AEP Resources Stresses Transmission, Generation In Comments On Ontario's Energy Competition Act

Aug. 20, 1998•News Release

TORONTO, Aug. 20, 1998 -- Ontario's Bill 35, the Energy Competition Act, must create a competitive environment for electricity that results in lower prices for the consumer, according to Tom Drolet, managing director of the Canadian office for AEP Resources, a subsidiary of American Electric Power (NYSE: AEP). "Competition resulting in lower prices underpins most issues that this legislation means to address," Drolet explained. "The necessary goal must be to introduce competitors in this marketplace." Drolet, in comments today before the Ontario Government's Standing Committee on Resources Development, recommended changes in Bill 35 addressing transmission and generation issues to attract more competitors to the Ontario market and benefit consumers. Today's meeting of the Standing Committee on Resources Development is the last of a series to hear comments on Bill 35. The Ontario electric power system is "relatively isolated with respect to many surrounding power systems," Drolet explained. Ontario's transmission grid has approximately six direct interconnections with other transmission systems. By comparison, the American Electric Power transmission system in the U.S. is interconnected with 29 companies at approximately 120 points, Drolet said. "We encourage you to set specific goals for the further integration of the Ontario system with its neighboring systems," Drolet said. "We believe this will be essential to lay the groundwork for the transition from today's relatively isolated operation to one where power and energy can be freely exchanged, delivered and consumed in the most economically efficient manner possible unencumbered by transmission constraints. "Further development of the transmission system will provide benefits to all consumers by enhancing customer choice among suppliers and by promoting increased opportunities for the export and import of power and energy from the most economic resources." Drolet also recommended the government strengthen areas of Bill 35 which foster new merchant generation and generation tied to specific industrial developments within Ontario. "With the possibility of a competitive transition charge on transmission and/or generation in order to take care of the stranded debt of Ontario Hydro, the returns from an investment of pure merchant or industrial-hosted merchant plant is likely to be smaller as the stranded debt gets bigger," Drolet said. "In order to foster competition among a greater number of players, the government should allow for special cases based on building and serving customers with new investment in plant and jobs." Drolet noted that AEP Resources established its Canadian office in Toronto two years ago and is working to create partnerships for energy-related opportunities throughout Canada. AEP Resources, a wholly owned subsidiary of American Electric Power, pursues energy-related domestic and international investment opportunities and projects.The company has offices in Columbus, Ohio; London; Singapore; Toronto; Beijing; and Sydney, Australia. 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. On Dec. 22, 1997, AEP announced a definitive merger agreement for a tax-free, stock-for-stock transaction with Central and South West Corp., a public utility holding company based in Dallas.

For More Information, Contact: Pat D. Hemlepp Manager, Media Relations American Electric Power 614/223-1620

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