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 JUNE 30, 1997

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

            For The Transition Period from          to         
<CAPTION>
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 July 31, 1997 was 189,188,675.
/TABLE
<PAGE>
<PAGE>
<TABLE>
    AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES

                               FORM 10-Q

                  For The Quarter Ended June 30, 1997
<CAPTION>
                                 INDEX
                                                                          Page
Part I.  FINANCIAL INFORMATION
           <S>                                                            <C>
           American Electric Power Company, Inc. and Subsidiary Companies:
             Consolidated Statements of Income and
               Consolidated Statements of Retained Earnings . . . . . . . A-1
             Consolidated Balance Sheets. . . . . . . . . . . . . . . . . A-2 - A-3
             Consolidated Statements of Cash Flows. . . . . . . . . . . . A-4
             Notes to Consolidated Financial Statements . . . . . . . . . A-5 - A-7
             Management's Discussion and Analysis of Results of
               Operations and Financial Condition . . . . . . . . . . . . A-8 - A-11

           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-11

           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-6
             Management's Discussion and Analysis of Results of
               Operations and Financial Condition . . . . . . . . . . . . E-7 - E-9

           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 June 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 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1 - II-3
           Item 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . II-3 - II-5
           Item 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . II-5

SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-6

                                                                                   


   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       Six Months Ended
                                                  June 30,                June 30,      
                                              1997        1996        1997        1996
<S>                                       <C>         <C>         <C>         <C>          
OPERATING REVENUES . . . . . . . . . . . .$1,382,158  $1,400,941  $2,874,227  $2,918,722

OPERATING EXPENSES:
  Fuel and Purchased Power . . . . . . . .   391,878     404,914     826,575     845,891
  Other Operation. . . . . . . . . . . . .   300,305     300,723     602,585     604,431
  Maintenance. . . . . . . . . . . . . . .   124,728     139,043     224,113     244,466
  Depreciation and Amortization. . . . . .   151,549     149,414     303,501     298,528
  Taxes Other Than Federal Income Taxes. .   122,166     120,990     248,780     248,616
  Federal Income Taxes . . . . . . . . . .    70,277      65,232     175,440     164,043
          TOTAL OPERATING EXPENSES . . . . 1,160,903   1,180,316   2,380,994   2,405,975
OPERATING INCOME . . . . . . . . . . . . .   221,255     220,625     493,233     512,747
NONOPERATING INCOME (LOSS) . . . . . . . .     5,686       1,030      10,195         (97)
INCOME BEFORE INTEREST CHARGES AND
 PREFERRED DIVIDENDS . . . . . . . . . . .   226,941     221,655     503,428     512,650
INTEREST CHARGES . . . . . . . . . . . . .   103,651      98,363     197,473     198,388
PREFERRED STOCK DIVIDEND REQUIREMENTS
 OF SUBSIDIARIES . . . . . . . . . . . . .     2,151      10,626      12,255      21,584
NET INCOME . . . . . . . . . . . . . . . .$  121,139  $  112,666  $  293,700  $  292,678
AVERAGE NUMBER OF SHARES OUTSTANDING . . .   188,822     187,104     188,585     186,913
EARNINGS PER SHARE . . . . . . . . . . . .     $0.64       $0.60       $1.56       $1.57
CASH DIVIDENDS PAID PER SHARE. . . . . . .     $0.60       $0.60       $1.20       $1.20

                                                                  

               CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
                                (UNAUDITED)

                                             Three Months Ended       Six Months Ended
                                                   June 30,                June 30,      
                                              1997        1996        1997        1996
                                                           (in thousands)

BALANCE AT BEGINNING OF PERIOD . . . . . . $1,607,776  $1,477,852  $1,547,746  $1,409,645
NET INCOME . . . . . . . . . . . . . . . .    121,139     112,666     293,700     292,678
DEDUCTIONS:
  Cash Dividends Declared. . . . . . . . .    113,227     112,205     226,170     224,188
  Other. . . . . . . . . . . . . . . . . .        649         120         237         (58)

