SOUTHWESTERN ELECTRIC POWER COMPANY

                      RESTATED CERTIFICATE OF INCORPORATION

                            Dated: December 14, 1970

                        (As Amended Through May 6, 1997)


     FIRST.  The name of this corporation is Southwestern Electric Power 
Company.

     SECOND. The location of its principal office in the State of Delaware is in
the City of Wilmington, County of New Castle. The name of the agent therein, and
in charge thereof and upon whom legal process against this corporation may be
served, is The Corporation Trust Company.

     THIRD. The nature of the business of, and the objects and purposes proposed
to be transacted, promoted and carried on by, the corporation are to do any or
all of the things herein mentioned and set forth, as fully and to the same
extent, to all intents and purposes, as natural persons might or could do, and
in any part of the world, namely:

          To produce, or in any manner acquire, and to sell and dispose of, and
     distribute, artificial gas, and its by-products and residual products, and
     to construct, or in any manner acquire, to own, hold, and operate, and to
     sell, exchange, lease and incumber, or in any manner dispose of, works,
     buildings, pipelines, mains, machinery, apparatus, appliances, facilities,
     rights, privileges, franchises, ordinances, and all such real and personal
     property as may be necessary, useful or convenient to the production,
     acquisition, storage and distribution of the aforesaid products.

          To mine for, prospect for, drill for, produce, buy and in any manner
     acquire, and to market, sell, transport and distribute, natural gas; to
     mine for, produce, buy and in any manner acquire, to refine, manufacture,
     into its several products to sell, market, distribute and transport,
     petroleum, and its products, and by-products, and to construct, lay,
     purchase, or in any manner acquire, to maintain and operate, and to sell,
     lease, encumber, or in any manner dispose of, works, buildings, pipelines,
     mains, machinery, apparatus, appliances, facilities, rights, privileges,
     franchises, ordinances, and all such real and personal property as may be
     necessary, useful or convenient to the production, acquisition, storage,
     transportation, and distribution of natural gas or petroleum, or both.

          To manufacture, buy, sell, rent and deal in stoves, engines, motors,
     lamps, and other apparatus and appliances calculated, directly or
     indirectly, to promote the consumption or use of natural or artificial gas
     or petroleum, or any of their products or by-products.

          To lease, buy, or otherwise acquire, to hold and operate and to sell,
     lease, incumber, or otherwise dispose of, petroleum oil and gas lands and
     leases, and right to explore for and remove natural gas and petroleum, and
     to take contracts for the drilling of oil and gas wells, and to carry out
     and execute the same.

          To generate, produce, buy, or in any manner acquire, and to sell,
     dispose of and distribute, electricity for light, heat, power and other
     purposes, and to construct, erect, or in any manner acquire, to own, hold
     and operate, and to sell, exchange, lease, incumber, or in any manner
     dispose of, works, poles, wires, conduits, subways, cables, machinery,
     apparatus, appliances, facilities, rights, privileges, franchises,
     ordinances and all such real and personal property as may be necessary,
     useful or convenient in the production, accumulation, sale, transmission,
     and distribution of electricity, and to manufacture, buy, sell, lease and
     deal in, fixtures, chandeliers, electroliers, brackets, lamps, globes,
     motors, generators, meters, dynamos, batteries and all other appliances,
     appurtenances and devices capable of being employed in connection with the
     generation, accumulation, distribution, transmission and use of
     electricity.

          To furnish light, heat and power by natural or artificial gas,
     electricity, steam, water or other means, and to acquire, operate and
     dispose of all such real and personal property, and such rights, privileges
     and franchises, as shall be necessary, useful or convenient to such ends.

          To construct, or in any manner acquire, to equip, to own, hold and
     operate, and to sell, exchange, lease, incumber, or in any manner dispose
     of, street railways, and interurban railways, for the transportation of
     passengers, merchandise, mail, express and other freight, and to acquire,
     hold, operate and dispose of such real and personal property, rights,
     privileges, franchises and ordinances, as may be necessary, useful or
     convenient for such purpose, including parks and other public places of
     amusement and attraction calculated to promote the use of any such street
     or interurban railway.

          To purchase, subscribe for, or in any manner acquire, to own, and
     hold, to receive and dispose of the income from, to sell, assign, transfer,
     pledge, mortgage, or in any manner dispose of, and to exercise all the
     rights of individual natural persons with respect to, any bonds,
     securities, and evidences of indebtedness, of, or shares of stock in, any
     corporation, association or joint stock company of the State of Delaware,
     or of any other state, territory or country.

          To sell, or in any manner dispose of, mortgage or pledge any stocks,
     bonds or other obligations, or any property, which at any time may be held
     by the Company, for its proper corporate purposes, as and when the Board of
     Directors shall determine.

          To manufacture, buy, sell and deal in ice; to carry on and conduct the
     business of cold storage, refrigeration or freezing; and to acquire by
     construction, purchase, or otherwise, and to maintain and operate any plant
     or property useful for any of said purposes.

     IN FURTHERANCE AND NOT IN LIMITATION of the general powers conferred by the
laws of the State of Delaware, it is expressly provided that the Company shall
also have the following additional powers, namely:

          To acquire the good will, rights and property, and to undertake the
     whole or any part of the assets or liabilities, of any person, firm,
     association or corporation; to pay for the same in cash, the stock or bonds
     of this Company, or otherwise; to hold, or in any manner dispose of, the
     whole or any part of the property so purchased; to conduct in any lawful
     manner the whole or any part of any business so acquired, and to exercise
     all the powers necessary or convenient in and about the conduct and
     management of such business.

          To apply for, purchase, or in any manner acquire, and to hold, own,
     use and operate, and to sell, or in any manner dispose of, and to grant
     licenses or other rights, in respect of, and in any manner deal with, any
     and all rights, inventions, improvements and processes used in connection
     with or secured under letters patent or copyrights of the United States, or
     other countries, or otherwise, and to work, operate and develop the same,
     and to carry on any business, manufacturing or otherwise, which may,
     directly or indirectly, effectuate these objects, or any of them.

          To enter into, make, and perform contracts of every kind with any
     person, firm, association or corporation, county, parish, state, territory,
     or government, or other municipality, or governmental subdivision, and,
     without limit as to amount, to draw, make, accept, endorse, discount,
     execute and issue promissory notes, drafts, bills of exchange, warrants,
     bonds, debentures, and other negotiable or transferable instruments, so far
     as may be permitted by the laws of the State of Delaware.

