Julie Sherwood - Director of Investor Relations Nicholas K. Akins - Chief Executive Officer, President, Director, Member of Executive Committee and Member of Policy Committee Brian X. Tierney - Chief Financial Officer and Executive Vice President

Greg Gordon - ISI Group Inc., Research Division Dan Eggers - Crédit Suisse AG, Research Division Anthony C. Crowdell - Jefferies LLC, Research Division Jonathan P. Arnold - Deutsche Bank AG, Research Division Steven I. Fleishman - Wolfe Research, LLC

Ladies and gentlemen, thank you for standing by. Welcome to the Second Quarter 2013 Earnings Conference Call. [Operator Instructions] And as a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Ms. Julie Sherwood. Please go ahead.

Thank you, Ernie. Good morning, and welcome to the second quarter 2013 earnings webcast of American Electric Power. Our earnings release, presentation slides and related financial information are available on our website, aep.com. Today, we will be making forward-looking statements during the call. There are many factors that may cause future results to differ materially from these statements. Please refer to our SEC filings for a discussion of these factors. Joining me this morning for opening remarks are Nick Akins, our President and Chief Executive Officer; and Brian Tierney, our Chief Financial Officer. We will take your questions following their remarks. And now I'd like to turn the call over to Nick. Nicholas K. Akins: Thanks, Julie. So thanks to everyone for joining us today. The second quarter, while in space may seem uneventful, there have been some significant developments that warrant further discussion and define the mile post for future action. The challenges we face with the economy, capacity markets and an industry in transition provide the forcing functions for change. That is exactly what our management team and this company intends to do, face these challenges head on and provide the tools for our employees to be agile and adapt to an ever-changing environment. So from the outset, the financial measures for the quarter were on track and respectable and have not changed our plans for the year or our guidance that has been previously provided. Second quarter GAAP earnings per share was $0.69 per share and $0.73 per share from an operating earnings perspective, which was slightly less than the $0.77 per share for second quarter 2012. So year-to-date puts us at $1.44 per share GAAP earnings and $1.53 per share operating, while again, it's slightly less than last year. The difference in GAAP versus operating earnings primarily is the net of an impairment related to Muskingum River 5, which should not clear the PJM capacity market, and the benefit of a Supreme Court ruling regarding the tax benefits related to a U.K. windfall profits tax. Our board yesterday did approve the quarterly payment of a dividend to investors of record of $0.49 per share, which is AEP's 413th consecutive quarter of paying a dividend. So steady as you go is from the board perspective. With the basic financial numbers for the quarter out of the way, I want to give you my perspective on the challenges we face and what we're doing about them. But first, let me cut to the chase. We are reaffirming our guidance range for 2013 of $3.05 to $3.25 per share. And despite the challenges before us, we still maintain expected long-term earnings growth rate of between 4% and 6%, albeit the results of the 2016-17 PJM capacity auction has tested our business case for the upside beyond this range. But through capital allocation, particularly the transmission, regulatory recoveries for it and performance improvements that benefit our customers, operations and bottom line performance, our management team is committed to living up to the 4% to 6% expectation. Too many times, we equate only load growth with earnings expectations. While that equation may still be partially true, our businesses change. It is more about optimization, performance improvement and disciplined capital and operating expense management that is driven by a culture of optimism and expectation that we can get the job done, and we will. So let me discuss some of the challenges I see. An economy that continues to be tenuous at best, I think you're seeing this all across the country. And for the past quarter, industrial load in our footprint has continued to be down, commercial load was down slightly and residential load held flat. Brian will discuss the numbers in detail. But because margins are different by rate class, financially, the impact was only $0.02 per share year-on-year, if you look at those traditional retail footprints. But with the addition of Generation and Marketing adding $0.04 per share, which includes our retail earnings, actually, the performance, the financial performance of serving load is up. So now let's take a look at the regulatory recovery support. The asset transfer cases in Kentucky, Virginia and West Virginia are moving along. In Kentucky, a nonunanimous settlement was filed that provides for the transfers of Mitchell, as planned, with recovery of Big Sandy-related conversion cost. In Virginia, we have made the case of the Wheeling merger along with the Mitchell transfers in the public interest, as well as the transfer of Amos. And in West Virginia, we just concluded hearings that we feel confident we demonstrated our case for the transfer of Amos and Mitchell, along with the Wheeling merger, that's in the best interest of customers. Why do we believe we just put an -- put on excellent cases in these jurisdictions? These are fully controlled units that are least cost options that provide a secure supply to customers for the future in lieu of the capacity payments that were paid through the AEP pool to the other operating companies. We believe we have strong cases and will soon find out the outcomes with the first order expected from Virginia by Wednesday, followed by West Virginia and Kentucky during the third quarter. A SWEPCO Texas rate case order related to Turk is expected in third quarter. That will be retroactive to late January 2013. And Brian will discuss this timing issue in our second quarter reporting on this subject. We're hopeful that the PUCT, the Public Utility Commission of Texas, will see beyond the shortsightedness of the ALJ decision in this case, particularly as it relates to the notion that we should have stopped construction of Turk late in the game. This is tantamount to hindsight regulation and should be rejected by the Texas commissioners. The PUCT commissioners need to send a strong message that