BALANCE AT END OF PERIOD . . . . . . . . . $1,615,039  $1,478,193  $1,615,039  $1,478,193

See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
      AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
                        CONSOLIDATED BALANCE SHEETS
                                (UNAUDITED)
<CAPTION>
                                                                June 30,     December 31,
                                                                  1997           1996    
                                                                    (in thousands)
ASSETS
<S>                                                           <C>            <C>
ELECTRIC UTILITY PLANT:
  Production . . . . . . . . . . . . . . . . . . . . . . .    $ 9,393,950    $ 9,341,849
  Transmission . . . . . . . . . . . . . . . . . . . . . .      3,399,090      3,380,258
  Distribution . . . . . . . . . . . . . . . . . . . . . .      4,498,915      4,402,449
  General (including mining assets and nuclear fuel) . . .      1,516,360      1,491,781
  Construction Work in Progress. . . . . . . . . . . . . .        406,401        353,832
          Total Electric Utility Plant . . . . . . . . . .     19,214,716     18,970,169
  Accumulated Depreciation and Amortization. . . . . . . .      7,745,799      7,549,798

          NET ELECTRIC UTILITY PLANT . . . . . . . . . . .     11,468,917     11,420,371





OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . . .      1,321,882        892,674





CURRENT ASSETS:
  Cash and Cash Equivalents. . . . . . . . . . . . . . . .         94,179         57,539
  Accounts Receivable. . . . . . . . . . . . . . . . . . .        565,939        535,024
  Allowance for Uncollectible Accounts . . . . . . . . . .         (7,227)        (3,692)
  Fuel . . . . . . . . . . . . . . . . . . . . . . . . . .        255,363        235,257
  Materials and Supplies . . . . . . . . . . . . . . . . .        243,827        251,896
  Accrued Utility Revenues . . . . . . . . . . . . . . . .        167,473        174,966
  Prepayments. . . . . . . . . . . . . . . . . . . . . . .        132,196        103,891

          TOTAL CURRENT ASSETS . . . . . . . . . . . . . .      1,451,750      1,354,881



REGULATORY ASSETS. . . . . . . . . . . . . . . . . . . . .      1,850,321      1,889,482



DEFERRED CHARGES . . . . . . . . . . . . . . . . . . . . .        233,948        325,580

            TOTAL. . . . . . . . . . . . . . . . . . . . .    $16,326,818    $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>
                                                               June 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 . . . . . .198,188,667   197,234,992
    (8,999,992 shares were held in treasury) . . . . . . .   $ 1,288,226     $ 1,282,027
  Paid-in Capital. . . . . . . . . . . . . . . . . . . . .     1,745,759       1,715,554
  Retained Earnings. . . . . . . . . . . . . . . . . . . .     1,615,039       1,547,746
          Total Common Shareholders' Equity. . . . . . . .     4,649,024       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 . . . . . . . . . . . . . . . . . . . . .     5,077,757       4,796,768

          TOTAL CAPITALIZATION . . . . . . . . . . . . . .     9,901,255       9,942,318

OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . . .     1,106,210       1,002,208

CURRENT LIABILITIES:
  Long-term Debt Due Within One Year . . . . . . . . . . .       265,870          86,942
  Short-term Debt. . . . . . . . . . . . . . . . . . . . .       639,400         319,695
  Accounts Payable . . . . . . . . . . . . . . . . . . . .       176,050         206,227
  Taxes Accrued. . . . . . . . . . . . . . . . . . . . . .       372,827         414,173
  Interest Accrued . . . . . . . . . . . . . . . . . . . .        75,171          75,124
  Obligations Under Capital Leases . . . . . . . . . . . .        94,417          89,553
  Other. . . . . . . . . . . . . . . . . . . . . . . . . .       294,536         304,323

          TOTAL CURRENT LIABILITIES. . . . . . . . . . . .     1,918,271       1,496,037

DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . . . .     2,601,701       2,643,143

DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . . .       389,818         401,491

DEFERRED GAIN ON SALE AND LEASEBACK - 
  ROCKPORT PLANT UNIT 2. . . . . . . . . . . . . . . . . .       235,959         240,598

DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . . .       173,604         157,193

COMMITMENTS AND CONTINGENCIES (Note 4)

