N EWS R ELEASE

October 21, 2004

• Third-quarter results: GAAP $1.34 per share, ongoing $0.80 per share
• Higher industrial demand, lower expenses help offset mild weather, ECOM absence
• Company affirms previous 2004 ongoing earnings guidance range of $2.20 to $2.40

- Full news release and supplemental tables (PDF: 290KB: get viewer)
- Consolidated Cash Flow (PDF: 12KB: get viewer)
- Consolidated Balance Sheet (PDF: 10KB: get viewer)
- Performance Drivers (PDF: 8KB: get viewer)
- Capital Structure September 2004 (PDF: 93KB: get viewer)

AMERICAN ELECTRIC POWER Preliminary, unaudited results (EPS based on 395mm shares Q3 2003, 396mm in Q3 2004, 382mm in 9 mo. 2003 and 396mm in 9 mo.2004)
	Third quarter ended Sept. 30			9-months ended Sept. 30
	2003	2004	Variance	2003	2004	Variance
Revenue ($ in billions)	3.9	3.7	(0.2)	11.2	10.4	(0.8)
Earnings ($ in millions):
GAAP	257	530	273	872	912	40
Ongoing	352	318	(34)	778	757	(21)
EPS ($):
GAAP	0.65	1.34	0.69	2.28	2.30	0.02
Ongoing	0.89	0.80	(0.09)	2.04	1.91	(0.13)

COLUMBUS, Ohio, Oct. 21, 2004 - American Electric Power (NYSE: AEP) today reported 2004 third-quarter earnings, prepared in accordance with Generally Accepted Accounting Principles (GAAP), of $530 million, or $1.34 per share, compared with $257 million, or $0.65 per share, in the same period last year.

One-time gains in third-quarter 2004, related to the sale of assets, were primary contributors to $212 million in special items that improved the company´s performance when compared to the prior period when the company recorded a loss of $95 million on special items.

Ongoing earnings (earnings excluding special items) for third-quarter 2004 were $318 million, or $0.80 per share, compared with $352 million, or $0.89 per share, in the same period last year.

The key factor in the third-quarter ongoing earnings performance, when compared with the prior period, is the absence of a non-cash Texas stranded cost recovery mechanism (commonly referred to as ECOM) in 2004 that added $60.6 million pre-tax, or $0.10 per share, to ongoing earnings in last year´s third quarter. ECOM was $169 million pre-tax for the nine months ended September 2003 and $218 million pre-tax for the full year. Under Texas regulations, companies could record ECOM earnings, based on a wholesale capacity auction true-up, from Jan. 1, 2002, through Dec. 31, 2003.

GAAP and ongoing earnings per share for third-quarter 2004 are based on an average of approximately 396 million shares outstanding, compared to an average of approximately 395 million shares outstanding for the same period in 2003. GAAP and ongoing earnings per share for the year-to-date period are based on an average of 396 million shares in 2004, compared to an average of 382 million shares in 2003. For the 2004 year-to-date period, dilution for GAAP earnings is $0.09 per share and dilution for ongoing earnings is $0.07 per share.

A full reconciliation of GAAP earnings to ongoing earnings for each period is included in tables at the end of this news release.

EARNINGS GUIDANCE

AEP affirmed its previous 2004 ongoing earnings guidance range of between $2.20 and $2.40 per share. In providing ongoing earnings guidance, there are differences between 2004 ongoing earnings and 2004 GAAP earnings because of the classification of UK operations and Louisiana Intrastate Gas (LIG) as discontinued and the impacts of disposals of UK operations, LIG and other non-core assets. At this time, AEP management is not able to estimate the impact on GAAP earnings of the anticipated Texas true-up proceedings or the potential impact of any future changes in accounting principles. Therefore, AEP is not able at this time to provide a corresponding GAAP equivalent for 2004 earnings guidance.