          To have one or more offices out of the State of Delaware, and to carry
     on its business and promote its objects without restriction as to place or
     amount.

          To guarantee any dividends or bonds or contracts or other obligations.

          While the owner of shares of stock of, or interests in, any
     corporation, joint stock company, firm, or association, to exercise all the
     rights and privileges of such ownership, including the right to vote
     thereon, and to do anything needful or convenient for the protection,
     improvement, betterment or enhancement in value of such shares of stock or
     interests, or any bonds or obligations owned by the Company, and to in any
     manner aid any such corporation, joint stock company, firm or association,
     the stock, bonds, or other obligations, of, or interests in, which are held
     by the Company.

          To do any or all of the things herein set forth to the same extent as
     natural persons might or could do, and in any part of the world, as
     principals, agents, contractors, trustees, or otherwise; and in general to
     carry on any business in connection therewith, whether manufacturing or
     otherwise, and with all the powers conferred by the laws of Delaware upon
     corporations organized under the Act* referred to in the last paragraph of
     the original Certificate of Incorporation of the corporation (which
     paragraph has been omitted from this Restated Certificate as stated above).

     FOURTH. The aggregate number of shares of stock of all classes which the
corporation has authority to issue is Nine Million Four Hundred Sixty Thousand
(9,460,000) shares, of which Seven Million Six Hundred Thousand (7,600,000)
shares of the par value of Eighteen Dollars ($18) each shall be of a class
designated Common Stock, and One Million Eight Hundred Sixty Thousand
(1,860,000) shares of the par value of One Hundred Dollars ($100) each shall be
of a class designated Preferred Stock.

     Seventy-five Thousand (75,000) shares of the Preferred Stock shall be
designated 5% Preferred Stock (the "5% Series") and shall constitute a series of
the Preferred Stock; Twenty-five Thousand (25,000) shares of the Preferred Stock
shall be designated 4.65% Preferred Stock (the "4.65% Series") and shall
constitute a series of the Preferred Stock; Sixty Thousand (60,000) shares of
the Preferred Stock shall be designated 4.28% Preferred Stock (the "4.28%
Series") and shall constitute a series of the Preferred Stock; and the remaining
shares of the Preferred Stock may be issued as additional shares of the 5%
Series, the 4.65% Series or the 4.28% Series, or as shares of one or more other
series, all as may be determined from time to time by the Board of Directors.
Shares of each series of the Preferred Stock shall have such designation,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as are stated and expressed
herein or in the resolution or resolutions providing for the issue of shares of
such series adopted by the Board of Directors as hereinafter provided. The
powers, preferences and rights of the classes of stock of the corporation and
the qualifications, limitations or restrictions of such powers, preferences and
rights, and the express grant of authority to the Board of Directors to fix by
resolution or resolutions the designations and certain of the powers,
preferences and rights of the shares of any additional series of the Preferred
Stock and the qualifications, limitations or restrictions of such powers,
preferences and rights, to the extent not fixed herein, are as hereinafter
provided.

------------
*    An Act of the Legislature of the State of Delaware entitled "An Act
     Providing A General Corporation Law", approved March 10, 1899, and the acts
     amendatory thereof and supplemental thereto.




     Authority is hereby expressly granted to the Board of Directors of the
corporation to establish by resolution, from time to time, one or more other
series of the Preferred Stock and to fix and determine the designations, rates
of dividend, the dates from which dividends shall be cumulative, redemption
prices and terms and conditions of redemption, the terms, provisions and
conditions of any sinking fund, conversion rights, if any, and terms and
conditions of conversion, the amounts payable in the event of the voluntary
liquidation, dissolution or winding up of the corporation, and any other special
rights which the Board of Directors may have authority under the laws of
Delaware to fix and determine, applicable to the shares of the respective
series, provided that the terms and provisions set forth herein with respect to
the Preferred Stock shall be applicable to all shares of the Preferred Stock of
each series except as and to the extent otherwise provided herein or fixed and
determined by the Board of Directors by resolution establishing a particular
series pursuant to the authority herein vested in such Board. Any authorized and
unissued shares of the Preferred Stock and any shares of the Preferred Stock
from time to time having the status of unissued shares may be issued as shares
of the 5% Series, the 4.65% Series or the 4.28% Series, or as shares of any one
or more other series established by the Board of Directors as herein authorized.

     (1) The holders of shares of the Preferred Stock shall be entitled to
receive, in respect of each share held, preferential dividends upon the par
value thereof at the annual rate specified in the designation of such share, and
no more, payable quarter-yearly on January first, April first, July first and
October first in each year, when and as declared by the Board of Directors, out
of the surplus or net profits of the corporation. Such dividends shall be
cumulative (a) as to the 75,000 outstanding shares of the 5% Series, from the
first day of the dividend period in which such shares were originally issued,
(b) as to the 25,000 outstanding shares of the 4.65% Series and the 60,000
shares of the 4.28% Series initially to be issued, from the date of issue
thereof, (c) as to the shares initially issued of any other series, from the
date of issue or such other date as may be provided in the resolution of the
Board of Directors authorizing the initial issue of shares of such series, and
(d) as to additional shares of any then outstanding series, from the first day
of the dividend period in which issued; and such dividends shall be paid, or
declared and set apart for payment, before any dividends shall be declared or
paid on or set apart for the Common Stock and before any payments are made to
any sinking fund created as herein provided for any series of Preferred Stock,
so that if for any past dividend period or the current dividend period dividends
on the Preferred Stock (of all series) shall not have been paid, or declared and
set apart for payment, the deficiency shall be fully paid or declared and funds
set apart for the payment thereof before any dividends shall be declared or paid
on or set apart for the Common Stock and before any payments are made to any
sinking fund created for any series of Preferred Stock. No dividend shall at any
time be paid on or set apart for any share of Preferred Stock, of any series,
unless at the same time there shall be paid on or set apart for all shares of
Preferred Stock (of all series) then outstanding dividends in such amount that
the holders of all shares of the Preferred Stock (of all series) shall receive
or have set apart for them a uniform percentage of the full annual dividend to
which they are, respectively, entitled. The term "dividend period" as used
herein, refers to each period of three consecutive calendar months ending on the
day next preceding the date on which dividends, if declared, shall be payable.
The holders of the shares of the Preferred Stock shall not be entitled to
receive any dividends thereon other than cash dividends at no more than the
annual rate specified in the designation of such shares. All shares of the
Preferred Stock at any time authorized, regardless of the series or designation
thereof, shall constitute one class of stock and, except as to those provisions
applicable only to the shares of a particular series as provided herein or as
fixed and determined by the Board of Directors pursuant to the authority herein
vested in the Board of Directors, shall be of equal rank and confer equal rights
upon the holders thereof. Whenever full cumulative dividends as aforesaid upon
the Preferred Stock (of all series) and upon any other shares of stock having
priority as to dividends over the Common Stock, then outstanding, for all past
dividend periods and for the current dividend period shall have been paid, or
declared and set apart for payment, and after complying with all provisions in
respect of any sinking fund or funds for the Preferred Stock of any series (if
and to the extent compliance with such provisions is a condition precedent to
the declaration or payment of dividends on Common Stock), the Board of Directors
may declare and authorize the payment of dividends on the Common Stock of the
corporation, SUBJECT, HOWEVER, to the restrictions hereinafter set forth.