            TOTAL. . . . . . . . . . . . . . . . . . . . .   $16,326,818     $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>
                                                                      Six Months Ended
                                                                          June 30,       
                                                                     1997         1996
                                                                       (in thousands)
<S>                                                                <C>          <C>
OPERATING ACTIVITIES:
  Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 293,700    $ 292,678
  Adjustments for Noncash Items:
    Depreciation and Amortization. . . . . . . . . . . . . . . . .   303,318      294,865
    Deferred Federal Income Taxes. . . . . . . . . . . . . . . . .   (17,262)      (9,048)
    Deferred Investment Tax Credits. . . . . . . . . . . . . . . .   (11,673)     (11,760)
    Amortization of Deferred Property Taxes. . . . . . . . . . . .    76,422       74,709
    Amortization of Operating Expenses and
       Carrying Charges (net). . . . . . . . . . . . . . . . . . .    14,317       18,183
  Changes in Certain Current Assets and Liabilities:
    Accounts Receivable (net). . . . . . . . . . . . . . . . . . .   (27,380)     (52,667)
    Fuel, Materials and Supplies . . . . . . . . . . . . . . . . .   (12,037)         622
    Accrued Utility Revenues . . . . . . . . . . . . . . . . . . .     7,493       36,269
    Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . .   (28,305)     (44,902)
    Accounts Payable . . . . . . . . . . . . . . . . . . . . . . .   (30,177)     (42,423)
    Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . . . .   (41,346)     (49,668)
    Revenue Refunds Accrued. . . . . . . . . . . . . . . . . . . .    (1,606)      26,812
  Other (net). . . . . . . . . . . . . . . . . . . . . . . . . . .    40,956       20,615
        Net Cash Flows From Operating Activities . . . . . . . . .   566,420      554,285

INVESTING ACTIVITIES:
  Construction Expenditures. . . . . . . . . . . . . . . . . . . .  (331,278)    (215,227)
  Investment in Yorkshire Electricity Group plc. . . . . . . . . .  (357,205)        -
  Proceeds from Sale of Property and Other . . . . . . . . . . . .     4,785        6,670
        Net Cash Flows Used For Investing Activities . . . . . . .  (683,698)    (208,557)

FINANCING ACTIVITIES:
  Issuance of Common Stock . . . . . . . . . . . . . . . . . . . .    39,023       33,121
  Issuance of Long-term Debt . . . . . . . . . . . . . . . . . . .   651,318      309,404
  Change in Short-term Debt (net). . . . . . . . . . . . . . . . .   319,705      161,346
  Retirement of Cumulative Preferred Stock . . . . . . . . . . . .  (433,234)     (38,057)
  Retirement of Long-term Debt . . . . . . . . . . . . . . . . . .  (196,724)    (556,895)
  Dividends Paid on Common Stock . . . . . . . . . . . . . . . . .  (226,170)    (224,188)
        Net Cash Flows From (Used For) Financing Activities. . . .   153,918     (315,269)

Net Increase in Cash and Cash Equivalents. . . . . . . . . . . . .    36,640       30,459
Cash and Cash Equivalents at Beginning of Period . . . . . . . . .    57,539       79,955
Cash and Cash Equivalents at End of Period . . . . . . . . . . . . $  94,179    $ 110,414

Supplemental Disclosure:
  Cash paid for interest net of capitalized amounts was $190,815,000 and $191,603,000 and
  for income  taxes was  $146,130,000  and  $138,641,000 in 1997  and 1996, respectively.
  Noncash acquisitions under capital leases were $105,663,000 and $83,502,000 in 1997 and
  1996, respectively.

See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
  AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           JUNE 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 with current-period presentation.

2. FINANCING AND RELATED ACTIVITIES

       During the first six months of 1997, subsidiaries issued
   $655 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; $50 million of financing obligations under a sale-leaseback
   agreement and other loan agreements of $275 million
   at 6.06% for an investment in the United Kingdom due in 1999
   and $6 million at 12.42% for an investment in China due in
   2000.

