Obligation AEP Texas 3.95% ( US00108WAH34 ) en USD

AEP Texas

92.2071 % ▼

Etas-Unis

US00108WAH34 ( en USD )

3.95% par an ( paiement semestriel )

31/05/2028

Prospectus brochure de l'obligation AEP Texas US00108WAH34 en USD 3.95%, échéance 31/05/2028

2 USD

494 USD

00108WAH3

A- ( Qualité moyenne supérieure )

Baa2 ( Qualité moyenne inférieure )

01/12/2024 ( Dans 127 jours )

L'Obligation émise par AEP Texas ( Etas-Unis ) , en USD, avec le code ISIN US00108WAH34, paye un coupon de 3.95% par an.
Le paiement des coupons est semestriel et la maturité de l'Obligation est le 31/05/2028

L'Obligation émise par AEP Texas ( Etas-Unis ) , en USD, avec le code ISIN US00108WAH34, a été notée Baa2 ( Qualité moyenne inférieure ) par l'agence de notation Moody's.

L'Obligation émise par AEP Texas ( Etas-Unis ) , en USD, avec le code ISIN US00108WAH34, a été notée A- ( Qualité moyenne supérieure ) par l'agence de notation Standard & Poor's ( S&P ).

Document
424B3 1 aeptexas424b312-2018.htm AEP TEXAS 424B3 12-2018
PROSPECTUS
AEP Texas Inc.
Offer to Exchange
$500,000,000 aggregate principal amount of its 3.950% Senior Notes, Series F due 2028,
registered under the Securities Act of 1933, as amended, for any and all of its outstanding
3.950% Senior Notes, Series E due 2028
We are conducting the Offer to Exchange described above, or Exchange Offer, in order to provide you with an
opportunity to exchange your unregistered outstanding notes referred to above, or Outstanding Notes, for
substantially identical notes that have been registered under the Securities Act, which we refer to as Exchange Notes.
The Exchange Offer
·
We will exchange all Outstanding Notes that are validly tendered and not validly withdrawn for an equal principal
amount of Exchange Notes that are registered under the Securities Act.
·
You may withdraw tenders of Outstanding Notes at any time prior to the expiration of the Exchange Offer.
·
The Exchange Offer expires at 5:00 p.m., New York City time, on January 17, 2019, unless extended. We do not
currently intend to extend the Expiration Date.
·
The exchange of Outstanding Notes for Exchange Notes in the Exchange Offer will not be a taxable event to holders
for United States federal income tax purposes.
·
The terms of the Exchange Notes to be issued in the Exchange Offer are substantially identical to the Outstanding
Notes, except that the Exchange Notes will be registered under the Securities Act, and do not have any transfer
restrictions, registration rights or additional interest provisions.
Results of the Exchange Offer
·
Except as prohibited by applicable law, the Exchange Notes may be sold in the over-the-counter market, in
negotiated transactions or through a combination of such methods. There is no existing market for the Exchange
Notes to be issued, and we do not plan to list the Exchange Notes on a national securities exchange or market.
·
We will not receive any proceeds from the Exchange Offer.
All untendered Outstanding Notes will remain outstanding and continue to be subject to the restrictions on transfer set forth in
the Outstanding Notes and in the indenture governing the Outstanding Notes. In general, the Outstanding Notes may not be
offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities laws. Other than in connection with the Exchange Offer, we do
not currently anticipate that we will register the Outstanding Notes under the Securities Act.
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Each broker-dealer that receives Exchange Notes for its own account in the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of those Exchange Notes. The letter of transmittal states that by so
acknowledging and delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with
resales of Exchange Notes received in exchange for Outstanding Notes where the broker-dealer acquired such Outstanding
Notes as a result of market-making or other trading activities. We have agreed that, for a period of 180 days after the
Expiration Date, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution."
See "Risk Factors" beginning on page 8 for a discussion of certain risks that you should consider before participating
in the Exchange Offer.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of
the Exchange Notes to be distributed in the Exchange Offer or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is December 17, 2018.
In making your investment decision, you should rely only on the information contained in or incorporated by reference
into this prospectus. We have not authorized anyone to provide you with different information. If anyone provides you
with different or inconsistent information, you should not rely on it. We are not making an offer of the Exchange Notes
in any jurisdiction where the offer thereof is not permitted. The information contained in this prospectus speaks only
as of the date of this prospectus.
This prospectus incorporates by reference important business and financial information about us from documents filed
with the SEC that have not been included herein or delivered herewith. Information incorporated by reference is
available without charge at the website that the SEC maintains at http://www.sec.gov, as well as from other sources.
See "Where You Can Find More Information" and "Incorporation by Reference." In addition, you may request a copy
of such document, at no cost, by writing or calling us at the following address or telephone number: Investor
Relations, American Electric Power Service Corporation, 1 Riverside Plaza, Columbus, OH 43215; 614-716-1000. In
order to receive timely delivery of those materials, you must make your requests no later than five business days before
expiration of the applicable exchange offer, or January 17, 2019, the present expiration date of the Exchange Offer.
References to "AEP Texas," "Company," "we," "us" and "our" in this prospectus are references to AEP Texas Inc.
specifically or, if the context requires, to AEP Texas Inc. and its subsidiaries, collectively.
TABLE OF CONTENTS