     (2) In the event of the involuntary liquidation, dissolution or winding up
of the corporation, the holders of shares of the Preferred Stock (of all series)
then outstanding shall be entitled to be paid in full, out of the net assets of
the corporation, the par value of their shares plus an amount equal to the
accrued dividends on such shares, and no more, before any amount shall be paid
or distributed to the holders of shares of the Common Stock. In the event of the
voluntary liquidation, dissolution or winding up of the corporation, the holders
of shares of the 5% Series, the 4.65% Series and the 4.28% Series then
outstanding shall be entitled to be paid in full, out of the net assets of the
corporation, the then effective respective redemption prices of such shares
(including an amount equal to the accrued dividends on such shares), and no
more, before any amount shall be paid or distributed to the holders of shares of
the Common Stock. After payment in full to the holders of all shares of the
Preferred Stock (of all series) and of all other shares of stock, if any, having
priority over the Common Stock as to assets, then outstanding, of the amounts to
which they are respectively entitled as herein provided, the remaining assets
and profits shall be divided among and paid or distributed to the holders of
shares of Common Stock.

     (3) The corporation, on the sole authority of its Board of Directors, shall
have the right at any time or from time to time to redeem and retire all or any
part of the Preferred Stock, or all or any part of the shares of one or more
series of the Preferred Stock, upon and by the payment to the holders of the
shares to be redeemed, or upon or by setting aside as hereinafter provided for
the benefit of such holders, of the redemption price or prices fixed for the
shares to be redeemed, which redemption price (a) in the case of shares of the
5% Series shall be $109 per share plus accrued dividends to the date of
redemption, (b) in the case of shares of the 4.65% Series shall be $103.75 per
share if the date of redemption is on or prior to July 1, 1959, and $102.75 per
share if the date of redemption is subsequent to July 1, 1959, plus, in each
case, accrued dividends to the date of redemption, and (c) in the case of shares
of the 4.28% Series shall be $105.904 per share if the date of redemption is
prior to January 1, 1960, $104.904 per share if the date of redemption is on or
subsequent to January 1, 1960, and prior to January 1, 1965, and $103.904 per
share if the date of redemption is on or subsequent to January 1, 1965, plus, in
each case, accrued dividends to the date of redemption; PROVIDED that not later
than on the thirtieth day prior to the date fixed for such redemption, notice of
the intention of the corporation to redeem such shares, specifying the shares to
be redeemed and the date and place of redemption, shall be given to the holders
of record of the shares so to be redeemed, in the discretion of the Board of
Directors, either by publication in a newspaper of general circulation published
in the City of Chicago, Illinois, and in a newspaper of general circulation in
the City of New York, New York, or by depositing a copy of such notice in a
United States post office or mail box at any place in the United States
addressed to each holder of record of the shares to be redeemed at his address
as the same appears upon the records of the corporation; AND, PROVIDED FURTHER,
that if such notice is given by mail, unintentional omissions or errors in names
or addresses, or other defects in such mailing, shall not impair the validity of
the notice of, or proceedings for, such redemption. In every case of the
redemption of less than all the outstanding shares of any particular series of
Preferred Stock, the shares of such series to be redeemed shall be chosen by
proration (so far as may be without the issuance of fractional shares), by lot
or in such other equitable manner as may be prescribed by resolution of the
Board of Directors. The corporation may deposit, with a bank or trust company,
which shall be named in the notice of redemption, shall be located in the City
of New York, New York, or in Chicago, Illinois, and shall have capital, surplus
and undivided profits of at least $1,000,000, the aggregate redemption price of
the shares to be redeemed, in trust for the payment thereof on or before the
redemption date to or upon the order of the holders of such shares, upon
surrender of the certificates for such shares. Such deposit in trust may, at the
option of the corporation, be upon terms whereby in case the holder of any
shares of Preferred Stock called for redemption shall not, within ten years
after the date fixed for redemption of such shares, claim the amount so
deposited for the payment of the redemption price of such shares, such bank or
trust company shall on demand, when requested by resolution of the Board of
Directors of the corporation or its successor, pay to or upon the written order
of the corporation or its successor the amount so deposited, and thereupon such
bank or trust company shall be released from any and all further liability with
respect to the payment of such redemption price and the holder of said shares
shall be entitled to look only to the corporation or its successor for the
payment thereof. Upon the giving of notice of redemption and upon the deposit of
the redemption price, as aforesaid, or, if no such deposit is made, upon the
redemption date (unless the corporation defaults in making payment of the
redemption price as set forth in such notice), such holders shall cease to be
stockholders with respect to said shares, and from and after the making of said
deposit and the giving of said notice, or, if no such deposit is made, after the
redemption date (the corporation not having defaulted in making payment of the
redemption price as set forth in such notice), said shares shall no longer be
transferable on the books of the corporation, and said holders shall have no
interest in or claim against the corporation or its successor with respect to
said shares, but shall be entitled only to receive said moneys on the date fixed
for redemption, as aforesaid, from said bank or trust company, or from the
corporation or its successor, without interest thereon, upon surrender of the
certificates for said shares as aforesaid. All shares of the Preferred Stock so
redeemed shall be cancelled and retired.

     The term "accrued dividends," as used in this Article FOURTH, shall be
deemed to mean, in respect of any share of the Preferred Stock (of any series)
as of any given date, the amount of dividends payable on such share, computed at
the annual dividend rate stated in the designation of such share from the date
on which dividends thereon became cumulative to and including such given date,
less the aggregate amount of all dividends which have been paid, or which have
been declared and set apart for payment, on such share. Accumulations of
dividends shall not bear interest.