       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 $196 million principal amount of long-term
   debt: $156 million of first mortgage bonds with interest rates
   ranging from 8.75% to 9.35% due in 2021 and 2022; $20 million
   of variable rate installment purchase contracts due in 2025;
   and $20 million of term loans 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

3. YORKSHIRE ACQUISITION

       In April 1997 the Company and Public Service Company of
   Colorado through an equally owned joint venture acquired all
   of the outstanding shares of Yorkshire Electricity Group plc,
   an electric distribution company in the United Kingdom.  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 investment in Yorkshire Electricity. The
   investment in the joint venture is included in other property
   and investments ($361 million) and the earnings ($4.1
   million)from the Yorkshire investment are included in
   nonoperating income.
<PAGE>
<PAGE>
4. COMMITMENTS AND CONTINGENCIES

   Taxes

       As discussed in Note 3, the Company and Public Service
   Company of Colorado acquired a United Kingdom distribution
   company, Yorkshire Electricity Group plc.  On July 2, 1997 the
   United Kingdom's governing Labour Party proposed a budget that
   includes a windfall profits tax on certain privatized entities. 
   The tax was enacted on July 31, 1997. The windfall profits tax
   liability for Yorkshire Electricity Group plc is estimated to
   be 135 million pounds sterling ($222 million) and is payable
   in two equal installments with the first due in December 1997
   and the second installment a year later.  AEP's share of the
   tax is estimated to be $111 million.  The effect on after tax
   net earnings of the windfall profits tax is currently being
   assessed and will be recorded in the third quarter.

       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 June 30, 1997 would reduce earnings by
   approximately $267 million inclusive of interest.  Management
   believes it will ultimately prevail on this issue and will
   vigorously contest any disallowance that may be proposed.

   Steam Generator Replacement

       The Company has announced plans to replace the four steam
   generators in the Donald C. Cook Nuclear Plant's Unit 1 in
   Bridgman, Michigan.  The replacement will take place during the
   regularly scheduled refueling outage in the spring of the year
   2000.  The unit is expected to be out of service for about 100
   days.  The cost of similar steam generator replacement projects
   in the industry have ranged from $150 million to $180 million. 
   Certain construction commitments to produce the steam generator
   components with long lead time production requirements have
   been made.  The plant's Unit 2 steam generators were replaced
   in 1988.

   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) in the
   Federal Register.  These standards are expected to result in
   redesignation of a number of areas of the country currently in
   attainment to nonattainment which could ultimately dictate more
   stringent emission restrictions for AEP System generating
   units.


<PAGE>
<PAGE>
       The new rules provide that the states must first determine
   the attainment status of their areas.  The states then have
   three years to submit a compliance plan and up to ten years
   after designation to come into compliance with the new
   standards.  The compliance deadline could be as late as 2010
   for the ozone standard and 2012-2015 for the fine particulate
   standard.

       Management is reviewing the impact of the new rules,
   however, we are unable to estimate compliance costs without
   knowledge of reductions that the states will find necessary to
   meet the new standards.  If such reductions are significant and
   the Company must bear a significant portion of the cost of
   compliance in the region or county that is in violation of the
   revised standards, it would have a material adverse effect on
   results of operations or 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>
<PAGE>
  AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                      AND FINANCIAL CONDITION                   


           SECOND QUARTER 1997 vs. SECOND QUARTER 1996
                               AND
             YEAR-TO-DATE 1997 vs. YEAR-TO-DATE 1996
RESULTS OF OPERATIONS
   Net income increased 8% or $8.5 million in the second quarter
primarily due to reduced operating expenses, increased nonoperating
income and the favorable effects of a preferred stock redemption
program.  For the year-to-date period net income was relatively
unchanged as the negative effects of milder weather on revenues
were largely offset by the effects of decreased operating expenses,
increased nonoperating income and the favorable impact of the
preferred stock redemptions.
   Operating revenues decreased in both periods as a result of
decreased energy sales to retail customers partly offset by the
effect of increased wholesale energy transactions.  Retail energy
sales decreased 1% in the second quarter and 2% in the year-to-date
period reflecting decreased energy sales to residential and
commercial customers due to milder weather in 1997.
   Energy sales to wholesale customers were up 13% in the second
quarter and 11% in the year-to-date period primarily due to
increased coal conversion service sales which are for the
conversion of customers' coal to electricity.  The substantial
increase in coal conversion service sales reflects the cost
effectiveness of this service to customers.  An increase in
transmission and other related services to wholesale customers also
contributed to an increase in wholesale revenues.
   Income statement items which changed significantly were:

