AEP receives approval to build IGCC plant from WV PSC

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COLUMBUS, Ohio, March 7, 2008 – American Electric Power (NYSE: AEP) operating unit Appalachian Power has received authority from the Public Service Commission of West Virginia (WV PSC) to build a 629-megawatt Integrated Gasification Combined Cycle (IGCC) electric generating plant in West Virginia.

The WV PSC granted Appalachian Power a Certificate of Public Convenience and Necessity for the plant, which would be located beside the company’s existing Mountaineer Plant near New Haven, W.Va. Appalachian Power filed for the certificate Jan. 12, 2006. The plant’s estimated cost is approximately $2.23 billion.

“It is critical for our nation and the world that we move forward with advanced, cleaner technologies that allow us to continue to use coal for electricity generation,” said Michael G. Morris, AEP chairman, president and chief executive officer. “With IGCC generation, we can continue to rely on our nation’s and West Virginia’s abundant coal resources as a generating fuel with fewer emissions and less impact on our environment.

“West Virginia Governor Joe Manchin and the state’s regulatory commissioners have wisely focused on the future of their state and our world by supporting IGCC technology. We hope for a similar decision from the members of the Virginia State Corporation Commission and are ready to begin construction on our IGCC plant as soon as we have all the necessary approvals in hand,” Morris said.

“With new record peak demands for electricity set twice within the last year, Appalachian Power has a clear need for additional generation capacity,” said Dana Waldo, Appalachian Power president and chief operating officer. “We recently added 175 megawatts of renewable wind generation to serve our customers, but it is critical that we also have base-load generation that is ready and able to serve our customers 24 hours, every day. This IGCC unit best meets that need by providing cleaner coal-fueled electricity while at the same time supporting the West Virginia economy.”

In addition to the West Virginia filing, Appalachian Power has filed with the Virginia State Corporation Commission (SCC) for approval to recover the Virginia share of carrying costs associated with the plant and has filed for an environmental permit from the West Virginia Department of Environmental Protection (WV DEP). The Virginia SCC is expected to rule on the IGCC plant in April. AEP continues to work with WV DEP to complete the air permitting process. From the time construction begins, it will require approximately 48 to 54 months to complete the IGCC unit.

AEP has proposed IGCC technology for use as new base-load generation in the seven-state eastern portion of its service area. The company announced in August 2004 its intent to scale-up IGCC technology and build approximately 1,200 megawatts of large, commercial-scale IGCC generation. In addition to the IGCC unit at Mountaineer, AEP has proposed to build a similar 629-megawatt IGCC unit in Ohio.

IGCC technology converts coal into a synthetic gas that moves through pollutant-removal equipment before the gas is burned in a combined-cycle gas turbine to produce electricity. The process allows for more efficient and effective reduction and removal of sulfur dioxides, particulates and mercury from plant emissions than conventional pulverized coal technology. IGCC plants also offer the opportunity for more efficient, less costly carbon capture for permanent storage in deep geologic formations.

American Electric Power is one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states. AEP ranks among the nation’s largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the U.S. AEP also owns the nation’s largest electricity transmission system, a nearly 39,000-mile network that includes more 765 kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined. AEP’s transmission system directly or indirectly serves about 10 percent of the electricity demand in the Eastern Interconnection, the interconnected transmission system that covers 38 eastern and central U.S. states and eastern Canada, and approximately 11 percent of the electricity demand in ERCOT, the transmission system that covers much of Texas. AEP’s utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana and east Texas). AEP’s headquarters are in Columbus, Ohio.

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This report made by AEP and its Registrant Subsidiaries contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although the registrants believe that their expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are: electric load and customer growth; weather conditions, including storms; available sources and costs of, and transportation for, fuels and the creditworthiness and performance of fuel suppliers and transporters; availability of generating capacity and the performance of AEP’s generating plants; AEP’s ability to recover regulatory assets and stranded costs in connection with deregulation; AEP’s ability to recover increases in fuel and other energy costs through regulated or competitive electric rates; AEP’s ability to build or acquire generating capacity (including the company’s ability to obtain any necessary regulatory approvals and permits) when needed at acceptable prices and terms and to recover those costs through applicable rate cases or competitive rates; new legislation, litigation and government regulation including requirements for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances; timing and resolution of pending and future rate cases, negotiations and other regulatory decisions (including rate or other recovery of new investments in generation, distribution and transmission service and environmental compliance); resolution of litigation (including disputes arising from the bankruptcy of Enron Corp. and related matters); AEP’s ability to constrain operation and maintenance costs; the economic climate and growth in AEP’s service territory and changes in market demand and demographic patterns; inflationary and interest rate trends; volatility in the financial markets, particularly developments affecting the availability of capital on reasonable terms and developments impairing AEP’s ability to refinance existing debt at attractive rates; AEP’s ability to develop and execute a strategy based on a view regarding prices of electricity, natural gas and other energy-related commodities; changes in the creditworthiness of the counterparties with whom AEP has contractual arrangements, including participants in the energy trading market; actions of rating agencies, including changes in the ratings of debt; volatility and changes in markets for electricity, natural gas, coal, nuclear fuel and other energy-related commodities; changes in utility regulation, including the potential for new legislation in Ohio and the allocation of costs within regional transmission organizations; accounting pronouncements periodically issued by accounting standard-setting bodies; the impact of volatility in the capital markets on the value of the investments held by AEP’s pension, other postretirement benefit plans and nuclear decommissioning trust; prices for power that AEP generates and sells at wholesale; changes in technology, particularly with respect to new, developing or alternative sources of generation; other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.


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