     Nothing herein contained shall limit any legal right of the corporation to
purchase or otherwise acquire any shares of the Preferred Stock of any series;
PROVIDED that the corporation shall not redeem, purchase or otherwise acquire
less than all the outstanding shares of the Preferred Stock if at the time of
such redemption, purchase or other acquisition dividends payable on the
Preferred Stock shall be in default in whole or in part unless, prior to or
concurrently with such redemption, purchase or other acquisition, all such
defaults in dividends shall have been cured, or unless such redemption, purchase
or other acquisition shall have been ordered, approved or permitted by the
Securities and Exchange Commission or any successor commission under the Public
Utility Holding Company Act of 1935. All shares of the Preferred Stock so
redeemed, purchased or acquired shall be cancelled and retired.

     (4) So long as any shares of the Preferred Stock shall be outstanding, the
corporation shall not, without the affirmative vote or the consent of the record
holders of at least two-thirds of the total number of shares of the Preferred
Stock (of all series) at the time outstanding:

          (a) create or authorize, by amendment to the Certificate of
     Incorporation or otherwise, shares of any class of stock ranking prior to
     the Preferred Stock as to dividends or assets or any security convertible
     into shares of such prior ranking stock, OR issue any of such prior ranking
     stock or any such convertible security after the expiration of one year
     from such vote or consent of the holders of the shares of the Preferred
     Stock; or

          (b) change, alter or repeal, by amendment to the Certificate of
     Incorporation or otherwise, any of the powers, preferences or rights of the
     holders of the shares of the Preferred Stock so as to affect adversely any
     of such powers, preferences or rights; PROVIDED that (i) any increase or
     decrease in the authorized amount of the Preferred Stock or the creation,
     or any increase or decrease in the authorized amount, of any class of stock
     ranking on a parity with the Preferred Stock as to dividends or assets
     shall not be deemed to affect adversely the powers, preferences or rights
     of the holders of the shares of the Preferred Stock and (ii) if any such
     change, alteration or repeal would affect adversely the powers, preferences
     or rights of the holders of shares of one or more, but less than all, of
     the series of the Preferred Stock at the time outstanding, the vote or
     consent only of the record holders of at least two-thirds of the total
     number of outstanding shares of the series so adversely affected shall be
     required.

     No vote or consent of the holders of the shares of the Preferred Stock
shall be required in respect of any transaction enumerated in this Paragraph (4)
if, at or prior to the time when such transaction is to take effect, provision
is made for the redemption or other retirement of all outstanding shares of the
Preferred Stock the vote or consent of which would otherwise be required by this
Paragraph (4).

     No provision contained in this Paragraph (4) is intended or shall be
construed to relieve the corporation from compliance with any applicable
statutory provision requiring the vote or consent of the holders of a greater
number of the outstanding shares of the Preferred Stock.

     (5) So long as any shares of the Preferred Stock shall be outstanding, the
corporation shall not, without the affirmative vote or consent of the record
holders of a majority of the total number of shares of the Preferred Stock (of
all series) at the time outstanding:

          (a) merge or consolidate with or into any other corporation or
     corporations, or sell or otherwise dispose of all or substantially all of
     the assets of the corporation, unless such merger, consolidation, sale or
     other disposition, or the exchange, issuance or assumption of all
     securities to be exchanged, issued or assumed in connection with any such
     merger, consolidation, sale or other disposition, shall have been ordered,
     approved or permitted by the Securities and Exchange Commission or any
     successor commission under the Public Utility Holding Company Act of 1935;
     PROVIDED that the provisions of this subparagraph (a) shall not apply to
     the purchase or other acquisition by the corporation of the franchises or
     assets of another corporation in any manner not involving a statutory
     merger or consolidation; or

          (b) issue any shares of the Preferred Stock, including the reissuance
     of any shares thereof reacquired by the corporation, or shares of any other
     stock ranking on a parity with the Preferred Stock as to dividends or
     assets, for any purpose OTHER THAN [in exchange for or to effect the
     redemption or other retirement of not less than] an equal par amount or
     stated value of the Preferred Stock or of stock ranking prior to or on a
     parity with the Preferred Stock as to dividends or assets at the time
     outstanding, UNLESS (1) the gross income of the corporation (after
     deducting all taxes, including taxes based on income, and determined as
     hereinafter provided) for twelve consecutive calendar months ending within
     the fifteen calendar months immediately preceding the issuance of the
     shares to be issued shall have been at least one and one-half times the sum
     of (i) the annual interest charge on all indebtedness of the corporation
     which will be outstanding immediately after the issuance of the shares to
     be issued and (ii) the annual dividend requirement on all shares of the
     Preferred Stock and of any other stock ranking prior to or on a parity with
     the Preferred Stock as to dividends or assets (including the shares to be
     issued) which will be outstanding immediately after the issuance of the
     shares to be issued; AND (2) the common stock equity of the corporation,
     computed as provided in Paragraph (6) hereof, shall be not less than the
     aggregate amount payable in the event of the involuntary liquidation,
     dissolution or winding up of the corporation in respect of all shares of
     the Preferred Stock and of any other stock ranking prior to or on a parity
     with the Preferred Stock as to dividends or assets which will be
     outstanding immediately after the issuance of the shares to be issued.

     Gross income shall be determined in accordance with such system of accounts
as may be prescribed by regulatory authorities having jurisdiction in the
premises or, in the absence of any such system of accounts, in accordance with
generally accepted accounting principles, provided that in computing gross
income of the corporation for the purposes of subparagraph (b) of this Paragraph
(5), (i) in the event any additional property or assets are to be acquired by
the corporation by the issuance, or the application of any of the proceeds from
the issuance, of any shares of the Preferred Stock or of stock ranking on a
parity with or junior to the Preferred Stock as to dividends or assets, to be
then issued, the gross income of the property or assets to be so acquired
(computed on the same basis as the gross income of the corporation as herein
provided and for the same period) may be included, on a pro forma basis, in
making such computation of gross income of the corporation, and (ii) the amounts
to be deducted from gross income as charges for depreciation, retirements,
renewals and replacements and/or amortization shall not be less in the aggregate
than an amount equal to 9% (or such other percentage as may upon application by
the corporation be approved by the Securities and Exchange Commission, or any
successor authority, under the Public Utility Holding Company Act of 1935) of
the arithmetical average of the amount of depreciable property of the
corporation at the beginning and the amount thereof at the end, of such 12-month
period, in plant accounts of the corporation, with respect to which bonds may at
the time be authenticated under any indenture securing first mortgage bonds of
the corporation, determined in accordance with generally accepted principles of
accounting, and provided that amounts included in plant acquisition adjustment
account, or accounts of similar purpose, shall not be included in the amount of
such property if adequate provision for the amortization of such amounts is made
by current charges to income or surplus. In computing the annual interest charge
and the annual dividend requirement referred to in said subparagraph (b), there
shall be excluded the interest charges and dividend requirements on all
indebtedness and shares of stock, respectively, which are to be redeemed or
otherwise retired by the issuance, or the application of any of the proceeds
from the issuance, of any shares of the Preferred Stock or of stock ranking
prior to or on a parity with the Preferred Stock at to dividends or assets, then
to be issued.