Summary

1
Risk Factors

8
Forward-Looking Statements

11
Use of Proceeds

13
Where You Can Find More Information

13
Incorporation by Reference

13
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The Exchange Offer

15
Description of the Exchange Notes

30
Material United States Federal Income Tax Consequences of the Exchange Offer

39
Plan of Distribution

39
Legal Matters

41
Experts

41
SUMMARY
This summary highlights certain information concerning the Company and this offering that may be contained
elsewhere, or incorporated by reference, in this prospectus. This summary is not complete and does not contain all the
information that may be important to you. You should read this prospectus and the documents incorporated by
reference herein in their entirety before making an investment decision.
AEP Texas Inc.
Overview
AEP Texas is a wholly owned public utility subsidiary of American Electric Power Company, Inc. ("AEP").
The Company is engaged in the transmission and distribution of electric power to approximately 1,030,000 retail
meters through retail electric providers ("REPs") in its service territory in southern, western and central Texas.
AEP Texas was formed by the merger, effective December 31, 2016, of AEP Texas Central Company ("TCC")
and AEP Texas North Company ("TNC") into AEP Utilities, Inc. The merger preserved the respective rate structures
of the merging entities. AEP Utilities, Inc. changed its name to AEP Texas Inc.
As of December 31, 2017, AEP Texas had approximately 1,540 employees. Among the principal industries
served by AEP Texas are chemical and petroleum refining, chemicals and allied products, oil and natural gas
extraction, food processing, metal refining, plastics and machinery equipment, agriculture and the manufacturing or
processing of cotton seed products, oil products, precision and consumer metal products, meat products and gypsum
products. The territory served by AEP Texas also includes several military installations and correctional facilities. AEP
Texas is a member of the Electric Reliability Council of Texas ("ERCOT"). Under Texas Restructuring Legislation,
AEP Texas' utility predecessors, TCC and TNC, exited the generation business and ceased serving retail load.
However, AEP Texas continues as part owner in the Oklaunion Plant operated by Public Service Company of
Oklahoma, an affiliate of AEP Texas, but has leased its entire portion of the output of the Oklaunion Plant through
2027 to a non-utility affiliate. AEP Texas consolidates AEP Texas North Generation Company, LLC, AEP Texas
Central Transition Funding II LLC and AEP Texas Central Transition Funding III LLC, its wholly-owned subsidiaries.
1
The Exchange Offer
In May 2018, we issued the Outstanding Notes in a transaction not subject to the registration requirements of
the Securities Act of 1933, as amended, or "Securities Act". The term "Exchange Notes" refers to the 3.950% Senior
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Notes, Series F due 2028. The term "Notes" collectively refers to the Outstanding Notes and the Exchange Notes.

