AEP expands CO2 reduction commitment through 2010; extends participation in Chicago Climate Exchange

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COLUMBUS, Ohio, Aug. 10, 2005 -- American Electric Power (NYSE: AEP) today announced the company will expand and extend its commitment to voluntarily reduce, avoid or sequester its greenhouse gas emissions through 2010 and will continue its membership in the Chicago Climate Exchange (CCX), the first voluntary, legally binding greenhouse gas emissions reduction and trading program in North America.

As a founding member of CCX, AEP committed in 2003 to reduce or offset its greenhouse gas emissions by 1 percent in 2003, 2 percent in 2004, 3 percent in 2005 and 4 percent in 2006 below a baseline average of 1998 to 2001 emission levels. Today’s commitment to Phase II of CCX extends AEP’s greenhouse gas reduction commitment ultimately to 6 percent below the same baseline by 2010 (4.25 percent in 2007, 4.5 percent in 2008, 5 percent in 2009 and 6 percent in 2010).

With this new commitment, AEP expects to reduce or offset approximately 46 million metric tons of carbon dioxide (CO2) equivalent emissions between 2003 and the end of the decade.

“We’ve long believed that as the leader in our industry on the climate change issue, it is important for AEP to go beyond simply talking about what should be done and actually make real reductions in our greenhouse gas emissions,” said Michael G. Morris, AEP chairman, president and chief executive officer. “The fact that AEP is projecting growth in demand for our generation in the range of 2 to 3 percent per year through the end of the decade makes this expanded reduction commitment more significant.

“Equally important, we believe that market-based approaches are the best and most cost-effective way to achieve emission reductions. Continuing participation in Phase II of CCX helps demonstrate that a well-designed, market-based approach is the right way to successfully achieve global greenhouse gas reductions,” Morris said.

Chicago Climate Exchange is the world’s first and North America’s only voluntary, legally binding greenhouse emissions reduction and trading program. The more than 100 current CCX members reflect a cross-section of major public and private sector North American entities.

“AEP and the members of CCX have achieved real and significant reductions in the greenhouse gas burden, while proving that an emissions reduction and trading program works. Phase II is the consolidation and expansion of this success,” said Dr. Richard Sandor, chairman and CEO of CCX and a member of AEP’s Board of Directors.

“AEP’s vision and leadership have been extraordinary throughout the evolution of CCX, and we applaud their decision to be the first entity to announce membership in Phase II of CCX,” Sandor said.

"CCX is unique because it involves a legally binding commitment for tangible and verifiable reductions for all six greenhouse gases and provides an important policy model of a market-based system for effectively addressing the challenge of climate change,” said Dennis Welch, AEP’s senior vice president – environment and safety. “It also allows members, like AEP, to gain experience and skill in monitoring and managing emissions and challenges participants to develop creative ways to achieve economic emission reductions.”

AEP expects to continue achieving its reduction commitment cost-effectively through a broad portfolio of actions to reduce, avoid or sequester greenhouse gas emissions, including power plant efficiency improvements, renewable generation such as wind and biomass co-firing, off-system greenhouse gas reduction projects, reforestation projects and the direct purchase of emission credits through CCX.

AEP already has made efficiency improvements on its current generating fleet, retired inefficient gas-fired generation, enhanced the performance of its nuclear generation and expanded its use of renewable generation. The company also has invested nearly $24 million in terrestrial sequestration projects designed to conserve and reforest sensitive areas and offset more than 20 million metric tons of CO2 over the next 40 years.

Going forward, AEP is focused on developing and deploying new technology that will reduce the greenhouse gas emissions of future coal-based power generation. The company has filed for regulatory approval in Ohio to build the first large, commercial-scale Integrated Gasification Combined Cycle (IGCC) clean-coal power plant by 2010, which will be designed to accommodate retrofit of technology to capture CO2 emissions. A second 600-megawatt IGCC plant is under consideration by AEP for West Virginia, Ohio or Kentucky.

AEP also is part of a consortium proposing to build “FutureGen,” a $1-billion research project in conjunction with the Department of Energy that will build the world’s first nearly emission-free plant to produce electricity and hydrogen from coal while capturing and storing CO2 in geologic formations.

Additionally, AEP’s Mountaineer Plant in New Haven, W.Va., is the site of a $4.2-million carbon sequestration research project through which scientists from Battelle Memorial Institute are seeking to obtain the data required to better understand the capability of deep saline aquifers for storage of carbon dioxide emissions from power plants.

Beyond CO2, AEP has made significant reductions in its emissions of SF6, an extremely potent greenhouse gas used in transmission equipment. The company reduced leakage of SF6 from 19,778 pounds in 1999 (a leakage rate of 10 percent) to only 1,962 pounds in 2004 (a leakage rate of 0.5 percent).

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; 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 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; volatility and changes in markets for electricity, natural gas, and other energy-related commodities; changes in utility regulation, including membership 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 and other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.
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Melissa McHenry
Manager, Corporate Media Relations

Julie Sloat
Vice President, Investor Relations