AEP Entering Next Century of Business Well-Positioned for Success, Morris Tells Shareholders at Annual Meeting

COLUMBUS, Ohio, April 25 /PRNewswire-FirstCall/ -- American Electric Power entered 2006 well-positioned to begin its next century as a successful investor-owned utility, Michael G. Morris, AEP chairman, president and chief executive officer, told shareholders attending the company's annual meeting today in Charleston, W.Va.

"As we celebrate our 100th anniversary and prepare to enter our second century as a company, we're stronger and more focused than we've been in the recent past," Morris said. "We ended 2005 in a strong financial position with ongoing earnings of $2.73, at the high end of our increased guidance range. We improved our debt ratio to 57.2 percent of capitalization and were very pleased when Moody's upgraded our debt ratings in September. We had the opportunity to reward our shareholders with an increase of approximately 6 percent in the quarterly dividend paid on our common stock and also met our goal of fully funding our pension liabilities to help ensure the financial well-being our employees and retirees.

"And, we're beginning 2006 on a good note. As we announced late last week, we are expecting to report first quarter ongoing earnings of 97 cents, a 7-cent increase over the very good first quarter we reported last year. And, we recently received approval from the Public Utilities Commission of Ohio (PUCO) to move forward with the first phase of building an Integrated Gasification Combined Cycle (IGCC) clean-coal plant in Ohio. However, as pleased as we are with our recent successes, we remain acutely focused on addressing the challenges and opportunities that will shape our performance going forward," Morris said.

In keeping with its legacy, AEP will make significant investments in all parts of its business in 2006, including pioneering new ways to produce and deliver electricity more cleanly and more efficiently.

The company is moving forward with plans to build additional base-load generation for the first time in several decades, including constructing the first large-scale, base-load IGCC plants in the world. AEP recently received approval and recovery from the PUCO for the first phase of a proposed 629- megawatt IGCC plant in Meigs County, Ohio, and has filed for a Certificate of Public Convenience and Necessity to build another 629-megawatt IGCC plant adjacent to its Mountaineer Plant in New Haven, W.Va. AEP also has submitted self-build proposals, including IGCC proposals, in response to requests for proposals (RFPs) for up to 1,200 megawatts of base-load generation to serve growing electricity demand in its western service area.

Beyond generation, AEP announced plans Jan. 31 to build a 550-mile, high- voltage transmission superhighway from West Virginia to New Jersey. The 765- kilovolt (kV) line would reduce congestion costs and transmission line losses within the PJM Interconnection, enhance reliability in the eastern transmission grid and provide more flexibility and opportunity to site new generation. With an estimated in-service date of 2014 and a projected cost of approximately $3 billion, the new line is the first interstate transmission proposal submitted in response to the Energy Policy Act signed into law in 2005.

While proposing first-of-their-kind projects for new generation and transmission, the company remains focused on significant investment in environmental improvements on its current fleet of coal-fired power plants. In the last two years, AEP has invested more than $1 billion in technology to reduce emissions of sulfur dioxide, nitrogen oxides and mercury on its coal- fueled plants and plans to spend an additional $3 billion on retrofits through 2010.

AEP also is moving forward with efforts to improve the reliability of its vast transmission and distribution system. The company invested more than $1.1 billion in its system in 2005, $370 million more than in 2004, and projects a $1.3 billion investment in its energy delivery system in 2006.

One significant, and long-awaited, improvement to AEP's energy delivery system will be completed this summer. The 90-mile Wyoming-Jacksons Ferry 765-kV transmission line to strengthen the transmission system serving West Virginia, southwestern Virginia and eastern Kentucky should be energized by July.

Morris acknowledged that recovering these significant capital investments is one challenge the company faces. "We've very focused on helping our regulators and customers understand the benefits of the planned investments in our system, and we believe our efforts will reflect in their decisions about adjusting rates to cover our costs of doing business. Even with these significant investments, our customers will continue to benefit from some of the lowest rates in the regions that we serve," Morris said.

AEP already has completed base rate proceedings in two states. In 2005, AEP's Ohio companies received approval for a rate stabilization plan that provides for annual generation rate increases through 2008 of 3 percent for Columbus Southern Power and 7 percent for Ohio Power.

AEP's Kentucky Power unit received a settlement order in its Kentucky base rate case March 15. The approved settlement provided a $41 million annual rate increase for Kentucky Power beginning March 30.

AEP's Appalachian Power and Wheeling Power units filed a settlement agreement yesterday for approval from the Public Service Commission of West Virginia in its base rate case. The agreement would provide an initial $44 million increase in the companies revenues effective July 28. The agreement also includes a mechanism to provide additional rate increases in each of the next three years for recovery of the companies' ongoing environmental investments resulting in an estimated overall $129 million increase between the end of July 2006 and mid-2009.

Going forward, Appalachian Power anticipates filing a base rate case in Virginia after May 1. AEP Texas is working through the stranded cost recovery process in Texas and intends to seek a continued rehearing of the Public Utilities Commission of Texas order in the stranded cost case.

Morris reaffirmed AEP's ongoing earnings guidance of $2.50 to $2.70 per share for 2006.

"Like 2005 and many years before, we expect 2006 to be a year of rewards and challenges. We are already seeing some of the rewards with our first- quarter results, but we recognize that continuing our success won't be simple," Morris said. "However, I know that if we focus on doing business in a way that makes our customers feel better-served by us and our employees and shareholders proud of their affiliation with AEP, we can't help but be successful," Morris said.

In business items, AEP shareholders re-elected 13 directors to hold office until the next annual meeting or until the election of successors. Directors elected to the Board are: Morris, 59, of Columbus, Ohio; E.R. Brooks, 68, of Granbury, Texas; Donald M. Carlton, 68, of Austin, Texas; Ralph D. Crosby Jr., 58, of Arlington, Va.; John P. DesBarres, 66, of Park City, Utah; Robert W. Fri, 70, of Washington, D.C.; Linda A. Goodspeed, 44, of Richardson, Texas; William R. Howell, 70, of Dallas, Texas; Lester A. Hudson Jr., 66, of Charlotte, N.C.; Lionel L. Nowell III, 51, of Purchase, N.Y.; Richard L. Sandor, 64, of Chicago; Donald G. Smith, 70, of Roanoke, Va.; and Kathleen D. Sullivan, 54, of Columbus, Ohio.

A significant majority of shares voted (92 percent) ratified the firm of Deloitte & Touche LLP as AEP's independent auditors for 2006.

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 is the nation's largest generator of electricity, owning more than 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, West Virginia and 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.

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; 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.); AEP's ability to constrain its operation and maintenance costs; AEP's ability to sell assets at acceptable prices and on other acceptable terms, including rights to share in earnings derived from the assets subsequent to their sale; 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 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 membership in 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.