Texas jurisdictional capacity can get built and recovered in a state that desperately needs capacity. Customers are benefiting from an exceptional generating unit that is 15% more efficient, the new supercritical unit in the country, and thereby saving customers considerable fuel cost. This is a win for Texas customers and should be a forward to recovery in the ROE that is deserved for this major investment, and sub 10% isn't reasonable. In Indiana, 2 positive developments have occurred that further improved the recovery of the life cycle management program at Cook and the recovery of the dry sorbent injection equipment at Rockport. The $1.169 billion, less about $23 million of incremental upsizing costs, were approved for recovery, which was $741 million jurisdictional to Indiana and allowed the deferral of other project-related costs for future recovery related to the life cycle management programs. So very good outcome in Indiana in this regard. Regarding the Rockport DSI projects, just yesterday, a settlement agreement was filed to allow the full recovery of the dry sorbent injection systems. 80% would be through a tracker and 20% deferred for the next rate case. So another great outcome. Also, at Flint Creek, we received an order earlier in this month to allow recovery of the scrubber installation, and the Arkansas Public Service Commission approved that. So now let's talk about performance improvement. I'm CEO of AEP, but many of you may know I'm also a rock drummer. And one of the biggest challenges -- I know that's hard to believe, but it's -- one of the biggest challenges for a beginning drummer is to separate the movement of the right hand and the right foot. At first, it's not natural. But after practice, it becomes second nature in its reaction to play and react to different kinds of music. I tell you that because too many times we assume that work has to be performed one way or even the old way only to find out there are better and more efficient ways of improving processes and while reducing operating expenses. This is what we're doing in AEP. Too many times, we assume performance improvement is only about cost cutting. Therefore, we think that expense reductions are not sustaining. This is just not true. I've been involved with just about every operational business function in this company. And what our employees are doing to reinvent this company is truly phenomenal. So I've decided to give you a little insight to help you understand our sustainability initiative and what we're doing relative to our ability to adjust to this changing environment that we operate in, particularly with the questions about capacity markets, load forecasts and so forth. We estimate that we'll exceed our expense reduction revenue enhancement targets for 2013 through our repositioning engaged to gain employee programs, while increasing O&M spend in specific areas of prioritization, such as transmission, cyber, retail and other things. So I think it's important to note that we are being mindful that we need to add O&M in certain places and prioritize the areas and, at the same time, achieve the O&M objectives we've set out for ourselves for the year. So far, as well, our 3 plants, who have gone through the lean processes, have been just transformational for these generating plants. We've achieved between $5 million and $10 million of savings per plant in this analysis. And that process hasn't ended. The third plant is only in its eighth week of doing these lean initiatives, and it's just amazing the kind of things they come up with. And oh, by the way, next year, we'll have 6 to 8 plants about this time going through the same process. And we have between 15 and 20 plants to go through this process. So it's important to note that we are far from done and a lot more work to do, but a lot more savings when there is a benefit as we go forward. We've executed a supply chain RFP that generates substantial savings in the tens of millions of dollars just by going out for bid with our repositioning programs, standardize some equipment specs and enabled us to do that kind of buying. And typically, we haven't done that in years. But we've now done that, and it will provide tremendous benefits. We've also done things in the -- like changing limestone specs and suppliers, lowering auxiliary loads and minimum loads at power plants, and the list goes on and on. But it's also a work in progress, and there's many savings initiatives yet to follow. We would not have increased O&M in some areas if we believed that second quarter O&M timing issues were a problem. We're putting a culture of continuous improvement in place that will achieve savings this year and, yes, will help mitigate the impact of the 2016-17 capacity auction results. Chuck Zebula will be also looking at this business like a private equity investor with the help of generation employees and corporate to reduce expenses commensurate with what the capacity market dictates. AEP has issues with this regulatory construct we sometimes call a capacity market in PJM. This version of socialism that equates DSM and nonfirm transmission with reliable and capital-intensive steel in the ground is really just capitalism in a sandbox, where the rules seem to penalize long-term investors. This has to change or we'll eventually have a doughnut, with PJM being the empty middle, and reliability will suffer. PJM is fully aware of our concerns and, hopefully, will react accordingly because change is desperately needed. Regarding President Obama's speech, I'll refer to Page 5 of the presentation. And in that, you'll see -- I was actually -- when I heard the President's speech, it was a little different than what the actual write-up of what the initiative was. In the write-up, it had talked about things like clean coal, natural gas, nuclear renewables, electric vehicles with the eGallon approach, which I find pretty intriguing to talk about the dollar per gallon equivalent for the electricity side of things, and transmission was discussed. So for that perspective, it was a balanced approach. But I guess the proof comes with what the administration will do and the EPA will do as a result of some of the activities they're going through. It's certainly clear that they need to be consistent and reasonable in their approach. And I think that, as you can see from the Page 5, our 2015 estimate shows that we'll exceed even the Waxman-Markey litigation targets of 17% by 2020 because of coal retirements, coal-to-gas switching and energy efficiency and renewable resources, as well as transmission