Common use of Engineering and Administration Clause in Contracts

Engineering and Administration. Engineering and administrative overhead loading rates are used to allocate engineering, supervision, and administrative overhead costs not assigned to specific project work orders. AEP uses separate loading rates for AEP Service Corporation engineering (SCEt&d) and operating company construction overhead costs (CCO). A complete description of the costs recovered through the loading rates is provided in Note 1 to page 218 of each AEP Company's FERC Form-1 Report. A copy of that note is included as the last page in this Attachment 4. As the description of Construction Overhead Procedure shows, the CCO and SCEt&d loading rates (cclr and sclrt&d, respectively) are derived in the normal course of business for the purpose of capturing the portions of AEP Service Corporation engineering and operating company construction overhead costs which are incurred in connection with transmission and distribution (T&D) plan construction. The cclr and sclrt&d are reviewed monthly and updated, as needed, to clear the respective engineering and administrative overhead costs yearly. In symbolic format the engineering and administration overhead costs (O) are calculated as follows: O = CCO + SCEt&d Where CCO = (M + L + E + S) x cclr and SCEt&d = (M + L + E + S + CCO) x sclrt&d

Engineering and Administration. Engineering and administrative overhead loading rates are used to allocate engineering, supervision, and administrative overhead costs not assigned to specific project work orders. AEP uses separate loading rates for AEP Service Corporation engineering (SCEt&d) and operating company construction overhead costs (CCO). A complete description of the costs recovered through the loading rates is provided in Note 1 to page 218 of each AEP Company's FERC Form-1 Report. A copy of that note is included as the last page in this Attachment 4. Appendix G. As the description of Construction Overhead Procedure shows, the CCO and SCEt&d loading rates (cclr and sclrt&d, respectively) are derived in the normal course of business for the purpose of capturing the portions of AEP Service Corporation engineering and operating company construction overhead costs which are incurred in connection with transmission and distribution (T&D) plan construction. The cclr and sclrt&d are reviewed monthly and updated, as needed, to clear the respective engineering and administrative overhead costs yearly. In symbolic format the engineering and administration overhead costs (O) are calculated as follows: O = CCO + SCEt&d Where CCO = (M + L + E + S) x cclr and SCEt&d XXXx&x = (M + L + E + S + CCO) x sclrt&d

Engineering and Administration. Engineering and administrative overhead loading rates are used to allocate engineering, supervision, and administrative overhead costs not assigned to specific project work orders. AEP uses separate loading rates for AEP Service Corporation engineering (SCEt&d) and operating company construction overhead costs (CCO). A complete description of the costs recovered through the loading rates is provided in Note 1 to page 218 of each AEP Company's FERC Form-1 Report. A copy of that note is included as the last page in this Attachment 4. Appendix G. As the description of Construction Overhead Procedure shows, the CCO and SCEt&d loading rates (cclr and sclrt&d, respectively) are derived in the normal course of business for the purpose of capturing the portions of AEP Service Corporation engineering and operating company construction overhead costs which are incurred in connection with transmission and distribution (T&D) plan construction. The cclr and sclrt&d are reviewed monthly and updated, as needed, to clear the respective engineering and administrative overhead costs yearly. In symbolic format for, the engineering and administration overhead costs (O) are calculated as follows: O = CCO + SCEt&d Where CCO = (M + L + E + S) x cclr and SCEt&d XXXx&x = (M + L + E + S + CCO) x sclrt&d

