THE CONSOLIDATED 10-Q FOR AMERICAN ELECTRIC POWER CO., INC. AND
SUBSIDIARIES IS REQUESTED TO BE INCLUDED AS PART OF THE FILING.

<PAGE>
<TABLE>
                     SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D.C.  20549
                                 FORM 10-Q

            [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                   OF THE SECURITIES EXCHANGE ACT OF 1934

             For The Quarterly Period Ended SEPTEMBER 30, 1997

           [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                   OF THE SECURITIES EXCHANGE ACT OF 1934

            For The Transition Period from          to         

Commission           Registrant; State of Incorporation;                I. R. S. Employer
File Number           Address; and Telephone Number                     Identification No.
 <S>          <C>                                                            <C>
  1-3525      AMERICAN ELECTRIC POWER COMPANY, INC.                          13-4922640
              (A New York Corporation)
              1 Riverside Plaza, Columbus, Ohio  43215
              Telephone (614) 223-1000

  0-18135     AEP GENERATING COMPANY (An Ohio Corporation)                   31-1033833
              1 Riverside Plaza, Columbus, Ohio  43215
              Telephone (614) 223-1000

  1-3457      APPALACHIAN POWER COMPANY (A Virginia Corporation)             54-0124790
              40 Franklin Road, Roanoke, Virginia  24011
              Telephone (540) 985-2300

  1-2680      COLUMBUS SOUTHERN POWER COMPANY (An Ohio Corporation)          31-4154203
              215 North Front Street, Columbus, Ohio  43215
              Telephone (614) 464-7700

  1-3570      INDIANA MICHIGAN POWER COMPANY (An Indiana Corporation)        35-0410455
              One Summit Square
              P.O. Box 60, Fort Wayne, Indiana  46801
              Telephone (219) 425-2111

  1-6858      KENTUCKY POWER COMPANY (A Kentucky Corporation)                61-0247775
              1701 Central Avenue, Ashland, Kentucky  41101
              Telephone (800) 572-1141

  1-6543      OHIO POWER COMPANY (An Ohio Corporation)                       31-4271000
              301 Cleveland Avenue S.W., Canton, Ohio  44702
              Telephone (330) 456-8173

AEP Generating Company, Columbus Southern Power Company and Kentucky Power Company meet
the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and are
therefore filing this Form 10-Q with the reduced disclosure format specified in General
Instruction H(2) to Form 10-Q.

Indicate by check mark whether the registrants (1) have filed all reports required to
be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrants were required to
file such reports), and (2) have been subject to such filing requirements for the past
90 days.                                                                             
                                                            Yes   X          No      

The number of shares outstanding of American Electric Power Company, Inc. Common Stock,
par value $6.50, at October 31, 1997 was 189,611,006.
/TABLE
<PAGE>
<PAGE>
<TABLE>
    AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES

                               FORM 10-Q

               For The Quarter Ended September 30, 1997
<CAPTION>
                                 INDEX

                                                                          Page
Part I.  FINANCIAL INFORMATION
           <S>                                                            <C>
           American Electric Power Company, Inc. and Subsidiary Companies:
             Consolidated Statements of Income. . . . . . . . . . . . . . A-1
             Consolidated Balance Sheets. . . . . . . . . . . . . . . . . A-2 - A-3
             Consolidated Statements of Cash Flows. . . . . . . . . . . . A-4
             Consolidated Statements of Retained Earnings . . . . . . . . A-5
             Notes to Consolidated Financial Statements . . . . . . . . . A-6 - A-8
             Management's Discussion and Analysis of Results of
               Operations and Financial Condition . . . . . . . . . . . . A-9 - A-12

           AEP Generating Company:
             Statements of Income and Statements of Retained Earnings . . B-1
             Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . B-2 - B-3
             Statements of Cash Flows . . . . . . . . . . . . . . . . . . B-4
             Notes to Financial Statements. . . . . . . . . . . . . . . . B-5
             Management's Narrative Analysis of Results of Operations . . B-6 - B-7

           Appalachian Power Company and Subsidiaries:
             Consolidated Statements of Income and
               Consolidated Statements of Retained Earnings . . . . . . . C-1
             Consolidated Balance Sheets. . . . . . . . . . . . . . . . . C-2 - C-3
             Consolidated Statements of Cash Flows. . . . . . . . . . . . C-4
             Notes to Consolidated Financial Statements . . . . . . . . . C-5 - C-7
             Management's Discussion and Analysis of Results of
               Operations and Financial Condition . . . . . . . . . . . . C-8 - C-10

           Columbus Southern Power Company and Subsidiaries:
             Consolidated Statements of Income and
               Consolidated Statements of Retained Earnings . . . . . . . D-1
             Consolidated Balance Sheets. . . . . . . . . . . . . . . . . D-2 - D-3
             Consolidated Statements of Cash Flows. . . . . . . . . . . . D-4
             Notes to Consolidated Financial Statements . . . . . . . . . D-5 - D-6
             Management's Narrative Analysis of Results of Operations . . D-7 - D-9

           Indiana Michigan Power Company and Subsidiaries:
             Consolidated Statements of Income and
               Consolidated Statements of Retained Earnings . . . . . . . E-1
             Consolidated Balance Sheets. . . . . . . . . . . . . . . . . E-2 - E-3
             Consolidated Statements of Cash Flows. . . . . . . . . . . . E-4
             Notes to Consolidated Financial Statements . . . . . . . . . E-5 - E-7
             Management's Discussion and Analysis of Results of
               Operations and Financial Condition . . . . . . . . . . . . E-8 - E-10

           Kentucky Power Company:
             Statements of Income and Statements of Retained Earnings . . F-1
             Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . F-2 - F-3
             Statements of Cash Flows . . . . . . . . . . . . . . . . . . F-4
             Notes to Financial Statements. . . . . . . . . . . . . . . . F-5 - F-6
             Management's Narrative Analysis of Results of Operations . . F-7 - F-8


<PAGE>
                                    AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES

                                        FORM 10-Q

                                    For The Quarter Ended September 30, 1997

                                          INDEX

                                                                        Page
           Ohio Power Company and Subsidiaries:
             Consolidated Statements of Income and
               Consolidated Statements of Retained Earnings . . . . . . G-1
             Consolidated Balance Sheets. . . . . . . . . . . . . . . . G-2 - G-3
             Consolidated Statements of Cash Flows. . . . . . . . . . . G-4
             Notes to Consolidated Financial Statements . . . . . . . . G-5 - G-6
             Management's Discussion and Analysis of Results of 
               Operations and Financial Condition . . . . . . . . . . . G-7 - G-10


Part II. OTHER INFORMATION

           Item 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
           Item 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2

SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-3

                                                                                   


   This combined Form 10-Q is separately filed by American Electric Power Company,
Inc., AEP Generating Company, Appalachian Power Company, Columbus Southern Power
Company, Indiana Michigan Power Company, Kentucky Power Company and Ohio Power Company. 
Information contained herein relating to any individual registrant is filed by such
registrant on its own behalf.  Each registrant makes no representation as to
information relating to the other registrants.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
      AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
                     CONSOLIDATED STATEMENTS OF INCOME
                 (in thousands, except per-share amounts)
                                (UNAUDITED)
<CAPTION>
                                           Three Months Ended       Nine Months Ended
                                              September 30,           September 30,    
                                            1997        1996        1997        1996
<S>                                      <C>         <C>         <C>         <C>
OPERATING REVENUES . . . . . . . . . . . $1,583,994  $1,484,422  $4,458,221  $4,403,144

OPERATING EXPENSES:
  Fuel and Purchased Power . . . . . . .    522,776     416,470   1,349,351   1,262,361
  Other Operation. . . . . . . . . . . .    302,307     299,496     904,892     903,927
  Maintenance. . . . . . . . . . . . . .    123,781     129,140     347,894     373,606
  Depreciation and Amortization. . . . .    144,342     151,809     447,843     450,337
  Taxes Other Than Federal Income Taxes.    123,943     128,155     372,723     376,771
  Federal Income Taxes . . . . . . . . .     91,755      99,607     267,195     263,650

          TOTAL OPERATING EXPENSES . . .  1,308,904   1,224,677   3,689,898   3,630,652

OPERATING INCOME . . . . . . . . . . . .    275,090     259,745     768,323     772,492

NONOPERATING INCOME. . . . . . . . . . .     32,835       3,655      43,030       3,558

INCOME BEFORE INTEREST CHARGES AND
  PREFERRED DIVIDENDS. . . . . . . . . .    307,925     263,400     811,353     776,050

INTEREST CHARGES . . . . . . . . . . . .    103,378      90,878     300,851     289,266

PREFERRED STOCK DIVIDEND REQUIREMENTS
  OF SUBSIDIARIES. . . . . . . . . . . .      2,801      10,198      15,056      31,782

INCOME BEFORE EXTRAORDINARY ITEM . . . .    201,746     162,324     495,446     455,002

EXTRAORDINARY LOSS - U. K. WINDFALL TAX.   (110,565)       -       (110,565)       -   

NET INCOME . . . . . . . . . . . . . . . $   91,181  $  162,324  $  384,881  $  455,002

AVERAGE NUMBER OF SHARES OUTSTANDING . .    189,287     187,528     188,819     187,118

EARNINGS PER SHARE:

 Before Extraordinary Item . . . . . . .      $1.07       $0.87       $2.62       $2.43

 Extraordinary Loss - U. K. Windfall Tax      (0.59)        -         (0.58)        -  

 Net Income. . . . . . . . . . . . . . .      $0.48       $0.87       $2.04       $2.43

CASH DIVIDENDS PAID PER SHARE. . . . . .      $0.60       $0.60       $1.80       $1.80

See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
      AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
                        CONSOLIDATED BALANCE SHEETS
                                (UNAUDITED)
<CAPTION>
                                                          September 30,   December 31,
                                                               1997           1996    
                                                                 (in thousands)
ASSETS
<S>                                                        <C>            <C>
ELECTRIC UTILITY PLANT:
  Production . . . . . . . . . . . . . . . . . . . . .     $ 9,424,789    $ 9,341,849
  Transmission . . . . . . . . . . . . . . . . . . . .       3,417,136      3,380,258
  Distribution . . . . . . . . . . . . . . . . . . . .       4,551,816      4,402,449
  General (including mining assets and nuclear fuel) .       1,549,018      1,491,781
  Construction Work in Progress. . . . . . . . . . . .         419,754        353,832
          Total Electric Utility Plant . . . . . . . .      19,362,513     18,970,169
  Accumulated Depreciation and Amortization. . . . . .       7,860,161      7,549,798


          NET ELECTRIC UTILITY PLANT . . . . . . . . .      11,502,352     11,420,371




OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . .       1,313,845        892,674




CURRENT ASSETS:
  Cash and Cash Equivalents. . . . . . . . . . . . . .          91,767         57,539
  Accounts Receivable. . . . . . . . . . . . . . . . .         580,677        535,024
  Allowance for Uncollectible Accounts . . . . . . . .          (7,009)        (3,692)
  Fuel . . . . . . . . . . . . . . . . . . . . . . . .         236,716        235,257
  Materials and Supplies . . . . . . . . . . . . . . .         240,084        251,896
  Accrued Utility Revenues . . . . . . . . . . . . . .         149,402        174,966
  Prepayments. . . . . . . . . . . . . . . . . . . . .          87,443        103,891

          TOTAL CURRENT ASSETS . . . . . . . . . . . .       1,379,080      1,354,881



REGULATORY ASSETS. . . . . . . . . . . . . . . . . . .       1,838,720      1,889,482



DEFERRED CHARGES . . . . . . . . . . . . . . . . . . .         216,417        325,580


            TOTAL. . . . . . . . . . . . . . . . . . .     $16,250,414    $15,882,988

See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
      AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
                        CONSOLIDATED BALANCE SHEETS
                                (UNAUDITED)
<CAPTION>
                                                         September 30,    December 31,
                                                              1997            1996    
                                                                 (in thousands)
CAPITALIZATION AND LIABILITIES
<S>                                                       <C>             <C>
CAPITALIZATION:
  Common Stock-Par Value $6.50:
                                1997          1996
    Shares Authorized . . . .300,000,000   300,000,000
    Shares Issued . . . . . .198,610,998   197,234,992
    (8,999,992 shares were held in treasury) . . . . .    $ 1,290,971     $ 1,282,027
  Paid-in Capital. . . . . . . . . . . . . . . . . . .      1,762,296       1,715,554
  Retained Earnings. . . . . . . . . . . . . . . . . .      1,592,705       1,547,746
          Total Common Shareholders' Equity. . . . . .      4,645,972       4,545,327
  Cumulative Preferred Stocks of Subsidiaries:
    Not Subject to Mandatory Redemption. . . . . . . .         46,869          90,323
    Subject to Mandatory Redemption. . . . . . . . . .        127,605         509,900
  Long-term Debt . . . . . . . . . . . . . . . . . . .      5,122,382       4,796,768

          TOTAL CAPITALIZATION . . . . . . . . . . . .      9,942,828       9,942,318

OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . .      1,173,160       1,002,208

CURRENT LIABILITIES:
  Long-term Debt Due Within One Year . . . . . . . . .        219,422          86,942
  Short-term Debt. . . . . . . . . . . . . . . . . . .        507,750         319,695
  Accounts Payable . . . . . . . . . . . . . . . . . .        207,669         206,227
  Taxes Accrued. . . . . . . . . . . . . . . . . . . .        260,739         414,173
  Interest Accrued . . . . . . . . . . . . . . . . . .        112,043          75,124
  Obligations Under Capital Leases . . . . . . . . . .         95,609          89,553
  Other. . . . . . . . . . . . . . . . . . . . . . . .        358,942         304,323

          TOTAL CURRENT LIABILITIES. . . . . . . . . .      1,762,174       1,496,037

DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . .      2,573,150       2,643,143

DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . .        383,981         401,491

DEFERRED GAIN ON SALE AND LEASEBACK - 
  ROCKPORT PLANT UNIT 2. . . . . . . . . . . . . . . .        233,640         240,598

DEFERRED CREDITS . . . . . . . . . . . . . . . . . . .        181,481         157,193

COMMITMENTS AND CONTINGENCIES (Note 5)

            TOTAL. . . . . . . . . . . . . . . . . . .    $16,250,414     $15,882,988

See Notes to Consolidated Financial Statements.
</TABLE>

<PAGE>
<PAGE>
<TABLE>
      AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (UNAUDITED)
<CAPTION>
                                                                   Nine Months Ended
                                                                     September 30,      
                                                                 1997             1996
                                                                     (in thousands)
<S>                                                           <C>              <C>
OPERATING ACTIVITIES:
  Net Income . . . . . . . . . . . . . . . . . . . . . . . .  $ 384,881        $ 455,002
  Adjustments for Noncash Items:
    Depreciation and Amortization. . . . . . . . . . . . . .    455,494          442,205
    Deferred Federal Income Taxes. . . . . . . . . . . . . .    (35,566)         (14,126)
    Deferred Investment Tax Credits. . . . . . . . . . . . .    (17,510)         (17,643)
    Amortization of Deferred Property Taxes. . . . . . . . .    132,251          132,061
    Amortization of Operating Expenses and
      Carrying Charges (net) . . . . . . . . . . . . . . . .     24,356           38,226
    Extraordinary Loss - U.K. Windfall Tax . . . . . . . . .    110,565             -
  Changes in Certain Current Assets and Liabilities:
    Accounts Receivable (net). . . . . . . . . . . . . . . .    (42,336)         (33,281)
    Fuel, Materials and Supplies . . . . . . . . . . . . . .     10,353           20,644
    Accrued Utility Revenues . . . . . . . . . . . . . . . .     25,564           62,841
    Accounts Payable . . . . . . . . . . . . . . . . . . . .      1,442          (42,363)
    Taxes Accrued. . . . . . . . . . . . . . . . . . . . . .   (153,434)        (136,429)
    Interest Accrued . . . . . . . . . . . . . . . . . . . .     36,919           31,868
  Other (net). . . . . . . . . . . . . . . . . . . . . . . .     33,016           45,555 
        Net Cash Flows From Operating Activities . . . . . .    965,995          984,560

INVESTING ACTIVITIES:
  Construction Expenditures. . . . . . . . . . . . . . . . .   (496,155)        (355,878)
  Investment in Yorkshire Electricity Group plc. . . . . . .   (361,795)            -
  Proceeds from Sale of Property and Other . . . . . . . . .      2,492            8,825
        Net Cash Flows Used For Investing Activities . . . .   (855,458)        (347,053)

FINANCING ACTIVITIES:
  Issuance of Common Stock . . . . . . . . . . . . . . . . .     58,045           49,337
  Issuance of Long-term Debt . . . . . . . . . . . . . . . .    776,441          406,905
  Retirement of Cumulative Preferred Stock . . . . . . . . .   (433,234)         (39,966)
  Retirement of Long-term Debt . . . . . . . . . . . . . . .   (325,931)        (594,609)
  Change in Short-term Debt (net). . . . . . . . . . . . . .    188,055          (89,774)
  Dividends Paid on Common Stock . . . . . . . . . . . . . .   (339,685)        (336,651)
        Net Cash Flows Used For Financing Activities . . . .    (76,309)        (604,758)

Net Increase in Cash and Cash Equivalents. . . . . . . . . .     34,228           32,749 
Cash and Cash Equivalents at Beginning of Period . . . . . .     57,539           79,955
Cash and Cash Equivalents at End of Period . . . . . . . . .  $  91,767        $ 112,704

Supplemental Disclosure:
  Cash paid for interest net of  capitalized amounts  was $253,884,000  and $247,393,000
  and for income taxes was $290,682,000 and $278,050,000 in 1997 and 1996, respectively.
  Noncash  acquisitions  under  capital leases  were $171,947,000  and  $108,340,000  in
  1997 and 1996, respectively.

