AEP-CSW Merger Making 'Great Progress,' Draper Tells Shareholders at Annual Meeting

April 29, 1999•News Release

CHARLESTON, W.Va., April 28, 1999 – The momentum toward completion of the pending merger between American Electric Power (NYSE: AEP) and Central and South West Corporation (NYSE: CSR) has increased with the recent announcements of significant agreements, AEP chairman, president and chief executive officer E. Linn Draper Jr. told company shareholders at the company's annual meeting today. The meeting was held in Charleston, W.Va., part of AEP's tradition of rotating the location of the annual shareholders meeting among the seven states in its service territory. The meeting was last held in Charleston in 1987. During his annual report to shareholders, Draper detailed progress on completion of the merger, described AEP's strategy for the future, and discussed events that have negatively influenced AEP's stock price. "We have made great progress recently in moving our merger forward toward completion," Draper told shareholders. The AEP-CSW merger has conditional approval in Arkansas, a partial settlement in Oklahoma and a settlement in principle in Texas, three of the four CSW states that must determine the merger is in the public interest. Draper said the companies are making excellent progress in Louisiana, the fourth CSW state, and have also settled with several intervenors at the federal level. "Clearly, the momentum is building," Draper said. "You can feel the enthusiasm for it (the merger) within both of our companies. Both AEP and CSW have taken a bold and progressive step to create a stronger, better company, one that will enhance shareholder value, one that will allow us to transform two large independent utilities into a global energy services provider that can meet the challenges of the future." The merger with CSW, a public holding company based in Dallas, was announced Dec. 22, 1997, and requires approval from the Federal Energy Regulatory Commission -- which has scheduled a hearing for June 29, the Securities and Exchange Commission and the Department of Justice. The Nuclear Regulatory Commission has approved a license transfer application related to the merger. Once the merger is completed, the new company will operate as American Electric Power. "We have made enormous progress over the last two weeks," Draper said. "We are committed to presenting our case on the benefits of the merger vigorously and enthusiastically in the weeks ahead." Draper, when describing AEP's strategy for the future, noted that the company has earned a reputation as a technological leader, as a low-cost provider of electricity, and as a company that consistently ranks in the top five in customer satisfaction surveys. "Our vision for the future does not cast that proud heritage aside," Draper said. "Instead, we use it as a solid platform, a base from which we will grow, from which we will transform our company into a leader that will power tomorrow." Key elements in the strategy are: -- Selling energy and energy products in the wholesale and retail markets; -- Owning and operating strategic assets -- assets that are efficient and low cost or give AEP information about the marketplace; -- Capitalizing on AEP's historic strengths by focusing on the lines of business with the greatest potential, and by leveraging across those lines of business; -- Responding to the demand for improved efficiencies; -- Buying strategic assets and selling those assets which no longer have strategic value; -- And redefining and realigning AEP's current lines of business so that each is aimed at maximizing shareholder value. "We will grow our wholesale business -- already in the top tier when measured nationally -- in electricity, coal and natural gas," Draper said. "When we can maximize value, we will buy and sell energy production and fuel-related assets. Our skills in operation and maintenance will be used to maximize their profitability and to create the greatest value. "Our regulated distribution operations will be consolidated into a group of regional companies here and abroad focusing on the highest possible standards of performance and cost management," he said. "We intend to explore fully retail business opportunities using our brand and our reputation coupled with our wholesale procurement capabilities. We will optimize existing transmission assets to the degree possible under current regulation. We believe our know-how and experience in extra-high-voltage transmission, substation technology and grid management give us marketable skills globally either as developer or as a technical service provider. "Internationally we intend to create significant scale in carefully selected regions where we can extend our skills along our lines of business -- but only if we can expect to obtain risk-adjusted results that are as great as or greater than we receive in our regulated domestic business." Draper told shareholders that four events have independently -- and negatively -- influenced the company's stock price over the last year: -- The electric utility industry is in a slump. The Standard and Poor's electric utility index is down 10.5 percent so far this year, through last Friday, and is trading 25 to 30 percent below historic averages with 14 of the 26 index stocks hitting 52-week lows during March and April this year. -- The extended outage at AEP's Cook Nuclear Plant in Michigan continues. An announcement of a restart schedule is planned for June. -- Uncertainty exists over the restructuring legislation in Ohio. -- The merger approval process continues. "Each of these deflators has an end in sight," Draper said. "The industry will return to its historic norms. The Cook Plant will run again. Restructuring will happen in Ohio -- and we will help shape it. And the merger will be consummated." In business items, AEP shareholders: -- Elected 10 directors -- John P. DesBarres of Rancho Palos Verdes, Calif.; Draper of Columbus, Ohio; Robert M. Duncan of Columbus, Ohio; Robert W. Fri of Washington, D.C.; Lester A. Hudson Jr. of Greenville, S.C.; Leonard J. Kujawa of Atlanta, Ga.; Donald G. Smith of Roanoke, Va.; Linda Gillespie Stuntz of Washington, D.C.; Kathryn D. Sullivan of Columbus, Ohio; and Morris Tanenbaum of Short Hills, N.J. -- to hold office until the next annual meeting and until their successors are duly elected; -- Approved Deloitte & Touche LLP as independent auditors for 1999. AEP, a global energy company, is one of the United States' largest investor-owned utilities, providing energy to 3 million customers in Indiana, Kentucky, Michigan, Ohio, Tennessee, Virginia and West Virginia. AEP has holdings in the United States, the United Kingdom, China and Australia. Wholly owned subsidiaries provide power engineering, energy consulting and energy management services around the world. The company is based in Columbus, Ohio.

For More Information, Contact: Media: Pat D. Hemlepp Manager, Media Relations 614/223-1620 Analysts: John S. Bilacic Manager, Investor Relations 614/223-2847

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