General
In connection with the issuance of the Outstanding Notes, we entered into a registration
rights agreement with representatives of the initial purchasers of the Outstanding Notes
pursuant to which we agreed, among other things, to deliver this prospectus to you and to
use commercially reasonable efforts to complete the Exchange Offer within 375 days after
the date of original issuance of the Outstanding Notes. You are entitled to exchange in the
Exchange Offer your Outstanding Notes for the Exchange Notes that are identical in all
material respects to the Outstanding Notes except:
· the Exchange Notes have been registered under the Securities Act and,
therefore, will not be subject to the restrictions on transfer applicable to the
Outstanding Notes (except as described in "The Exchange Offer-Resale of
Exchange Notes" and "Description of the Exchange Notes-Form; Transfers;

Exchanges");
· the Exchange Notes are not entitled to any registration rights which are
applicable to the Outstanding Notes under the registration rights agreement,
including any rights to additional interest for failure to comply with the

registration rights agreement; and

· the Exchange Notes will bear different CUSIP numbers.
The Exchange Offer
We are offering to exchange $500,000,000 aggregate principal amount of 3.950% Senior
Notes, Series F due 2028 that have been registered under the Securities Act for any and all
of our existing 3.950% Senior Notes, Series E due 2028. You may only exchange
Outstanding Notes in minimum denominations of $2,000 and integral multiples of $1,000 in
excess thereof. Any untendered Outstanding Notes must also be in a minimum
denomination of $2,000.
Resale
Based on an interpretation by the staff of the Securities and Exchange Commission, or SEC,
set forth in no-action letters issued to third parties, we believe that the Exchange Notes
issued pursuant to the Exchange Offer in exchange for the Outstanding Notes may be
offered for resale, resold and otherwise transferred by you (unless you are our "affiliate"
within the meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided that:
· you are acquiring the Exchange Notes in the ordinary course of your business;

and
· you have not engaged in, do not intend to engage in, and have no arrangement
or understanding with any person to participate in, a distribution of the

Exchange Notes.
2

Any holder of Outstanding Notes who:

· is our affiliate;

· does not acquire Exchange Notes in the ordinary course of its business; or
· tenders its Outstanding Notes in the Exchange Offer with the intention to
participate, or for the purpose of participating, in a distribution of Exchange

Notes
cannot rely on the position of the staff of the SEC enunciated in the staff's no-action letters
to Morgan Stanley & Co. Incorporated (available June 5, 1991) and Exxon Capital
Holdings Corporation (available May 13, 1988), as interpreted in Shearman &
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Sterling (available July 2, 1993), or similar no-action letters and, in the absence of an
exemption therefrom, must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale of the Exchange Notes.
If you are a broker-dealer and receive Exchange Notes for your own account in exchange
for Outstanding Notes that you acquired as a result of market-making activities or other
trading activities, you must acknowledge that you will deliver this prospectus in connection
with any resale of the Exchange Notes and that you are not our affiliate and did not
purchase your Outstanding Notes from us or any of our affiliates. See "Plan of
Distribution."
Our belief that the Exchange Notes may be offered for resale without compliance with the
registration or prospectus delivery provisions of the Securities Act is based on
interpretations of the SEC for other exchange offers that the SEC expressed in some of its
no-action letters to other issuers in exchange offers like ours. We have not sought a no-
action letter in connection with the Exchange Offer, and we cannot guarantee that the SEC
would make a similar decision about our Exchange Offer. If our belief is wrong, or if you
cannot truthfully make the representations mentioned above, and you transfer any Exchange
Note issued to you in the Exchange Offer without meeting the registration and prospectus
delivery requirements of the Securities Act, or without an exemption from such
requirements, you could incur liability under the Securities Act. We are not indemnifying