See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
      AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
               CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
                                (UNAUDITED)
<CAPTION>
                                           Three Months Ended       Nine Months Ended
                                              September 30,           September 30,    
                                            1997        1996        1997        1996
                                                         (in thousands)
<S>                                      <C>         <C>         <C>         <C>
BALANCE AT BEGINNING OF PERIOD . . . . . $1,615,039  $1,478,193  $1,547,746  $1,409,645

NET INCOME . . . . . . . . . . . . . . .     91,181     162,324     384,881     455,002

DEDUCTIONS:
  Cash Dividends Declared. . . . . . . .    113,515     112,463     339,685     336,651
  Other. . . . . . . . . . . . . . . . .       -              9         237         (49)

BALANCE AT END OF PERIOD . . . . . . . . $1,592,705  $1,528,045  $1,592,705  $1,528,045

See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
  AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         SEPTEMBER 30, 1997                     
                           (UNAUDITED)

1.   GENERAL

          The accompanying unaudited consolidated financial state-ments should
     be read in conjunction with the 1996 Annual
     Report as incorporated in and filed with the Form 10-K. 
     Certain prior-period amounts have been reclassified to
     conform to current-period presentation.

2.   FINANCING AND RELATED ACTIVITIES

          During the first nine months of 1997, the utility
     operating subsidiaries issued $422 million principal amount
     of long-term obligations: three series of first mortgage
     bonds totaling $144 million at 6.35%, 6.4% and 6.71% all due
     in 2000; $180 million of junior subordinated deferrable
     interest debentures at 7.92% and 8% due in 2027; one $48
     million unsecured note due 2004 at 6.73% and $50 million of
     financing obligations under a sale leaseback agreement.

          The proceeds were used during 1997 to redeem 4,257,490
     shares of cumulative preferred stock as detailed in the
     table below and to retire $243 million principal amount of
     long-term debt: $203 million of first mortgage bonds with
     interest rates ranging from 6-1/2% to 9.35% due from 1997 to
     2022; $20 million of variable rate installment purchase
     contracts due in 2025; and a $20 million term loan with an
     interest rate of 7.19% at maturity.

                     Number                            Total
                   of Shares                       Reacquisition
    Series          Retired        Price Range         Price    
                                                   (in thousands)

    4.08%-4.56%      434,540     $ 61.00-$ 69.94      $ 29,361
    5.90%-5.92%    1,515,900      101.83- 103.20       156,074
    6.02%-6-7/8%   1,307,050      103.71- 107.26       137,071
    7.80%-7-7/8%   1,000,000      105.20- 105.50       105,232
                                                      $427,738

          As a result of the redemption of the 6-1/2% series first
     mortgage bonds due in 1997, the restriction on the use of
     retained earnings for the payment of common stock dividends
     was reduced to $27 million.

          At September 30, 1997, AEP Resources, Inc., a subsidiary
     which is pursuing new business opportunities, had $270
     million of outstanding debt at LIBOR rates under its long-term revolving
     credit agreement which expires in 1999,
     primarily for its investment in Yorkshire Electricity Group,
     plc.

          In October 1997 two domestic electric operating
     subsidiaries issued $96 million of unsecured medium term
     notes due in 2005 and 2007 at 6.85% and 6.91%, respectively.

<PAGE>
3.   EXTRAORDINARY LOSS - WINDFALL TAX

          The Company and New Century Energies, Inc. acquired a
     United Kingdom distribution company, Yorkshire Electricity
     Group plc, through an equally owned joint venture in April
     1997.  Total consideration paid by the joint venture was
     approximately $2.4 billion which was financed by a
     combination of equity and non-recourse debt.  The Company
     uses the equity method of accounting for its $273 million
     equity investment in Yorkshire Electricity which is included
     in other property and investments.

          In July 1997 the British government enacted a new law
     that imposed a one-time windfall tax on a revised
     privatization value which originally had been computed in
     1990 of certain privatized utilities.  The windfall tax is
     actually an adjustment of the original privatization price
     by the U.K. government.  The windfall tax liability for
     Yorkshire Electricity Group plc is estimated to be 135
     million pounds ($221 million) and is payable in two equal
     installments with the first due in December 1997 and the
     second installment a year later.  The Company's $110.6
     million share of the tax is reported as an extraordinary
     loss.  The earnings from the Yorkshire investment excluding
     the extraordinary loss, which are included in nonoperating
     income, are $34 million for the third quarter and $38
     million for the year-to-date period which includes $26
     million of nonrecurring tax benefits related to a reduction
     of the United Kingdom corporate income tax rate from 33% to
     31% and the utilization of foreign tax credits.

4.   ZIMMER PHASE-IN PLAN

          In June 1997, a domestic electic operating subsidiary,
     Columbus Southern Power Company, completed recovery of its
     Zimmer Plant phase-in plan deferrals through the cessation
     of a 3.39% temporary surcharge.  The temporary surcharge was
     placed into effect on February 1, 1994 to allow recovery of
     a rate phase-in deferral of $93.9 million.  The amount of
     net phase-in deferrals that were collected through the
     surcharge was $18.5 million in 1994, $28.5 million in 1995,
     $31.5 million in 1996 and $15.4 million in 1997.  The
     cessation of the surcharge recovery of amounts deferred
     under the phase-in plan did not affect net income since the
     deferred costs were amortized commensurate with their
     recovery.  For other information regarding the Zimmer rate
     case refer to the 1996 Annual Report - Notes to Consolidated
     Financial Statements - Note 3.

5.   CONTINGENCIES

     Taxes

          As discussed in Note 9, "Federal Income Taxes" of the
     Notes to Consolidated Financial Statements in the 1996
     Annual Report, the Internal Revenue Service (IRS) agents
     auditing the consolidated federal income tax returns for the
     years 1991 through 1993 requested a ruling from their
     National Office as to whether certain interest deductions
     relating to corporate owned life insurance (COLI) should be
     disallowed.  The COLI program was established in 1990 as
     part of the Company's strategy to fund and reduce the cost
     of medical benefits for retired employees.  The Company
     filed a brief with the IRS National Office defending the
     subject deductions.  Although no disallowance has been
     proposed, a disallowance of COLI interest deductions through
     September 30, 1997 would reduce earnings by approximately
     $276 million inclusive of interest.  Management believes it
     will ultimately prevail on this issue and will vigorously
     contest any disallowance that may be proposed.

     Revised Air Quality Standards

          On July 18, 1997, the United States Environmental
     Protection Agency published a revised National Ambient Air
     Quality Standard (NAAQS) for ozone and a new NAAQS for fine
     particulate matter (less than 2.5 microns in size).  The new
     ozone standard is expected to result in redesignation of a
     number of areas of the country that are currently in
     compliance with the existing standard to nonattainment
     status which could ultimately dictate more stringent
     emission restrictions for AEP System generating units. New
     stringent emission restrictions on AEP System generating
     units to achieve attainment of the fine particulate matter
     standard could also be imposed.  The AEP System operating
     companies joined with other utilities to appeal the revised
     NAAQS and filed petitions for review in August and September
     1997 in the U.S. Court of Appeals for the District of
     Columbia Circuit.

          Management is unable to estimate compliance costs
     without knowledge of the reductions that may be necessary to
     meet the new standards.  If such costs are significant, it
     could have a material adverse effect on results of
     operations and possibly financial condition unless such
     costs are recovered.

     Cook Plant Shutdown

          On September 9 and 10, 1997, during a Nuclear Regulatory
     Commission (NRC) architect engineer design inspection,
     questions regarding the operability of certain safety
     systems caused Company operations personnel to shut down
     Units 1 and 2 of the Cook Nuclear Plant.  On September 19,
     1997, the NRC issued a Confirmatory Action Letter requiring
     the Company to address certain issues identified in the
     letter.  The Company is working with the NRC to resolve this
     matter.  At this time management is unable to determine when
     the units will be returned to service.  If the units are not
     returned to service in a timely manner, it could have an
     adverse impact on results of operations and possibly
     financial condition.

          The Company continues to be involved in certain other
     matters discussed in the 1996 Annual Report.
<PAGE>
  AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                      AND FINANCIAL CONDITION                   

            THIRD QUARTER 1997 vs. THIRD QUARTER 1996
                               AND
             YEAR-TO-DATE 1997 vs. YEAR-TO-DATE 1996
RESULTS OF OPERATIONS
     Income before extraordinary loss increased by $39.4 million
for the quarter and $40.4 for the year-to-date period due
predominantly to increased wholesale sales, reduced preferred
stock dividends due to a redemption program and nonoperating
income from AEP's April 1997 investment in Yorkshire Electricity
Group plc.  Net income decreased $71.1 million or 44% for the
third quarter and $70.1 million or 15% for the year-to-date
period primarily due to an extraordinary loss incurred by
Yorkshire Electricity Group plc.  The extraordinary loss resulted
from the United Kingdom's one-time windfall tax on a revision or
recomputation of the original privatization value of certain
privatized utilities.
     Income statement lines which changed significantly were:
                                     Increase (Decrease)         
                              Third Quarter       Year-to-Date   
                           (in millions)   %   (in millions)   % 

Operating Revenues . . . . . .  $ 99.6     7        $55.1      1
Fuel and Purchased
 Power Expense . . . . . . . .   106.3    26         87.0      7
Maintenance Expense. . . . . .    (5.4)   (4)       (25.7)    (7)
Depreciation and Amortization
 Expense . . . . . . . . . . .    (7.5)   (5)        (2.5)    (1)
Federal Income Taxes . . . . .    (7.9)   (8)         3.5      1
Nonoperating Income. . . . . .    29.2   N.M.        39.5    N.M.
Interest Charges . . . . . . .    12.5    14         11.6      4
Preferred Stock Dividend
 Requirements of Subsidiaries.    (7.4)  (73)       (16.7)   (53)

N.M. = Not Meaningful

     Operating revenues increased for the third quarter as a
result of a 43% increase in sales to wholesale customers largely
as a result of new power marketing transactions which began in
July 1997.  The new power marketing transactions involve the
purchase and sale of electricity outside the AEP transmission
system.  Although energy sales to retail customers rose 2%
primarily due to growth in the number of commercial customers and
increased industrial customer usage, retail revenues were flat
reflecting price reductions from rate decreases, expiration of a
phase-in plan surcharge and reduced prices negotiated with
certain industrial customers.

     The increase in operating revenues for the year-to-date
period resulted from increased wholesale energy sales.  Sales to
wholesale customers rose 22% due to the new power marketing
transactions and an increase in coal conversion service sales,
which are for the conversion of customers' coal to electricity.
Operating revenues from retail customers declined 2% primarily
due to a 4% decrease in energy sales to residential customers
reflecting mild weather in the first and second quarters of 1997.
     The increases in fuel and purchased power expense for both
periods were due mainly to purchases of electricity as part of
the new power marketing transactions.  Also contributing to the
increase in the quarter were increased fuel costs resulting from
increased coal-fired generation and reduced nuclear generation as
both units of the Cook Nuclear Plant were shut down in September
1997 to resolve concerns regarding the documentation of safety
systems.
     Maintenance expense decreased for the year-to-date period
due primarily to reduced levels of repairs to distribution
facilities in 1997 and the effects of the recognition of
incremental storm damage expense in accordance with an order of
the Virginia regulatory commission in the second quarter of 1996.
     The reduction in depreciation and amortization expense for
the third quarter reflects the completion of a rate phase-in plan
for Zimmer Plant costs which had been deferred and were being
amortized commensurate with recovery in rates.
     Federal income tax expense attributable to operations
decreased in the third quarter due to a decrease in pre-tax
operating income inclusive of interest charges and changes in
certain book/tax differences accounted for on a flow-through
basis for rate-making and financial reporting purposes.
     The increases in nonoperating income for both periods
reflects the Company's share of Yorkshire Electricity Group plc's
earnings of $34 million for the third quarter and $38 million for
the year-to-date period which includes $26 million of
nonrecurring tax benefits related to a reduction of the United
Kingdom corporate income tax rate from 33% to 31% and the
utilization of foreign tax credits.
     Interest charges increased in both periods due to higher
outstanding balances of long-term and short-term debt.  The
increase in borrowing was primarily for international investment,
including the acquisition of a 50% interest in Yorkshire
Electricity in April 1997, and to redeem preferred stock. 
Preferred stock dividend requirements of the subsidiaries
decreased in both periods reflecting the redemption of over 4
million shares of cumulative preferred stock during the first
half of 1997 as part of a redemption program.
FINANCIAL CONDITION
     Total plant and property additions including capital leases
for the first nine months of 1997 were $670 million.
     During the first nine months of 1997 subsidiaries and their
minority interest partners issued $699 million principal amount
of long-term obligations at interest rates ranging from 6.1% to
12.42%; retired $243 million principal amount of long-term debt
with interest rates ranging from 6-1/2% to 9.35%; redeemed
4,257,490 shares of cumulative preferred stock with rates ranging
from 4.08% to 7-7/8% at a total cost of $433 million and
increased short-term debt by $188 million.
REVISED AIR QUALITY STANDARDS
     On July 18, 1997, the United States Environmental Protection
Agency published a revised National Ambient Air Quality Standard
(NAAQS) for ozone and a new NAAQS for fine particulate matter
(less than 2.5 microns in size).  The new ozone standard is
expected to result in redesignation of a number of areas of the
country that are currently in compliance with the existing
standard to nonattainment status which could ultimately dictate
more stringent emission restrictions for AEP System generating
units. New stringent emission restrictions on AEP System
generating units to achieve attainment of the fine particulate
matter standard could also be imposed.  The AEP System operating
companies joined with other utilities to appeal the revised NAAQS
and filed petitions for review in August and September 1997 in
the U.S. Court of Appeals for the District of Columbia Circuit.
     Management is unable to estimate compliance costs without
knowledge of the reductions that may be necessary to meet the new
standards.  If such costs are significant, it could have a
material adverse effect on results of operations and possibly
financial condition unless such costs are recovered.
JOINT VENTURES ANNOUNCED
     On October 2, 1997 the Company and Conoco, the energy
subsidiary of DuPont, signed a letter of intent to form two
jointly held venture companies to provide energy management and
capital to industrial and large commercial customers.  AEP Conoco
Energy Capital will acquire and lease back energy assets at
industrial and large commercial facilities and provide future
capital for energy projects.  AEP Conoco Energy Management
Services will also provide energy management services.  The
ventures will initially acquire and manage industrial energy
assets valued at approximately $1 billion for DuPont energy
facilities at 33 U.S. industrial plants.  The Company, through
its AEP Resources subsidiary, and DuPont will each invest
approximately $125 million in equity in the joint ventures with
the remainder to be financed through non-recourse debt.
COOK PLANT SHUTDOWN
     On September 9 and 10, 1997, during a Nuclear Regulatory
Commission (NRC) architect engineer design inspection, questions
regarding the operability of certain safety systems caused
Company operations personnel to shut down Units 1 and 2 of the
Cook Nuclear Plant.  On September 19, 1997, the NRC issued a
Confirmatory Action Letter requiring the Company to address
certain issues identified in the letter.  The Company is working
with the NRC to resolve this matter.  At this time management is
unable to determine when the units will be returned to service. 
If the units are not returned to service in a timely manner, it
could have an adverse impact on results of operations and
possibly financial condition.

<PAGE>
<PAGE>
<TABLE>
                                            AEP GENERATING COMPANY
                                            STATEMENTS OF INCOME
                                        (UNAUDITED)
<CAPTION>
                                           Three Months Ended      Nine Months Ended
                                              September 30,          September 30,    
                                             1997      1996         1997        1996
                                                         (in thousands)
<S>                                        <C>        <C>         <C>         <C>
OPERATING REVENUES . . . . . . . . . . .   $58,136    $56,821     $170,665    $169,618

OPERATING EXPENSES:
  Fuel . . . . . . . . . . . . . . . . .    26,354     23,701       72,443      68,969
  Rent - Rockport Plant Unit 2 . . . . .    17,071     17,070       51,212      51,218
  Other Operation. . . . . . . . . . . .     2,518      3,036        8,362       9,147
  Maintenance. . . . . . . . . . . . . .     2,372      3,154       10,115      10,530
  Depreciation . . . . . . . . . . . . .     5,402      5,413       16,209      16,239
  Taxes Other Than Federal Income Taxes.     1,015        821        2,744       2,703
  Federal Income Taxes . . . . . . . . .       922        987        2,529       2,924

          TOTAL OPERATING EXPENSES . . .    55,654     54,182      163,614     161,730

OPERATING INCOME . . . . . . . . . . . .     2,482      2,639        7,051       7,888

NONOPERATING INCOME. . . . . . . . . . .       831      1,018        2,631       2,642

INCOME BEFORE INTEREST CHARGES . . . . .     3,313      3,657        9,682      10,530

INTEREST CHARGES . . . . . . . . . . . .       986      1,042        2,997       3,186

NET INCOME . . . . . . . . . . . . . . .   $ 2,327    $ 2,615     $  6,685    $  7,344

                                                       

                      STATEMENTS OF RETAINED EARNINGS
                                (UNAUDITED)

                                           Three Months Ended      Nine Months Ended
                                              September 30,          September 30,    
                                             1997      1996         1997        1996
                                                         (in thousands)

BALANCE AT BEGINNING OF PERIOD . . . . .    $3,672    $2,184       $1,886      $1,955

NET INCOME . . . . . . . . . . . . . . .     2,327     2,615        6,685       7,344 

CASH DIVIDENDS DECLARED. . . . . . . . .     3,286     3,000        5,858       7,500

BALANCE AT END OF PERIOD . . . . . . . .    $2,713    $1,799       $2,713      $1,799

                    

The common stock of the Company is wholly owned by 
American Electric Power Company, Inc.