SUMMARY ONGOING RESULTS BY SEGMENT ($ in millions except EPS; EPS based on 395mm shares Q3 2003, 396mm in Q3 2004, 382mm in 9 mo. 2003 and 396mm in 9 mo.2004)
	Q3 03	Q3 04	Variance	YTD 03	YTD 04	Variance
Utility Operations	394	359	(35)	928	845	(83)
Ongoing EPS	1.00	0.91	(0.09)	2.43	2.13	(0.30)
Investments	(21)	(32)	(11)	(111)	(45)	66
Ongoing EPS	(0.06)	(0.08)	(0.02)	(0.29)	(0.11)	0.18
Parent Company	(21)	(9)	12	(39)	(43)	(4)
Ongoing EPS	(0.05)	(0.03)	0.02	(0.10)	(0.11)	(0.01)
Ongoing Earnings	352	318	(34)	778	757	(21)
Ongoing EPS	$0.89	$0.80	($0.09)	$2.04	$1.91	($0.13)

"We accomplished much in the third quarter and recorded solid earnings for the period," said Michael G. Morris, AEP´s chairman, president and chief executive officer. "We completed the divestiture of a number of assets that did not fit our business model, including the generation in the United Kingdom. Our domestic utility assets, the core of our ongoing business strategy, performed well. When you factor ECOM out of the equation, our utilities improved earnings from the prior period despite milder weather conditions.

"We continue to see growth in industrial demand, evidence of an ongoing economic recovery in areas we serve," Morris said. "I consider that to be a further indication that our decision to focus our strategy on our utility operations and assets has us well positioned for the future."

The decline in the Investments segment performance from third-quarter 2003 is primarily attributed to fluctuations in the value, for accounting purposes, of natural gas in storage. This will be reported as income in future periods as the gas is withdrawn from storage.

The $12 million reduction in Parent Company expenses in the quarter compared to the prior period is primarily the result of lower interest and other expenses.

ONGOING RESULTS FROM UTILITY OPERATIONS ($ in millions except EPS; EPS based on 395mm shares Q3 2003, 396mm in Q3 2004, 382mm in 9 mo. 2003 and 396mm in 9 mo.2004)
	Q3 03	Q3 04	Variance	YTD 03	YTD 04	Variance
Regulated Integrated Utilities	800	815	15	2,183	2,315	132
Ohio Companies	545	516	(29)	1,505	1,497	(8)
Texas Wires	177	128	(49)	508	334	(174)
Texas Supply/REP	99	89	(10)	325	273	(52)
Off-System Sales	157	131	(26)	379	413	34
Other Wholesale Transactions	1	-	(1)	(4)	13	17
Transmission Revenue - 3rd Party	121	125	4	350	368	18
Other Operating Revenue	91	88	(3)	270	247	(23)
Total Gross Margin	1,991	1,892	(99)	5,516	5,460	(56)
Operations & Maintenance	(717)	(720)	(3)	(2,138)	(2,276)	(138)
Depreciation & Amortization	(317)	(322)	(5)	(927)	(940)	(13)
Taxes Other Than Income Taxes	(182)	(175)	7	(521)	(530)	(9)
Interest Expense & Preferred Dividend	(168)	(151)	17	(499)	(471)	28
Other Income & Deductions	-	7	7	7	32	25
Income Taxes	(213)	(172)	41	(510)	(430)	80
Total Utility Operations	394	359	(35)	928	845	(83)
Ongoing EPS	$1.00	$0.91	($0.09)	$2.43	$2.13	($0.30)

Reduced expenses, increased industrial demand for electricity and growth in the number of residential and commercial customers helped AEP partially offset the absence of ECOM in third-quarter 2004. Mild summer weather reduced residential and commercial demand for power in many areas served by AEP when compared with the same period last year.

AEP´s Regulated Integrated Utilities increased gross margin in the quarter, even though residential and commercial sales were down slightly because of weather. Industrial sales increased 6 percent from the prior period.

The reduction in gross margin in the quarter from AEP´s Ohio Companies reflects the mild summer weather, which contributed to a 5 percent reduction in retail sales to residential and commercial customers, and higher fuel costs in a state that has frozen rates. Industrial sales increased 5 percent from the prior period.

The loss of ECOM from Texas Wires gross margin in the quarter was partially offset by higher residential usage and residential and commercial customer growth in AEP´s Texas Central Company (TCC).

The decrease in gross margin in the quarter from Texas Supply is primarily attributed to the divestiture of TCC generation to comply with Texas stranded cost recovery regulations. This resulted in higher purchased power costs to fulfill contractual commitments.

Reduced gross margins from Off-System Sales are primarily the result of less favorable optimization activities in the current period.

Utility expenses in the quarter were $64 million lower than in the same period last year, primarily because of lower tax expenses in the quarter and reduced interest expenses as a result of refinancings and paying down debt. Operations & Maintenance and Depreciation & Amortization expenses were relatively flat period to period.