you for any such liability.
Expiration Date
The Exchange Offer will expire at 5:00 p.m., New York City time, on January 17, 2019,
unless extended by us. We do not currently intend to extend the Expiration Date.
Withdrawal
You may withdraw the tender of your Outstanding Notes at any time prior to the expiration
of the Exchange Offer. We will return to you any of your Outstanding Notes that are not
accepted for any reason for exchange, without expense to you, promptly after the expiration
or termination of the Exchange Offer.

Conditions to the
Each Exchange Offer is subject to customary conditions. We reserve the right to waive any
Exchange Offer
defects, irregularities or conditions to exchange as to particular Outstanding Notes. See
"The Exchange Offer-Conditions to the Exchange Offer."
3
Procedures for
If you wish to participate in the Exchange Offer, you must either:
Tendering
· complete, sign and date the applicable accompanying letter of transmittal, or a
Outstanding Notes
facsimile of the letter of transmittal, in accordance with the instructions
contained in this prospectus and the letter of transmittal, and mail or deliver
such letter of transmittal or facsimile thereof, together with the Outstanding
Notes to be exchanged for Exchange Notes, and any other required documents,
to the Exchange Agent at the address set forth on the cover page of the letter of
transmittal;
or

· if you hold Outstanding Notes through The Depository Trust Company, or
"DTC", comply with DTC's Automated Tender Offer Program procedures
described in this prospectus, by which you will agree to be bound by the letter

of transmittal.
By signing, or agreeing to be bound by, the letter of transmittal, you will represent to us

that, among other things:
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· any Exchange Notes received by you will be acquired in the ordinary course of

your business;
· you have no arrangements or understanding with any person to participate in
the distribution of the Exchange Notes within the meaning of the Securities

Act;
· if you are a broker-dealer, you will receive Exchange Notes for your own
account in exchange for Outstanding Notes that were acquired as a result of
market-making activities or other trading activities, and you will deliver a

