11/6/2006

AEP and Midamerican Energy Holdings Company to form joint venture company to build transmission in Texas; Announcement part of AEP strategy to grow its transmission business

COLUMBUS, Ohio, Nov. 6, 2006 – American Electric Power (NYSE: AEP) has signed a memorandum of understanding (MOU) with MidAmerican Energy Holdings Co. (MidAmerican) to form a joint venture company to build and own new electric transmission assets within the Electric Reliability Council of Texas (ERCOT).

Under the terms of the MOU, AEP will contribute AEP Texas transmission assets currently under construction valued at approximately $100 million to the joint venture company. A MidAmerican Energy Holdings Co. subsidiary will make a cash contribution to the joint venture company. The equity ownership of the new company would be split 50-50 between AEP and MidAmerican Energy Holdings Co. with an anticipated utility capitalization structure targeted at 40 percent equity and 60 percent debt.

AEP and MidAmerican intend for the joint venture company to invest in additional transmission projects in ERCOT. The scope of the future transmission investment will be determined by the board of the joint venture company, which will include two representatives from AEP and two from MidAmerican. Subject to completion of operating and service agreements by the end of 2006 and approval of regulatory filings in 2007, the companies anticipate up to $1 billion of projects could be included in the new company over the next several years. The joint venture would operate as a transmission utility and would be subject to the rules and regulations governing utilities within ERCOT. Initially, AEP will act as project manager and will develop, build and operate the transmission lines and facilities for the joint venture company.

“As the owner of the nation’s largest transmission system, we want to leverage our 100 years of expertise in planning, siting, building and operating transmission lines into a vibrant transmission business opportunity,” said Michael G. Morris, AEP chairman, president and chief executive officer. “We have identified approximately $9 billion in necessary transmission investment, within and adjacent to our footprint, over the next few decades that will increase the capacity of our nation’s transmission system and help continue reliable delivery of electricity, enhance electricity market efficiency, and support the growth of renewable and other environmentally responsible generation.

“The transmission investment needs in AEP’s Texas footprint alone are expected to exceed $1 billion over the next several years to address existing congestion and support development of additional generation, particularly renewables. ERCOT has a streamlined process for transmission recovery, and Governor Perry has indicated that his administration will work to ensure that sufficient transmission capacity is added to support development of new wind generation in Texas,” Morris said. “Partnering with MidAmerican, a company with a strong capital base as well as significant transmission operating experience, gives us the ability to expand AEP’s transmission investment in Texas to meet ERCOT’s needs at the same time that we are investing significant capital to enhance the environmental performance of our generating facilities.”

“We are pleased to join forces with a high-quality partner to make a significant investment in transmission infrastructure in the state of Texas,” said David Sokol, chairman and chief executive officer of MidAmerican Energy Holdings Co. “The increase in transmission capacity in Texas will support continued reliable electric service delivery, enhance the efficiency of the wholesale electric market and encourage the development of renewable generation in the state.”

AEP’s contribution to the joint venture will include transmission assets already under construction in the Laredo area that are designed to strengthen transmission grid reliability in South Texas and reduce the need for older reliability-must-run generation in that area. The assets include a variable frequency transformer (VFT), a device that will facilitate bidirectional power flow between the U.S. and Mexico transmission grids, and other associated transmission system facilities.

AEP and MidAmerican Energy Holdings expect to execute definitive agreements for the joint venture by the end of 2006. The joint venture will require regulatory approval from the Public Utility Commission of Texas (PUCT) and the Federal Energy Regulatory Commission (for the transfer of AEP Texas transmission assets to the joint venture). The companies anticipate the joint venture will begin operations in the second half of 2007.

MidAmerican Energy Holdings Co., based in Des Moines, Iowa, is a global provider of energy services. Through its energy-related business platforms – PacifiCorp, MidAmerican Energy Co., CE Electric UK, Kern River Gas Transmission Co., Northern Natural Gas Co. and CalEnergy – MidAmerican provides electric and natural gas service to more than 6.7 million customers worldwide. MidAmerican Energy Holdings Co. subsidiaries PacifiCorp and MidAmerican Energy Co. own and operate more than 18,000 miles of electric transmission lines. Information about MidAmerican is available on the Internet at www.midamerican.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 36,000 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 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). American Electric Power, based in Columbus, Ohio, is celebrating its 100th anniversary in 2006.

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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 build or acquire generating capacity when needed at acceptable prices and terms and to recover those costs through applicable rate cases or competitive rates; 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, 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 its 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; 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; volatility and changes in markets for electricity, natural gas, and other energy-related commodities; changes in utility regulation, including implementation of EPACT and membership in and integration into regional transmission structures; 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, 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

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

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