optimization. The industry itself has already achieved 16% reduction because of these activities. So this is not a time to really impair the economy even further. The mercury rules and the natural gas revolution has already achieved the objectives that we've set out to try to make consistent progress, and commensurate with the Waxman-Markley limitations before. So there's no reason to further cripple the economic recovery of this nation by adding -- or even adding a larger burden of onerous greenhouse gas requirements that further jeopardize the economic recovery and even the electric grid itself. I believe that Gina McCarthy, the Head of EPA, will be more responsible and reasonable, particularly with what has already been achieved with the mercury rules, where certainly we're seeing more retirements related to that, much more than even the EPA had anticipated. So hopefully, we'll wind up in a -- with a reasonable solution that we can work forward with, particularly as it relates to existing units. We have proposed an efficiency top of requirement. And certainly, we have striven with our plants to find more efficiency gains, and we continue to do that. Lastly, I'll point you to my favorite graph, which is back on Page 4. I know there's been some comments earlier this morning about this, but this is a 12-month ROE view. And as we look at this thing, APCo is continuing to improve. We expect that to continue to improve. I&M has a rate case that was completed that's not fully reflected in these numbers, so its ROE will certainly improve upwards toward 10% in the coming year. And then, as we look at SWEPCO, the SWEPCO rate case in Texas, it's retroactive back to the end of January. So when you -- and Brian will talk about this, the AFUDC part of the analysis versus what's actually going to happen when the rates become effective and are retroactive back to that point. So wouldn't you expect SWEPCO to move up toward the 9%, 9-plus range? So we continue to see improvement in those areas, and it's really because of the capital intensiveness, but also the cases that have either been completed, are waiting for an order from the commissions or just haven't been fully reflected in these numbers. So we continue to be optimistic about how this chart will look as we go forward in the year. So with that, I'd have to say that, overall, the second quarter has been a typical second quarter, weather dependent, load dependent. But as you know, the third and fourth quarter is where AEP certainly sees the benefits of not only the timing related to O&M, but also from the earnings standpoint, what occurs during the rest of the year, during the hot season and the cold season. So again, thank you very much for attending. And I'll turn it over to Brian. Brian X. Tierney: Thank you, Nick. And good morning, everyone. I'll start on Slide 6 with the reconciliation of this year's second quarter to last year's. As you can see, American Electric Power's operating earnings were $0.73 per share for the second quarter as compared to $0.77 per share last year. As I will discuss, this decline of $0.04 is explained by the effect of certain Ohio transition items, with our regulated businesses showing a net favorable impact for the period. The largest item adversely affecting the quarter-over-quarter comparison includes a combination of certain Ohio transition items that were unfavorable, $0.09 per share. This effect on earnings included the reversal of a prior period fuel provision last year worth $0.05 per share and lower capacity payments from competitive suppliers totaling $0.04 per share. Operations and maintenance expenses, net of offsets, increased slightly, adversely affecting earnings by $0.05 per share. The higher expense levels were driven primarily by additional spending associated with storm restoration and incremental plant outage work performed in 2013. We continue to focus on controlling our expenses across all functions, particularly overhead costs, and expect to see this impact back-end loaded in 2013. We anticipate that O&M, net of offsets, will be close to flat when compared to 2012 on an annual basis. We will discuss this more later. Weather played an unfavorable role in our quarterly earnings comparison. Temperatures were milder across all of our jurisdictions, adversely affecting results by $0.04 per share. However, weather was $0.02 per share favorable versus normal. Allowance for funds used during construction, or AFUDC, was up $0.03 per share in 2013 versus 2012, due primarily to the startup of the Turk plant in December of 2012. With the inclusion of Turk in Louisiana and FERC wholesale rates currently and with the anticipated rate order in Texas, this item will be offset in rate relief as the year progresses. Other items in total were unfavorable by $0.03 per share and include lower results from River Operations segment due to weaker market conditions and challenging operating results. Regulated retail load was down from the prior period, adversely affecting the quarterly comparison by $0.02 per share. This decline is being driven by lower commercial and industrial sales, and we'll talk about this later more as well. Items positively affecting the quarter-over-quarter comparison include continued growth in our Transmission Operations business for $0.02 per share and higher interest income for the quarter of $0.06 per share. This latter item is largely the interest income component of the favorable U.S. Supreme Court ruling associated with the U.K. windfall profit tax treatment. The operating income treatment here is consistent with how we have previously treated this component of the case. The positive benefit of the tax credit itself is being treated as nonoperating and is also consistent with prior period treatment. Finally, rate changes were favorable by $0.14 per share in the second quarter of 2013 and are the result of rate activity across multiple of our jurisdictions. Turning our attention to the year-to-date comparison on Slide 7. You can see that the company's operating earnings for this year were $1.53 per share compared to $1.57 per share last year. I'll focus my remarks on the significant differences from the quarterly explanations. Adverse year-to-date comparisons include the Ohio transition items that were unfavorable $0.20 per share. O&M expenses, net of offsets, and River Operations were negative for the year-to-date, reasons similar to the quarterly comparison. And the effective tax rate was negative by $0.05 per share. The tax rate difference was driven by positive prior year tax adjustments that were not