prospectus in connection with any resale of such Exchange Notes.
Special Procedures for If you are a beneficial owner of Outstanding Notes that are registered in the name of a
Beneficial Owners
broker, dealer, commercial bank, trust company or other nominee, and you wish to tender
those Outstanding Notes in the Exchange Offer, you should contact the registered holder
promptly and instruct the registered holder to tender those Outstanding Notes on your
behalf. If you wish to tender on your own behalf, you must, prior to completing and
executing the letter of transmittal and delivering your Outstanding Notes, either make
appropriate arrangements to register ownership of the Outstanding Notes in your name or
obtain a properly completed bond power from the registered holder. The transfer of
registered ownership may take considerable time and may not be able to be completed prior
to the Expiration Date.
Guaranteed Delivery
If you wish to tender your Outstanding Notes and your Outstanding Notes are not
Procedures
immediately available, or you cannot deliver your Outstanding Notes, the letter of
transmittal or any other required documents, or you cannot comply with the procedures
under DTC's Automated Tender Offer Program for transfer of book-entry interests prior to
the Expiration Date, you must tender your Outstanding Notes according to the guaranteed
delivery procedures set forth in this prospectus under "The Exchange Offer-Guaranteed
Delivery Procedures."
4
Effect on Holders of
As a result of the making of, and upon acceptance for exchange of all validly tendered
Outstanding Notes
Outstanding Notes pursuant to the terms of, the Exchange Offer, we will have fulfilled a
covenant under the registration rights agreement. Accordingly, we will not be required to
pay additional interest on the Outstanding Notes under the circumstances described in the
registration rights agreement. If you do not tender your Outstanding Notes in the Exchange
Offer, you will continue to be entitled to all the rights and subject to all the limitations
applicable to the Outstanding Notes as set forth in the Indenture (as defined below), except
we will not have any further obligation to you to provide for the exchange and registration
of untendered Outstanding Notes under the registration rights agreement. To the extent that
Outstanding Notes are tendered and accepted in the Exchange Offer, the trading market for
Outstanding Notes that are not so tendered and accepted could be adversely affected.
Consequences of
All untendered Outstanding Notes will remain outstanding and continue to be subject to the
Failure to Exchange
restrictions on transfer set forth in the Outstanding Notes and in the Indenture. In general,
the Outstanding Notes may not be offered or sold unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not subject to, the Securities Act
and applicable state securities laws. Other than in connection with the Exchange Offer, we
do not currently anticipate that we will register the Outstanding Notes under the Securities
Act.
United States Federal
The exchange of Outstanding Notes in the Exchange Offer will not be a taxable event to
Income Tax
holders for United States federal income tax purposes. See "Material United States Federal
Consequences
Income Tax Consequences of the Exchange Offer."
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Use of Proceeds
We will not receive any proceeds from the issuance of the Exchange Notes in the Exchange
Offer. See "Use of Proceeds."
Exchange Agent
The Bank of New York Mellon Trust Company, N.A. is the Exchange Agent for the
Exchange Offer. Any questions and requests for assistance with respect to accepting or
withdrawing from the Exchange Offer, requests for additional copies of this prospectus or of
the letter of transmittal and requests for the notice of guaranteed delivery should be directed
to the Exchange Agent. The address and telephone number of the Exchange Agent are set
forth in the section captioned "The Exchange Offer-Exchange Agent."
5
The Exchange Notes
The summary below describes the principal terms of the Exchange Notes. Certain of the terms and conditions
described below are subject to important limitations and exceptions. The "Description of the Exchange Notes" section
of this prospectus contains more detailed descriptions of the terms and conditions of the Outstanding Notes and
Exchange Notes. The Exchange Notes will have terms identical in all material respects to the Outstanding Notes,
except that the Exchange Notes will not contain certain terms with respect to transfer restrictions, registration rights
and additional interest for failure to observe certain obligations in the registration rights agreement.

Issuer

AEP Texas Inc.
The Exchange Notes
$500,000,000 principal amount of 3.950% Senior Notes, Series F due

2028.
Maturity

June 1, 2028.
Interest Rate

3.95% per annum.
Interest Payment Dates

June 1 and December 1 of each year, beginning on June 1, 2019.
Ranking
The Exchange Notes are our senior unsecured obligations and will rank
equally with all our other senior unsecured obligations and will be
effectively subordinated to all of our secured debt, of which we have

none outstanding as of December 17, 2018.
Optional Redemption
At any time prior to March 1, 2028, we may redeem the Exchange Notes
at any time, in whole or in part, at a "make whole" redemption price
equal to the greater of (1) the principal amount being redeemed or (2) the
sum of the present values of the remaining scheduled payments of
principal and interest on the Notes being redeemed that would be due if
such Exchange Notes matured on March 1, 2028, discounted to the
redemption date on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Treasury Rate (as defined
herein), plus 15 basis points, plus in each case accrued and unpaid
interest to the redemption date.
At any time on or after March 1, 2028, we may redeem the Exchange
Notes in whole or in part at 100% of the principal amount of the
Exchange Notes being redeemed, plus accrued and unpaid interest

thereon to but excluding the date of redemption.
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6
Covenants
The Indenture (as defined herein) limits our ability to incur Liens (as
defined herein) and limits our ability to merge, consolidate or sell all or
substantially all of our assets as an entirety.
These limitations are subject to a number of important qualifications
and exceptions. For more information, see "Description of the Exchange