Engineering and Administration. Engineering and administrative overhead loading rates are used to allocate engineering, supervision, and administrative overhead costs not assigned to specific project work orders. AEP uses separate loading rates for AEP Service Corporation engineering (SCEt&d) and operating company construction overhead costs (CCO). A complete description of the costs recovered through the loading rates is provided in Note 1 to page 218 of each AEP Company's FERC Form-1 Report. A copy of that note is included as the last page in this Attachment 4. Appendix G. As the description of Construction Overhead Procedure shows, the CCO and SCEt&d loading rates (cclr and sclrt&d, respectively) are derived in the normal course of business for the purpose of capturing the portions of AEP Service Corporation engineering and operating company construction overhead costs which are incurred in connection with transmission and distribution (T&D) plan construction. The cclr and sclrt&d are reviewed monthly and updated, as needed, to clear the respective engineering and administrative overhead costs yearly. In symbolic format for, the engineering and administration overhead costs (O) are calculated as follows: O = CCO + SCEt&d Where CCO = (M + L + E + S) x cclr 6. and SCEt&d XXXx&x Taxes = (M + L + E + S + CCO) x sclrt&dsclrt&d The total taxes charged to the Generating Company will be the sum of receipts and other taxes incurred.

Engineering and Administration. Engineering and administrative overhead loading rates are used to allocate engineering, supervision, and administrative overhead costs not assigned to specific project work orders. AEP uses separate loading rates for AEP Service Corporation engineering (SCEt&d) and operating company construction overhead costs (CCO). A complete description of the costs recovered through the loading rates is provided in Note 1 to page 218 of each AEP Company's FERC Form-1 Report. A copy of that note is included as the last page in this Attachment 4. Appendix G. As the description of Construction Overhead Procedure shows, the CCO and SCEt&d loading rates (cclr and sclrt&d, respectively) are derived in the normal course of business for the purpose of capturing the portions of AEP Service Corporation engineering and operating company construction overhead costs which are incurred in connection with transmission and distribution (T&D) plan construction. The cclr and sclrt&d are reviewed monthly and updated, as needed, to clear the respective engineering and administrative overhead costs yearly. In symbolic format format, the engineering and administration overhead costs (O) are calculated as follows: O = CCO + SCEt&d XXXx&x Where CCO = (M + L + E + S) x cclr and SCEt&d XXXx&x = (M + L + E + S + CCO) x sclrt&d

Engineering and Administration. Engineering and administrative overhead loading rates are used to allocate engineering, supervision, and administrative overhead costs not assigned to specific project work orders. AEP uses separate loading rates for AEP Service Corporation engineering (SCEt&d) and operating company construction overhead costs (CCO). A complete description of the costs recovered through the loading rates is provided in Note 1 to page 218 of each AEP Company's FERC Form-1 Report. A copy of that note is included as the last page in this Attachment 4. As the description of Construction Overhead Procedure shows, the CCO and SCEt&d loading rates (cclr and sclrt&d, respectively) are derived in the normal course of business for the purpose of capturing the portions of AEP Service Corporation engineering and operating company construction overhead costs which are incurred in connection with transmission and distribution (T&D) plan construction. The cclr and sclrt&d are reviewed monthly and updated, as needed, to clear the respective engineering and administrative overhead costs yearly. In symbolic format format, the engineering and administration overhead costs (O) are calculated as follows: O = CCO + SCEt&d XXXx&x Where CCO = (M + L + E + S) x cclr and SCEt&d XXXx&x = (M + L + E + S + CCO) x sclrt&d

Engineering and Administration. Engineering and administrative overhead loading rates are used to allocate engineering, supervision, and administrative overhead costs not assigned to specific project work orders. AEP uses separate loading rates for AEP Service Corporation engineering (SCEt&d) and operating company construction overhead costs (CCO). A complete description of the costs recovered through the loading rates is provided in Note 1 to page 218 of each AEP Company's FERC Form-1 Report. A copy of that note is included as the last page in this Attachment 4. As the description of Construction Overhead Procedure shows, the CCO and SCEt&d loading rates (cclr and sclrt&d, respectively) are derived in the normal course of business for the purpose of capturing the portions of AEP Service Corporation engineering and operating company construction overhead costs which are incurred in connection with transmission and distribution (T&D) plan construction. The cclr and sclrt&d are reviewed monthly and updated, as needed, to clear the respective engineering and administrative overhead costs yearly. In symbolic format the engineering and administration overhead costs (O) are calculated as follows: O = CCO + SCEt&d Where CCO = (M + L + E + S) x cclr and SCEt&d XXXx&x = (M + L + E + S + CCO) x sclrt&d