COLUMBUS, Ohio, April 3, 2007
– American Electric Power (NYSE: AEP) today issued two requests for proposals seeking long-term wind energy purchase agreements, the first steps toward a goal of adding 1,000 megawatts of new wind energy by 2011 as part of AEP’s comprehensive strategy to address greenhouse gas emissions.
The requests for proposals (RFP) are for up to 260 megawatts of wind energy for AEP’s Appalachian Power utility unit and up to 100 megawatts of wind energy for AEP’s Indiana Michigan Power utility unit. The 360 megawatts of wind energy included in the two RFPs equals almost 60 percent of the currently installed wind generation in the PJM Interconnection, a regional transmission organization that covers all or parts of 13 states ranging from Illinois to North Carolina to New Jersey.
The deadline for bids is April 30, with delivery to begin the end of 2008, the current expiration of the Federal Production Tax Credit for wind. RFP information can be found at http://www.IndianaMichiganPower.com/go/rfp
The purchases, if approved by regulators, will mark AEP’s first commercial use of wind energy in its seven eastern states, with Indiana, Michigan, Virginia and West Virginia sites to be among those considered for the wind farms. AEP currently owns two wind farms in Texas with a total capacity of 310 megawatts and has long-term contracts to purchase 467 megawatts of output from wind farms in Oklahoma and Texas owned by third parties.
Much of the 1,000 megawatts of wind energy AEP plans to add by 2011 is expected to be located in the PJM Interconnection and serve customers in AEP’s eastern states.
“We face the need for additional supplies to meet our customers’ growing demand for electricity,” said Michael G. Morris, AEP’s chairman, president and chief executive officer. “Using wind energy to help satisfy that increased demand aligns with the desire expressed by many governors for alternative energy resources for customers in their states.
“It also improves our fuel diversity in our eastern footprint, when combined with our purchase of natural gas-fired plants and our plans for two Integrated Gasification Combined Cycle (IGCC) clean coal plants,” Morris said. “With Congress expected to take action on greenhouse gas limits, this added fuel diversity will prove important for our customers and shareholders.”
The plan to add 1,000 megawatts of nameplate-rated wind capacity by 2011 is part of AEP’s comprehensive strategy to capture, reduce, avoid or offset greenhouse gas emissions. The addition of wind capacity to AEP’s energy portfolio to meet growing electricity demand avoids an increase in greenhouse gas emissions that would occur if AEP used traditional fossil generation.
AEP recently announced its intent to install carbon capture on two existing coal-fired power plants, the first commercial use of technologies to significantly reduce carbon dioxide emissions from existing plants. Technologies being advanced by AEP’s plan include both post-combustion and pre-combustion solutions to carbon dioxide emissions from coal-fired generation.
In addition to the carbon capture and wind plans, components of AEP’s climate strategy include domestic greenhouse gas offsets through agriculture, forestry and other projects; power plant efficiency improvements; and demand-side management/end-use energy efficiency programs to be developed with state regulators.
“Wind generation can play a role in helping the U.S. meet climate targets,” Morris said. “For wind to reach its maximum potential, Congress must first address a long-term extension of the Federal Production Tax Credit for wind generation. The production tax credits help make wind energy cost-competitive with other sources. But the short-term nature of the current production tax credit program and the constant uncertainty about extension serve as financial disincentives to investment by wind turbine manufacturers and wind developers and act to increase the cost of wind energy.”
AEP has led the U.S. electric utility industry in taking action to reduce its greenhouse gas emissions. AEP was the first and largest U.S. utility to join the Chicago Climate Exchange (CCX), the world’s first and North America’s only voluntary, legally binding greenhouse gas emissions reduction and trading program. As a member of CCX, AEP committed to gradually reduce, avoid or offset its greenhouse gas emissions to 6 percent below the average of its 1998 to 2001 emission levels by 2010. Through this commitment, AEP will reduce or offset approximately 46 million metric tons of greenhouse gas emissions by the end of the decade.
AEP is achieving its greenhouse gas reductions through a broad portfolio of actions, including power plant efficiency improvements, renewable generation such as wind and biomass co-firing, off-system greenhouse gas reduction projects, reforestation projects and the potential purchase of emission credits through CCX.
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 Texas). AEP’s headquarters are in Columbus, Ohio.
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 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 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; 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 or regulation in Ohio and/or Virginia 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 sell 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.