See Notes to Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
                          AEP GENERATING COMPANY
                              BALANCE SHEETS
                                (UNAUDITED)
<CAPTION>
                                                            September 30,  December 31,
                                                                 1997          1996    
                                                                   (in thousands)

ASSETS
<S>                                                           <C>            <C>
ELECTRIC UTILITY PLANT:
  Production. . . . . . . . . . . . . . . . . . . . . . . .   $626,880       $627,926
  General . . . . . . . . . . . . . . . . . . . . . . . . .      3,082          2,931
  Construction Work in Progress . . . . . . . . . . . . . .      2,007          1,400
          Total Electric Utility Plant. . . . . . . . . . .    631,969        632,257
  Accumulated Depreciation. . . . . . . . . . . . . . . . .    252,026        238,532


          NET ELECTRIC UTILITY PLANT. . . . . . . . . . . .    379,943        393,725




CURRENT ASSETS:
  Cash and Cash Equivalents . . . . . . . . . . . . . . . .      1,810            139
  Accounts Receivable . . . . . . . . . . . . . . . . . . .     20,683         18,879 
  Fuel. . . . . . . . . . . . . . . . . . . . . . . . . . .     10,735         17,792 
  Materials and Supplies. . . . . . . . . . . . . . . . . .      4,174          4,266 
  Prepayments . . . . . . . . . . . . . . . . . . . . . . .        483            804 


          TOTAL CURRENT ASSETS. . . . . . . . . . . . . . .     37,885         41,880 



REGULATORY ASSETS . . . . . . . . . . . . . . . . . . . . .      5,694          5,857



DEFERRED CHARGES. . . . . . . . . . . . . . . . . . . . . .      2,419          1,449



            TOTAL . . . . . . . . . . . . . . . . . . . . .   $425,941       $442,911 

See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
                          AEP GENERATING COMPANY
                              BALANCE SHEETS
                                (UNAUDITED)
<CAPTION>
                                                           September 30,   December 31,
                                                                1997           1996    
                                                                  (in thousands)

CAPITALIZATION AND LIABILITIES
<S>                                                           <C>            <C>
CAPITALIZATION:
  Common Stock - Par Value $1,000:
    Authorized and Outstanding - 1,000 Shares . . . . . . .   $  1,000       $  1,000
  Paid-in Capital . . . . . . . . . . . . . . . . . . . . .     42,235         44,235 
  Retained Earnings . . . . . . . . . . . . . . . . . . . .      2,713          1,886 
          Total Common Shareholder's Equity . . . . . . . .     45,948         47,121 
  Long-term Debt. . . . . . . . . . . . . . . . . . . . . .     69,565         89,554 

          TOTAL CAPITALIZATION. . . . . . . . . . . . . . .    115,513        136,675 

OTHER NONCURRENT LIABILITIES. . . . . . . . . . . . . . . .      1,358          1,613 

CURRENT LIABILITIES:
  Short-term Debt - Notes Payable . . . . . . . . . . . . .       -             9,575
  Accounts Payable. . . . . . . . . . . . . . . . . . . . .      4,855          7,510
  Taxes Accrued . . . . . . . . . . . . . . . . . . . . . .      5,195          2,903
  Rent Accrued - Rockport Plant Unit 2. . . . . . . . . . .     23,427          4,963
  Other . . . . . . . . . . . . . . . . . . . . . . . . . .      3,031          3,932 

          TOTAL CURRENT LIABILITIES . . . . . . . . . . . .     36,508         28,883 

DEFERRED GAIN ON SALE AND LEASEBACK - 
  ROCKPORT PLANT UNIT 2 . . . . . . . . . . . . . . . . . .    140,294        144,472

REGULATORY LIABILITIES:
  Deferred Investment Tax Credits . . . . . . . . . . . . .     70,934         73,460
  Amounts Due to Customers for Income Taxes . . . . . . . .     32,885         33,893
  Other . . . . . . . . . . . . . . . . . . . . . . . . . .         28             66

          TOTAL REGULATORY LIABILITIES. . . . . . . . . . .    103,847        107,419

DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . .     28,421         23,849

            TOTAL . . . . . . . . . . . . . . . . . . . . .   $425,941       $442,911 

See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
                          AEP GENERATING COMPANY
                         STATEMENTS OF CASH FLOWS
                                (UNAUDITED)
<CAPTION>
                                                                 Nine Months Ended
                                                                   September 30,     
                                                                 1997          1996
                                                                   (in thousands)
<S>                                                           <C>           <C>
OPERATING ACTIVITIES:
  Net Income . . . . . . . . . . . . . . . . . . . . . . . .  $   6,685     $   7,344
  Adjustments for Noncash Items:
    Depreciation . . . . . . . . . . . . . . . . . . . . . .     16,209        16,239
    Deferred Federal Income Taxes. . . . . . . . . . . . . .      3,564         3,710
    Deferred Investment Tax Credits. . . . . . . . . . . . .     (2,526)       (2,531)
    Amortization of Deferred Gain on Sale
      and Leaseback - Rockport Plant Unit 2. . . . . . . . .     (4,178)       (4,178)
  Changes in Certain Current Assets and Liabilities:
    Accounts Receivable. . . . . . . . . . . . . . . . . . .     (1,804)         (328)
    Fuel, Materials and Supplies . . . . . . . . . . . . . .      7,149          (729)
    Accounts Payable . . . . . . . . . . . . . . . . . . . .     (2,655)       (3,920)
    Taxes Accrued. . . . . . . . . . . . . . . . . . . . . .      2,292         2,201 
    Rent Accrued - Rockport Plant Unit 2 . . . . . . . . . .     18,464        18,464
  Other (net). . . . . . . . . . . . . . . . . . . . . . . .     (2,044)       (2,924)
        Net Cash Flows From Operating Activities . . . . . .     41,156        33,348

INVESTING ACTIVITIES - Construction Expenditures . . . . . .     (2,042)       (1,492)

FINANCING ACTIVITIES:
  Return of Capital to Parent Company. . . . . . . . . . . .     (2,000)         (500)
  Retirement of Long-term Debt . . . . . . . . . . . . . . .    (20,010)         -    
  Change in Short-term Debt (net). . . . . . . . . . . . . .     (9,575)      (21,725)
  Dividends Paid . . . . . . . . . . . . . . . . . . . . . .     (5,858)       (7,500)
        Net Cash Flows Used For Financing Activities . . . .    (37,443)      (29,725)

Net Increase in Cash and Cash Equivalents. . . . . . . . . .      1,671         2,131
Cash and Cash Equivalents at Beginning of Period . . . . . .        139            22
Cash and Cash Equivalents at End of Period . . . . . . . . .  $   1,810     $   2,153


Supplemental Disclosure:
  Cash paid  (received) for interest  net of capitalized  amounts was  $2,699,000 and
  $3,009,000  and for  income  taxes  was $(1,598,000) and  $(1,374,000) in  1997 and
  1996, respectively.

See Notes to Financial Statements.
</TABLE>

<PAGE>
                      AEP GENERATING COMPANY
                  NOTES TO FINANCIAL STATEMENTS
                        SEPTEMBER 30, 1997     
                           (UNAUDITED)

     GENERAL

          The accompanying unaudited financial statements should
     be read in conjunction with the 1996 Annual Report as
     incorporated in and filed with the Form 10-K.

     FINANCING ACTIVITIES

          In June 1997, the Company redeemed $10 million each of
     the 1995 Series A and 1995 Series B Pollution Control
     Revenue Bonds due 2025.

          In 1997, the Company returned capital to its parent in
     the amount of $2 million.




<PAGE>
                      AEP GENERATING COMPANY
     MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

            THIRD QUARTER 1997 vs. THIRD QUARTER 1996
                               AND
             YEAR-TO-DATE 1997 vs. YEAR-TO-DATE 1996

     Operating revenues are derived from the sale of Rockport
Plant energy and capacity to two affiliated companies and one
unaffiliated utility pursuant to Federal Energy Regulatory
Commission (FERC) approved long-term unit power agreements.  The
unit power agreements provide for recovery of costs including a
FERC approved rate of return on common equity and a return on
other capital, net of temporary cash investments. 
     Net income decreased $0.3 million or 11% for the third
quarter and $0.7 million or 9% for the year-to-date period as a
result of the decrease in the return on common equity due to a
return of capital to the parent company and a decrease in the
return on other capital due to lower financing costs, partially
offset in the year-to-date period by income earned on temporary
cash investments.
     Income statement items which changed significantly were as
follows:
                                   Increase (Decrease)           
                            Third Quarter         Year-to-Date   
                         (in millions)    %   (in millions)    % 

Operating Revenues. . . . .   $1.3        2        $1.0        1
Fuel Expense. . . . . . . .    2.7       11         3.5        5
Other Operation Expense . .    (.5)     (17)        (.8)      (9)
Maintenance Expense . . . .    (.8)     (25)        (.4)      (4)
Taxes Other Than 
  Federal Income Taxes. . .     .2       24           -        -
Federal Income Taxes. . . .    (.1)      (7)        (.4)     (14)
Nonoperating Income . . . .    (.2)     (18)          -        -
Interest Charges. . . . . .    (.1)      (5)        (.2)      (6)

     The increase in operating revenues for both periods is
primarily attributable to collection of increased fuel expense
under the terms of the unit power agreements, partly offset by
the decrease in allowed returns previously mentioned.  It should
be noted that increases in operating expenses are recoverable
through the unit power agreement and do not impact net income.
     Fuel expense increased due to an increase in generation for
the quarter and an increase in the average cost of fuel consumed
for both the quarter and year-to-date periods.
     A decrease in other operation expense for both periods was
caused by a reduction in the annual Federal Energy Regulatory
Commission fee assessment.
<PAGE>
     Maintenance expense decreased due to the effect of recording
a write-off of obsolete maintenance materials in the third
quarter of 1996.
     Taxes other than federal income taxes increased for the
quarter due to the effect of an unfavorable accrual adjustment
for Indiana property tax.
     Federal income taxes attributable to operations decreased
reflecting the decline in pre-tax operating income.
     The decrease in nonoperating income for the current period
was due to the effect of a credit adjustment recorded in 1996.
     Interest charges decreased for both periods due to the
redemption of $20 million of Pollution Control Revenue Bonds in
June of this year.  Additionally year-to-date interest charges
declined due to a reduction in the average balances of short-term
debt outstanding.
<PAGE>
<PAGE>
<TABLE>
                APPALACHIAN POWER COMPANY AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF INCOME
                                (UNAUDITED)
<CAPTION>
                                           Three Months Ended       Nine Months Ended
                                             September 30,            September 30,      
                                           1997         1996        1997          1996
                                                         (in thousands)
<S>                                      <C>          <C>        <C>           <C>
OPERATING REVENUES . . . . . . . . . . . $438,510     $393,797   $1,228,044    $1,214,656

OPERATING EXPENSES:
  Fuel . . . . . . . . . . . . . . . . .  104,514       82,432      288,773       263,935
  Purchased Power. . . . . . . . . . . .  100,587       84,388      261,595       252,025
  Other Operation. . . . . . . . . . . .   60,585       53,561      185,852       177,370
  Maintenance. . . . . . . . . . . . . .   27,615       28,279       79,505        87,655
  Depreciation and Amortization. . . . .   34,568       33,450      102,817        99,491
  Taxes Other Than Federal Income Taxes.   29,544       29,758       89,580        90,074
  Federal Income Taxes . . . . . . . . .   16,317       20,670       45,411        55,991

          TOTAL OPERATING EXPENSES . . .  373,730      332,538    1,053,533     1,026,541

OPERATING INCOME . . . . . . . . . . . .   64,780       61,259      174,511       188,115
NONOPERATING INCOME (LOSS) . . . . . . .      305         (240)         628           336 
INCOME BEFORE INTEREST CHARGES . . . . .   65,085       61,019      175,139       188,451
INTEREST CHARGES . . . . . . . . . . . .   30,332       26,380       88,524        82,082
NET INCOME . . . . . . . . . . . . . . .   34,753       34,639       86,615       106,369
PREFERRED STOCK DIVIDEND REQUIREMENTS. .      681        4,099        6,326        12,300
EARNINGS APPLICABLE TO COMMON STOCK. . . $ 34,072     $ 30,540   $   80,289    $   94,069
                                                              

               CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
                                (UNAUDITED)

                                           Three Months Ended        Nine Months Ended
                                             September 30,             September 30,     
                                           1997         1996         1997          1996
                                                         (in thousands)

BALANCE AT BEGINNING OF PERIOD . . . . . $197,471     $208,399     $208,472      $199,021
NET INCOME . . . . . . . . . . . . . . .   34,753       34,639       86,615       106,369
DEDUCTIONS:
  Cash Dividends Declared:
    Common Stock . . . . . . . . . . . .   28,609       27,075       85,827        81,225
    Cumulative Preferred Stock . . . . .      572        3,914        2,649        11,748
  Capital Stock Expense. . . . . . . . .      109          184        3,677           552

BALANCE AT END OF PERIOD . . . . . . . . $202,934     $211,865     $202,934      $211,865

The common stock of the Company is wholly owned by
American Electric Power Company, Inc.

See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
                APPALACHIAN POWER COMPANY AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                                (UNAUDITED)
<CAPTION>
                                                          September 30,   December 31,
                                                               1997           1996    
                                                                 (in thousands)
ASSETS
<S>                                                         <C>            <C>
ELECTRIC UTILITY PLANT:
  Production . . . . . . . . . . . . . . . . . . . . .      $1,915,626     $1,883,271
  Transmission . . . . . . . . . . . . . . . . . . . .       1,067,090      1,054,207
  Distribution . . . . . . . . . . . . . . . . . . . .       1,557,679      1,495,445
  General. . . . . . . . . . . . . . . . . . . . . . .         206,130        188,740
  Construction Work in Progress. . . . . . . . . . . .          94,011         95,469
          Total Electric Utility Plant . . . . . . . .       4,840,536      4,717,132
  Accumulated Depreciation and Amortization. . . . . .       1,850,887      1,782,017

          NET ELECTRIC UTILITY PLANT . . . . . . . . .       2,989,649      2,935,115



OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . .          36,699         29,621



CURRENT ASSETS:
  Cash and Cash Equivalents. . . . . . . . . . . . . .           8,667          7,260
  Accounts Receivable. . . . . . . . . . . . . . . . .         147,498        160,021
  Allowance for Uncollectible Accounts . . . . . . . .          (1,622)          (687)
  Fuel . . . . . . . . . . . . . . . . . . . . . . . .          59,509         52,605
  Materials and Supplies . . . . . . . . . . . . . . .          51,464         56,605
  Accrued Utility Revenues . . . . . . . . . . . . . .          32,901         51,843
  Prepayments. . . . . . . . . . . . . . . . . . . . .           7,102         10,797

          TOTAL CURRENT ASSETS . . . . . . . . . . . .         305,519        338,444


REGULATORY ASSETS. . . . . . . . . . . . . . . . . . .         441,959        451,272


DEFERRED CHARGES . . . . . . . . . . . . . . . . . . .          35,295         46,285

            TOTAL. . . . . . . . . . . . . . . . . . .      $3,809,121     $3,800,737

See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
                APPALACHIAN POWER COMPANY AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                                (UNAUDITED)
<CAPTION>
                                                        September 30,   December 31,
                                                             1997           1996    
                                                               (in thousands)
CAPITALIZATION AND LIABILITIES
<S>                                                      <C>             <C>
CAPITALIZATION:
  Common Stock - No Par Value:
    Authorized -  30,000,000 Shares
    Outstanding - 13,499,500 Shares. . . . . . . . . .   $  260,458      $  260,458
  Paid-in Capital. . . . . . . . . . . . . . . . . . .      592,924         575,380
  Retained Earnings. . . . . . . . . . . . . . . . . .      202,934         208,472
          Total Common Shareholder's Equity. . . . . .    1,056,316       1,044,310
  Cumulative Preferred Stock:
    Not Subject to Mandatory Redemption. . . . . . . .       19,795          29,815
    Subject to Mandatory Redemption. . . . . . . . . .       22,310         190,000
  Long-term Debt . . . . . . . . . . . . . . . . . . .    1,494,283       1,365,834

          TOTAL CAPITALIZATION . . . . . . . . . . . .    2,592,704       2,629,959

OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . .      132,777         109,203

CURRENT LIABILITIES:
  Short-term Debt. . . . . . . . . . . . . . . . . . .       83,525          60,700
  Accounts Payable . . . . . . . . . . . . . . . . . .       99,080          85,892
  Taxes Accrued. . . . . . . . . . . . . . . . . . . .       42,577          40,935
  Customer Deposits. . . . . . . . . . . . . . . . . .       13,764          13,750
  Interest Accrued . . . . . . . . . . . . . . . . . .       33,223          20,938
  Other. . . . . . . . . . . . . . . . . . . . . . . .       58,424          80,360

          TOTAL CURRENT LIABILITIES. . . . . . . . . .      330,593         302,575

DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . .      656,896         669,964

DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . .       69,106          72,677

DEFERRED CREDITS . . . . . . . . . . . . . . . . . . .       27,045          16,359

CONTINGENCIES (Note 4)

            TOTAL. . . . . . . . . . . . . . . . . . .   $3,809,121      $3,800,737

See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
                APPALACHIAN POWER COMPANY AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (UNAUDITED)
<CAPTION>
                                                                  Nine Months Ended
                                                                    September 30,     
                                                                 1997           1996
                                                                    (in thousands)
<S>                                                           <C>             <C>
OPERATING ACTIVITIES:
  Net Income . . . . . . . . . . . . . . . . . . . . . . . .  $  86,615       $106,369
  Adjustments for Noncash Items:
    Depreciation and Amortization. . . . . . . . . . . . . .    103,796        100,471
    Deferred Federal Income Taxes. . . . . . . . . . . . . .     (8,719)           838
    Deferred Investment Tax Credits. . . . . . . . . . . . .     (3,571)        (3,614)
    Provision for Rate Refunds . . . . . . . . . . . . . . .      3,083         (5,547)
    Deferred Power Supply Costs (net). . . . . . . . . . . .     13,951           (425)
  Changes in Certain Current Assets and Liabilities:
    Accounts Receivable (net). . . . . . . . . . . . . . . .     13,458        (13,318)
    Fuel, Materials and Supplies . . . . . . . . . . . . . .     (1,763)         9,195
    Accrued Utility Revenues . . . . . . . . . . . . . . . .     18,942         21,123
    Prepayments. . . . . . . . . . . . . . . . . . . . . . .      3,695         (5,637)
    Accounts Payable . . . . . . . . . . . . . . . . . . . .     13,188           (409)
    Taxes Accrued. . . . . . . . . . . . . . . . . . . . . .      1,642        (12,670)
    Interest Accrued . . . . . . . . . . . . . . . . . . . .     12,285         12,588
  Other (net). . . . . . . . . . . . . . . . . . . . . . . .     (8,076)         6,928
        Net Cash Flows From Operating Activities . . . . . .    248,526        215,892

INVESTING ACTIVITIES:
  Construction Expenditures. . . . . . . . . . . . . . . . .   (146,039)      (120,761)
  Proceeds from Sale of Property . . . . . . . . . . . . . .      4,204          1,546
        Net Cash Flows Used For Investing Activities . . . .   (141,835)      (119,215)

FINANCING ACTIVITIES:
  Capital Contributions from Parent Company. . . . . . . . .     20,000         25,000
  Issuance of Long-term Debt . . . . . . . . . . . . . . . .    183,257        273,340
  Change in Short-term Debt (net). . . . . . . . . . . . . .     22,825       (104,825)
  Retirement of Cumulative Preferred Stock . . . . . . . . .   (183,842)          (146)
  Retirement of Long-term Debt . . . . . . . . . . . . . . .    (56,378)      (195,909)
  Dividends Paid on Common Stock . . . . . . . . . . . . . .    (85,827)       (81,225)
  Dividends Paid on Cumulative Preferred Stock . . . . . . .     (5,319)       (11,751)
        Net Cash Flows Used For Financing Activities . . . .   (105,284)       (95,516)

Net Increase in Cash and Cash Equivalents. . . . . . . . . .      1,407          1,161 
Cash and Cash Equivalents at Beginning of Period . . . . . .      7,260          8,664
Cash and Cash Equivalents at End of Period . . . . . . . . .  $   8,667      $   9,825

Supplemental Disclosure:
  Cash paid for  interest net of capitalized  amounts was  $73,466,000 and $67,073,000
  and for income taxes was $46,965,000 and $54,583,000 in 1997 and 1996, respectively.
  Noncash acquisitions under  capital leases were $14,377,000 and  $10,741,000 in 1997
  and 1996, respectively.

