SHREVEPORT, La., April 30, 2009 – AEP Southwestern Electric Power Co. (SWEPCO) and its subsidiary Dolet Hills Lignite Co. (DHLC), announced today that they have entered into an agreement with The North American Coal Corporation and its affiliates, Red River Mining Company (RRMC) and Oxbow Property Company L.L.C. (OPC), to acquire 50 percent of the Oxbow Mine lignite reserves and all associated mining equipment and assets. As part of the transaction, Cleco Power LLC, a subsidiary of Cleco Corp., is acquiring the remaining 50 percent of Oxbow Mine lignite reserves, located near Coushatta, La.
SWEPCO is a subsidiary of American Electric Power (NYSE: AEP). RRMC is a joint venture between North American Coal and OPC.
Consummation of the transaction is subject to regulatory approval by the Louisiana and Arkansas Public Service Commissions and the transfer of other regulatory instruments. If approved, DHLC will acquire and own the Oxbow Mine mining equipment and related assets and it will operate the Oxbow Mine. The preliminary purchase price of approximately $42 million includes the lignite reserves, mining equipment and related assets and permits.
SWEPCO and Cleco Power, along with Northeast Texas Electric Cooperative and Oklahoma Municipal Power Authority (OMPA), are co-owners of the 650-megawatt Dolet Hills Power Station located approximately 20 miles from the Oxbow Mine. SWEPCO and Cleco Power also control the Dolet Hills Mine lignite reserves in DeSoto Parish, La. Lignite from the Dolet Hills Mine (3.3 million tons annually) and the Oxbow Mine (550,000 tons annually) has been the sole fuel source for the Dolet Hills Power Station since it started operating in 1985.
“This acquisition would ensure a stable and affordable fuel supply for the Dolet Hills Power Station, extending the supply of local lignite to the plant through the year 2026. It would also maintain a positive economic impact on employment and state and local tax base,” said Paul Chodak, SWEPCO president and chief operating officer. “We anticipate that most of the existing RRMC workforce will remain in place,” Chodak said.
“This acquisition will strengthen our local lignite fuel supply and our ongoing relationship with SWEPCO,” said Dilek Samil, president and chief operating officer of Cleco Power LLC, which operates the Dolet Hills Power Station.
Cleco Corp. is a regional energy services company headquartered in Pineville, La. It operates a regulated electric utility company that serves 276,000 customers in Louisiana. Cleco also operates a wholesale energy business with approximately 1,350 megawatts of generating capacity. For more information about Cleco, visit www.cleco.com
SWEPCO serves more than 473,500 customers in three states: 180,000 in Northwest Louisiana, 180,000 in East and North Texas, and 113,500 in western Arkansas. SWEPCO’s headquarters are in Shreveport, La. News releases and other information about SWEPCO can be found at www.swepco.com
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 AEP 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 AEP’s ability to obtain any necessary regulatory approvals and permits) when needed at acceptable prices and terms and to recover those costs 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; 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 for new investments, transmission service and environmental compliance); resolution of litigation (including pending Clean Air Act enforcement actions and 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 in AEP’s service territory and changes in market demand and demographic patterns; inflationary and interest rate 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 of the counterparties with whom AEP has contractual arrangements, including participants in the energy trading market; actions of rating agencies, including changes in the ratings of debt; volatility and changes in markets for electricity, natural gas and other energy-related commodities; changes in utility regulation, including the potential for new legislation in Ohio and membership in and integration into regional transmission organizations; accounting pronouncements periodically issued by accounting standard-setting bodies; the performance of AEP’s pension and other postretirement benefit plans; prices for power that AEP generates and sells at wholesale; changes in technology, particularly with respect to new, developing or alternative sources of generation; other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.