9/30/2008

Commitment to Turk Plant remains strong

SHREVEPORT, La., Sept. 30, 2008 – AEP Southwestern Electric Power Company (SWEPCO) remains committed to the construction of the John W. Turk Jr. Power Plant, despite a recommendation by the Arkansas Governor’s Commission on Global Warming for a moratorium on new coal plants.

The commission has no statutory authority and will be sending its final recommendations to the governor at the end of October.

Last Thursday members of the commission voted 11 to 10 to recommend the moratorium as one of about 50 actions to reduce global warming. The commission’s action seeks to delay SWEPCO’s planned Turk plant in Hempstead County until carbon capture and storage technology is available.

“We agree with the 10 commissioners who voted against the moratorium,” said Paul Chodak, SWEPCO president and chief operating officer.  “We support the development of a balanced national policy to address global climate change.  In fact, as part of the larger AEP team, we continue to be leaders in utility industry efforts to reduce greenhouse gas emissions by employing a balanced energy plan. This includes wind power, efficiency improvements, the deployment of state-of-the-art, low emissions coal generation -- such as the Turk plant -- and the development of carbon capture technology.  However, it is important not to disadvantage Arkansas through a unilateral and unnecessarily drastic moratorium on coal plants. SWEPCO is committed to moving forward with the Turk plant to provide its customers and the state of Arkansas with one of the cleanest coal plants in North America. We are working hard to do just that.”
 
The Arkansas Public Service Commission has approved the Turk Plant, and site preparation work has begun. Actual construction cannot begin until an air permit is received from the Arkansas Department of Environmental Quality, where the permit is pending. The $1.5 billion plant is targeted to begin commercial operation in 2012.

Plant construction will create approximately 1,400 jobs at the height of construction. The plant will bring an estimated 110 permanent jobs to the area, with an annual payroll of approximately $9 million. The plant will also pay about $4 million in property taxes per year.

“SWEPCO has completed a multi-year planning and permitting process that determined that additional power generation resources are needed and that the proposed Turk plant is a reasonable choice to meet our customers’ needs,”  said Brian Bond, SWEPCO vice president of external affairs.  “This is part of a regulatory process that thoughtfully evaluated both environmental and economic considerations to provide affordable electricity to our customers.”  

The Global Warming Commission has suggested that SWEPCO replace the Turk Plant with energy efficiency, wind energy and natural gas generation. “These alternatives are certainly part of the energy mix that needs to be explored and implemented where practical. But frankly, they provide inadequate power to meet our customers’ needs by 2012 and, in the case of natural gas, will be more expensive and still emit carbon dioxide,” Bond said.

Bond said the Hempstead County plant will use an advanced combustion technology called “ultra-supercritical” which requires less fuel and produces fewer emissions, including carbon dioxide.

AEP is working to bring advanced coal generation technologies, including carbon capture and storage, ultra-supercritical pulverized coal and Integrated Gasification Combined Cycle (IGCC), to commercial operation. AEP is evaluating a chilled amonia process developed by Alstom in a validation project at an AEP plant in West Virginia, collaborating with Alstom and German utility RWE on the carbon capture and with Battelle Memorial Institute on geologic storage. The validation project, to be installed in 2009, will be followed by a larger deployment at another AEP plant.  AEP also continues to evaluate and pursue research of other promising carbon capture technologies.
Earlier this year, SWEPCO issued a request for proposals for 65 to 100 megawatts of wind or other renewable energy resources to be operational by the end of 2010. The request is part of AEP’s plan – announced in 2007 – to add 1,000 megawatts of new wind or other renewable energy by 2011 as part of the company’s comprehensive strategy to address its greenhouse gas emissions. 

SWEPCO serves more than 473,500 customers in three states, including 113,500 in western Arkansas, 180,000 in Northwest Louisiana, and 180,000 in East and North Texas. SWEPCO’s headquarters are in Shreveport, La. News releases and other information about SWEPCO can be found at www.swepco.com.

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 and north Texas). AEP’s headquarters are in Columbus, Ohio. News releases and other information about AEP can be found at www.aep.com.

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 AEP and each of its Registrant Subsidiaries 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 AEP’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; 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 for new investments, transmission service and environmental compliance); resolution of litigation (including pending Clean Air Act enforcement actions and 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; 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 and other energy-related commodities; changes in utility regulation, including the potential for new legislation in Ohio and membership in and integration into regional transmission organizations; accounting pronouncements periodically issued by accounting standard-setting bodies; the performance of AEP’s pension and other postretirement benefit plans; 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.

MEDIA CONTACTS:
SWEPCO Corporate Communications:
Scott McCloud, 318-673-3532
Kacee Kirschvink, 318-673-3394

ANALYSTS CONTACT:
Julie Sherwood
Director, Investor Relations
614-716-2663

AEP Corporate Communications:
Director of Media Relations
Pat Hemlepp
614-716-1620

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