repeated in 2013, as well as unfavorable book-to-tax differences, which are accounted for on a flow-through basis. On the positive side of the ledger, the most significant contributor to the other category, which was up $0.03 per share, was the Generation and Marketing segment, which Nick had mentioned earlier. Transmission operations and interest income were up a combined $0.09 per share for reasons similar to the quarterly comparison. And in contrast to the second quarter results, weather through June was favorable compared to the year-to-date in 2012 by $0.07 per share. Weather was favorable by $0.04 per share relative to normal. Finally, rate changes were favorable by $0.21 per share in the first half of 2013 versus 2012, with the improvement again coming from multiple of our jurisdictions. In summary, we continue to face the challenge of offsetting the unfavorable effect of Ohio transition items, but remain on track to achieve our earnings guidance range for 2013. I'll remind you that the Ohio transition items were included in our guidance for the year. We're clearly being challenged in the area of regulated load, but expect to exceed our forecast in other areas. As we always do, we will continue to manage our businesses and adjust accordingly as we work our way through the year. We are confident we are on track to deliver results within the stated guidance range, and we will discuss this again in more detail later. As I mentioned earlier, I'd like to spend some time looking at our regulated load so far this year. Turning to Slide 8, you can see in the lower right-hand quadrant that weather-normalized load was down 2.7% for the quarter and 2.1% for the year-to-date period. The decline in both periods was driven by lower industrial sales. Residential sales were close to flat for the quarter, but the year-to-date results were driven by strong results in the first quarter. The residential class, shown in the upper left quadrant, was comparable to last year's second quarter, down just 0.1%. Year-to-date residential sales show a favorable 0.7% increase as compared to the same period last year. We continue to see some modest residential customer growth of 0.7% in our Western service territories, but none to speak of in our Eastern areas. In the upper right-hand quadrant, you can see the 2.1% decline in commercial sales for the quarter. Year-to-date, commercial sales were down only 0.9%, aided by stronger results in the first quarter. Our sales to commercial customers have been the strongest in Texas and Ohio, where growth is being driven by stronger employment growth. Finally, in the lower left quadrant, you can see the declines I mentioned earlier, where industrial sales are down 5.3% for the quarter and 5.7% year-to-date. If you exclude the effect of our largest customer, which has been operating at reduced levels, the declines would have been 3.1% and 3.3% for the quarter and year-to-date periods, respectively. While not minimizing the importance of these declines, it's important to note that the effect on gross margin associated with declines in industrial class is less than in other classes. The average realization from industrial customers is less than half that of residential customers, and a larger portion of the rate is driven by demand charges that adjust to lower levels on a lagging basis. Because of this, we are not alarmed, from an earnings standpoint, by overall load being down relative to forecast. As Nick alluded to earlier, the mix of load and margin differences result in overall year-to-date earnings only being off $0.02 per share, despite a year-to-date normalized load decrease of 2.1%. As I have done on previous calls, I'll pause here to share some economic indicators for AEP. The company's service territory continues to experience stronger growth than the U.S. in terms of GDP, although the growth is not evenly distributed. For the quarter, GDP growth in AEP's Western footprint was 2.7% compared to 1.8% growth in the Eastern part of AEP's territory. That's compared to an estimated 1.9% growth for the U.S. in aggregate. Unemployment for AEP's total service territory at 7.1% is still lower than it is for the U.S. as a whole at 7.6%. Employment growth for the U.S. has finally caught up with growth within AEP's territory, after having lagged behind since the start of the recession. Job growth in AEP's Western footprint of 1.5% is identical to that for the U.S. as a whole. Estimates for job growth in our Eastern service territory moderated this quarter to an increase of 0.8%. Let's turn to Slide 9, where you'll find load trends for the quarter from our 5 largest industrial sectors. Our largest sector, primary metals, was down 16% from last year's second quarter. As I mentioned earlier, the curtailed production at our largest customer -- and excluding that effect, this sector would have been down closer to 8%. We are seeing other customers reducing operations until market conditions improve, and some are taking advantage of this situation to retool their operations and add efficiencies for their ultimate return to operation. Chemical manufacturing was down 2.6% for the quarter. This decline was widespread across our service area, with the exception of Texas. Even with low natural gas prices, market demand remains soft. Petroleum and coal products were up 1.2% for the quarter versus the same period last year, reflecting a new refinery in Texas that reached full capacity in June of 2012. Two refineries were down for maintenance in the first quarter. Excluding those customers, this sector would be up 3.5% for the year. The mining sector, excluding oil and gas, was down 1.2% for the quarter. This continuing decline reflects the effect of recent mild winters, low natural gas prices and low utility demand. Approximately 90% of AEP's mining load is located in our Eastern footprint. Paper manufacturing was up 2.5% for the quarter, driven by higher demand in Ohio that more than offset lower demand in the West. Although not in our top 5 sectors, we also continue to see growing sales in the oil and gas extraction and the pipeline transportation sectors, driven by continued expansion related to shale gas activity. Slide 10 provides an opportunity to update you on the financial health of American Electric Power. Our debt to total capitalization remains very healthy at 55.2%. This ranks among the lowest levels for the company in recent history. Our credit metrics, the FFO interest coverage and FFO to total debt, are solidly BBB and Baa2 at 4.5x and 19.1%, respectively. Our net available liquidity stands