1/27/2005
AEP ENCOURAGED BY PUCO APPROVAL OF OHIO RATE STABILIZATION PLAN; PLAN WILL KEEP AEP’S RATES AMONG THE LOWEST IN OHIO

COLUMBUS, Ohio, Jan. 27, 2005 – American Electric Power (NYSE: AEP) is encouraged by the Public Utilities Commission of Ohio (PUCO) approval of the company’s rate stabilization plan for its Ohio Power and Columbus Southern Power operating companies.
 
The rate plan, filed with the PUCO in February 2004, was proposed to address rates following the end of Ohio’s electric customer choice market development period which ends Dec. 31, 2005.
 
“Although we are still reviewing the fine print, the PUCO appears to have balanced their objectives of providing stability and reliability for our Ohio electricity customers with providing a workable rate structure that will benefit our customers, shareholders and the environment,” said Michael G. Morris, AEP chairman, president and chief executive officer.
 
“With the approved gradual rate increases, our customers will be protected from market rate shock and volatility and will maintain some of the lowest electricity rates in the state. Our shareholders will receive a fair return on their investment in our operations over the next three years. And, we will be able to move forward with significant investments in environmental retrofits at our generating plants to give Ohioans cleaner air while maintaining their access to the low-cost, coal-fired generation that helps fuel Ohio’s economy,“ Morris said.
 
Under the plan approved yesterday by the PUCO, generation rates for customers will increase each year in 2006, 2007 and 2008, by 3 percent per year for Columbus Southern Power customers and by 7 percent per year for Ohio Power customers. As stated by the PUCO, residential ratepayers will see an average monthly increase to the generation rate of less than $2 for Columbus Southern Power customers and less than $3 for Ohio Power customers.
 
“We understand that no one is ever happy with price increases, but this plan provides customers with a clear understanding of what their rates will be for the next three years. We believe these rates will continue to be competitive, but customers also will still have the option to shop and switch to a competitive supplier if they choose,” said Kevin Walker, president and chief operating officer, AEP Ohio.
 
According to the plan, AEP will be permitted to seek additional generation increases, after a Commission proceeding, for increases in environmental costs, security costs, taxes, new generation-related regulatory requirements or customer-load switches that impact the company’s ability to recover anticipated generation revenues. These additional increases would be capped at an average of no more than 4 percent per year for each company.
 
The PUCO did not authorize AEP’s proposal to defer regional transmission organization administrative charges and construction-work-in-progress and in-plant carrying charges. The PUCO did authorize Provider of Last Resort (POLR) charges recognizing AEP’s POLR responsibilities during the rate stabilization period.  
 
The current five percent residential discount on generation rates in both the Columbus Southern Power and Ohio Power territories will end Dec. 31, 2005 pursuant to Senate Bill 3.  AEP’s distribution rates in effect Dec. 31, 2005, will remain frozen through 2008. AEP will have the opportunity to adjust those charges, after a Commission proceeding, to reflect increases in environmental costs, security costs, taxes or major storm damage restoration costs.
 
The PUCO directed AEP to allot $14 million over the three-year period for assistance for low-income customers and economic development. AEP Ohio will work with the PUCO staff and Ohio Department of Development to determine how to allocate those funds.
 
Base rates for electricity have not increased since 1994 for Columbus Southern Power customers and since 1995 for Ohio Power customers. Together, the companies serve approximately 1.4 million customers in Ohio.
 
American Electric Power owns more than 36,000 megawatts of generating capacity in the United States and is the nation´s largest electricity generator. AEP is also one of the largest electric utilities in the United States, with more than 5 million customers linked to AEP’s 11-state electricity transmission and distribution grid. The company is based in Columbus, Ohio.

This report made by AEP and certain of its 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 of fuel suppliers and transporters; availability of generating capacity and the performance of AEP’s generating plants; the ability to recover regulatory assets and stranded costs in connection with deregulation; the ability to recover increases in fuel and other energy costs through regulated or competitive electric rates; new legislation, litigation and government regulation including requirements for reduced emissions of sulfur, nitrogen, mercury, carbon and other substances; resolution of pending and future rate cases, negotiations and other regulatory decisions (including rate or other recovery for new investments and environmental compliance); oversight and/or investigation of the energy sector or its participants; resolution of litigation (including pending Clean Air Act enforcement actions and disputes arising from the bankruptcy of Enron Corp.); AEP´s ability to constrain its operation and maintenance costs; the success of disposing of investments that no longer match AEP´s business model; AEP´s ability to sell assets at acceptable prices and on other acceptable terms; international and country-specific developments affecting foreign investments including the disposition of any foreign investments; the economic climate and growth in AEP´s service territory and changes in market demand and demographic patterns; inflationary 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 and number of participants in the energy trading market; changes in the financial markets, particularly those affecting the availability of capital and AEP´s ability to refinance existing debt at attractive rates; actions of rating agencies, including changes in the ratings of debt and preferred stock; volatility and changes in markets for electricity, natural gas, and other energy-related commodities; changes in utility regulation, including membership and integration in a regional transmission structure; 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 and other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.

MEDIA CONTACT:
Melissa McHenry
Manager, Corporate Media Relations
614/716-1120

Terri Flora
General manager, Corporate Communications
AEP Ohio
614/883-6675

ANALYSTS CONTACT:
Julie Sloat
Vice President, Investor Relations
614/716-2885

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