                                       Increase (Decrease)      
                               Second Quarter     Year-To-Date  
                              (in millions)  %  (in millions)  %

Fuel and Purchased 
 Power Expense . . . . . . . .   $(13.0)    (3)     $(19.3)   (2)
Maintenance Expense. . . . . .    (14.3)   (10)      (20.4)   (8)
Federal Income Taxes . . . . .      5.0      8        11.4     7
Nonoperating Income. . . . . .      4.7    N.M.       10.3   N.M.
Preferred Stock Dividend
 Requirements of Subsidiaries.     (8.5)   (80)       (9.3)  (43)

N.M. = Not Meaningful<PAGE>
<PAGE>
   The decrease in operating expenses were mainly due to
reductions in fuel, purchased power and maintenance expenses.  The
decrease in fuel and purchased power expense was mainly due to
reduced generation reflecting the weather related decrease in sales
to retail customers.  Maintenance expense declined due primarily to
a decline in storm damage reflecting the milder weather.
   The increase in federal income tax expense attributable to
operations was due to changes in certain book/tax timing
differences accounted for on a flow-through basis for rate-making
and financial reporting purposes, including the effect of recent
federal legislation limiting corporate owned life insurance tax
deductions.
   Nonoperating income increased in both periods due to the
Company's 50% share of earnings from the recently acquired
Yorkshire Electricity Group plc of approximately $4.1 million. 
Also contributing to the year-to-date increase were the effect of
losses recorded in the first quarter of 1996 from certain demand
side management program costs and clean-up of underground fuel
storage tanks at a subsidiary's facilities.
   Preferred stock dividend requirements of the subsidiaries
decreased in both comparative periods reflecting the redemption of
over 4 million shares of cumulative preferred stock completed
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 six months were $438 million.
   During the first six months of 1997 subsidiaries issued $655
million principal amount of long-term obligations at interest rates
ranging from 6.06% to 12.42%; retired $196 million principal amount
of long-term debt with interest rates ranging from 3.45% 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 $320 million.
YORKSHIRE ACQUISITION
   Yorkshire Electricity Group plc, an electric distribution
company in the United Kingdom, was acquired by the Company and
Public Service Company of Colorado 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 investment in Yorkshire
Electricity. The investment in the joint venture is included in
other property and investments and the earnings from the Yorkshire
investment are included in nonoperating income.

<PAGE>
TAXES
   On July 2, 1997 the United Kingdom's governing Labour Party
proposed a budget that includes a windfall profits tax on certain
privatized entities.  The tax was enacted on July 31, 1997.  The
windfall profits tax liability for Yorkshire Electricity Group plc
is estimated to be 135 million pounds sterling ($222 million) and
is payable in two equal installments with the first due in December
1997 and the second installment a year later.  AEP's share of the
tax is estimated to be $111 million.  The effect on after tax net
earnings of the windfall profits tax is currently being assessed
and will be recorded in the third quarter.
STEAM GENERATOR REPLACEMENT
   The Company has announced plans to replace the four steam
generators in its Donald C. Cook Nuclear Plant's Unit 1.  The
replacement will take place during a regularly scheduled refueling
outage in the spring of the year 2000.  The unit is expected to be
out of service for about 100 days.  The cost of similar steam
generator replacement projects in the industry have ranged from
$150 million to $180 million.  Certain construction commitments to
produce the steam generator components with long lead time
production requirements have been made.  The plant's Unit 2 steam
generators were replaced in 1988.
REVISED AIR QUALITY STANDARDS
   On July 18, 1997, the United States Environmental Protection
Agency published revised a National Ambient Air Quality Standard
(NAAQS) for ozone and a new NAAQS for fine particulate matter (less
than 2.5 microns in size) in the Federal Register.  These standards
are expected to result in redesignation of a number of areas of the
country currently in attainment to nonattainment which could
ultimately dictate more stringent emission restrictions for AEP
System generating units.
   The new rules provide that the states must first determine the
attainment status of their areas.  The states then have three years
to submit a compliance plan and up to ten years after designation
to come into compliance with the new standards.  The compliance
deadline could be as late as 2010 for the ozone standard and 2012-2015 for
the fine particulate standard.
<PAGE>
<PAGE>
   Management is reviewing the impact of the new rules, however,
we are unable to estimate compliance costs without knowledge of
reductions that the states will find necessary to meet the new
standards.  If such reductions are significant and the Company must
bear a significant portion of the cost of compliance in the region
or county that is in violation of the revised standards, it would
have a material adverse effect on results of operations or possibly
financial condition unless such costs are recovered.
<PAGE>
<PAGE>
<TABLE>
                                            AEP GENERATING COMPANY
                                            STATEMENTS OF INCOME
                                     (UNAUDITED)
<CAPTION>
                                           Three Months Ended       Six Months Ended
                                                June 30,                June 30,      
                                             1997      1996         1997        1996
                                                         (in thousands)
<S>                                        <C>        <C>         <C>         <C>
OPERATING REVENUES . . . . . . . . . . .   $53,433    $55,313     $112,529    $112,797

