AEP Ohio withdraws from resolution of 2009 Significantly Excessive Earnings Test

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Delays cause uncertainty regarding implementation of agreement

GAHANNA, Ohio, December 16, 2010 – AEP Ohio, a unit of American Electric Power (NYSE:AEP), has withdrawn an agreement reached in late November with several parties that would have resolved pending cases in front of the Public Utilities Commission of Ohio (PUCO), including the company’s Significantly Excessive Earnings Test (SEET), Fuel Adjustment Clause (FAC) audit cases, and the merger application for Columbus Southern Power (CSP) and Ohio Power.

“After careful and thorough consideration of the effects created by the delayed procedural schedule for the AEP Ohio SEET settlement, the company has decided to withdraw from the agreement,” said Joe Hamrock, president and chief operating officer for AEP Ohio. “The agreement would have provided immediate value to our customers; however, in light of the delays and lingering uncertainty regarding implementation, we found it impractical to continue.”

The agreement, signed by the Staff of the PUCO, the Ohio Manufacturing Association (OMA), the Ohio Hospital Association (OHA), the Kroger Company, Ormet Corporation, and AEP Ohio, included an expedited procedural schedule that would provide for a Commission’s decision by the end of 2010. This original schedule was set in order to implement key provisions in the resolution starting in early 2011, including changing the rate cap for CSP customers to 0 percent from 6 percent, avoidance of $18 million in environmental costs, additional customer savings through avoided carrying charges on fuel costs to be recovered in future regulatory proceedings, and the customers’ benefit from the sale of a coal reserve asset owned by AEP shareholders.

Based on the objections of non-signatory parties, the Commission substantially modified that timeline and established an open-ended procedural schedule that more than likely will result in a decision on this agreement sometime in the second quarter of 2011.

“AEP Ohio and the parties that contributed to this resolution felt strongly that this agreement provided a critical balance for all parties involved, including the State of Ohio, our customers and our investors,” said Hamrock. “However, delays in this proceeding have modified several of the provisions. Since all the evidence has been presented, all the testimony has been heard and many of the issues around these cases have been fully litigated before the PUCO, we now will await the Commission’s final decision.”

AEP Ohio provides electricity to nearly 1.5 million customers of major AEP subsidiaries Columbus Southern Power Company and Ohio Power Company in Ohio, and Wheeling Power Company in the northern panhandle of West Virginia. AEP Ohio is based in Gahanna, Ohio. The company serves all or part of 61 counties in Ohio and two in West Virginia.

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 more than 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.

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Terri Flora
Director, Corporate Communications
AEP Ohio