AEP: RESPONSES TO FERC WILL SHOWNO INVOLVEMENT IN QUESTIONED ACTIVITIES

“Our focus is profitability, not volume,” said E. Linn Draper Jr., AEP’s chairman, president and chief executive officer. “Management has been consistent in its position that we should only undertake activities that have economic substance. Neither revenue nor volume is a factor in our compensation plans, so there is no incentive for our traders to enter transactions solely for the purpose of inflating reported revenue or volumes.”

AEP and more than 100 other companies received fact-finding letters from the FERC seeking information on potential “round-trip” or “wash” transactions during 2000 and 2001 in the Western Systems Coordinating Council (WSCC) for power and in WSCC and Texas for natural gas. The requests are part of the FERC’s ongoing investigation of potential market manipulation of electric and natural gas prices. Power responses are to be submitted to the FERC by Friday and gas responses by Wednesday, June 5.

AEP plans to file both responses by Friday.

In its FERC response, AEP will include information on trading activities on Sept. 21, 2001, when AEP and other traders using IntercontinentalExchange (ICE), an Internet-based commodities trading platform, bought and sold power with third parties on ICE to generate brokerage fees that were donated to a charitable fund for families of those who perished during the Sept. 11 terrorist attacks. A Dow Jones News Service story on Sept. 21, 2001, said the effort raised $1 million for the charitable fund. AEP’s energy traders have indicated they were not under any instruction by management to engage in these transactions.

“Although we do not believe these transactions meet the definitions in the FERC’s data request and the impact of the transactions is far from material for the company, we feel the uniqueness of the activity made disclosure appropriate,” Draper said.

AEP completed a review of its trading activities from Jan. 1, 1999, through March 31, 2002, a period that included more than 1.2 million trading transactions. The company identified and subjected to further review domestic trading transactions involving sequential trades with the same terms and counterparties, which amounted to approximately one-quarter of 1 percent of the total trading transactions. The total contribution of these transactions to gross revenue is not material. The company believes that substantially all of these transactions involve economic substance and risk transference and do not constitute ”round trip” or “wash” sales.

AEP´s response to the FERC May 21 and May 22 Data Request

American Electric Power is a multinational energy company with a balanced portfolio of energy assets. AEP, the United States’ largest electricity generator, owns and operates more than 42,000 megawatts of generating capacity in the U.S. and select international markets. AEP is a leading wholesale energy marketer, ranking among North America’s top providers of wholesale power and natural gas with a growing wholesale presence in European markets. In addition to electricity generation, AEP owns and operates natural gas pipeline systems, natural gas storage, coal mines, and the fourth-largest inland barge company in the U.S. AEP is also one of the largest electric utilities in the United States, with almost 5 million customers linked to AEP’s wires. The company is based in Columbus, Ohio.

The comments set forth above include forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, including (1) statements concerning the Company´s plans, objectives, expected performance and expenditures and (2) other statements that are other than statements of historical fact. These forward-looking statements reflect assumptions, and involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially from forward-looking statements are electric load and customer growth, abnormal weather conditions, availability of generating capacity, the ability to recover net regulatory assets and other stranded costs in connection with deregulation of generation, the outcome of environmental regulation and litigation, the impact of fluctuation in commodity prices and interest rates, and other risks and unforeseen events over which the Company has no control. The reader is also directed to the Company´s periodic filings with the Securities and Exchange Commission for additional factors that may impact the Company´s results of operations and financial condition. Furthermore, historical results may not be indicative of the Company´s future performance.