OPERATING EXPENSES:
  Fuel . . . . . . . . . . . . . . . . .    18,739     21,736       46,089      45,268
  Rent - Rockport Plant Unit 2 . . . . .    17,070     17,071       34,141      34,148
  Other Operation. . . . . . . . . . . .     2,714      2,962        5,844       6,111
  Maintenance. . . . . . . . . . . . . .     5,357      3,883        7,743       7,376
  Depreciation . . . . . . . . . . . . .     5,412      5,413       10,807      10,826
  Taxes Other Than Federal Income Taxes.       850        907        1,729       1,882
  Federal Income Taxes . . . . . . . . .       850        886        1,607       1,937

          TOTAL OPERATING EXPENSES . . .    50,992     52,858      107,960     107,548

OPERATING INCOME . . . . . . . . . . . .     2,441      2,455        4,569       5,249

NONOPERATING INCOME. . . . . . . . . . .       950        834        1,800       1,624

INCOME BEFORE INTEREST CHARGES . . . . .     3,391      3,289        6,369       6,873

INTEREST CHARGES . . . . . . . . . . . .     1,070      1,058        2,011       2,144

NET INCOME . . . . . . . . . . . . . . .   $ 2,321    $ 2,231     $  4,358    $  4,729

                                                       

                      STATEMENTS OF RETAINED EARNINGS
                                (UNAUDITED)

                                           Three Months Ended       Six Months Ended
                                                June 30,                June 30,      
                                             1997      1996         1997        1996
                                                         (in thousands)

BALANCE AT BEGINNING OF PERIOD . . . . .    $2,637    $1,953       $1,886      $1,955

NET INCOME . . . . . . . . . . . . . . .     2,321     2,231        4,358       4,729

CASH DIVIDENDS DECLARED. . . . . . . . .     1,286     2,000        2,572       4,500

BALANCE AT END OF PERIOD . . . . . . . .    $3,672    $2,184       $3,672      $2,184

                    

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>
                                                              June 30,     December 31,
                                                                1997           1996    
                                                                   (in thousands)

ASSETS
<S>                                                           <C>            <C>
ELECTRIC UTILITY PLANT:

  Production. . . . . . . . . . . . . . . . . . . . . . . .   $626,769       $627,926
  General . . . . . . . . . . . . . . . . . . . . . . . . .      3,082          2,931
  Construction Work in Progress . . . . . . . . . . . . . .      2,346          1,400

          Total Electric Utility Plant. . . . . . . . . . .    632,197        632,257

  Accumulated Depreciation. . . . . . . . . . . . . . . . .    247,114        238,532


          NET ELECTRIC UTILITY PLANT. . . . . . . . . . . .    385,083        393,725


CURRENT ASSETS:

  Cash and Cash Equivalents . . . . . . . . . . . . . . . .         25            139
  Accounts Receivable . . . . . . . . . . . . . . . . . . .     19,079         18,879 
  Fuel. . . . . . . . . . . . . . . . . . . . . . . . . . .     17,200         17,792 
  Materials and Supplies. . . . . . . . . . . . . . . . . .      4,178          4,266
  Prepayments . . . . . . . . . . . . . . . . . . . . . . .        607            804 