at nearly $3.5 billion and is underpinned by our 2 revolving credit facilities and our parent term loan credit facility. In order to be able to obtain a private letter ruling on the tax-free nature of our pending corporate separation, we terminated that company term loans facility and reinstated the same program at the subsidiary level. Now Ohio Power, AEP Generation Resources, Appalachian Power and Kentucky Power will be the direct borrowers of the facility. The size and tenor of the facility remain unchanged. And due to the ratings of the subsidiaries, transaction costs should be recovered by reduced borrowing costs. On the bottom left side of the slide, you'll see that our qualified pension liability is nearly fully funded at 97%. This is a result of aggressive funding over the last 3 years and this year's higher discount rate. In addition, due to the changes that were made last year on our post-retirement medical plans for future retirees, as well as higher discount rates, our other post-employment benefit liability is now fully funded. And finally, this week, we priced our inaugural securitization for American Electric Power in Ohio. Specifically, $267 million of securitization bonds comprised of $165 million with a weighted average life of 2.25 years and $102 million with a weighted average of just over 5 years were priced at a duration weighted yield of approximately 1.59%. The closing date for the issuance is scheduled for August 1. This marks additional progress in our 2013 financing plan and is particularly beneficial to AEP for 2 reasons: first, we strengthen our balance sheet as we transition a regulatory asset into cash; and second, we ease the burden on our customers, who realize a substantial reduction in the carrying charge on the regulatory assets. The net present value of the savings to the customer is estimated to be nearly $24 million. The management and board remain committed to the financial health of the company, as exhibited by the items that you see on Slide 10. We will continue to demonstrate O&M discipline, careful capital allocation and thoughtful access of the debt capital markets. Let me spend some time on Slide 11 talking about our recent success in reducing the baseline utility operations and maintenance expenses in recent years. We focus on the base spend because we had been successful in getting certain O&M items placed into trackers, with contemporaneous revenue increases for rate-making purposes. From 2010 through estimated year end of 2013, the compounded annual growth rate for the company's base O&M spend has been negative 2.9%. This spending discipline did not happen by accident. The employees of AEP have been hard at work on repositioning the company for the competitive environment we are facing. In 2013, we formalized the program and engaged our employees to focus on 5 distinct areas of efficiency improvements, cost-saving initiatives and revenue enhancement programs. In addition to the examples Nick provided earlier in the call, another example of the progress our employees have made is in the procurement organization. At the beginning of the year, we asked Craig Rhoades to take the role of Chief Procurement Officer. Among the initiatives that Craig and his team have undertaken was to select a single integrated maintenance repair and operation supplier for all of AEP. This selection will allow AEP to take advantage of its buying power on behalf of its customers and allow us to reap significant back office and process savings. Recognizing the competitive forces facing our business and the challenges posed by low capacity pricing in coming years, our employees have chosen to continue and expand the continuous improvement programs into 2014. Specific, targeted and employee-generated continuous improvement is becoming part of our culture at AEP. We have come to realize that it works. It makes our operations more efficient, engages and energizes our employees and provides a mechanism for wringing unnecessary activities and costs out of our operations. Those savings can be channeled back into customer-focused operations and some can flow to the bottom line. Nick mentioned some of the challenges posed by the capacity auction pricing in PJM. Expense savings through continuous improvement will help us fill the gap created by the reduced revenues, so low capital rotation into faster growth areas of our business like Transmission Operations. This is the same capital rotation that has allowed us to grow earnings in this segment of our operations from $0.02 per share in 2010 to a forecasted $0.14 per share this year. It would be a leap of faith for you to believe that we could be successful in these endeavors if our recent track record did not demonstrate our employees' ability to successfully deliver these positive results. I would never bet against the dedication, ingenuity and hard work of the American Electric Power employee. On Slide 12, I would like to point out some earnings contributors for the balance of 2013. Many of you have looked at the first half earnings of 2013, added last year's second half earnings and have expressed concerns about 2013 year end results. Those are concerns I don't share due to a number of the balance-of-year differences reflected on this slide. First, we are awaiting an order in Texas, as Nick indicated, placing the Turk power plant into rates. We anticipate an order shortly, with those rates to be effective to January 29 of this year. Second, in the fourth quarter of last year, we had a significant charge associated with refinancing of our parent company debt. That charge will not recur this year. In addition, we had some significant expenses in the third quarter last year associated with the derecho windstorm in the eastern part of our service territory. While we expect some continued storm activity, we do not anticipate a large storm of that magnitude. We believe that base utility O&M will be approximately flat to last year's level. We are anticipating better river conditions and grain export shipments this year on our River Operations business as compared to the dismal conditions from last year. Finally, we expect decreased depreciation expenses associated with our recent write-off of the Muskingum River 5 unit in the second half of this year. Given where we are in the year and how we are tracking to our plan, we are confident of our ability to meet our operating earnings guidance range of $3.05 to $3.25 per share for 2013. Thank you for your time this morning. And with that, I will turn the call back to the operator for your questions.