See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
            APPALACHIAN POWER COMPANY AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        SEPTEMBER 30, 1997            
                           (UNAUDITED)

1.   GENERAL

          The accompanying unaudited consolidated financial
     statements should be read in conjunction with the 1996
     Annual Report as incorporated in and filed  with the Form
     10-K. Certain prior-period amounts have been reclassified to
     conform with current-period presentation.

2.   RATE MATTERS

          On June 13, 1997, the Company filed an application with
     the Virginia State Corporation Commission (Virginia SCC) for
     approval of an alternative regulatory plan (Plan) and for an
     increase of $30.5 million in base rates on an annual basis
     to be effective July 13, 1997.  The Company's Plan would
     institute a moratorium period during which no changes in
     rates would be made prior to January 1, 2001, from the
     current rate levels (including the Company's current 1.482
     cents/kwh fuel factor) proposed by the Company.  In
     addition, it includes a sharing of earnings above certain
     levels between the Company and its customers, and
     acceleration of the recovery of certain regulatory assets.

          On July 10, 1997, the Virginia SCC issued an order
     suspending implementation of new rates until November 11,
     1997.  A public hearing has been scheduled for May 19, 1998
     to consider the Company's proposal.

3.   FINANCING ACTIVITIES

          During the first nine months of 1997, the Company issued
     two series of first mortgage bonds of $48 million each with
     rates of 6.35% and 6.71% due in 2000 and $90 million of 8%
     Series Junior Subordinated Deferrable Interest Debentures
     due in 2027.  In March 1997, the Company redeemed $56
     million of first mortgage bonds with interest rates of 8.75%
     and 9.35%.

          As part of a tender offer, the following shares of
     Cumulative Preferred Stock were reacquired and retired at
     the prices listed plus an amount equal to accrued dividends:

                     Number           Price            Total
                   of Shares        Paid Per       Reacquisition
    Series          Retired           Share            Price    
                                                   (in thousands)

    4-1/2%           99,563          $ 69.02          $ 6,872
    5.90%           422,900           103.17           43,631
    5.92%           538,500           103.20           55,573
    6.85%           215,500           107.26           23,114
    7.80%            22,500           105.50            2,374

          In April 1997, the Company redeemed the remaining
     477,500 shares of 7.80% Series Cumulative Preferred Stock,
     par value $100, at $105.20 per share.

          In June 1997, the Company received a $20 million cash
     capital contribution from its parent which was credited to
     paid-in capital.

4.   CONTINGENCIES

     Taxes

          As discussed in Note 9, "Federal Income Taxes" of the
     Notes to Consolidated Financial Statements in the 1996
     Annual Report, the Internal Revenue Service (IRS) agents
     auditing the AEP System's consolidated federal income tax
     returns for the years 1991 through 1993 requested a ruling
     from their National Office as to whether certain interest
     deductions relating to corporate owned life insurance (COLI)
     should be disallowed.  The COLI program was established in
     1990 as part of the Company's strategy to fund and reduce
     the cost of medical benefits for retired employees.  AEP
     filed a brief with the IRS National Office defending the
     subject deductions.  Although no disallowance has been
     proposed, a disallowance of the COLI interest deductions
     through September 30, 1997 would reduce earnings by
     approximately $69 million inclusive of interest.  Management
     believes it will ultimately prevail on this issue and will
     vigorously contest any disallowance that may be proposed.

     Revised Air Quality Standards

          On July 18, 1997, the United States Environmental
     Protection Agency published a revised National Ambient Air
     Quality Standard (NAAQS) for ozone and a new NAAQS for fine
     particulate matter (less than 2.5 microns in size).  The new
     ozone standard is expected to result in redesignation of a
     number of areas of the country that are currently in
     compliance with the existing standard to nonattainment
     status which could ultimately dictate more stringent
     emission restrictions for AEP System generating units. New
     stringent emission restrictions on AEP System generating
     units to achieve attainment of the fine particulate matter
     standard could also be imposed.  The AEP System operating
     companies joined with other utilities to appeal the revised
     NAAQS and filed petitions for review in August and September
     1997 in the U.S. Court of Appeals for the District of
     Columbia Circuit.

          Management is unable to estimate compliance costs
     without knowledge of the reductions that may be necessary to
     meet the new standards.  If such costs are significant, it
     could have a material adverse effect on results of
     operations and possibly financial condition unless such
     costs are recovered.

     Other

          The Company continues to be involved in certain other
     matters discussed in its 1996 Annual Report.


<PAGE>
            APPALACHIAN POWER COMPANY AND SUBSIDIARIES
  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                     AND FINANCIAL CONDITION                   
            THIRD QUARTER 1997 vs. THIRD QUARTER 1996
                               AND
             YEAR-TO-DATE 1997 vs. YEAR-TO-DATE 1996
RESULTS OF OPERATIONS
     Net income remained relatively unchanged for the quarter as
a significant increase in operating revenues was offset by
increases in operating expenses and interest charges.  Net income
decreased $19.8 million or 19% for the year-to-date period mainly
due to a decline in more profitable retail revenues reflecting
milder weather during the first six months of 1997 and an
increase in interest charges.
     Income statement items which changed significantly were:
                                   Increase (Decrease)          
                             Third Quarter       Year-to-Date   
                          (in millions)   %   (in millions)   % 

Operating Revenues . . . .    $44.7      11       $ 13.4      1
Fuel Expense . . . . . . .     22.1      27         24.8      9
Purchased Power Expense. .     16.2      19          9.6      4
Other Operation Expense. .      7.0      13          8.5      5
Maintenance Expense. . . .     (0.7)     (2)        (8.2)    (9)
Federal Income Taxes . . .     (4.4)    (21)       (10.6)   (19)
Interest Charges . . . . .      4.0      15          6.4      8

     Retail revenues increased for the quarter and decreased for
the year-to-date period, while wholesale revenues increased for
both periods.  The increase in retail energy sales for the
quarter reflects a return to warmer weather.  The decrease in
retail revenue for the year-to-date period can be attributed to
lower rates, while energy sales remained unchanged as milder
weather during the first six months of 1997 largely offset the
effects of warmer summer weather.  The wholesale revenue increase
in both periods reflects an increase in less profitable wholesale
sales from new power marketing transactions, coal conversion
services and related transmission services.  New power marketing
transactions involve the purchase and sale of electricity outside
of AEP's transmission system.  Coal conversion service sales are
for the conversion of customers' coal to electricity.
     The increases in fuel expense for the quarter and year-to-date period were
 primarily due to the operation of the West
Virginia power supply cost recovery mechanism as overcollections
of fuel cost were deferred for future refund to customers through
a charge to fuel expense in accordance with a rate order and
increased coal fired generation to meet increased demand for
retail energy.
     Purchased power expense increased as a result of additional
energy purchases related to the new power marketing transactions.
     The effect of recording a gain in 1996 on the disposition of
emission allowances accounted for the increase in other operation
expense.
     Maintenance expense decreased as a result of the effect of
the recognition in 1996 of deferred incremental storm damage
costs in accordance with directions of the Virginia State
Corporation Commission and reduced repairs to distribution
facilities in 1997.
     The decrease in federal income tax expense attributable to
operations was primarily due to a decrease in pre-tax operating
income and for the quarter due to changes in certain book/tax
differences accounted for on a flow-through basis for rate-making
and financial reporting purposes.
     A January 1997 tender offer that retired $130 million stated
value preferred stock on February 28, 1997 and the redemption of
$48 million stated value preferred stock in April 1997 are
responsible for an increase in the balance of long-term debt
outstanding which was issued to finance the reacquisitions
resulting in increased interest charges.
FINANCIAL CONDITION
     Total plant and property additions including capital leases
for the first nine months of 1997 were $160 million.
     The Company issued two series of first mortgage bonds of $48
million each with rates of 6.35% and 6.71% due in 2000.  The
Company also issued $90 million of 8% series Junior Subordinated
Deferrable Interest Debentures due in 2027.  In March 1997, the
Company redeemed $56 million of first mortgage bonds with
interest rates of 8.75% and 9.35%.  Short-term debt increased by
$23 million from year-end balances.  In June 1997, the Company
received a $20 million cash capital contribution from its parent
which was credited to paid-in capital.
     As part of the January 1997 tender offer for all of the
Company's outstanding preferred stock, 1,298,963 shares of $100
stated value preferred stock were reacquired.  The total cost of
the stock reacquisition was $134 million.  At a special meeting
of shareholders held on February 28, 1997, the Company's articles
of incorporation were amended to remove certain capitalization
ratio requirements which restricted the Company's ability to
issue debt.  As a result unsecured borrowings are now limited
only by the Public Utility Holding Company Act of 1935 and the
Virginia State Corporation Commission with the current limitation
set at $250 million for unsecured short-term borrowings.  In
April 1997, all remaining shares of the 7.80% Series of Preferred
Stock were reacquired for $50 million.
REVISED AIR QUALITY STANDARDS
     On July 18, 1997, the United States Environmental Protection
Agency published a revised National Ambient Air Quality Standard
(NAAQS) for ozone and a new NAAQS for fine particulate matter
(less than 2.5 microns in size).  The new ozone standard is
expected to result in redesignation of a number of areas of the
country that are currently in compliance with the existing
standard to nonattainment status which could ultimately dictate
more stringent emission restrictions for AEP System generating
units. New stringent emission restrictions on AEP System
generating units to achieve attainment of the fine particulate
matter standard could also be imposed.  The AEP System operating
companies joined with other utilities to appeal the revised NAAQS
and filed petitions for review in August and September 1997 in
the U.S. Court of Appeals for the District of Columbia Circuit.
     Management is unable to estimate compliance costs without
knowledge of the reductions that may be necessary to meet the new
standards.  If such costs are significant, it could have a
material adverse effect on results of operations and possibly
financial condition unless such costs are recovered.

<PAGE>
<PAGE>
<TABLE>
             COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF INCOME
                                (UNAUDITED)
<CAPTION>
                                          Three Months Ended        Nine Months Ended
                                             September 30,            September 30,    
                                           1997         1996        1997         1996
                                                         (in thousands)
<S>                                      <C>          <C>         <C>          <C>
OPERATING REVENUES . . . . . . . . . . . $313,024     $303,270    $841,294     $843,333

OPERATING EXPENSES:
  Fuel . . . . . . . . . . . . . . . . .   52,269       47,189     134,198      139,864
  Purchased Power. . . . . . . . . . . .   54,444       47,099     138,278      130,539
  Other Operation. . . . . . . . . . . .   46,505       55,609     132,256      146,617
  Maintenance. . . . . . . . . . . . . .   17,535       17,053      50,602       48,385
  Depreciation . . . . . . . . . . . . .   22,784       22,072      67,800       65,829
  Amortization of Zimmer Plant
    Phase-in Costs . . . . . . . . . . .     -           9,699      15,744       26,112
  Taxes Other Than Federal Income Taxes.   29,861       29,985      89,484       86,180
  Federal Income Taxes . . . . . . . . .   24,731       22,159      57,639       51,803
          TOTAL OPERATING EXPENSES . . .  248,129      250,865     686,001      695,329

OPERATING INCOME . . . . . . . . . . . .   64,895       52,405     155,293      148,004
NONOPERATING INCOME (LOSS) . . . . . . .      658        1,164       2,018       (1,356)
INCOME BEFORE INTEREST CHARGES . . . . .   65,553       53,569     157,311      146,648
INTEREST CHARGES . . . . . . . . . . . .   20,065       18,810      59,069       59,267
NET INCOME . . . . . . . . . . . . . . .   45,488       34,759      98,242       87,381
PREFERRED STOCK DIVIDEND REQUIREMENTS. .      532        1,493       1,909        4,537
EARNINGS APPLICABLE TO COMMON STOCK. . . $ 44,956     $ 33,266    $ 96,333     $ 82,844

                                                               

               CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
                                (UNAUDITED)

                                          Three Months Ended        Nine Months Ended
                                             September 30,            September 30,    
                                           1997         1996        1997         1996
                                                         (in thousands)

BALANCE AT BEGINNING OF PERIOD . . . . . $111,953     $ 86,019    $ 99,582     $ 74,320
NET INCOME . . . . . . . . . . . . . . .   45,488       34,759      98,242       87,381
DEDUCTIONS:
  Cash Dividends Declared:
    Common Stock . . . . . . . . . . . .   19,671       18,969      59,013       56,907
    Cumulative Preferred Stock . . . . .      437        1,422       1,312        4,266
  Capital Stock Expense. . . . . . . . .       95           71         261          212

BALANCE AT END OF PERIOD . . . . . . . . $137,238     $100,316    $137,238     $100,316

The common stock of the Company is wholly owned by American Electric Power Company, Inc.
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
             COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                                (UNAUDITED)
<CAPTION>
                                                          September 30,   December 31,
                                                              1997            1996    
                                                                 (in thousands)
ASSETS
<S>                                                        <C>             <C>
ELECTRIC UTILITY PLANT:
  Production . . . . . . . . . . . . . . . . . . . . .     $1,512,032      $1,503,371
  Transmission . . . . . . . . . . . . . . . . . . . .        332,834         326,247
  Distribution . . . . . . . . . . . . . . . . . . . .        919,204         885,267
  General. . . . . . . . . . . . . . . . . . . . . . .        130,887         130,946
  Construction Work in Progress. . . . . . . . . . . .         61,196          54,062
          Total Electric Utility Plant . . . . . . . .      2,956,153       2,899,893
  Accumulated Depreciation . . . . . . . . . . . . . .      1,058,186       1,016,909

          NET ELECTRIC UTILITY PLANT . . . . . . . . .      1,897,967       1,882,984



OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . .         34,652          24,069



CURRENT ASSETS:
  Cash and Cash Equivalents. . . . . . . . . . . . . .         12,596           9,134
  Accounts Receivable (net). . . . . . . . . . . . . .        115,789          63,003
  Fuel . . . . . . . . . . . . . . . . . . . . . . . .         17,392          18,278
  Materials and Supplies . . . . . . . . . . . . . . .         23,521          23,999
  Accrued Utility Revenues . . . . . . . . . . . . . .         45,883          31,826
  Prepayments. . . . . . . . . . . . . . . . . . . . .         27,061          32,330
 
          TOTAL CURRENT ASSETS . . . . . . . . . . . .        242,242         178,570


REGULATORY ASSETS. . . . . . . . . . . . . . . . . . .        357,773         385,689


DEFERRED CHARGES . . . . . . . . . . . . . . . . . . .         21,950          70,274


            TOTAL. . . . . . . . . . . . . . . . . . .     $2,554,584      $2,541,586

See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
             COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                                (UNAUDITED)
<CAPTION>
                                                          September 30,   December 31,
                                                              1997            1996    
                                                                 (in thousands)
CAPITALIZATION AND LIABILITIES
<S>                                                        <C>             <C>
CAPITALIZATION:
  Common Stock - No Par Value:
    Authorized -  24,000,000 Shares
    Outstanding - 16,410,426 Shares. . . . . . . . . .     $   41,026      $   41,026
  Paid-in Capital. . . . . . . . . . . . . . . . . . .        572,017         574,709
  Retained Earnings. . . . . . . . . . . . . . . . . .        137,238          99,582
          Total Common Shareholder's Equity. . . . . .        750,281         715,317
  Cumulative Preferred Stock - Subject to               
    Mandatory Redemption . . . . . . . . . . . . . . .         25,000          25,000
  Long-term Debt . . . . . . . . . . . . . . . . . . .        840,002         882,641
                                                        
          TOTAL CAPITALIZATION . . . . . . . . . . . .      1,615,283       1,622,958
                                                        
                                                        
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . .         41,997          40,068
                                                        
CURRENT LIABILITIES:                                    
  Preferred Stock Due Within One Year. . . . . . . . .           -             50,000
  Long-term Debt Due Within One Year . . . . . . . . .         96,390          14,640
  Short-term Debt. . . . . . . . . . . . . . . . . . .         94,725          51,800
  Accounts Payable . . . . . . . . . . . . . . . . . .         56,836          54,828
  Taxes Accrued. . . . . . . . . . . . . . . . . . . .         78,784         129,429
  Interest Accrued . . . . . . . . . . . . . . . . . .         26,312          13,605
  Other. . . . . . . . . . . . . . . . . . . . . . . .         32,395          32,314
                                                        
          TOTAL CURRENT LIABILITIES. . . . . . . . . .        385,442         346,616
                                                        
DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . .        432,018         441,477
                                                        
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . .         54,396          57,101
                                                        
DEFERRED CREDITS . . . . . . . . . . . . . . . . . . .         25,448          33,366
                                                        
CONTINGENCIES (Note 4)
                                                        