     If for the purpose of meeting the requirements of clause (2) of
subparagraph (b) of this Paragraph (5), it shall have been necessary to take
into consideration any earned surplus of the corporation, the corporation shall
not thereafter pay any dividends on common stock (as defined in Paragraph (6) of
this Article Fourth) in an amount which would result in reducing the common
stock equity of the corporation, as defined in said Paragraph (6), to an amount
less than the aggregate amount payable in the event of the involuntary
liquidation, dissolution or winding up of the corporation in respect of all
shares of the Preferred Stock and of stock ranking prior to or on a parity with
the Preferred Stock as to dividends or assets at the time outstanding.

     No vote or consent of the holders of the Preferred Stock shall be required
in respect of any transaction enumerated in this Paragraph (5) if, at or prior
to the time when such transaction is to take effect, provision is made for the
redemption or other retirement of all outstanding shares of the Preferred Stock
the vote or consent of which would otherwise be required by this Paragraph (5).

     No provision contained in this Paragraph (5) is intended or shall be
construed to relieve the corporation from compliance with any applicable
statutory provision requiring the vote or consent of the holders of a greater
number of the outstanding shares of the Preferred Stock.

     (6) So long as any shares of the Preferred Stock shall be outstanding, the
corporation shall not declare or pay any dividends on common stock of the
corporation (as herein defined) EXCEPT AS FOLLOWS:

          (a) if and so long as the common stock equity (as herein defined) of
     the corporation on the last day of a calendar month immediately preceding
     the date on which a dividend on common stock is proposed to be declared is,
     or as a result of the payment of such dividend would become, less than 20%
     of total capitalization of the corporation (as herein defined), the
     corporation shall not (except as hereinafter provided) declare any such
     dividend in an amount which, together with all other dividends on common
     stock paid within the year ending with and including the date on which such
     dividend is proposed to be payable, exceeds 50% of the net income of the
     corporation available for dividends on common stock (determined as herein
     provided) for twelve consecutive calendar months ending on the last day of
     the calendar month immediately preceding the month in which such dividend
     is proposed to be declared; PROVIDED that if any dividends (or additional
     dividends) on common stock could have been declared under the foregoing
     limitation in any previous year or years, but were not declared, then such
     dividend proposed to be paid may exceed 50% of the above specified net
     income of the corporation by a total amount equal to the aggregate amount
     of all dividends on common stock that could have been so declared but were
     not declared; and

          (b) if and so long as the common stock equity on the last day of a
     calendar month immediately preceding the date on which a dividend on common
     stock is proposed to be declared is, or as a result of the payment of such
     dividend would become, less than 25% but not less than 20% of total
     capitalization, the corporation shall not (except as hereinafter provided)
     declare any such dividend in an amount which, together with all other
     dividends on common stock paid within the year ending with and including
     the date on which such dividend is proposed to be payable, exceeds 75% of
     the net income of the corporation available for dividends on common stock
     for twelve consecutive calendar months ending on the last day of the
     calendar month immediately preceding the month in which such dividend is
     proposed to be declared; PROVIDED that if any dividends (or additional
     dividends) on common stock could have been declared under the foregoing
     limitation of this paragraph in any previous year or years, but were not
     declared, then such dividend proposed to be paid may exceed 75% of the
     above specified net income of the corporation by a total amount equal to
     the aggregate amount of all dividends on common stock that could have been
     so declared but were not declared; and

          (c) at any time when the common stock equity is 25% or more of total
     capitalization, the corporation shall not declare dividends on common stock
     which would reduce the common stock equity below 25% of total
     capitalization, EXCEPT to the extent provided or permitted in subparagraphs
     (a) and (b) above.

     "Dividends on common stock" of the corporation shall mean and include all
dividends on common stock (other than dividends payable solely in shares of
Common Stock or applied by the recipient to the purchase from the corporation of
shares of its Common Stock), distributions on, and purchases or other
acquisitions for value of, shares of Common Stock of the corporation or other
stock of the corporation, if any, ranking junior to the Preferred Stock as to
dividends or assets.

     "Common stock equity" of the corporation shall mean the aggregate of (a)
the par value of, or stated capital represented by, the outstanding shares of
all stock of the corporation ranking junior to the Preferred Stock as to
dividends or assets, and all premiums in respect of such junior ranking stock,
as carried on the books of the corporation, and (b) the amount of all surplus
accounts of the corporation, after deducting from such aggregate (1) the excess,
if any, of the aggregate amount payable in the event of the involuntary
liquidation, dissolution or winding up of the corporation in respect of all
outstanding shares of stock of the corporation ranking prior to the Common Stock
as to dividends or assets, over the aggregate par value of, or stated capital
represented by, such outstanding shares of prior ranking stock and any premiums
thereon, (2) any amounts recorded on the books of the corporation (estimated, if
not known) for used or useful utility plant and other property in excess of the
original cost of such plant or property, (3) any intangible items (such as
unamortized debt discount and expense, capital stock discount and expense) set
forth on the asset side of the balance sheet of the corporation as a result of
accounting convention, (4) the excess, if any, for the period from February 1,
1940, to December 31, 1976, of an amount equal to 15% of the gross operating
revenues derived by the corporation from the operation of its properties for
such period (after excluding or deducting from such revenues all non-operating
income, revenues derived directly from properties leased to the corporation, and
the aggregate cost of electric energy and gas purchased for exchange or resale),
over the aggregate amount charged or provided by the corporation on its books
for maintenance, repairs and depreciation of property for such period; provided
that no deduction shall be made or be required to be made for or in respect of
any items or amounts referred to in clauses (2) and (3) of this paragraph in the
event such items or amounts are being amortized or are provided for, or are
being provided for, by reserves, and (5) the excess, if any, for the period
beginning January 1, 1977, to the end of a month ending within ninety days next
preceding the date as of which common stock equity is being determined, of an
aggregate amount equal to 2.9% annually (or such other percentage as may upon
application by the corporation be approved by the Securities and Exchange
Commission, or any successor authority, under the Public Utility Holding Company
Act of 1935) of the arithmetical average of the amount of depreciable property
of the corporation at the beginning, and the amount thereof at the end, of each
calendar year and portion thereof contained in such period, in plant accounts of
the corporation, with respect to which bonds may at the time be authenticated
under any indenture securing first mortgage bonds of the corporation, determined
in accordance with generally accepted principles of accounting (excluding
amounts included in plant acquisition adjustment account, or accounts of similar
purpose, if adequate provision for the amortization of such amounts is made by
current charges to income or surplus), over the aggregate amount charged or
provided by the corporation on its books as charges for depreciation,
retirements, renewals and replacements and/or amortization for such period.