Notes."
Absence of Established Market for
We do not plan to have the Exchange Notes listed on any securities
the Exchange Notes
exchange or included in any automated quotation system. There is no
existing trading market for the Exchange Notes, and there can be no
assurance regarding any future development of a trading market for the
Exchange Notes, the price at which holders of the Exchange Notes may
be able to sell their Exchange Notes or the ability of such holders to sell

their Exchange Notes at all.
Form of Notes
The Exchange Notes will be issued in fully registered book-entry form
and the Exchange Notes will be represented by one or more global
certificates, which will be deposited with or on behalf of DTC and
registered in the name of DTC's nominee. Beneficial interests in global
certificates will be shown on, and transfers thereof will be effected only
through, records maintained by DTC and its direct and indirect
participants, and your interest in any global certificate may not be
exchanged for certificated Notes, except in limited circumstances
described herein. See "Description of the Exchange Notes-Book-Entry

Only Issuance-The Depository Trust Company."
Trustee

The Bank of New York Mellon Trust Company, N.A.
Governing Law
The Indenture is, and the Exchange Notes will be, governed by, and

construed in accordance with, the laws of the State of New York.
7
RISK FACTORS
An investment in the Notes, including a decision to tender your Outstanding Notes in the Exchange Offer,
involves a number of risks. Risks described below should be carefully considered together with the other information
included or incorporated by reference in this prospectus, including "Item 1A. Risk Factors" in our Annual Report on
Form 10-K for the year ended December 31, 2017, before investing in the Exchange Notes. Any of the events or
circumstances described as risks below or incorporated by reference could result in a significant or material adverse
effect on our business, results of operations, cash flows or financial condition, and a corresponding decline in the
market price of, or our ability to repay, the Exchange Notes. The risks and uncertainties described below or
incorporated by reference herein may not be the only risks and uncertainties that we face. Additional risks and
uncertainties not currently known or that we currently deem immaterial may also result in a significant or material
adverse effect on our business, results of operations, cash flow or financial condition.
Risks Relating to Our Corporate and Financial Structure
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Although the Exchange Notes are designated as "senior," your right to receive payment on the Exchange Notes
will be unsecured and effectively subordinated to any future secured debt of AEP Texas, to the extent of the value
of the collateral therefor.
The Exchange Notes will be general senior unsecured obligations and therefore will be effectively subordinated
to AEP Texas' future secured indebtedness. As of December 17, 2018, AEP Texas had no secured
indebtedness
outstanding. Although the Indenture places some limitations on our ability to create liens securing indebtedness, there
are significant exceptions to these limitations that allow us to secure indebtedness without equally and ratably securing
the Exchange Notes. If AEP Texas were to incur secured indebtedness and if AEP Texas defaulted on the Exchange
Notes or certain other indebtedness or became bankrupt, liquidated or reorganized, any secured creditor could use the
value of the collateral securing that debt to satisfy their secured indebtedness before you would receive any payment on
the Exchange Notes, unless the Notes were similarly secured as described in "Description of Exchange Notes
Limitation on Secured Debt" herein. If the value of such collateral is not sufficient to pay any secured indebtedness in
full, AEP Texas' secured creditors would share the value of AEP Texas' other assets, if any, with you and the holders
of other claims against AEP Texas which rank equally with the Exchange Notes.
AEP Texas could enter into various transactions that could increase the amount of its outstanding indebtedness, or
adversely affect its capital structure or credit ratings, or otherwise adversely affect the holders of the Exchange
Notes.
The terms of the Exchange Notes will not prevent AEP Texas from entering into a variety of acquisition,
refinancing, recapitalization or other highly-leveraged transactions. As a result, AEP Texas may enter into a
transaction even though the transaction could increase the total amount of its outstanding indebtedness, adversely
affect its capital structure or credit ratings or otherwise adversely affect the holders of the Notes.
As of September 30, 2018, AEP Texas had approximately $3.99 billion of indebtedness outstanding (of which
$829 million was securitization bonds issued by its subsidiaries).
8
Certain provisions in our debt instruments limit our financial and operating flexibility.
Our outstanding debt instruments contain numerous financial and operating covenants that place significant
restrictions on, among other things, our ability to create liens and engage in mergers and consolidations.
Our outstanding debt instruments also require us to meet certain financial ratios, such as maintaining certain debt
to capitalization ratios. Our ability to comply with these and other requirements and restrictions may be affected by
changes in economic or business conditions, results of operations or other events beyond our control. A failure to
comply with the obligations contained in any of our debt instruments could result in acceleration of certain of our
outstanding debt. Certain covenants with respect to the Exchange Notes and our outstanding indebtedness are
described under "Description of the Exchange Notes" and in Note 14 to our audited consolidated financial statements,
which are included Annual Report on Form 10-K for the year ended December 31, 2017 and incorporated herein by
reference.
Adverse changes in our credit ratings may negatively affect us.
Our ability to access capital markets is important to our ability to operate our business. Increased scrutiny of the
energy industry and the impact of regulation, as well as changes in our financial performance and unfavorable
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conditions in the capital markets could result in credit agencies reexamining our credit ratings. A downgrade in our
credit ratings could restrict or discontinue our ability to access capital markets at attractive rates and increase our
borrowing costs.
We are subject to control by AEP.
We are a wholly-owned subsidiary of AEP and, therefore, AEP ultimately controls the decision of all matters
submitted for shareholder approval. In circumstances involving a conflict of interest between AEP, on the one hand,
and our creditors, on the other, AEP could exercise this power to the detriment of our creditors, including holders of
the Exchange Notes.
Risks Related to the Exchange Offer
There may be adverse consequences if you do not exchange your Outstanding Notes.
If you do not exchange your Outstanding Notes for Exchange Notes in the Exchange Offer, you will continue to
be subject to restrictions on transfer of your Outstanding Notes as set forth in the offering memorandum distributed in
connection with the private offering of the Outstanding Notes. In general, the Outstanding Notes may not be offered or
sold unless they are registered or exempt from registration under the Securities Act and applicable state securities
laws. Except as required by the registration rights agreement, we do not intend to register resales of the Outstanding
Notes under the Securities Act. You should refer to "Summary-The Exchange Offer" and "The Exchange Offer" for
information about how to tender your Outstanding Notes.