[Operator Instructions] And we'll go to the line of Greg Gordon with ISI Group. Greg Gordon - ISI Group Inc., Research Division: So I hear your enthusiasm and optimism about the ongoing ability of the company to improve ROEs in states where you're under earning and control costs. But I -- there's still a lot of skepticism about the very significant headwind between 2015 and 2017 coming from the most recent PJM capacity result as it pertains to your ability to sustain your 4% to 6% growth rate. So can you just talk a little bit more about your planning horizon and what you think the tools are in your toolbox to plow through that headwind? Nicholas K. Akins: Yes. Greg, I guess we sort of learned this early on in my tenure. We had a $250 million problem with Ohio. And now, this time around, we have 2.5 to 3 years to get this fully resolved from a sustainability fashion. But as I mentioned earlier on the O&M issues and the revenue enhancements that we have going on, we've -- it's crescendo-ing over time. And like -- the plant ideas were an example of that, where you have 6 to 8 plants going through it next year and then the rest of the plants going through the following year. And then we also have the buying measures, the differences in the way they operate the plants. Certainly, the unregulated plants are now looking at -- I mean, they can look across the board at areas of fuel. I mean, fuel is part of the business case for some of the things that they do, which typically is hard to do in a regulated environment because of the different capital versus fuel decisions. But also, Chuck is looking deeply at that team to figure out, okay, what the overhead costs look like. We have to address that because it's in a competitive environment. These plants are focused on making sure they survive. And they intend on doing that. So I think -- and really, I guess, the optimism is coming from the fact that our employees have already come together to find objectives in terms of savings and revenue enhancements for the year that -- or in excess of the targets that we had in place, and that's sort of confirming this year. But also, it's setting the track record for the future years because we're only getting partial benefits of some of these in '13. Some of these things are starting to kick in now and will kick in later in the year, and we'll get the full year benefits in '14. And then, with the additional ideas and things that we're doing, particularly lean wires, those types of activities will continue and we'll see those benefits going into those future years. So -- and I guess another issue with that is mid-2014, there will be another capacity auction for the future years, so that will give us some insight in terms of how we deal with it in that specific year of late '16 and early '17, which straddles 2 years. But as well, we have to decide, okay, how much of this is one-time adjustments where we can move around outages and those types of things versus how much is actually sustaining into the future? But it really goes to the question of the volatility of that business and what that means to our planning associated with that, but -- so we're not wasting any time, obviously. We're acting like we're going to have to have sustainable savings going forward that compensates for the capacity auction in late '16, early '17. But if it winds up being some -- the capacity market moving up in the future, then that can be a different thing. But I think we certainly are at a position now, though, to where we're confident that we are changing a culture that focuses on our ability to address these types of issues. We have to, and that's what we're paid to do. And it's something I think that our employees are certainly energized around to achieve. So as I've said earlier in the discussion I had, it probably -- I was thinking originally, well, we may be able to exceed 6% if we had more transmission spending and those types of things. Well, the more transmission spending we have our eye on is going to fortify that 4% to 6%, and that's -- so yes, I mean, it'd be silly for us to sit here and say, "Well, it hasn't had any impact," because it has had an impact. But I think it's had an impact on our ability to exceed the 6% as opposed to be in that 4% to 6% range.

Next, we'll go to the line of Dan Eggers with Crédit Suisse. Dan Eggers - Crédit Suisse AG, Research Division: Listen, I'm going to maybe carry on with Greg's question. And I know you gave a very thorough answer. But I guess just maybe a little more simply, when you look at the Ohio generation and the uncertainty that RPM has created around economic viability and visibility to the business, how are you guys seeing that fit within AEP? And was RPM kind of a point where you were pushed to make a more drastic decision than maybe you were hoping? Nicholas K. Akins: Yes. I think, certainly, if capacity prices had stayed in there at a reasonable level, it probably wouldn't have had everyone questioning the 4% to 6% or the -- or our ability to get the cost savings that we needed to make sure we were sustainable into the future. I think it raises a lot of questions, and we're addressing those questions. It's -- but it also puts us even more focused on how we adjust that particular business. And when we talk about minimum load adjustments, for example, I mean, the Amos plant reduced its minimum load by over 1,000 megawatts, which -- that's a big change. It takes a lot of cost out of the way we operate in relation to the market. Our people have a very -- I'm not going to say what it is. But certainly, they have a very aggressive measure on what they're trying to achieve in terms of a clearing price for capacity that they operate under. And that's -- but we have a lot of work to do, but -- and I can say that, that business, if it remains as volatile as it is, if we don't get this capacity construct working to where it should, where it respects the long-term investments made by steel in the ground investors in the territory, then that's not something we're very interested in. And so I -- it doesn't fit what we believe our investors are looking for, and we'll need to make adjustments. Brian X. Tierney: Dan, I know you've talked about this in the past. We were very aggressive in moving our Muskingum River 5 as we saw the results of this and recognized that the capacity environment didn't lend itself to invest -- further investment in that unit. And we're going to be very disciplined in terms of the capital that we put to work in that regard. And right now, that's not an area that's attracting a lot of capital from us as compared to lower-volatility, higher-growth areas like our transmission business. We're -- we've been disciplined in the past, and we're going to demonstrate that discipline as we work our way through this capacity pricing issue. Nicholas K. Akins: And I don't know that the generation function itself can make up that difference. I mean, if you're thinking about what energy prices can be in the future -- well, we don't want to bank on what energy prices are going to be in the future. We just assume they're going to be low. So we have to adjust accordingly. And it's not just a matter of looking at the generation -- the unregulated generation business itself. It's also a matter of looking at the overhead that's charged to that generation business because if there's less units running, if they're running in different ways and you're compartmentalizing the profit-loss picture of each unit, then it drives a very different supporting structure from corporate that supports it. So there's a lot of work to be done, and we'll be doing it. Dan Eggers - Crédit Suisse AG, Research Division: And Nick, I guess one other question is kind of looking at the load trends and, obviously, the bankruptcies to just kind of skew the industrial numbers maybe a little worse than they otherwise would be. But usage trends haven't been great. You've seen unemployment fall. You've seen economic growth in the region. What is the prognosis, do you think, for power demand growth for your territories going forward? And is there something bigger structural happening from usage that's really going to limit the amount of future demand growth? Nicholas K. Akins: I think we continue to see probably soft load because -- and it's probably 2 things. I mean, energy efficiency is part of it. Also, it's an area where the economy -- and through the entire country, but certainly in our area as well, there's been a lasting impact of that. And at the first of the year, economists were saying by the third quarter, things would pick up. We were always saying and have been saying for several quarters now, actually since the third quarter of last year, the industrials were tenuous at best. And that continues to be the case. I think there are some structural changes that are occurring. We'll continue to have energy efficiency in play. The question is, can the electrification of the economy outstrip the energy efficiency piece of the business that enables us to continue to grow. But you can't bank on that. And that's why I say our business is going to be more about optimization and providing services to customers as well that provide additional benefits beyond what you see just strictly in the load numbers. But I also believe that, and as Brian pointed out, the oil and gas activity in our footprint is prevalent, whether the Eagle Ford Shale or the Utica Shale and others. Those are wet gas, and we have a lot of dry gas top formations. If we can -- if we ever get to a point where the economy starts to pick up like the economists keep projecting, at some point, we'll benefit probably more than others because of that indigenous growth associated with the shale gas footprint and the production capability associated with it, so -- and that's actually been our saving grace on the other primary metals industrial losses that have occurred. So I'd say, certainly, with the growing economy but also with the intensive focus on energy-related infrastructure, particularly in our service territory, that could be a benefit, so I -- and I'm probably more optimistic. I guess I'm probably -- if there's -- if it's pessimism, it's when is it going to happen. And we've all been waiting for an economic recovery, and you hear a lot about housing construction and I see a lot of commercial and housing construction in our service territory. And I also see the top of the -- all the corn in the fields are still green. So that's a good sign. But we really do need an emphasis placed on how to move this economy forward.

