assets of
the AEP transmission and distribution utility subsidiaries are subject to the
rules, protocols and agreements in place with PJM and ERCOT, and as approved
by the FERC. In addition to providing transmission services in connection with
power sales in their service areas, AEP’s transmission and distribution
utility subsidiaries through RTOs also provide transmission services for non-affiliated
companies.