            TOTAL. . . . . . . . . . . . . . . . . . .     $2,554,584      $2,541,586

See Notes to Consolidated Financial Statements.
</TABLE>

<PAGE>
<PAGE>
<TABLE>
             COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (UNAUDITED)
<CAPTION>
                                                                 Nine Months Ended
                                                                    September 30,     
                                                                1997            1996
                                                                   (in thousands)
<S>                                                          <C>             <C>
OPERATING ACTIVITIES:
  Net Income . . . . . . . . . . . . . . . . . . . . . . . . $  98,242       $  87,381 
  Adjustments for Noncash Items:
    Depreciation . . . . . . . . . . . . . . . . . . . . . .    67,978          65,549
    Deferred Federal Income Taxes. . . . . . . . . . . . . .      (741)         (9,777)
    Deferred Investment Tax Credits. . . . . . . . . . . . .    (2,705)         (2,736)
    Deferred Fuel Cost (net) . . . . . . . . . . . . . . . .    (4,089)          6,032
    Amortization of Zimmer Plant Operating Expenses and 
      Carrying Charges . . . . . . . . . . . . . . . . . . .    15,936          24,539  
    Amortization of Deferred Property Taxes. . . . . . . . .    48,601          45,673
  Changes in Certain Current Assets and Liabilities:
    Accounts Receivable (net). . . . . . . . . . . . . . . .   (52,786)        (14,750)
    Fuel, Materials and Supplies . . . . . . . . . . . . . .     1,364           4,531
    Accrued Utility Revenues . . . . . . . . . . . . . . . .   (14,057)         10,821
    Accounts Payable . . . . . . . . . . . . . . . . . . . .     2,008           1,638
    Taxes Accrued. . . . . . . . . . . . . . . . . . . . . .   (50,645)        (40,527)
    Interest Accrued . . . . . . . . . . . . . . . . . . . .    12,707           9,283
  Other (net). . . . . . . . . . . . . . . . . . . . . . . .    (4,477)         17,432
        Net Cash Flows From Operating Activities . . . . . .   117,336         205,089

INVESTING ACTIVITIES:
  Construction Expenditures. . . . . . . . . . . . . . . . .   (82,696)        (61,321)
  Other. . . . . . . . . . . . . . . . . . . . . . . . . . .     1,586           2,624 
        Net Cash Flows Used For Investing Activities . . . .   (81,110)        (58,697)

FINANCING ACTIVITIES:
  Issuance of Long-term Debt . . . . . . . . . . . . . . . .    38,574            -   
  Change in Short-term Debt (net). . . . . . . . . . . . . .    42,925          24,750 
  Retirement of Cumulative Preferred Stock . . . . . . . . .   (52,953)         (7,500)
  Retirement of Long-term Debt . . . . . . . . . . . . . . .      -            (99,053)
  Dividends Paid on Common Stock . . . . . . . . . . . . . .   (59,013)        (56,907)
  Dividends Paid on Cumulative Preferred Stock . . . . . . .    (2,297)         (4,443)
        Net Cash Flows Used For Financing Activities . . . .   (32,764)       (143,153)

Net Increase in Cash and Cash Equivalents. . . . . . . . . .     3,462           3,239
Cash and Cash Equivalents at Beginning of Period . . . . . .     9,134          10,577
Cash and Cash Equivalents at End of Period . . . . . . . . . $  12,596       $  13,816

Supplemental Disclosure:
  Cash paid  for  interest net of capitalized amounts was $43,341,000  and $47,124,000
  and for income taxes was $50,609,000 and $46,943,000 in 1997 and 1996, respectively.
  Noncash acquisitions under capital leases were $6,583,000 and $9,707,000 in 1997 and
  1996, respectively.

See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
         COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        SEPTEMBER 30, 1997               
                           (UNAUDITED)

1.   GENERAL

          The accompanying unaudited consolidated financial
     statements should be read in conjunction with the 1996
     Annual Report as incorporated in and filed with the Form 10-K. 

2.   FINANCING ACTIVITIES

          In January 1997 the Company terminated an agreement
     under which $50 million of undivided interests in designated
     pools of accounts receivable and accrued utility revenues
     were sold with limited recourse.

          In March 1997 the Company redeemed the entire 500,000
     shares outstanding of its 7-7/8% Series of Cumulative
     Preferred Stock, par value $100, at the regular redemption
     price of $105.25 per share and issued $40 million of 7.92%
     Junior Subordinated Deferrable Interest Debentures due in
     2027.

          In October 1997 the Company issued $48 million of 6.85%
     Unsecured Medium Term Notes due 2005.  Also the Company
     redeemed the entire $14.6 million outstanding balance of 6-1/4% First
     Mortgage Bonds due in 1997.

3.   ZIMMER PHASE-IN PLAN

          In June 1997 the Company completed recovery of its
     Zimmer Plant phase-in plan deferrals through the cessation
     of a 3.39% temporary surcharge.  The temporary surcharge was
     placed into effect on February 1, 1994 to allow recovery of
     a rate phase-in deferral of $93.9 million.  The amount of
     net phase-in deferrals that were collected through the
     surcharge was $18.5 million in 1994, $28.5 million in 1995,
     $31.5 million in 1996 and $15.4 million in 1997.  The
     cessation of the surcharge recovery of amounts deferred
     under the phase-in plan did not affect net income since the
     deferred costs were amortized commensurate with their
     recovery.  For other information regarding the Zimmer rate
     case refer to the 1996 Annual Report - Notes to Consolidated
     Financial Statements - Note 2.

4.   CONTINGENCIES

     Taxes

          As discussed in Note 8, "Federal Income Taxes" of the
     Notes to Consolidated Financial Statements in the 1996
     Annual Report, the Internal Revenue Service (IRS) agents
     auditing the AEP System's consolidated federal income tax
     returns for the years 1991 through 1993 requested a ruling
     from their National Office as to whether certain interest
     deductions relating to corporate owned life insurance (COLI)
     should be disallowed.  The COLI program was established in
     1990 as part of the Company's strategy to fund and reduce
     the cost of medical benefits for retired employees.  AEP
     filed a brief with the IRS National Office defending the
     subject deductions.  Although no disallowance has been
     proposed, a disallowance of COLI interest deductions through
     September 30, 1997 would reduce earnings by approximately
     $38 million inclusive of interest.  Management believes it
     will ultimately prevail on this issue and will vigorously
     contest any disallowance that may be proposed.

     Revised Air Quality Standards

          On July 18, 1997, the United States Environmental
     Protection Agency published a revised National Ambient Air
     Quality Standard (NAAQS) for ozone and a new NAAQS for fine
     particulate matter (less than 2.5 microns in size).  The new
     ozone standard is expected to result in redesignation of a
     number of areas of the country that are currently in
     compliance with the existing standard to nonattainment
     status which could ultimately dictate more stringent
     emission restrictions for AEP System generating units. New
     stringent emission restrictions on AEP System generating
     units to achieve attainment of the fine particulate matter
     standard could also be imposed.  The AEP System operating
     companies joined with other utilities to appeal the revised
     NAAQS and filed petitions for review in August and September
     1997 in the U.S. Court of Appeals for the District of
     Columbia Circuit.

          Management is unable to estimate compliance costs
     without knowledge of the reductions that may be necessary to
     meet the new standards.  If such costs are significant, it
     could have a material adverse effect on results of
     operations and possibly financial condition unless such
     costs are recovered.

     Other

          The Company continues to be involved in certain other
     matters discussed in its 1996 Annual Report.
<PAGE>
         COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
     MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
            THIRD QUARTER 1997 vs. THIRD QUARTER 1996
                               AND
             YEAR-TO-DATE 1997 vs. YEAR-TO-DATE 1996

     Net income increased $10.7 million or 31% for the third
quarter of 1997 due to an increase in wholesale sales and a
decrease in operating expenses.  Year-to-date net income
increased $10.9 million or 12% as a result of a reduction in
operating expenses and an increase in non-operating income.
     Operating revenues increased 3% for the third quarter and
were flat for the year-to-date period.  The third quarter
increase was primarily due to increased wholesale revenues
partially offset by decreased retail revenues.  In the year-to-date period the
increase in wholesale revenues was offset by a
decline in retail revenues.  The reduction in retail revenues
resulted from the cessation in June 1997 business of a revenue
surcharge in connection with the recovery of phase-in deferrals
relating to the Zimmer Plant and reduced fuel clause revenues
reflecting the refund of previously over collected fuel costs. 
Under the Public Utilities Commission of Ohio fuel clause
adjustment mechanism, over recoveries of fuel costs are deferred
as a regulatory liability and subsequently refunded to customers
as a reduction to fuel clause revenues.  The cessation of the
Zimmer revenue surcharge and the refund of previously over
collected fuel costs did not affect net income since it was
commensurate with the amortization of regulatory costs and
liabilities, respectively.
     Revenues from wholesale customers increased 64% on a 70%
increase in sales for the third quarter and increased 23% on a
33% sales increase for the year-to-date period.  New power
marketing transactions and increased coal conversion service
sales, which are for the conversion of customers' coal to
electricity, accounted for the increase in wholesale sales.  The
new power marketing transactions involve the purchase and sale of
electricity outside of the AEP transmission system.
<PAGE>
     Income statement lines which changed significantly were:
                                    Increase (Decrease)          
                             Third Quarter        Year-to-Date   
                           (in millions)   %   (in millions)   % 

Fuel Expense. . . . . . . .    $ 5.1      11       $ (5.7)    (4)
Purchased Power Expense . .      7.3      16          7.7      6
Other Operation Expense . .     (9.1)    (16)       (14.4)   (10)
Amortization of Zimmer
  Plant Phase-in Costs. . .     (9.7)    N.M.       (10.4)   (40)
Federal Income Taxes. . . .      2.6      12          5.8     11
Nonoperating Income . . . .     (0.5)    (43)         3.4    N.M.

N.M. = Not Meaningful

     The increase in fuel expense for the quarter was due to an
increase in generation reflecting the increase in demand for
electricity.   The decline in fuel expense on a year-to-date 
basis was due to the operation of the fuel clause adjustment
mechanism which credited fuel expenses in the current period with
the amortization of previously over collected fuel costs deferred
as a regulatory liability in the prior period.
     Purchased power expense increased primarily as a result of
the new power marketing transactions.
     The decrease in other operation expense was mainly due to
the recognition of deferred gains on the sale of emission
allowances, commensurate with a reduction of customers bills
through the fuel clause adjustment mechanism, and a decline in
employee pensions and benefits expense.
     The reduction in the amortization of deferred Zimmer Plant
phase-in costs reflects the completion of the amortization.  The
reduction does not affect net income since the amortization was
being fully recovered in revenues through a surcharge which was
terminated when the amortization was completed.
     Federal income taxes attributable to operations increased
primarily due to an increase in pre-tax operating income partly
offset in the quarter by changes in certain book/tax differences
accounted for on a flow-through basis for rate-making and
financial reporting purposes.
     The decrease in nonoperating income for the third quarter
was due to the cessation of deferred Zimmer Plant carrying
charges as a result of the completion of the amortization and
surcharge recovery of the deferred Zimmer Plant phase-in revenues
in June 1997.  As a result net income was unaffected. 
Nonoperating income for the year-to-date period increased due to
the effect of losses recorded in the first quarter of 1996 from
certain deferred demand side management program costs and the
clean-up of underground fuel storage tanks at one of the
Company's facilities.
<PAGE>
<PAGE>
<TABLE>
              INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF INCOME
                                (UNAUDITED)
<CAPTION>
                                          Three Months Ended           Nine Months Ended
                                             September 30,              September 30,    
                                           1997        1996           1997         1996
                                                         (in thousands)
<S>                                      <C>         <C>           <C>           <C>
OPERATING REVENUES . . . . . . . . . . . $362,058    $339,847      $1,023,879    $993,224

OPERATING EXPENSES:
  Fuel . . . . . . . . . . . . . . . . .   62,275      59,546         176,051     176,101
  Purchased Power. . . . . . . . . . . .   54,043      33,887         124,216     103,203
  Other Operation. . . . . . . . . . . .   80,399      74,853         240,310     232,349
  Maintenance. . . . . . . . . . . . . .   29,408      28,269          85,103      84,818
  Depreciation and Amortization. . . . .   35,271      35,193         105,395     105,171
  Amortization of Rockport Plant Unit 1
    Phase-in Plan Deferrals. . . . . . .    2,999       3,911          10,821      11,733
  Taxes Other Than Federal Income Taxes.   15,781      19,823          49,657      58,184
  Federal Income Taxes . . . . . . . . .   21,433      23,242          61,843      57,094
          TOTAL OPERATING EXPENSES . . .  301,609     278,724         853,396     828,653
OPERATING INCOME . . . . . . . . . . . .   60,449      61,123         170,483     164,571
NONOPERATING INCOME (LOSS) . . . . . . .      499        (255)          1,464        (620)
INCOME BEFORE INTEREST CHARGES . . . . .   60,948      60,868         171,947     163,951
INTEREST CHARGES . . . . . . . . . . . .   15,857      16,322          48,689      50,131
NET INCOME . . . . . . . . . . . . . . .   45,091      44,546         123,258     113,820
PREFERRED STOCK DIVIDEND REQUIREMENTS. .    1,219       2,406           4,544       8,264
EARNINGS APPLICABLE TO COMMON STOCK. . . $ 43,872    $ 42,140      $  118,714    $105,556

                                                              

               CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
                                (UNAUDITED)

                                          Three Months Ended          Nine Months Ended
                                             September 30,              September 30,   
                                           1997        1996           1997        1996
                                                         (in thousands)

BALANCE AT BEGINNING OF PERIOD . . . . . $285,783    $242,269       $269,071    $235,107
NET INCOME . . . . . . . . . . . . . . .   45,091      44,546        123,258     113,820
DEDUCTIONS:
  Cash Dividends Declared:
    Common Stock . . . . . . . . . . . .   44,066      28,127        102,196      84,381
    Cumulative Preferred Stock . . . . .    1,186       2,359          3,573       7,608
  Capital Stock Expense. . . . . . . . .       33          47            971         656

BALANCE AT END OF PERIOD . . . . . . . . $285,589    $256,282       $285,589    $256,282

The common stock of the Company is wholly owned 
by American Electric Power Company, Inc.

See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
              INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                                (UNAUDITED)
<CAPTION>
                                                          September 30,   December 31,
                                                              1997            1996    
                                                                 (in thousands)
ASSETS
<S>                                                        <C>             <C>
ELECTRIC UTILITY PLANT:
  Production . . . . . . . . . . . . . . . . . . . . .     $2,536,799      $2,525,969
  Transmission . . . . . . . . . . . . . . . . . . . .        884,842         881,407
  Distribution . . . . . . . . . . . . . . . . . . . .        717,222         696,069
  General (including nuclear fuel) . . . . . . . . . .        209,412         189,619
  Construction Work in Progress. . . . . . . . . . . .        107,721          84,605
          Total Electric Utility Plant . . . . . . . .      4,455,996       4,377,669
  Accumulated Depreciation and Amortization. . . . . .      1,947,158       1,861,893

          NET ELECTRIC UTILITY PLANT . . . . . . . . .      2,508,838       2,515,776

NUCLEAR DECOMMISSIONING AND SPENT NUCLEAR FUEL
 DISPOSAL TRUST FUNDS. . . . . . . . . . . . . . . . .        548,614         490,778

OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . .        166,324         154,265



CURRENT ASSETS:
  Cash and Cash Equivalents. . . . . . . . . . . . . .          8,275           8,233
  Accounts Receivable. . . . . . . . . . . . . . . . .        119,700         125,822
  Allowance For Uncollectible Accounts . . . . . . . .         (1,063)           (156)
  Fuel . . . . . . . . . . . . . . . . . . . . . . . .         18,865          23,977
  Materials and Supplies . . . . . . . . . . . . . . .         73,481          77,074
  Accrued Utility Revenues . . . . . . . . . . . . . .         31,011          38,295
  Prepayments. . . . . . . . . . . . . . . . . . . . .          4,904          10,271

          TOTAL CURRENT ASSETS . . . . . . . . . . . .        255,173         283,516




REGULATORY ASSETS. . . . . . . . . . . . . . . . . . .        406,214         421,692

DEFERRED CHARGES . . . . . . . . . . . . . . . . . . .         22,754          31,457



            TOTAL. . . . . . . . . . . . . . . . . . .     $3,907,917      $3,897,484

See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
              INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                                (UNAUDITED)
<CAPTION>
                                                         September 30,    December 31,
                                                              1997            1996    
                                                                 (in thousands)
CAPITALIZATION AND LIABILITIES
<S>                                                       <C>              <C>
CAPITALIZATION:
  Common Stock - No Par Value:
    Authorized -  2,500,000 Shares
    Outstanding - 1,400,000 Shares . . . . . . . . . .    $   56,584       $   56,584
  Paid-in Capital. . . . . . . . . . . . . . . . . . .       732,439          731,272
  Retained Earnings. . . . . . . . . . . . . . . . . .       285,589          269,071
          Total Common Shareholder's Equity. . . . . .     1,074,612        1,056,927
  Cumulative Preferred Stock:
    Not Subject to Mandatory Redemption. . . . . . . .         9,499           21,977
    Subject to Mandatory Redemption. . . . . . . . . .        68,445          135,000
  Long-term Debt . . . . . . . . . . . . . . . . . . .     1,012,162        1,042,104

          TOTAL CAPITALIZATION . . . . . . . . . . . .     2,164,718        2,256,008

OTHER NONCURRENT LIABILITIES:
  Nuclear Decommissioning. . . . . . . . . . . . . . .       363,296          313,845
  Other. . . . . . . . . . . . . . . . . . . . . . . .       208,440          174,903

          TOTAL OTHER NONCURRENT LIABILITIES . . . . .       571,736          488,748

CURRENT LIABILITIES:
  Long-term Debt Due Within One Year . . . . . . . . .        35,000             -   
  Short-term Debt. . . . . . . . . . . . . . . . . . .        57,850           43,500
  Accounts Payable . . . . . . . . . . . . . . . . . .        25,430           61,892
  Taxes Accrued. . . . . . . . . . . . . . . . . . . .        51,785           65,400
  Interest Accrued . . . . . . . . . . . . . . . . . .        17,337           15,281
  Rent Accrued - Rockport Plant Unit 2 . . . . . . . .        23,427            4,963
  Obligations Under Capital Leases . . . . . . . . . .        32,891           29,740
  Dividends Declared . . . . . . . . . . . . . . . . .        16,185            2,359
  Other. . . . . . . . . . . . . . . . . . . . . . . .        65,231           59,114