Next we'll go to the line of Anthony Crowdell with Jefferies. Anthony C. Crowdell - Jefferies LLC, Research Division: Hopefully, 2 quick questions. One is, it seems everyone's focused on the '16 and beyond. Just wanted -- how could you help us maybe forecast like transmission earnings? I mean, you guys have a great trajectory of transmission earnings, I think roughly $0.35 you're projecting in '15. I mean, what's the best way we could do to forecast that going forward? And the second question is kind of, you mentioned during your opening remarks with RPM and it just seems like it's all over the map. It's just kind of throwing numbers out of a hat. What does AEP think the reserve margin is with actually steel in the ground versus when you're adding in all these demand response and everything else? Nicholas K. Akins: Yes. So I guess it's what steel you put in the ground that's important. We've already finished our build cycle-related generations. So Turk went operational. We bought natural gas. That's all done in our Eastern footprint. And so we're at a point where we can decide for the -- probably for the first time in a long time where our capital was deployed. Much of it was driven by environmental spend. It was driven by new generation spend. Now it's driven by block and tackle infrastructure spending that typically commissions don't have an issue with. Matter of fact, they support it. And they should because we are at a stage where there's a rehabilitation of the grid that needs to occur. What we're trying to focus on is whether those no-regrets types of activities and optimization of transmission is no regrets. Infrastructure build-related distribution is no regrets. Certainly, the investment we're making from an environmental standpoint, we have about $4 billion to $5 billion left to spend associated with the particular plants that we have. But we're doing it in very different way. We're not going out and building and then asking for recovery of it. We're going in at the beginning and saying, "Okay, before we start construction on this thing in a big way, we need to know, are we going to be able to recover it?" And in the case of Kentucky, we haven't. In the case of Arkansas, we have, because there's a different set of circumstances and we're more than willing to do that. Matter of fact, we want to move more of our capital to those infrastructure areas. And that's the kind of steel in the ground that makes sense. With demand-side resources, certainly, I'm all for demand-side resources, but not to the point of really jeopardizing the reliability of the grid by depending on those kinds of resources for only a specific set of hours during the year, as opposed to the things that we run into in the real world from an operational perspective. I started out as an electric system dispatcher, and my experience is actually in interconnected power system operations. And I can tell you, what's going on now is wrong and it needs to be fixed. But that said, demand-side resources, certainly, generation with firm transmission coming into the area is a benefit. And we should be mindful of that because we're optimizing resources and we're actually defining a new set of resources that includes new technologies as well. So my view is, we stay with optionality around resource side of things, but we focus on those enabling areas where we can accommodate those resources and provide better services to our customers. Brian X. Tierney: Anthony, we hope to have some more detail for you on the growth trajectory of transmission about the EEI conference timeframe. We're working on that capital rotation now. And one thing that we've never done is showed you earnings that we hope to get or think we might get or projects that may come together. We've really tried to show projects that are either approved or don't need further approval. And that's why we're reluctant to go out too far in terms of the transmission growth rate beyond areas where we've been through the planning process at the RTOs. Nicholas K. Akins: And Anthony, I mean, I'll add on to that. We're already looking at additional transmission that can be -- I think like projects that can be put in place and addressed more quickly because, frankly, that's part of the revenue stream and the additional earnings that would partially fill the gap for this capacity issue that we had. So we have every motivation to continue with our transmission investment and every motivation to find and release every bit of capital. And the one thing that gets forgotten in all of this, the performance management side of things also produces capital alleviation benefits that can be -- they can be redeployed to other areas, including transmission. So we're not just about O&M changes, we're about capital changes as well to accommodate that and fuel that future growth. So as Brian said, at EEI, we'll have more information on that.