ONGOING RESULTS FROM INVESTMENTS ($ in millions except EPS; EPS based on 395mm shares Q3 2003, 396mm in Q3 2004, 382mm in 9 mo. 2003 and 396mm in 9 mo.2004)
	Q3 03	Q3 04	Variance	YTD 03	YTD 04	Variance
AEPES, inc. Gas HoldCo (HPL)	(21)	(28)	(7)	(65)	(41)	24
MEMCO	3	1	(2)	4	6	2
IPPs and Wind Farms	4	1	(3)	(6)	7	13
AEP Resources - Other	(5)	(5)	-	(23)	(6)	17
Other	(2)	(1)	1	(21)	(11)	10
Total Investments	(21)	(32)	(11)	(111)	(45)	66
Ongoing EPS	($0.06)	($0.08)	($0.02)	($0.29)	($0.11)	$0.18

Improved pipeline margins and lower operating expenses for AEP Energy Services were more than offset by a $16 million after-tax reduction in value, for accounting purposes, of natural gas in storage, which will be reported as income in future periods as the gas is withdrawn from storage.

Two factors decreased third-quarter earnings from the MEMCO barge system: Higher diesel fuel costs in the quarter when compared to the prior period, and reduced August barge freight sales attributed to the U.S. Corps of Engineers´ closure of the McAlpine Lock on the Ohio River for repairs.

The decline in earnings from Independent Power Plants (IPPs) and Wind Farms reflects the sale of IPPs in Colorado and Florida that contributed $2.8 million to third-quarter 2003 earnings.

ADDITIONAL INFORMATION ON WEB SITE

AEP´s balance sheet and a cash flow table are available on AEP´s web site at http://www.aep.com/go/earnings.

WEBCAST

American Electric Power´s quarterly conference call with financial analysts will be broadcast live over the Internet at 9 a.m. EDT today at http://www.aep.com/go/webcasts or http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=105011&eventID=952103.

The call will be archived on http://www.aep.com/go/webcasts for use by those unable to listen during the live webcast.

Minimum requirements to listen to broadcast: The Windows Media Player software, free from http://windowsmedia.com/download, and at least a 56Kbps connection to the Internet.

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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.

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AEP´s GAAP earnings are prepared in accordance with accounting principles generally accepted in the United States and represent the company´s earnings as reported to the Securities and Exchange Commission. AEP´s management believes that the company´s ongoing earnings, or GAAP earnings adjusted for certain items as described in the news release and charts, provide a more meaningful representation of the company´s performance. AEP uses ongoing earnings as the primary performance measurement when communicating with analysts and investors regarding its earnings outlook and results. The company also uses ongoing earnings data internally to measure performance against budget and to report to AEP´s board of directors.

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-Financial Results for 3rd Quarter 2004 Actual Reconciliation of On-going and Reported Earnings: Also see the printer-friendly version (PDF: 9KB: get viewer)

-Financial Results for YTD September 2004 Actual Reconciliation of On-going and Reported Earnings: Also see the printer-friendly version (PDF: 10KB: get viewer)

-Summary of Selected Sales Data For Domestic Operations (Data based on preliminary, unaudited results) 3 Months Ended September 30: Also see the printer-friendly version (PDF: 8KB: get viewer)

-Financial Results for 3rd Quarter 2004 Actual vs 3rd Quarter 2003 Actual: Also see the printer-friendly version (PDF: 9KB: get viewer)

-Financial Results for September 2004 YTD Actual vs September 2003 YTD Actual: Also see the printer-friendly version (PDF: 9KB: get viewer)

-Summary of Selected Sales Data For Domestic Operations (Data based on preliminary, unaudited results) 9 Months Ended September 30: Also see the printer-friendly version (PDF: 8KB: get viewer)

- Consolidated Cash Flow (PDF: 12KB: get viewer)

- Consolidated Balance Sheet (PDF: 10KB: get viewer)

- Performance Drivers (PDF: 8KB: get viewer)

- Capital Structure September 2004 (PDF: 93KB: get viewer)

- Full news release and supplemental tables (PDF: 290KB: get viewer)

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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; 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; 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 reduce 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 the establishment of a regional transmission structure; accounting pronouncements periodically issued by accounting standard-setting bodies; the performance of AEP´s pension plan; 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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