          TOTAL CURRENT LIABILITIES. . . . . . . . . .       325,136          282,249

DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . .       575,529          594,879

DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . .       140,567          146,473

DEFERRED GAIN ON SALE AND LEASEBACK - 
  ROCKPORT PLANT UNIT 2. . . . . . . . . . . . . . . .        93,346           96,125

DEFERRED CREDITS . . . . . . . . . . . . . . . . . . .        36,885           33,002

CONTINGENCIES (Note 4)

            TOTAL. . . . . . . . . . . . . . . . . . .    $3,907,917       $3,897,484

See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
              INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (UNAUDITED)
<CAPTION>
                                                                 Nine Months Ended
                                                                    September 30,     
                                                                 1997           1996
                                                                   (in thousands)
<S>                                                           <C>            <C>
OPERATING ACTIVITIES:
  Net Income . . . . . . . . . . . . . . . . . . . . . . . .  $ 123,258      $ 113,820
  Adjustments for Noncash Items:
    Depreciation and Amortization. . . . . . . . . . . . . .    111,176        110,934
    Amortization of Rockport Plant Unit 1 
      Phase-in Plan Deferrals. . . . . . . . . . . . . . . .     10,821         11,733
    Deferred Federal Income Taxes. . . . . . . . . . . . . .     (9,753)       (19,438)
    Deferred Investment Tax Credits. . . . . . . . . . . . .     (5,906)        (5,945)
  Changes in Certain Current Assets and Liabilities:
    Accounts Receivable (net). . . . . . . . . . . . . . . .      7,029        (10,422)
    Fuel, Materials and Supplies . . . . . . . . . . . . . .      8,705            (49)
    Accrued Utility Revenues . . . . . . . . . . . . . . . .      7,284         13,590
    Accounts Payable . . . . . . . . . . . . . . . . . . . .    (36,462)       (25,712)
    Taxes Accrued. . . . . . . . . . . . . . . . . . . . . .    (13,615)        (6,798)
    Rent Accrued - Rockport Plant Unit 2 . . . . . . . . . .     18,464         18,464
  Other (net). . . . . . . . . . . . . . . . . . . . . . . .     15,010         31,674
        Net Cash Flows From Operating Activities . . . . . .    236,011        231,851

INVESTING ACTIVITIES:
  Construction Expenditures. . . . . . . . . . . . . . . . .    (79,066)       (58,283)
  Other. . . . . . . . . . . . . . . . . . . . . . . . . . .      1,798            979
        Net Cash Flows Used For Investing Activities . . . .    (77,268)       (57,304)

FINANCING ACTIVITIES:
  Issuance of Long-term Debt . . . . . . . . . . . . . . . .     47,728         38,579
  Retirement of Cumulative Preferred Stock . . . . . . . . .    (78,838)       (30,568)
  Retirement of Long-term Debt . . . . . . . . . . . . . . .    (50,000)       (46,091)
  Change in Short-term Debt (net). . . . . . . . . . . . . .     14,350        (49,550)
  Dividends Paid on Common Stock . . . . . . . . . . . . . .    (87,195)       (84,381)
  Dividends Paid on Cumulative Preferred Stock . . . . . . .     (4,746)        (8,139)
        Net Cash Flows Used For Financing Activities . . . .   (158,701)      (180,150)

Net Increase (Decrease) in Cash and Cash Equivalents . . . .         42         (5,603)
Cash and Cash Equivalents at Beginning of Period . . . . . .      8,233         13,723
Cash and Cash Equivalents at End of Period . . . . . . . . .  $   8,275      $   8,120

Supplemental Disclosure:
  Cash paid  for interest  net of capitalized amounts was  $44,575,000 and $45,635,000 
  and for income taxes was $83,580,000 and $87,746,000 in 1997 and 1996, respectively.
  Noncash acquisitions under  capital leases were $80,231,000 and  $44,848,000 in 1997 
  and 1996, respectively.

See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
         INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        SEPTEMBER 30, 1997              
                           (UNAUDITED)

1.  GENERAL

          The accompanying unaudited consolidated financial
     statements should be read in conjunction with the 1996
     Annual Report as incorporated in and filed with the Form 10-K.  Certain
     prior-period amounts have been reclassified to
     conform to current-period presentation.

2.  FINANCING ACTIVITIES

          In February 1997, the Company issued $48 million of
     6.40% First Mortgage Bonds due 2000.  In May 1997, the
     Company redeemed $50 million of 8.75% First Mortgage Bonds
     due 2022.

          In March 1997, the Company, as part of a tender offer,
     reacquired and retired the following shares of Cumulative
     Preferred Stock at the prices listed plus an amount equal to
     accrued dividends:

                     Number           Price            Total
                   of Shares        Paid Per       Reacquisition
    Series          Retired           Share             Price   
                                                   (in thousands)

    4.12%            20,669          $ 64.17          $ 1,326
    4-1/8%           59,325            62.31            3,697
    4.56%            28,525            69.94            1,995
    5.90%           233,000           101.83           23,726
    6-1/4%           97,500           103.79           10,120
    6.30%           217,550           103.71           22,562
    6-7/8%          117,500           106.45           12,508

3.   NUCLEAR DECOMMISSIONING AND RATE PHASE-IN PLANS

     Decommissioning and Low Level Waste Accumulation Disposal
     Costs

           A 1997 nuclear decommissioning study has been
     completed.  The estimated cost of decommissioning at the
     Company's Donald C. Cook Nuclear Plant ranges from $700
     million to $1,152 million in 1997 nondiscounted dollars. 
     The previous estimated costs including low level radioactive
     waste accumulation disposal ranged from $634 million to $988
     million in 1993 nondiscounted dollars.  See Note 3
     "Commitments and Contingencies" of the Notes to Consolidated
     Financial Statements in the 1996 Annual Report for further
     discussion of decommissioning.

     Rate Phase-in Plans

          A rate phase-in plan in the Indiana jurisdiction
     provides for the recovery and straight-line amortization of
     deferred Rockport Plant Unit 1 costs over ten years
     beginning in August 1987.  In August 1997 the amortization
     of the deferred Rockport Plant Unit 1 Phase-in Plan costs
     attributable to the Indiana jurisdiction was completed.  In
     an effort to accelerate the recovery of the Cook Nuclear
     Plant's decommissioning cost, on September 9, 1997 the
     Company filed a petition with the Indiana Utility Regulatory
     Commission requesting authority to increase accrual of its
     nuclear decommissioning expense in an amount equal to the
     expired Rockport Plant Unit 1 Phase-in Plan amortization
     expense, with no effect on customers' rates and net income. 
     The matter is pending.

 4.  COMMITMENTS AND CONTINGENCIES

     Taxes

          As discussed in Note 7, "Federal Income Taxes" of the
     Notes to Consolidated Financial Statements in the 1996
     Annual Report, the Internal Revenue Service (IRS) agents
     auditing the AEP System's consolidated federal income tax
     returns for the years 1991 through 1993 requested a ruling
     from their National Office as to whether certain interest
     deductions relating to corporate owned life insurance (COLI)
     claimed on Federal income tax returns should be disallowed. 
     The COLI program was established in 1990 as part of the
     Company's strategy to fund and reduce the cost of medical
     benefits for retired employees.  AEP filed a brief with the
     IRS National Office defending the subject deductions. 
     Although no disallowance has been proposed, a disallowance
     of the COLI interest deductions through September 30, 1997
     would reduce earnings by approximately $57 million inclusive
     of interest.  Management believes it will ultimately prevail
     on this issue and will vigorously contest any disallowance
     that may be proposed.

     Revised Air Quality Standards

          On July 18, 1997, the United States Environmental
     Protection Agency published a revised National Ambient Air
     Quality Standard (NAAQS) for ozone and a new NAAQS for fine
     particulate matter (less than 2.5 microns in size).  The new
     ozone standard is expected to result in redesignation of a
     number of areas of the country that are currently in
     compliance with the existing standard to nonattainment
     status which could ultimately dictate more stringent
     emission restrictions for AEP System generating units. New
     stringent emission restrictions on AEP System generating
     units to achieve attainment of the fine particulate matter
     standard could also be imposed.  The AEP System operating
     companies joined with other utilities to appeal the revised
     NAAQS and filed petitions for review in August and September
     1997 in the U.S. Court of Appeals for the District of
     Columbia Circuit.

          Management is unable to estimate compliance costs
     without knowledge of the reductions that may be necessary to
     meet the new standards.  If such costs are significant, it
     could have a material adverse effect on results of
     operations and possibly financial condition unless such
     costs are recovered.

     Cook Plant Shutdown
     
          On September 9 and 10, 1997, during a Nuclear Regulatory
     Commission (NRC) architect engineer design inspection,
     questions regarding the operability of certain safety
     systems caused Company operations personnel to shut down
     Units 1 and 2 of the Cook Nuclear Plant.  On September 19,
     1997, the NRC issued a Confirmatory Action Letter requiring
     the Company to address certain issues identified in the
     letter.  The Company is working with the NRC to resolve this
     matter.  At this time management is unable to determine when
     the units will be returned to service.  If the units are not
     returned to service in a timely manner, it could have an
     adverse impact on results of operations and possibly
     financial condition.
<PAGE>
         INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                     AND FINANCIAL CONDITION                   

            THIRD QUARTER 1997 vs. THIRD QUARTER 1996
                               AND
             YEAR-TO-DATE 1997 vs. YEAR-TO-DATE 1996
RESULTS OF OPERATIONS
     Net income increased slightly for the quarter and increased
8% or $9.4 million for the year-to-date period due primarily to
increased revenues and a reduction in taxes other than federal
income taxes.
     Income statement line items which changed significantly
were:
                                    Increase (Decrease)          
                             Third Quarter         Year-to-Date  
                          (in millions)   %     (in millions)  % 

Operating Revenues . . . . .  $22.2       7         $30.7      3
Fuel Expense . . . . . . . .    2.7       5           (.1)     -
Purchased Power Expense. . .   20.2      59          21.0     20
Other Operation Expense. . .    5.5       7           8.0      3
Taxes Other Than Federal
 Income Taxes. . . . . . . .   (4.0)    (20)         (8.5)   (15)
Federal Income Taxes . . . .   (1.8)     (8)          4.7      8

     Operating revenues increased for both periods due
predominantly to an increase in sales to wholesale customers
largely as a result of new power marketing transactions which
began in July 1997.  The new power marketing transactions involve
the purchase and sale of electricity outside of AEP's
transmission system.  The increase in wholesale sales for the
year-to-date period is also due to increased coal conversion and
transmission services.  The increase for the year-to-date period
can be attributed to an increase in retail revenues reflecting an
increase in revenues under a fuel cost recovery mechanism and an
increase in sales to industrial customers due to increased usage. 
Under the fuel cost recovery mechanism, fuel and purchased power
costs not reflected in rates are deferred for future recovery.
     Fuel expense increased for the quarter due to increased
utilization of higher cost coal-fired generation due to reduced
nuclear generation.  The Donald C. Cook Nuclear Plant (Cook
Nuclear Plant) Units 1 and 2 were taken out of service in early
September to resolve concerns regarding the documentation of
safety systems.  See discussion below of Cook Plant Shutdown. 
Cook Nuclear Plant Unit 2 began a refueling, inspection and
general maintenance process on October 13, 1997.
     The increase in purchased power expense for both periods was
the result of the new power marketing transactions and additional
energy purchases from the Power Pool due to the unavailability of
the nuclear units.
     Other operation expense increased for both periods as a
result of the effect of recording a gain in 1996 on the
disposition of emission allowances and, for the year-to-date
period, increased administrative and general expenses and
uncollectible accounts receivable expense.
     The decrease in taxes other than federal income taxes for
both periods was the result of lower Indiana and Michigan real
and personal property tax accruals.
     Federal income taxes attributable to operations decreased
for the quarter due to changes in certain book/tax differences
accounted for on a flow-through basis for rate-making and
financial reporting purposes.  The increase in federal income
taxes for the year-to-date period resulted from an increase in
pre-tax operating income.
FINANCIAL CONDITION
     Total plant and property additions including capital leases
for the year-to-date period were $160 million.  During the first
nine months of 1997 short-term debt outstanding increased by $14
million.
     In February 1997 the Company issued $48 million of 6.40%
First Mortage Bonds due in 2000.  In May 1997 the Company
redeemed $50 million of 8.75% First Mortgage Bonds due in 2022.
     As part of a January 1997 tender offer for all of the
Company's outstanding preferred stock, 774,069 shares of $100 par
value preferred stock were reacquired.  The total cost of the
stock reacquisition was $78 million.  At a special meeting of
shareholders held on February 28, 1997, the Company's articles of
incorporation were amended to remove certain capitalization ratio
requirements which restricted the Company's ability to issue
unsecured debt.  As a result, unsecured borrowings are now
limited only by the Public Utility Holding Company Act of 1935
with the current limitation set at $175 million for unsecured
short-term borrowings.
REVISED AIR QUALITY STANDARDS
     On July 18, 1997, the United States Environmental Protection
Agency published a revised National Ambient Air Quality Standard
(NAAQS) for ozone and a new NAAQS for fine particulate matter
(less than 2.5 microns in size).  The new ozone standard is
expected to result in redesignation of a number of areas of the
country that are currently in compliance with the existing
standard to nonattainment status which could ultimately dictate
more stringent emission restrictions for AEP System generating
units. New stringent emission restrictions on AEP System
generating units to achieve attainment of the fine particulate
matter standard could also be imposed.  The AEP System operating
companies joined with other utilities to appeal the revised NAAQS
and filed petitions for review in August and September 1997 in
the U.S. Court of Appeals for the District of Columbia Circuit.
     Management is unable to estimate compliance costs without
knowledge of the reductions that may be necessary to meet the new
standards.  If such costs are significant, it could have a
material adverse effect on results of operations and possibly
financial condition unless such costs are recovered.
COOK PLANT SHUTDOWN
     On September 9 and 10, 1997, during a Nuclear Regulatory
Commission (NRC) architect engineer design inspection, questions
regarding the operability of certain safety systems caused
Company operations personnel to shut down Units 1 and 2 of the
Cook Nuclear Plant.  On September 19, 1997, the NRC issued a
Confirmatory Action Letter requiring the Company to address
certain issues identified in the letter.  The Company is working
with the NRC to resolve this matter.  At this time management is
unable to determine when the units will be returned to service. 
If the units are not returned to service in a timely manner, it
could have an adverse impact on results of operations and
possibly financial condition.
<PAGE>
<PAGE>
<TABLE>
                          KENTUCKY POWER COMPANY
                           STATEMENTS OF INCOME
                                (UNAUDITED)
<CAPTION>
                                           Three Months Ended        Nine Months Ended
                                              September 30,            September 30,    
                                             1997        1996        1997         1996
                                                          (in thousands)
<S>                                        <C>         <C>         <C>          <C>
OPERATING REVENUES . . . . . . . . . . . . $89,791     $78,499     $256,472     $245,818

OPERATING EXPENSES:
  Fuel . . . . . . . . . . . . . . . . . .  20,020      16,821       58,647       58,611
  Purchased Power. . . . . . . . . . . . .  28,632      23,643       73,775       68,264
  Other Operation. . . . . . . . . . . . .  13,241       9,774       37,130       34,104
  Maintenance. . . . . . . . . . . . . . .   6,148       7,485       16,826       22,839
  Depreciation and Amortization. . . . . .   6,649       6,288       19,708       18,809
  Taxes Other Than Federal Income Taxes. .   2,427       2,246        7,266        6,364
  Federal Income Taxes . . . . . . . . . .   1,837       1,849        7,614        4,975

         TOTAL OPERATING EXPENSES. . . . .  78,954      68,106      220,966      213,966

OPERATING INCOME . . . . . . . . . . . . .  10,837      10,393       35,506       31,852

NONOPERATING LOSS. . . . . . . . . . . . .     (62)        (97)        (351)        (526)

INCOME BEFORE INTEREST CHARGES . . . . . .  10,775      10,296       35,155       31,326

INTEREST CHARGES . . . . . . . . . . . . .   6,323       5,855       18,431       17,760

NET INCOME . . . . . . . . . . . . . . . . $ 4,452     $ 4,441     $ 16,724     $ 13,566


                                                                               

                      STATEMENTS OF RETAINED EARNINGS
                                (UNAUDITED)

                                           Three Months Ended        Nine Months Ended
                                              September 30,            September 30,    
                                             1997        1996        1997         1996
                                                          (in thousands)

BALANCE AT BEGINNING OF PERIOD . . . . . . $82,982     $88,374      $84,090      $91,381

NET INCOME . . . . . . . . . . . . . . . .   4,452       4,441       16,724       13,566

CASH DIVIDENDS DECLARED. . . . . . . . . .   6,690       6,066       20,070       18,198

BALANCE AT END OF PERIOD . . . . . . . . . $80,744     $86,749      $80,744      $86,749

                    

The common stock of the Company is wholly owned by
American Electric Power Company, Inc.