And next, we'll go to the line of Jonathan Arnold with Deutsche Bank. Jonathan P. Arnold - Deutsche Bank AG, Research Division: Just quick one on -- so on the -- just the quarterly sales in commercial, you mentioned, Brian, I think, that you were strong still in Texas and Ohio, but you didn't really say very much about what had underpinned the big drop. Was it a couple of specific items or something more broad? Can you just give us a bit more color on what certainly turns the negative there? Brian X. Tierney: Sure. It was -- and it was largely broader-based across the area. The place where we saw -- places where we saw the increase was really associated with shale gas plays, where we're seeing the growth in employment. And in the other areas, we just weren't seeing that growth in employment as much as we were. And it was pretty much broad-based across the sector. The one thing, Jonathan, that I'll say, and we look at these monthly. We look at -- we discuss with you quarterly weather-normalized sales. You really need to look at, I think, the trend over time to try and understand what's happening with load and can't just take it quarter-to-quarter. Up modestly in the first quarter of this year, down greater than 2% in the second quarter. You need to kind of look at a trend line for these quarterlies to get some sense for what you think is going on. But with the exception of Texas and Ohio, the decrease was pretty broadly based. Jonathan P. Arnold - Deutsche Bank AG, Research Division: Okay. And secondly, on the -- just to understand this interest income item. So there was like $0.06 of benefit relating to reversing a previous negative related to the U.K. windfall tax. Is that correct? Brian X. Tierney: Yes. So it's separated into 2 categories: one is the interest income component of it, and the other is the tax component of it. Interest income, we always reflect in ongoing earnings. To the point where it's specifically associated with this item, we had a negative in the fourth quarter of last year, as we thought that the case was going against us. And then the PP&L won their case at the U.S. Supreme Court. And since we had previously adjusted for this in operating earnings, the interest income component were just reflecting the same treatment that we always had for interest income. Jonathan P. Arnold - Deutsche Bank AG, Research Division: So it's -- the negative, it was the -- the negative was booked Q4 last year. This reverses that, effectively? Brian X. Tierney: It doesn't entirely reverse it. We took a partial write-down of that in the fourth quarter of last year, where we had previously accounted for the interest income, and then we had the full reversal in this year. But the full treatment of this issue has always been in ongoing earnings. Jonathan P. Arnold - Deutsche Bank AG, Research Division: Okay. Is there any ongoing -- beyond this quarter, do we have any continued impact from this item? Brian X. Tierney: Very little bit. Jonathan P. Arnold - Deutsche Bank AG, Research Division: Okay, so -- and how -- just in Q3 or is that... Brian X. Tierney: It will be true-ups as we work our way through the balance of the year, but very little. Jonathan P. Arnold - Deutsche Bank AG, Research Division: Okay. And then could I just squeeze in one other thing? On the whole -- this conversation going on with the commission and Ormet around trying to reduce tariff, does -- how does -- how should we -- is there any kind of guidance exposure to that? Or how should we be thinking about that as we watch it play out? Brian X. Tierney: We -- so I wouldn't want to talk specifically about the discussions with the commission that we're having. There are issues related to whether or not Ormet stays in business or not altogether. And those items are fairly small for us. If Ormet were to stop operations altogether, the pretax would be about $2.8 million per month, so for the balance of the year, maybe $0.025, and for all of 2014, maybe $0.045 per share. Jonathan P. Arnold - Deutsche Bank AG, Research Division: That would be the -- that would be not -- but the incremental would be the difference? Brian X. Tierney: That would be if they -- that's right. And that would be if they ceased operations altogether. But remember, Jonathan, there will be some offset for that as well in off-system sales as we've had the incremental energy to take out to the market. Nicholas K. Akins: Yes. It's a large load, like many of these industrials, but that one in particular. And if you -- we don't hardly make any money off of it to begin with. But then, if it did go away, then we'd be selling it at any off-system [ph] market, so...

And our final question will come from the line of Steven Fleishman with Wolfe Research. Steven I. Fleishman - Wolfe Research, LLC: Just on the PJM outcome and implications, does it have any change besides Muskingum 5 to your kind of coal plant shutdown plans or EPA spend? Are those under any kind of review because of that? Nicholas K. Akins: I'd say no, not at this point, obviously. We've addressed Muskingum River 5. That was the one issue where we had an incremental investment that would have to be made and was related to natural gas, so -- and if the market didn't support making that investment, then we retire it. The others are either planned to be retired anyway, which we've already written those off in terms of an impairment. So the others are fully controlled units that operate well in the market and -- but we're certainly focused on that year to ensure that we're driving costs out and efficiencies that we can drive through the market and make sure they continue to operate. So we don't see anything else at this point. Brian X. Tierney: Yes. So Steve, we've been proactive in getting out in front of this. As Nick mentioned, we had those units that we knew we were going to retire in 2015, and the Ohio components of them we wrote off late last year. And then we had bubble units, and Muskingum River 5 is one where we thought we were going to be able to retrofit it and run it on gas through 2028, and the capacity results just made that not a prudent investment for us. So it went from being on the bubble to being a unit that makes sense for us to not operate after 2015.

Thank you for joining us on today's call. As always, the IR team will be available to answer any additional questions you might have. Ernie, can you please give the replay information?

Thank you very much. And ladies and gentlemen, this conference will be available for replay after 11:00 A.M. today until August 1, 2013, at midnight. You may access the AT&T Executive Playback Service at any time by dialing 1 (800) 475-6701 and entering the access code 297308. International participants may dial 1 (320) 365-3844 and using that same access code, 297308. This does conclude our conference for today. Thank you again for your participation and for using AT&T Executive TeleConference Service. You may now disconnect.