The tender of Outstanding Notes under the Exchange Offer will reduce the outstanding amount of the
Outstanding Notes, which may have an adverse effect upon, and increase the volatility of, the market prices of the
Outstanding Notes due to a reduction in liquidity.
9
Your ability to transfer the Exchange Notes may be limited if there is no active trading market, and there is no
assurance that any active trading market will develop for the Exchange Notes.

We are offering the Exchange Notes to the holders of the Outstanding Notes. We do not intend to list the
Exchange Notes on any securities exchange. There is currently no established market for the Exchange Notes. If no
active trading market develops, you may not be able to resell your Exchange Notes at their fair market value or at all.
Future trading prices of the Exchange Notes will depend on many factors including, among other things, prevailing
interest rates, our operating results and the market for similar securities. No assurance can be given as to the liquidity
of or trading market for the Exchange Notes.
Certain persons who participate in the Exchange Offer must deliver a prospectus in connection with resales of the
Exchange Notes.

Based on interpretations of the staff of the SEC contained in Exxon Capital Holdings Corp., SEC no-action letter
(available May 13, 1988), Morgan Stanley & Co. Inc., SEC no-action letter (available June 5, 1991) and Shearman &
Sterling, SEC no-action letter (available July 2, 1993), we believe that you may offer for resale, resell or otherwise
transfer the Exchange Notes without compliance with the registration and prospectus delivery requirements of the
Securities Act. We cannot guarantee that the SEC would make a similar decision about our Exchange Offer. If our
belief is wrong, or if you cannot truthfully make the representations set forth under "The Exchange Offer," and you
transfer any Exchange Note issued to you in the Exchange Offer without meeting the registration and prospectus
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