See Notes to Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
                          KENTUCKY POWER COMPANY
                              BALANCE SHEETS
                                (UNAUDITED)
<CAPTION>
                                                         September 30,    December 31,
                                                             1997             1996    
                                                                (in thousands)
ASSETS
<S>                                                        <C>              <C>
ELECTRIC UTILITY PLANT:
  Production . . . . . . . . . . . . . . . . . . . . .     $247,665         $244,805
  Transmission . . . . . . . . . . . . . . . . . . . .      267,281          264,563
  Distribution . . . . . . . . . . . . . . . . . . . .      337,797          329,184
  General. . . . . . . . . . . . . . . . . . . . . . .       67,187           64,650
  Construction Work in Progress. . . . . . . . . . . .       63,959           48,400
          Total Electric Utility Plant . . . . . . . .      983,889          951,602
  Accumulated Depreciation and Amortization. . . . . .      292,629          286,640

          NET ELECTRIC UTILITY PLANT . . . . . . . . .      691,260          664,962

OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . .        6,434            6,452

CURRENT ASSETS:
  Cash and Cash Equivalents. . . . . . . . . . . . . .        1,477            1,106
  Accounts Receivable. . . . . . . . . . . . . . . . .       29,158           28,589
  Allowance for Uncollectible Accounts . . . . . . . .         (536)            (272)
  Fuel . . . . . . . . . . . . . . . . . . . . . . . .        9,492            9,244
  Materials and Supplies . . . . . . . . . . . . . . .       13,040           13,175
  Accrued Utility Revenues . . . . . . . . . . . . . .        6,463            8,175
  Prepayments. . . . . . . . . . . . . . . . . . . . .        1,809            2,011

          TOTAL CURRENT ASSETS . . . . . . . . . . . .       60,903           62,028


REGULATORY ASSETS. . . . . . . . . . . . . . . . . . .       89,808           88,776

DEFERRED CHARGES . . . . . . . . . . . . . . . . . . .        6,903           11,361

            TOTAL. . . . . . . . . . . . . . . . . . .     $855,308         $833,579

See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
                          KENTUCKY POWER COMPANY
                              BALANCE SHEETS
                                (UNAUDITED)
<CAPTION>
                                                          September 30,   December 31,
                                                              1997           1996    
                                                                 (in thousands)
CAPITALIZATION AND LIABILITIES
<S>                                                         <C>             <C>
CAPITALIZATION:
  Common Stock - $50 Par Value:
    Authorized -  2,000,000 Shares
    Outstanding - 1,009,000 Shares . . . . . . . . . .      $ 50,450        $ 50,450
  Paid-in Capital. . . . . . . . . . . . . . . . . . .       118,750         108,750
  Retained Earnings. . . . . . . . . . . . . . . . . .        80,744          84,090
          Total Common Shareholder's Equity. . . . . .       249,944         243,290
  First Mortgage Bonds . . . . . . . . . . . . . . . .       179,384         179,305
  Notes Payable. . . . . . . . . . . . . . . . . . . .        75,000          75,000
  Subordinated Debentures. . . . . . . . . . . . . . .        38,923          38,893

          TOTAL CAPITALIZATION . . . . . . . . . . . .       543,251         536,488

OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . .        22,191          19,467

CURRENT LIABILITIES:
  Short-term Debt. . . . . . . . . . . . . . . . . . .        71,450          51,675
  Accounts Payable . . . . . . . . . . . . . . . . . .        22,017          31,057
  Customer Deposits. . . . . . . . . . . . . . . . . .         3,580           3,409
  Taxes Accrued. . . . . . . . . . . . . . . . . . . .         3,827           5,064
  Interest Accrued . . . . . . . . . . . . . . . . . .         6,442           5,217
  Other. . . . . . . . . . . . . . . . . . . . . . . .        11,388           9,199

          TOTAL CURRENT LIABILITIES. . . . . . . . . .       118,704         105,621

DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . .       154,003         153,538

DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . .        16,083          17,007

DEFERRED CREDITS . . . . . . . . . . . . . . . . . . .         1,076           1,458

CONTINGENCIES (Note 4)

            TOTAL. . . . . . . . . . . . . . . . . . .      $855,308        $833,579

See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
                          KENTUCKY POWER COMPANY
                         STATEMENTS OF CASH FLOWS
                                (UNAUDITED)
<CAPTION>
                                                                Nine Months Ended
                                                                  September 30,     
                                                                1997          1996
                                                                  (in thousands)
<S>                                                           <C>           <C>
OPERATING ACTIVITIES:
  Net Income . . . . . . . . . . . . . . . . . . . . . . . .  $ 16,724      $ 13,566
  Adjustments for Noncash Items:
    Depreciation and Amortization. . . . . . . . . . . . . .    19,718        18,864
    Deferred Federal Income Taxes. . . . . . . . . . . . . .       163           (16)
    Deferred Investment Tax Credits. . . . . . . . . . . . .      (924)         (933)
    Amortization of Deferred Property Taxes. . . . . . . . .     3,690         3,528
  Changes in Certain Current Assets and Liabilities:
    Accounts Receivable (net). . . . . . . . . . . . . . . .      (305)       (1,716)
    Fuel, Materials and Supplies . . . . . . . . . . . . . .      (113)       (1,087)
    Accrued Utility Revenues . . . . . . . . . . . . . . . .     1,712         8,441
    Accounts Payable . . . . . . . . . . . . . . . . . . . .    (9,040)       (6,982)
    Taxes Accrued. . . . . . . . . . . . . . . . . . . . . .    (1,237)        1,232
  Other (net). . . . . . . . . . . . . . . . . . . . . . . .     5,301         5,520
        Net Cash Flows From Operating Activities . . . . . .    35,689        40,417

INVESTING ACTIVITIES:
  Construction Expenditures. . . . . . . . . . . . . . . . .   (45,023)      (38,561)
  Proceeds from Sales of Property. . . . . . . . . . . . . .      -              250
        Net Cash Flows Used For Investing Activities . . . .   (45,023)      (38,311)

FINANCING ACTIVITIES:
  Capital Contributions from Parent Company. . . . . . . . .    10,000        10,000
  Issuance of Long-term Debt . . . . . . . . . . . . . . . .      -           74,985
  Change in Short-term Debt (net). . . . . . . . . . . . . .    19,775         6,200 
  Retirement of Long-term Debt . . . . . . . . . . . . . . .      -          (74,737)
  Dividends Paid . . . . . . . . . . . . . . . . . . . . . .   (20,070)      (18,198)
        Net Cash Flows From (Used For) Financing Activities.     9,705        (1,750)

Net Increase in Cash and Cash Equivalents. . . . . . . . . .       371           356 
Cash and Cash Equivalents at Beginning of Period . . . . . .     1,106         1,031
Cash and Cash Equivalents at End of Period . . . . . . . . .  $  1,477      $  1,387

Supplemental Disclosure:
  Cash paid for interest net of capitalized amounts was  $16,950,000 and $16,920,000
  and for income taxes was $8,115,000 and $4,585,000 in 1997 and 1996, respectively.
  Noncash acquisitions under capital leases  were $3,571,000 and $4,571,000  in 1997
  and 1996, respectively.

See Notes to Financial Statements.
</TABLE>
<PAGE>
                      KENTUCKY POWER COMPANY
                  NOTES TO FINANCIAL STATEMENTS
                        SEPTEMBER 30, 1997     
                           (UNAUDITED)


1.   GENERAL

          The accompanying unaudited financial statements should
     be read in conjunction with the 1996 Annual Report as
     incorporated in and filed with the Form 10-K.

2.   FINANCING ACTIVITIES

          The Company received from its parent a cash capital
     contribution of $10 million in June 1997 which was credited
     to paid-in capital.  In October 1997 the Company issued $48
     million of Unsecured Medium Term Notes at 6.91% due 2007.

3.   RATE MATTERS

          In a May 27, 1997 order the Kentucky Public Service
     Commission (KPSC) approved the Company's request for a
     monthly surcharge to recover environmental compliance costs. 
     The surcharge was applied to bills rendered on and after
     July 7, 1997.  However, as part of the May 27, 1997 order
     the KPSC directed the Company to refund to ratepayers the
     emission allowance sale proceeds, through a reduction of the
     first twelve months of environmental surcharge revenues. 
     Management believes the KPSC's order unlawfully requires the
     Company to refund the allowance sale proceeds and is
     pursuing a favorable resolution of this matter through the
     appeals process. The Company believes, based on written
     advice of outside counsel, that it is probable it will
     prevail on appeal.  No provision for loss has been recorded. 
     At September 30, 1997 the effect on net income should the
     Company not prevail is $1.7 million ($1.1 million after
     tax).

4.   CONTINGENCIES

     Taxes

          As discussed in Note 7, "Federal Income Taxes" of the
     Notes to Financial Statements in the 1996 Annual Report, the
     Internal Revenue Service (IRS) agents auditing the AEP
     System's consolidated federal income tax returns for the
     years 1991 through 1993 requested a ruling from their
     National Office as to whether certain interest deductions
     relating to corporate owned life insurance (COLI) claimed by
     the Company for 1992 and 1993 should be disallowed.  The
     COLI program was established in 1992 as part of the
     Company's strategy to fund and reduce the cost of medical
     benefits for retired employees.  AEP filed a brief with the
     IRS National Office defending the subject deductions. 
     Although no disallowance has been proposed, a disallowance
     of COLI interest deductions through September 30, 1997 would
     reduce earnings by approximately $6 million inclusive of
     interest.  Management believes it will ultimately prevail on
     this issue and will vigorously contest any disallowance that
     may be proposed.

     Revised Air Quality Standards

          On July 18, 1997, the United States Environmental
     Protection Agency published a revised National Ambient Air
     Quality Standard (NAAQS) for ozone and a new NAAQS for fine
     particulate matter (less than 2.5 microns in size).  The new
     ozone standard is expected to result in redesignation of a
     number of areas of the country that are currently in
     compliance with the existing standard to nonattainment
     status which could ultimately dictate more stringent
     emission restrictions for AEP System generating units. New
     stringent emission restrictions on AEP System generating
     units to achieve attainment of the fine particulate matter
     standard could also be imposed.  The AEP System operating
     companies joined with other utilities to appeal the revised
     NAAQS and filed petitions for review in August and September
     1997 in the U.S. Court of Appeals for the District of
     Columbia Circuit.

          Management is unable to estimate compliance costs
     without knowledge of the reductions that may be necessary to
     meet the new standards.  If such costs are significant, it
     could have a material adverse effect on results of
     operations and possibly financial condition unless such
     costs are recovered.

     Other

          The Company continues to be involved in certain other
     matters discussed in its 1996 Annual Report.
<PAGE>
                      KENTUCKY POWER COMPANY
     MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

            THIRD QUARTER 1997 vs. THIRD QUARTER 1996
                               AND
             YEAR-TO-DATE 1997 vs. YEAR-TO-DATE 1996
     Net income remained relatively unchanged for the quarter and
increased $3.2 million or 23% for the year-to-date period.  The
increase in net income for the year-to-date period is
attributable to an increase in wholesale revenues and a decrease
in maintenance expense.
     Income statement items that changed significantly were:
                                    Increase (Decrease)         
                            Third Quarter        Year-to-Date   
                          (in millions)  %   (in millions)    % 

Operating Revenues. . . . .   $11.3      14      $10.7         4
Fuel Expense. . . . . . . .     3.2      19         -          -
Purchased Power Expense . .     5.0      21        5.5         8
Other Operation Expense . .     3.5      35        3.0         9
Maintenance Expense . . . .    (1.3)    (18)      (6.0)      (26)
Taxes Other Than Federal
  Income Taxes. . . . . . .     0.2       8        0.9        14
Federal Income Taxes. . . .      -        -        2.6        53

     The increase in operating revenues for the third quarter and
year-to-date periods was due primarily to increased wholesale
revenues from new power marketing transactions and increased
energy sales to the AEP System Power Pool (Power Pool) due to
increased availability of Big Sandy Plant Unit 2 in 1997.  The
new power marketing transactions involve the purchase and sale of
electricity outside of the AEP transmission system.  Year-to-date
wholesale revenues also rose due to an increase in coal
conversion service revenues which are for the conversion of
customers' coal to electricity.
     Fuel expense rose for the quarter due to increased
generation  reflecting the effect of scheduled maintenance work
in 1996 at the Company's Big Sandy Plant Unit 2.
     The increases in purchased power expense for both periods
resulted mainly from the new power marketing transactions.
     Other operation expense increased for the quarter and year-to-date periods
primarily due to the effects of gains on the sale
of emission allowances recorded in 1996 and the write-down in
1997 of certain preliminary survey costs related to a future
plant site.
     The significant decrease in maintenance expense in both
periods reflects the effects of scheduled steam plant maintenance
work in 1996 at the Company's Big Sandy Plant Unit 2 and reduced
overhead distribution line maintenance work in 1997.

     The increase in taxes other than federal income taxes, which
was due to an increase in state income taxes, and the increase in
federal income taxes resulted from an increase in pre-tax
operating income.
<PAGE>
<PAGE>
<TABLE>
                    OHIO POWER COMPANY AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF INCOME
                                (UNAUDITED)
<CAPTION>
                                          Three Months Ended         Nine Months Ended
                                             September 30,             September 30,     
                                           1997        1996          1997         1996
                                                         (in thousands)
<S>                                      <C>         <C>          <C>          <C>
OPERATING REVENUES . . . . . . . . . . . $486,398    $483,957     $1,417,845   $1,438,081
OPERATING EXPENSES:
  Fuel . . . . . . . . . . . . . . . . .  156,482     162,606        462,720      485,358
  Purchased Power. . . . . . . . . . . .   37,270      17,086         69,738       48,326
  Other Operation. . . . . . . . . . . .   78,623      83,518        240,182      245,394
  Maintenance. . . . . . . . . . . . . .   39,443      43,645        102,292      114,795
  Depreciation and Amortization. . . . .   35,323      34,499        105,351      103,142
  Taxes Other Than Federal Income Taxes.   42,938      43,214        126,801      125,949
  Federal Income Taxes . . . . . . . . .   27,203      30,137         92,022       90,738

          TOTAL OPERATING EXPENSES . . .  417,282     414,705      1,199,106    1,213,702
OPERATING INCOME . . . . . . . . . . . .   69,116      69,252        218,739      224,379
NONOPERATING INCOME. . . . . . . . . . .    2,273       4,338          9,803        6,600
INCOME BEFORE INTEREST CHARGES . . . . .   71,389      73,590        228,542      230,979
INTEREST CHARGES . . . . . . . . . . . .   20,718      18,670         61,961       65,574
NET INCOME . . . . . . . . . . . . . . .   50,671      54,920        166,581      165,405
PREFERRED STOCK DIVIDEND REQUIREMENTS. .      370       2,201          2,278        6,681
EARNINGS APPLICABLE TO COMMON STOCK. . . $ 50,301    $ 52,719     $  164,303   $  158,724

                                                                    

               CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
                                (UNAUDITED)

                                          Three Months Ended         Nine Months Ended
                                             September 30,             September 30,     
                                           1997        1996          1997         1996
                                                         (in thousands)

BALANCE AT BEGINNING OF PERIOD . . . . . $573,236    $552,605     $584,015       $518,029
NET INCOME . . . . . . . . . . . . . . .   50,671      54,920      166,581        165,405
DEDUCTIONS:  
  Cash Dividends Declared:
    Common Stock . . . . . . . . . . . .   37,562      35,714      161,771        107,142
    Cumulative Preferred Stock . . . . .      370       2,167        2,829          6,555
  Capital Stock Expense. . . . . . . . .     -             43           21            136

BALANCE AT END OF PERIOD . . . . . . . . $585,975    $569,601     $585,975       $569,601

The common stock of the Company is wholly owned by
American Electric Power Company, Inc.

See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
                    OHIO POWER COMPANY AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                                (UNAUDITED)
<CAPTION>
                                                          September 30,   December 31,
                                                              1997            1996    
                                                                 (in thousands)
ASSETS
<S>                                                        <C>             <C>
ELECTRIC UTILITY PLANT:
  Production . . . . . . . . . . . . . . . . . . . . .     $2,585,787      $2,556,507
  Transmission . . . . . . . . . . . . . . . . . . . .        831,336         820,636
  Distribution . . . . . . . . . . . . . . . . . . . .        893,807         872,936
  General (including mining assets). . . . . . . . . .        699,169         680,443
  Construction Work in Progress. . . . . . . . . . . .         85,651          66,099
          Total Electric Utility Plant . . . . . . . .      5,095,750       4,996,621
  Accumulated Depreciation and Amortization. . . . . .      2,319,694       2,216,534

          NET ELECTRIC UTILITY PLANT . . . . . . . . .      2,776,056       2,780,087


OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . .        118,563         106,485


CURRENT ASSETS:
  Cash and Cash Equivalents. . . . . . . . . . . . . .         38,826          24,003
  Accounts Receivable. . . . . . . . . . . . . . . . .        243,760         232,734
  Allowance for Uncollectible Accounts . . . . . . . .         (2,567)         (1,433)
  Fuel . . . . . . . . . . . . . . . . . . . . . . . .        120,723         113,361
  Materials and Supplies . . . . . . . . . . . . . . .         73,658          75,908
  Accrued Utility Revenues . . . . . . . . . . . . . .         28,808          38,852
  Prepayments. . . . . . . . . . . . . . . . . . . . .         36,282          44,203

          TOTAL CURRENT ASSETS . . . . . . . . . . . .        539,490         527,628



REGULATORY ASSETS. . . . . . . . . . . . . . . . . . .        541,358         540,123


DEFERRED CHARGES . . . . . . . . . . . . . . . . . . .         78,350         137,843



            TOTAL. . . . . . . . . . . . . . . . . . .     $4,053,817      $4,092,166


See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
                    OHIO POWER COMPANY AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                                (UNAUDITED)
<CAPTION>
                                                          September 30,   December 31,
                                                              1997           1996    
                                                                 (in thousands)
CAPITALIZATION AND LIABILITIES
<S>                                                        <C>             <C>
CAPITALIZATION:
  Common Stock - No Par Value:
    Authorized -  40,000,000 Shares
    Outstanding - 27,952,473 Shares. . . . . . . . . .     $  321,201      $  321,201
  Paid-in Capital. . . . . . . . . . . . . . . . . . .        462,285         460,662
  Retained Earnings. . . . . . . . . . . . . . . . . .        585,975         584,015
          Total Common Shareholder's Equity. . . . . .      1,369,461       1,365,878
  Cumulative Preferred Stock:
    Not Subject to Mandatory Redemption. . . . . . . .         17,575          38,532
    Subject to Mandatory Redemption. . . . . . . . . .         11,850         109,900
  Long-term Debt . . . . . . . . . . . . . . . . . . .      1,014,661       1,002,436

          TOTAL CAPITALIZATION . . . . . . . . . . . .      2,413,547       2,516,746

OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . .        286,037         245,032

CURRENT LIABILITIES:
  Long-term Debt Due Within One Year . . . . . . . . .         83,024          67,293
  Short-term Debt. . . . . . . . . . . . . . . . . . .         94,425          41,302
  Accounts Payable . . . . . . . . . . . . . . . . . .        124,111          89,399
  Taxes Accrued. . . . . . . . . . . . . . . . . . . .         82,687         162,798
  Interest Accrued . . . . . . . . . . . . . . . . . .         23,997          18,094
  Obligations Under Capital Leases . . . . . . . . . .         28,980          24,153
  Other. . . . . . . . . . . . . . . . . . . . . . . .         97,001          84,385