     "Total capitalization" of the corporation shall mean the aggregate of (i)
the principal amount of all outstanding bonds, debentures, notes and other
securities representing indebtedness (whether secured or unsecured) of the
corporation maturing more than twelve months after the date as of which total
capitalization is being determined, and (ii) the par value of, or stated capital
represented by, the outstanding shares of the capital stock of all classes of
the corporation, all premiums in respect of such stock, as carried on the books
of the corporation, and the amount of all surplus accounts of the corporation,
AFTER DEDUCTING from such aggregate any amounts required to be deducted, in the
determination of common stock equity, pursuant to the provisions of clauses (2)
and (3) of the foregoing definition of "common stock equity."

     "Net income of the corporation available for dividends on common stock"
shall be determined by deducting from the sum of the total operating revenues
and other income of the corporation for any given period, all operating expenses
for such period (including maintenance, repairs and depreciation, taxes based on
income and all other taxes, all proper accruals, interest charges, amortization
charges, other proper income deductions and dividends paid or accrued on
outstanding shares of stock of the corporation ranking prior to the Common Stock
as to dividends, for such period), all as determined in accordance with such
system of accounts as may be prescribed by regulatory authorities having
jurisdiction in the premises or, in the absence of any such system of accounts,
in accordance with generally accepted accounting principles.

     (7) The voting rights of the holders of shares of the Preferred Stock and
of the Common Stock of the corporation shall be as follows:

          (a) No holder of shares of the Preferred Stock shall be entitled to
     vote, at any meeting of stockholders of the corporation, for the election
     of directors or in respect of any other matter, EXCEPT as expressly
     provided in Paragraph (4) or (5) of this Article Fourth or in this
     Paragraph (7) AND EXCEPT as may be required by law. In such excepted cases,
     each record holder of outstanding shares of the Preferred Stock shall have
     one (1) vote for each share of the Preferred Stock held by him. Each record
     holder of outstanding shares of Common Stock shall, at all meetings of
     stockholders of the corporation, have one (1) vote for each share of Common
     Stock held by him, EXCEPT as otherwise provided in this Paragraph (7).

          (b) If and when dividends payable on the Preferred Stock shall be in
     default in an amount equivalent to four full quarter-yearly dividends or
     more per share on all shares of the Preferred Stock then outstanding, and
     thereafter until all dividends on such Preferred Stock in default shall
     have been paid, the record holders of the shares of the Preferred Stock,
     voting separately as one class, shall be entitled, at each meeting of the
     shareholders at which directors are elected, to elect the smallest number
     of directors necessary to constitute a majority of the full Board of
     Directors of the corporation, and EXCEPT as provided in the following
     subparagraph (c), the record holders of the shares of Common Stock, voting
     separately as a class, shall be entitled at any such meeting to elect the
     remaining directors of the corporation. The term of office of each director
     of the corporation shall terminate upon the election of his successor. At
     each election of directors by a class vote pursuant to the provisions of
     this paragraph, the class first electing the directors which it is entitled
     to elect shall name the directors who are to be succeeded by the directors
     then elected by such class, whereupon the term of office of the directors
     so named shall terminate. The term of office of the directors not so named
     shall terminate upon the election by the other class of the directors which
     it is entitled to elect.

          (c) If and when all dividends then in default on the Preferred Stock
     then outstanding shall be paid (and such dividends shall be paid, or
     declared and set apart for payment, out of any funds legally available
     therefor, as soon as reasonably practicable), the holders of the shares of
     the Preferred Stock shall thereupon be divested of the special right with
     respect to the election of directors provided for in subparagraph (b) of
     this Paragraph (7), and the voting power of the holders of the shares of
     the Preferred Stock and the Common Stock shall revert to the status
     existing before the first dividend payment date on which dividends on the
     Preferred Stock were not paid in full, but always subject to the same
     provisions for vesting such special rights in the record holders of shares
     of the Preferred Stock in case of further like default or defaults in the
     payment of dividends thereon as described in said subparagraph (b).
     Dividends shall be deemed to have been paid, as that term is used in this
     subparagraph (c), whenever such dividends shall have been declared and
     paid, or declared and provision made for the payment thereof, or whenever
     there shall be (i) funds available for the payment thereof and (ii)
     sufficient surplus or net profits of the corporation legally available for
     the payment thereof which shall have accrued since the date of the default
     giving rise to such special voting right; and thereupon the holders of a
     majority of the shares of the Common Stock shall have the right to elect
     directors to succeed those elected by the holders of the Preferred Stock,
     PROVIDED that in the event all dividends in default on the Preferred Stock
     at the time of the election of such successor directors shall not actually
     be paid or declared and set apart for payment within thirty days after such
     election, such successor directors so elected shall resign forthwith and
     the directors elected by the holders of the shares of the Preferred Stock
     shall forthwith be reelected to fill the vacancies so created and shall
     assume office as directors.

          (d) In case of any vacancy in the Board of Directors occurring among
     the directors elected by the holders of the shares of the Preferred Stock,
     voting separately as a class, pursuant to subparagraph (b) of this
     Paragraph (7), the remaining directors elected by such holders, by the
     affirmative vote of a majority thereof, or the remaining director so
     elected if there be but one, may elect a successor or successors to hold
     office for the unexpired term or terms of the director or directors whose
     place or places shall be vacant. Likewise, in case of any vacancy in the
     Board of Directors occurring among the directors elected by the holders of
     the shares of the Common Stock, voting separately as a class, pursuant to
     subparagraph (b) of this Paragraph (7), the remaining directors elected by
     such holders, by the affirmative vote of a majority thereof, or the
     remaining director so elected if there be but one, may elect a successor or
     successors to hold office for the unexpired term or terms of the director
     or directors whose place or places shall be vacant.

