Two shareholder derivative cases against AEP dismissed

Attorneys for the plaintiffs agreed to dismiss the claims, filed in Franklin County, Ohio, Common Pleas Court in November and December 2002, that alleged a breach of fiduciary duty by AEP´s board of directors for failure to maintain adequate internal controls over gas trading operations. The claims followed AEP´s disclosure in October 2002 that it had discovered that five natural gas traders had reported inaccurate information about natural gas trades to industry publications. AEP discovered the inaccurate data reporting, immediately fired the five natural-gas traders, and reported the traders’ activities to the appropriate regulatory agencies.

"We strongly believed that the allegations in these cases were without merit and we were prepared to aggressively defend ourselves in court," said Michael G. Morris, AEP´s chairman, president and chief executive officer. "We´re pleased that the plaintiffs apparently recognized that their cases were not strong and decided not to pursue them."

The dismissal of the two cases in state court follows a September decision by Judge Algenon L. Marbley of the U.S. District Court for the Southern District of Ohio to dismiss with prejudice all claims brought against American Electric Power (NYSE: AEP) and individual defendants in 11 cases related to the reporting of natural gas data that were consolidated in the case of The Albert Fadem Trust v. American Electric Power. The consolidated cases were federal securities actions that centered on allegations that AEP did not disclose that five traders had filed inaccurate reports about natural gas trades to industry publications.

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; 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.