          TOTAL CURRENT LIABILITIES. . . . . . . . . .        534,225         487,424

DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . .        726,664         738,626

DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . .         43,774          46,308

DEFERRED CREDITS . . . . . . . . . . . . . . . . . . .         49,570          58,030

CONTINGENCIES (Note 3)

            TOTAL. . . . . . . . . . . . . . . . . . .     $4,053,817      $4,092,166

See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
                    OHIO POWER COMPANY AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (UNAUDITED)
<CAPTION>
                                                                  Nine Months Ended
                                                                    September 30,     
                                                                 1997           1996
                                                                    (in thousands)
<S>                                                           <C>            <C>
OPERATING ACTIVITIES:
  Net Income . . . . . . . . . . . . . . . . . . . . . . . .  $ 166,581      $ 165,405
  Adjustments for Noncash Items:
    Depreciation, Depletion and Amortization . . . . . . . .    129,597        123,326
    Deferred Federal Income Taxes. . . . . . . . . . . . . .         85         14,291
    Deferred Fuel Costs (net). . . . . . . . . . . . . . . .    (22,257)        (8,933)
    Amortization of Deferred Property Taxes. . . . . . . . .     57,646         59,738
  Changes in Certain Current Assets and Liabilities:
    Accounts Receivable (net). . . . . . . . . . . . . . . .     (9,892)       (12,715)
    Fuel, Materials and Supplies . . . . . . . . . . . . . .     (5,112)         8,787
    Accrued Utility Revenues . . . . . . . . . . . . . . . .     10,044          7,578
    Prepayments. . . . . . . . . . . . . . . . . . . . . . .      7,921         (2,187)
    Accounts Payable . . . . . . . . . . . . . . . . . . . .     34,712         (1,904)
    Taxes Accrued. . . . . . . . . . . . . . . . . . . . . .    (80,111)       (77,402)
  Other (net). . . . . . . . . . . . . . . . . . . . . . . .     21,556         18,488
        Net Cash Flows From Operating Activities . . . . . .    310,770        294,472

INVESTING ACTIVITIES:
  Construction Expenditures. . . . . . . . . . . . . . . . .   (102,469)       (72,288)
  Proceeds from Sale of Property and Other . . . . . . . . .      8,553          7,113
        Net Cash Flows Used For Investing Activities . . . .    (93,916)       (65,175)

FINANCING ACTIVITIES:
  Issuance of Long-term Debt . . . . . . . . . . . . . . . .    146,589           -
  Change in Short-term Debt (net). . . . . . . . . . . . . .     53,123         73,937
  Retirement of Cumulative Preferred Stock . . . . . . . . .   (117,601)        (1,752)
  Retirement of Long-term Debt . . . . . . . . . . . . . . .   (119,542)      (158,818)
  Dividends Paid on Common Stock . . . . . . . . . . . . . .   (161,771)      (107,142)
  Dividends Paid on Cumulative Preferred Stock . . . . . . .     (2,829)        (6,555)
        Net Cash Flows Used For Financing Activities . . . .   (202,031)      (200,330)

Net Increase in Cash and Cash Equivalents. . . . . . . . . .     14,823         28,967
Cash and Cash Equivalents at Beginning of Period . . . . . .     24,003         44,000
Cash and Cash Equivalents at End of Period . . . . . . . . .  $  38,826      $  72,967

Supplemental Disclosure:
  Cash paid for  interest net  of capitalized amounts was  $54,010,000 and $57,949,000
  and for income taxes was $98,341,000 and $79,932,000 in 1997 and 1996, respectively.
  Noncash acquisitions  under capital leases were $41,667,000 and  $19,903,000 in 1997
  and 1996, respectively.

See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
               OHIO POWER COMPANY AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        SEPTEMBER 30, 1997            
                           (UNAUDITED)

1.   GENERAL

          The accompanying unaudited consolidated financial state-ments should
     be read in conjunction with the 1996 Annual
     Report as incorporated in and filed with the Form 10-K.

2.   FINANCING ACTIVITY

          During the first nine months of 1997 the Company issued
     $50 million of 7.92% Junior Subordinated Deferrable Interest
     Debentures due 2027, $48 million of 6.73% Unsecured Medium
     Term Notes due 2004 and a coal mining subsidiary received
     $50 million under a sale-leaseback agreement accounted for
     as a financing transaction.  Under this accounting the
     assets sold remain on the books and the seller recognizes a
     financing liability as part of long-term debt.  The Company
     and a subsidiary also retired $117 million of long-term
     debt: $50 million of 8.75% Series First Mortgage Bonds due
     in 2022 under maintenance provisions at 100%, $47 million of
     6-1/2% Series First Mortgage Bonds and $20 million of 7.19%
     Notes Payable at maturity.

          As a result of the redemption at maturity of the 6-1/2%
     Series First Mortgage Bonds due in 1997, the restriction on
     the use of retained earnings for the payment of common stock
     dividends was reduced to $20.8 million.

          In March 1997 the Company, as part of a tender offer,
     reacquired and retired the following shares of cumulative
     preferred stock at the prices listed plus an amount equal to
     accrued dividends:

                     Number           Price            Total
                   of Shares        Paid Per       Reacquisition
    Series          Retired           Share            Price    
                                                   (in thousands)

    4.08%            27,182          $ 64.56          $ 1,755
    4.20%            28,875            66.46            1,919
    4.40%            55,889            69.62            3,891
    4-1/2%           97,616            69.02            6,737
    5.90%           321,500           103.09           33,143
    6.02%           364,000           103.71           37,750
    6.35%           295,000           105.14           31,016

3.   CONTINGENCIES

     Taxes

          As discussed in Note 8, "Federal Income Taxes" of the
     Notes to Consolidated Financial Statements in the 1996
     Annual Report, the Internal Revenue Service (IRS) agents
     auditing the AEP System's consolidated federal income tax
     returns for the years 1991 through 1993 requested a ruling
     from their National Office as to whether certain interest
     deductions relating to corporate owned life insurance (COLI)
     should be disallowed.  The COLI program was established in
     1990 as part of the Company's strategy to fund and reduce
     the cost of medical benefits for retired employees.  AEP
     filed a brief with the IRS National Office defending the
     subject deduction.  Although no disallowance has been
     proposed, a disallowance of COLI interest deductions through
     September 30, 1997 would reduce earnings by approximately
     $103 million inclusive of interest.  Management believes it
     will ultimately prevail on this issue and will vigorously
     contest any disallowance that may be proposed.

     Revised Air Quality Standards

          On July 18, 1997, the United States Environmental
     Protection Agency published a revised National Ambient Air
     Quality Standard (NAAQS) for ozone and a new NAAQS for fine
     particulate matter (less than 2.5 microns in size).  The new
     ozone standard is expected to result in redesignation of a
     number of areas of the country that are currently in
     compliance with the existing standard to nonattainment
     status which could ultimately dictate more stringent
     emission restrictions for AEP System generating units. New
     stringent emission restrictions on AEP System generating
     units to achieve attainment of the fine particulate matter
     standard could also be imposed.  The AEP System operating
     companies joined with other utilities to appeal the revised
     NAAQS and filed petitions for review in August and September
     1997 in the U.S. Court of Appeals for the District of
     Columbia Circuit.

          Management is unable to estimate compliance costs
     without knowledge of the reductions that may be necessary to
     meet the new standards.  If such costs are significant, it
     could have a material adverse effect on results of
     operations and possibly financial condition unless such
     costs are recovered.

     Other

          The Company continues to be involved in certain other
     matters discussed in the 1996 Annual Report.

<PAGE>
               OHIO POWER COMPANY AND SUBSIDIARIES
  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                     AND FINANCIAL CONDITION                   

            THIRD QUARTER 1997 vs. THIRD QUARTER 1996
                               AND
             YEAR-TO-DATE 1997 vs. YEAR-TO-DATE 1996
RESULTS OF OPERATIONS
     Although energy sales increased slightly for the third
quarter, net income decreased $4.3 million or 8% primarily due to
an increase in purchased power expense, a decrease in
nonoperating income and an increase in interest charges.  Net
income increased $1.2 million for the year-to-date period
reflecting an increase in nonoperating income and a reduction in
interest charges.
     Operating revenues increased slightly for the third quarter
due predominantly to a 3% increase in sales to wholesale
customers largely as a result of new power marketing
transactions.  Although total energy sales increased for the
quarter, sales to retail customers decreased 1% as usage by
weather-sensitive residential customers declined by 1% reflecting
the mild summer weather and consumption by industrial customers
decreased by 1% due to a major industrial customer's labor
strike.
     Year-to-date operating revenues declined $20 million or 1%
predominantly due a reduction in retail revenues reflecting a 4%
decrease in energy sales to weather-sensitive residential
customers and decreased industrial sales due to the labor strike
and the negative effect on revenues of a contract price reduction
for another major industrial customer.  Although sales to retail
customers declined, total energy sales for the year-to-date
period increased 3% primarily as a result of an 11% increase in
energy sales to wholesale customers.  The significant rise in
wholesale sales reflects the new power marketing transactions and
an increase in coal conversion service sales, which are for the
conversion of customers' coal to electricity.  The new power
marketing transactions involve the purchase and sale of
electricity outside of the AEP transmission system.
<PAGE>
     Income statement lines which changed significantly were:
                                    Increase (Decrease)          
                             Third Quarter       Year-to-Date    
                          (in millions)   %   (in millions)    % 

Fuel Expense. . . . . . . .     $(6.1)   (4)      $(22.6)     (5)
Purchased Power . . . . . .      20.2   118         21.4      44
Other Operation Expense . .      (4.9)   (6)        (5.2)     (2)
Maintenance Expense . . . .      (4.2)  (10)       (12.5)    (11)
Federal Income Taxes. . . .      (2.9)  (10)         1.3       1
Nonoperating Income . . . .      (2.1)  (48)         3.2      49
Interest Charges. . . . . .       2.0    11         (3.6)     (6)

     The decreases in fuel expense for the third quarter and
year-to-date periods were mainly due to a reduction in generation
attributable to the decrease in energy demand by retail
customers.
     Purchased power expense increased for both periods primarily
due to the new power marketing transactions which began in July
1997.
     Other operation expense declined in the third quarter
primarily due to decreased employee pension and benefit costs.
     The decreases in maintenance expense for both periods were
mainly due to decreased boiler plant maintenance reflecting a
reduction in planned maintenance work on the Company's generating
units.
     Federal income tax expense attributable to operations
decreased in the third quarter due to a decrease in pre-tax
operating income and changes in certain book/tax differences
accounted for on a flow-through basis for rate-making and
financial reporting purposes.
     The decrease in nonoperating income for the quarter was due
to the effect of adjustments recorded in 1996 related to emission
allowance transactions.  On a year-to-date basis nonoperating
income increased as a result of the effect of losses recorded in
1996 related to emission allowance transactions.
     Interest charges increased in the third quarter due to the
effect of a September 1996 adjustment to commission authorized
carrying charges recorded on deferred gains from the sale of
emission allowances.  The decrease in interest charges for the
year-to-date period was due to a reduction in the average levels
of long-term debt outstanding resulting from the redemption of
long-term debt.
FINANCIAL CONDITION
     Total plant and property additions including capital leases
for the first nine months of 1997 were $144 million.
     During the first nine months of 1997, the Company and a
subsidiary retired $117 million principal amount of long-term
debt with interest rates ranging from 6-1/2% to 8.75%, issued
$148 million of long-term obligations at interest rates ranging
from 6.73% to 7.92% and increased short-term debt by $53 million.
     As part of the January 1997 tender offer for all of the
Company's outstanding preferred stock, 1,190,062 shares of $100
par value preferred stock were reacquired.  The total cost of the
stock reacquisition was $118 million.  At a special meeting of
shareholders held on February 28, 1997 the Company's articles of
incorporation were amended to remove certain capitalization ratio
requirements which restricted the Company's ability to issue
unsecured debt.  As a result unsecured borrowings are now limited
only by the Public Utility Holding Company Act of 1935 with the
current limitation set at $250 million for unsecured short-term
borrowings.
     As a result of the redemption at maturity of the 6-1/2%
Series First Mortgage Bonds due in 1997, the restriction on the
use of retained earnings for the payment of common stock
dividends was reduced to $20.8 million.
REVISED AIR QUALITY STANDARDS
     On July 18, 1997, the United States Environmental Protection
Agency published a revised National Ambient Air Quality Standard
(NAAQS) for ozone and a new NAAQS for fine particulate matter
(less than 2.5 microns in size).  The new ozone standard is
expected to result in redesignation of a number of areas of the
country that are currently in compliance with the existing
standard to nonattainment status which could ultimately dictate
more stringent emission restrictions for AEP System generating
units. New stringent emission restrictions on AEP System
generating units to achieve attainment of the fine particulate
matter standard could also be imposed.  The AEP System operating
companies joined with other utilities to appeal the revised NAAQS
and filed petitions for review in August and September 1997 in
the U.S. Court of Appeals for the District of Columbia Circuit.
     Management is unable to estimate compliance costs without
knowledge of the reductions that may be necessary to meet the new
standards.  If such costs are significant, it could have a
material adverse effect on results of operations and possibly
financial condition unless such costs are recovered.
<PAGE>
                   PART II.  OTHER INFORMATION
Item 5.  Other Information.

American Electric Power Company, Inc. ("AEP") and Appalachian
Power Company ("APCo")

     Reference is made to page 12 of the Annual Report on Form
10-K for the year ended December 31, 1996 ("1996 10-K") for a
discussion of APCo's proposed transmission facilities.  On
September 30, 1997, APCo filed applications for certificates to
build its 765,000-volt line from its Wyoming station to its
Cloverdale station, at a cost estimated to be $263,000,000, with
the Virginia State Corporation Commission and Public Service
Commission of West Virginia.

AEP, AEP Generating Company ("AEGCo"), APCo, Columbus Southern
Power Company ("CSPCo"), Indiana Michigan Power Company ("I&M"),
Kentucky Power Company ("KEPCo") and Ohio Power Company ("OPCo")

     Reference is made to page 22 of the 1996 10-K and page II-4
of the Quarterly Report on Form 10-Q for the quarter ended June
30, 1997 for a discussion of the assessment of long range
transport of ozone precursors.

     On or about August 14, 1997, eight northeast states filed
petitions with the United States Environmental Protection Agency
("Federal EPA") under Section 126 of the Clean Air Act alleging
that nitrogen oxides ("NOx") emissions from sources in upwind
midwestern states are significantly contributing to non-attainment of the
ambient air quality standard for ozone in the
petitioning states.  These petitions seek the development of
controls for the upwind sources in a rulemaking to be undertaken
by Federal EPA.  AEP System coal-fired generating plants are
included (directly or indirectly) as sources in each of these
petitions and the rulemaking could require significant reductions
of NOx emissions at such AEP plants.  AEP System operating
companies have joined with other unaffiliated utilities in the
filing of a petition for review in October 1997 in the U.S. Court
of Appeals for the District of Columbia Circuit of actions
outlined in an August 8, 1997 letter from Federal EPA to the
State of New Hampshire with regard to the filing of, and standard
of review for, these petitions.

     In a separate related proceeding, on November 7, 1997,
Federal EPA published in the Federal Register a proposed
rulemaking under Section 110 of the Clean Air Act requiring the
revision of state implementation plans in 22 eastern states,
including those states in which the operating companies of the
AEP System have coal-fired generating plants.  The proposed rule,
if finalized in its current form, will require reductions in NOx
emissions from utility sources of approximately 85% below 1990
levels and entail very substantial capital and operating
expenditures by AEP System operating companies.  Pollution
controls to meet the proposed revised NOx emission limits would
have to be in place by 2002.<PAGE>
Item 6.   Exhibits and Reports on Form 8-K.

     (a)  Exhibits:

          AEP

              Exhibit 3(a) - Restated Certificate of Incorporation
              of AEP, dated October 29, 1997.

          AEP, APCo and OPCo

              Exhibit 10 - American Electric Power System Excess
              Benefit Plan as Amended through August 25, 1997.

          APCo, CSPCo, I&M, KEPCo and OPCo

              Exhibit 12 - Statement re: Computation of Ratios.

          AEP, AEGCo, APCo, CSPCo, I&M, KEPCo and OPCo

              Exhibit 27 - Financial Data Schedule.

     (b)  Reports on Form 8-K:

           Company
          Reporting      Date of Report    Item Reported

          AEP        July 2, 1997  Item 5. Other Events

          AEGCo, APCo, CSPCo, I&M, KEPCo and OPCo

          No reports on Form 8-K were filed during the quarter
          ended September 30, 1997. 





<PAGE>
<PAGE>
     In the opinion of the companies, the financial statements contained
herein reflect all adjustments (consisting of only normal recurring accruals)
which are necessary to a fair presentation of the results of operations for
the interim periods.

                            SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.  The signatures for each undersigned
company shall be deemed to relate only to matters having reference to such
company and any subsidiaries thereof.

              AMERICAN ELECTRIC POWER COMPANY, INC.

G.P. Maloney                                   P.J. DeMaria                
G.P. Maloney, Vice President                   P.J. DeMaria, Controller
              and Secretary
                      AEP GENERATING COMPANY

G.P. Maloney                                   P.J. DeMaria                
G.P. Maloney, Vice President                   P.J. DeMaria, Vice President
                                                                and Controller
                    APPALACHIAN POWER COMPANY

G.P. Maloney                                   P.J. DeMaria                
G.P. Maloney, Vice President                   P.J. DeMaria, Vice President
                                                                and Controller

                 COLUMBUS SOUTHERN POWER COMPANY

G.P. Maloney                                   P.J. DeMaria                
G.P. Maloney, Vice President                   P.J. DeMaria, Vice President
                                                                and Controller

                  INDIANA MICHIGAN POWER COMPANY

G.P. Maloney                                   P.J. DeMaria                
G.P. Maloney, Vice President                   P.J. DeMaria, Vice President
                                                                and Controller

                      KENTUCKY POWER COMPANY

G.P. Maloney                                   P.J. DeMaria                
G.P. Maloney, Vice President                   P.J. DeMaria, Vice President
                                                                and Controller

                        OHIO POWER COMPANY

G.P. Maloney                                   P.J. DeMaria                
G.P. Maloney, Vice President                   P.J. DeMaria, Vice President
                                                                and Controller


Date:  November 12, 1997    


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