          (e) Whenever the right shall have accrued to the holders of the shares
     of the Preferred Stock, voting separately as a class, to elect directors,
     pursuant to subparagraph (b) of this Paragraph (7), it shall be the duty of
     the President, a Vice President or the Secretary of the corporation
     forthwith to call and cause notice to be given to the stockholders of the
     corporation entitled to vote of a meeting to be held, at such time as the
     officers of the corporation may fix, for the purpose of electing directors,
     provided that such meeting shall be held not less than 45 days, nor more
     than 90 days, after the accrual of such right to elect directors. At all
     meetings of stockholders at which directors are elected during such times
     as the holders of shares of the Preferred Stock shall have the special
     right, voting separately as a class, to elect directors pursuant to
     subparagraph (b) of this Paragraph (7), the presence in person or by proxy
     of the holders of a majority of the outstanding shares of the Common Stock
     shall be required to constitute a quorum of such class for the election of
     directors, and, except as hereinafter stated, the presence in person or by
     proxy of the holders of a majority of the outstanding shares of all series
     of the Preferred Stock shall be required to constitute a quorum of such
     class for the election of directors; PROVIDED, HOWEVER, that (i) the
     absence of a quorum of the holders of stock of either such class shall not
     prevent the election at any such meeting, or adjournment thereof, of
     directors by the other such class if the necessary quorum of the holders of
     stock of such class is present in person or by proxy at such meeting, and
     (ii) in the absence of a quorum of the holders of stock of either such
     class, a majority of those holders of the stock of such class who are
     present in person or by proxy shall have power to adjourn the election of
     the directors to be elected by such class, and (iii) at any such adjourned
     meeting, the presence in person or by proxy of the holders of not less than
     35% of the outstanding shares of the Preferred Stock shall constitute a
     quorum of the Preferred Stock for the election of directors by such class,
     and (iv) if at any such adjourned meeting the holders of at least 35% of
     the outstanding shares of the Preferred Stock shall not be present in
     person or by proxy, the directors to be elected by such class shall be
     elected by vote of the holders of not less than a majority of the
     outstanding shares of Common Stock. Not less than thirty days' notice in
     writing of any such adjourned meeting shall, upon request, be given by the
     Company at its expense to the record holders of such class or classes.

          (f) In consideration of the issue, sale or delivery by the
     corporation, and the purchase or other acquisition by the holders thereof,
     of shares of the capital stock (both preferred and common) of the
     corporation, each and every present and future holder of shares of the
     capital stock (both preferred and common) of the corporation shall be
     conclusively deemed, by purchasing, acquiring or holding such shares, to
     have expressly consented to all and singular the terms and provisions of
     this Paragraph (7) and to have agreed that the voting rights of such
     holder, and the restrictions and qualifications thereof, shall be as set
     forth in this Paragraph (7).

          (g) Except when some mandatory provision of law shall be controlling
     and except as otherwise provided in Paragraph (4) of this Article Fourth,
     no particular series of the Preferred Stock shall be entitled to vote as a
     separate series or class on any matter and all shares of the Preferred
     Stock of all series shall be deemed to constitute but one class for any
     purpose for which a vote of the stockholders of the corporation by classes
     may now or hereafter be required.

     (8) The rights of the holders of shares of the Preferred Stock shall not be
deemed to be adversely affected by any increase in the number of authorized or
outstanding shares of Common Stock, or the creation and issue of shares of any
class of stock subordinate in all respects to the rights of the Preferred Stock.

     (9) No share of stock or evidence of indebtedness shall be deemed to be
"outstanding," as that term is used in this Certificate of Incorporation (as
amended), if prior to or concurrently with the event in reference to which a
determination as to the amount thereof outstanding is to be made, the requisite
funds for the redemption, payment or other retirement thereof shall be deposited
in trust for that purpose and, in the case of redemption, the requisite notice
for the redemption thereof shall be given or the depositary of such funds shall
be irrevocably authorized and directed to give or complete such notice of
redemption.

     (10) No holder of shares of stock of any class of the corporation shall be
entitled, as a matter of right, to subscribe for, purchase or receive any shares
of stock of any class of the corporation, or any rights or options of the
corporation which it may issue or sell, whether out of the number of shares now
authorized or hereafter authorized. Nor shall any holder of shares of stock of
any class of the corporation be entitled, as a matter of right, to subscribe
for, purchase or receive any shares of stock or bonds, debentures or other
obligations which the corporation may issue or sell, which shall be convertible
into or exchangeable for stock of any class of the corporation, or to which
shall be attached or appertain any warrant or warrants (or other instrument or
instruments) which shall confer upon the holder or owner the right to subscribe
for or purchase from the corporation any shares of its capital stock of any
class; and all such additional issues of shares of stock of any class, or of
rights or options, or of bonds, debentures or other obligations convertible into
or exchangeable for stock or to which such warrants or other instruments shall
be attached or appertain, may be issued and disposed of as determined by the
Board of Directors to such persons (whether stockholders or not), at such times,
for such consideration and upon such terms, permitted by the laws of Delaware,
as the Board of Directors in its absolute discretion may deem advisable.

     (11) The corporation reserves the right to increase or decrease its
authorized capital stock or any class thereof, or any series of any such class,
or to reclassify the same, and to amend, alter, change or repeal any provision
contained in the Certificate of Incorporation (as amended) of the corporation,
or in this amendment or any future amendment to said Certificate, in the manner
now or hereafter prescribed by law, BUT SUBJECT to such conditions and
limitations as are hereinbefore prescribed; and all rights granted to or
conferred upon stockholders in the Certificate of Incorporation (as amended) of
the corporation, or in this amendment or any future amendment to said
Certificate, are granted and conferred subject to this reservation.

     (12) Neither a consolidation or merger of the corporation with or into any
other corporation, nor a merger of any other corporation into the corporation,
nor the purchase or other acquisition, redemption or other retirement by the
corporation of all or any part of the outstanding shares of its Preferred Stock
of any class, shall be deemed to be a distribution of assets, or a liquidation,
dissolution or winding up, of the corporation within the meaning of any of the
provisions of the Certificate of Incorporation (as amended) of the corporation,
as then in effect.

     (13) The amount of capital stock with which the corporation will commence
business is the sum of Five Thousand Dollars ($5,000.00), being Fifty (50)
shares of the Common Stock of the corporation.

     FIFTH.  The corporation is to have perpetual existence.

     SIXTH.  The private property of the stockholders shall not
be subject to the payment of corporate debts to any extent
whatever.

