1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation Income Taxes 2. COMMITMENTS, GUARANTEES AND CONTINGENCIES 3. FINANCING ACTIVITIES Long-term Debt S-8 Parent files a consolidated federal income tax return with its subsidiaries. AEP System’s current consolidated federal income tax is allocated to AEP System companies so that their current tax expense reflects a separate return result for each company in the consolidated group. The tax benefit of Parent is allocated to its subsidiaries with taxable income. Parent and its subsidiaries are parties to environmental and other legal matters. For further discussion, see Note 6 - Commitments, Guarantees and Contingencies included in the 2019 Annual Report. The following details long-term debt outstanding as of December 31, 2019 and 2018: (a) Amounts reflect the impact of fair value hedge accounting. See “Accounting for Fair Value Hedging Strategies” section of Note 10 included in the 2019 Annual Report for additional information. The condensed financial information of Parent is required as a result of the restricted net assets of AEP consolidated subsidiaries exceeding 25% of AEP consolidated net assets as of December 31, 2019. Parent is a public utility holding company that owns all of the outstanding common stock of its public utility subsidiaries and varying percentages of other subsidiaries, including joint ventures and equity investments. The primary source of income for Parent is equity in its subsidiaries’ earnings. Its major source of cash is dividends from the subsidiaries. Parent borrows the funds for the money pool that is used by the subsidiaries for their short-term cash needs. Weighted-Average Interest Rate Ranges as of Outstanding as of Interest Rate as of December 31, December 31, Type of Debt Maturity December 31, 2019 2019 2018 2019 2018 (in millions) Senior Unsecured Notes 2020-2028 3.30% 2.15%-4.30% 2.15%-4.30% $ 2,301.5 $ 2,266.4 Pollution Control Bonds 2024-2029 2.26% 1.90%-2.60% 535.5 — Junior Subordinate Notes 2022 3.40% 3.40% 787.8 — Total Long-term Debt Outstanding 3,624.8 2,266.4 Long-term Debt Due Within One Year 501.9 — Long-term Debt $ 3,122.9 $ 2,266.4 Long-term debt outstanding as of December 31, 2019 is payable as follows: 2020 2021 2022 2023 2024 After 2024 Total (in millions) Principal Amount (a) $ 501.9 $ 402.8 $ 1,107.6 $ 2.4 $ 300.9 $ 1,342.9 $ 3,658.5 Unamortized Discount, Net and Debt Issuance Costs (33.7) Total Long-term Debt Outstanding $ 3,624.8