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December 04, 2009

AEP Selected to Receive DOE Funds to Advance Carbon Dioxide Capture and Storage to Commercial Scale

COLUMBUS, Ohio, Dec. 4, 2009 – American Electric Power (NYSE: AEP) was notified by the U.S. Department of Energy that it was selected to receive funding through the Clean Coal Power Initiative Round 3 to pay part of the costs of installing the nation’s first commercial-scale carbon dioxide capture and storage system on its Mountaineer coal-fired power plant in New Haven, W.Va.

The DOE announced the funding today.

AEP will immediately begin negotiating terms with the DOE to receive $334 million to assist with the installation of the system that will use a chilled ammonia process to capture at least 90 percent of the carbon dioxide from 235 megawatts of the plant’s 1,300 megawatts of capacity. The captured carbon dioxide, approximately 1.5 million metric tons per year, will be treated and compressed, then injected into suitable geologic formations for permanent storage approximately 1.5 miles below the surface. The system will begin commercial operation in 2015, according to the company’s application for funding.

The $334 million requested by AEP is about half of the estimated cost of the system.

“We’re pleased that the DOE selected our project for funding,” said Michael G. Morris, AEP’s chairman, president and chief executive officer. “It demonstrates the agency’s recognition that commercialization of carbon capture and storage technology is an essential component in a successful climate strategy for this nation, which relies on coal-fired generation for about half of its electricity supply.

“Customers of utilities in the U.S. and abroad will benefit from the work we are doing at our Mountaineer plant,” Morris said. “The first use of any technology comes at a higher cost than subsequent uses. The DOE funding will reduce the costs our customers face for the first commercial deployment of this technology, which will lead to lower future costs for customers of AEP and other utilities as companies retrofit existing coal-fired plants to address carbon dioxide emissions.

“We greatly appreciate the support we’ve received from West Virginia’s Washington delegation and state officials as we pursued funding to push this important technology to commercial scale,” Morris said.

For this commercial-scale project, AEP has formed a diverse technical advisory committee that includes recognized experts in the field of geologic carbon dioxide storage. This group will include participants from Schlumberger Limited, Battelle Memorial Institute, Lawrence Livermore National Laboratory, Massachusetts Institute of Technology, The Ohio State University, West Virginia University, The University of Texas, West Virginia Geological Survey, Ohio Geological Survey, CONSOL Energy, and the West Virginia Department of Commerce Division of Energy. Additionally, Battelle and Schlumberger will work directly with AEP to design and deploy the carbon dioxide storage system at Mountaineer.

AEP is also in discussions with other potential international partners for the project.

AEP and Alstom began operating a smaller-scale validation of the technology in September at the Mountaineer plant. That system captures up to 90 percent of the carbon dioxide from a slipstream of flue gas equivalent to 20 megawatts of generating capacity. The captured carbon dioxide, more than 100,000 tons a year, is being compressed and injected into suitable geologic formations for permanent storage approximately 1.5 miles below the surface.

No federal funds are being used for the validation project.

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 American Electric Power 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 and performance 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 (including the ability to obtain any necessary regulatory approvals and permits) when needed at acceptable prices and terms and to recover those costs (including the costs of projects that are canceled) 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 of new investments in generation, distribution and transmission service and environmental compliance); resolution of litigation (including 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 or contraction in AEP’s service territory and changes in market demand and demographic patterns; inflationary and interest rate trends; volatility in the financial markets, particularly developments affecting the availability of capital on reasonable terms and developments impacting AEP’s ability to refinance existing debt at attractive rates; 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 markets; actions of rating agencies, including changes in the ratings of debt; volatility and changes in markets for electricity, natural gas, coal, nuclear fuel and other energy-related commodities; changes in utility regulation, including the implementation of the recently passed utility law in Ohio and the allocation of costs within regional transmission organizations; accounting pronouncements periodically issued by accounting standard-setting bodies; the impact of volatility in the capital markets on the value of the investments held by AEP’s pension, other postretirement benefit plans and nuclear decommissioning trust and the impact on future funding requirements; 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.

MEDIA CONTACT:
Pat D. Hemlepp
Director, Corporate Media Relations
614/716-1620

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