     SEVENTH. The number of Directors of the corporation shall be fixed from
time to time by the By-laws, and such number may be increased or decreased in
such manner as may be provided in the By-laws. In case of any increase in the
number of Directors, the additional Directors shall be elected, as may be
provided by the By-laws, by the Directors then in office, or by the stockholders
at an annual or special meeting. In case of any vacancy in the Board of
Directors through death, resignation, disqualification or other cause, the
remaining Directors may elect a successor to hold office for the unexpired
portion of the term of the Director whose place shall be vacant, and until the
election of his successor.

     Subject always to By-laws made by the stockholders the Board of Directors
may make By-laws from time to time, and may alter, amend or repeal such By-laws,
but any By-laws made by the Board of Directors may be altered, amended or
repealed by the stockholders, at any annual meeting, or at any special meeting,
provided notice of such proposed alteration, amendment or repeal shall have been
included in the notice of such special meeting.

     With the consent of the holders of two-thirds in amount of each class of
stock of the corporation at the time outstanding, such consent being expressed
in writing or by a vote at any special meeting called for such purpose, the
Directors shall have authority to dispose, in any manner, of the whole property
of the corporation, including the franchises and good will thereof, and to
receive any form of consideration therefor, including bonds, debentures or
obligations of, or shares of stock in, any corporation, or any other or
different form of consideration.

     The Board of Directors shall have power to fix and to determine, and to
vary, the amount of the working capital of the Company, and to direct and
determine the use and disposition of any surplus or net profits over and above
the capital stock paid in; and to determine the date or dates for the
declaration and payment of dividends.

     The Board of Directors, by the affirmative vote of a majority of the whole
Board, may appoint from the Directors an Executive Committee, of which a
majority shall constitute a quorum, and, to such extent as shall be provided in
the By-laws or in the resolution appointing them, such Committee shall have and
may exercise all or any of the powers of the Board of Directors, including the
power to cause the seal of the corporation to be affixed to all papers that may
require it. The Board of Directors, by the affirmative vote of a majority of the
whole Board, may appoint any other standing committees, and such standing
committees shall have and may exercise such powers as shall be authorized by the
By-laws or by the resolution appointing them. The Board of Directors may appoint
not only other officers of the Company, but also one or more Vice Presidents,
one or more Assistant Treasurers and one or more Assistant Secretaries, and, to
the extent provided in the By-laws or in the resolution appointing them, the
persons so appointed, respectively, shall have and may exercise all the powers
of the President, Secretary and Treasurer, respectively. Any officer elected or
appointed by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the whole Board. Any other officer or employee
of the Company may be removed at any time by vote of the Board of Directors, or
by any committee or superior officer upon whom such power of removal may be
conferred by the By-laws or by resolution of the Board.

     Subject to the provisions of the statute under which this corporation is
organized, the corporation may keep its books outside of the state.

     The Board of Directors shall have power from time to time to determine
whether, and to what extent, and at what times and places, and under what
conditions and regulations, the accounts and books of the corporation (other
than the stock ledger) or any of them, shall be open to the inspection of the
stockholders, and no stockholder shall have any right to inspect any account or
book or document of the corporation, except as conferred by statute, or
authorized by the Directors, or by a resolution of the stockholders.

     It is the intention that the objects, purposes and powers specified in
Section numbered "THIRD" hereof shall, except where otherwise specified in said
Section, be in nowise limited or restricted by reference to or inference from
the terms of any other section or paragraph in this Restated Certificate, but
that the objects, purposes and powers specified in said Section numbered
"THIRD", and in each of the clauses or paragraphs in this Charter or Restated
Certificate, shall be regarded as independent objects, purposes and powers.







                            CERTIFICATE OF AMENDMENT
                                       TO
                      RESTATED CERTIFICATE OF INCORPORATION
                                       OF
                       SOUTHWESTERN ELECTRIC POWER COMPANY

              Southwestern Electric Power Company, a Delaware corporation (the
"corporation"), certifies as follows:

              1. In accordance with the provisions of Section 242 of Title 8 of
the Delaware Code, the Board of Directors and the Preferred and Common
Stockholders of the corporation have duly adopted the following amendments to
the corporation's Restated Certificate of Incorporation, as heretofore amended
(the "Certificate"):

              2.     Paragraph (5), subsection (b), of Article "Fourth" of the
Certificate is further amended to read as follows:

              "(b) issue any shares of the Preferred Stock, including the
       reissuance of any shares thereof reacquired by the corporation, or shares
       of any other stock ranking on a parity with the Preferred Stock as to
       dividends or assets, for any purpose OTHER THAN [in exchange for or to
       effect the redemption or other retirement of not less than] an equal par
       amount or stated value of the Preferred Stock or of stock ranking prior
       to or on a parity with the Preferred Stock as to dividends or assets at
       the time outstanding, UNLESS (1) the gross income of the corporation
       (after deducting all taxes, including taxes based on income, and
       determined as hereinafter provided) for twelve consecutive calendar
       months ending within the fifteen calendar months immediately preceding
       the issuance of the shares to be issued shall have been at least one and
       one-half times the sum of (i) the annual interest charge on all
       indebtedness of the corporation which will be outstanding immediately
       after the issuance of the shares to be issued and (ii) the annual
       dividend requirement on all shares of the Preferred Stock and of any
       other stock ranking prior to or on a parity with the Preferred Stock as
       to dividends or assets (including the shares to be issued) which will be
       outstanding immediately after the issuance of the shares to be issued;
       AND (2) the common stock equity of the corporation, computed as provided
       in Paragraph (6) hereof, shall be not less than the aggregate amount
       payable in the event of the involuntary liquidation, dissolution or
       winding up of the corporation in respect of all shares of the Preferred
       Stock and of any other stock ranking prior to or on a parity with the
       Preferred Stock as to dividends or assets which will be outstanding
       immediately after the issuance of the shares to be issued."

              3.     Paragraph 5, subsection (c), of Article "Fourth" of the 
Certificate is further amended by deleting Paragraph 5, subsection (c) in its 
entirety.

              IN WITNESS WHEREOF, Southwestern Electric Power Company has caused
this Certificate of Amendment to be signed by Michael D. Smith, its President,
and its corporate seal to be hereunto affixed and attested by Marilyn S.
Kirkland, its Secretary, this 2nd day of May, 1997.


                                  SOUTHWESTERN ELECTRIC POWER COMPANY



                                  By /S/ MICHAEL D. SMITH
                                           President


(CORPORATE SEAL)

ATTEST:



 /S/ MARILYN S. KIRKLAND
       Secretary