          TOTAL CURRENT ASSETS. . . . . . . . . . . . . . .     41,089         41,880 


REGULATORY ASSETS . . . . . . . . . . . . . . . . . . . . .      5,748          5,857


DEFERRED CHARGES. . . . . . . . . . . . . . . . . . . . . .      2,986          1,449




            TOTAL . . . . . . . . . . . . . . . . . . . . .   $434,906       $442,911 

See Notes to Financial Statements.
</TABLE>


<PAGE>
<PAGE>
<TABLE>
                          AEP GENERATING COMPANY
                              BALANCE SHEETS
                                (UNAUDITED)
<CAPTION>
                                                              June 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 . . . . . . . . . . . . . . . . . . . .      3,672          1,886 
          Total Common Shareholder's Equity . . . . . . . .     46,907         47,121 
  Long-term Debt. . . . . . . . . . . . . . . . . . . . . .     69,562         89,554 

          TOTAL CAPITALIZATION. . . . . . . . . . . . . . .    116,469        136,675 

OTHER NONCURRENT LIABILITIES. . . . . . . . . . . . . . . .      1,463          1,613 

CURRENT LIABILITIES:
  Short-term Debt - Notes Payable . . . . . . . . . . . . .     18,800          9,575
  Accounts Payable. . . . . . . . . . . . . . . . . . . . .     15,132          7,510
  Taxes Accrued . . . . . . . . . . . . . . . . . . . . . .      4,108          2,903
  Rent Accrued - Rockport Plant Unit 2. . . . . . . . . . .      4,963          4,963
  Other . . . . . . . . . . . . . . . . . . . . . . . . . .        299          3,932 

          TOTAL CURRENT LIABILITIES . . . . . . . . . . . .     43,302         28,883 

DEFERRED GAIN ON SALE AND LEASEBACK - 
  ROCKPORT PLANT UNIT 2 . . . . . . . . . . . . . . . . . .    141,687        144,472

REGULATORY LIABILITIES:
  Deferred Investment Tax Credits . . . . . . . . . . . . .     71,776         73,460
  Amounts Due to Customers for Income Taxes . . . . . . . .     33,221         33,893
  Other . . . . . . . . . . . . . . . . . . . . . . . . . .         88             66

          TOTAL REGULATORY LIABILITIES. . . . . . . . . . .    105,085        107,419

DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . .     26,900         23,849

            TOTAL . . . . . . . . . . . . . . . . . . . . .   $434,906       $442,911

See Notes to Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
                          AEP GENERATING COMPANY
                         STATEMENTS OF CASH FLOWS
                                (UNAUDITED)
<CAPTION>
                                                                  Six Months Ended
                                                                      June 30,       
                                                                1997           1996
                                                                   (in thousands)
<S>                                                           <C>             <C>
OPERATING ACTIVITIES:
  Net Income . . . . . . . . . . . . . . . . . . . . . . . .  $  4,358        $ 4,729
  Adjustments for Noncash Items:
    Depreciation . . . . . . . . . . . . . . . . . . . . . .    10,807         10,826
    Deferred Federal Income Taxes. . . . . . . . . . . . . .     2,379          2,434
    Deferred Investment Tax Credits. . . . . . . . . . . . .    (1,684)        (1,687)
    Amortization of Deferred Gain on Sale
      and Leaseback - Rockport Plant Unit 2. . . . . . . . .    (2,785)        (2,786)
    Deferred Property Taxes. . . . . . . . . . . . . . . . .    (1,460)        (1,562)
  Changes in Certain Current Assets and Liabilities:
    Accounts Receivable. . . . . . . . . . . . . . . . . . .      (200)          (609)
    Fuel, Materials and Supplies . . . . . . . . . . . . . .       680         (1,831)
    Accounts Payable . . . . . . . . . . . . . . . . . . . .     7,622           (584)
    Taxes Accrued. . . . . . . . . . . . . . . . . . . . . .     1,205          3,387 
  Other (net). . . . . . . . . . . . . . . . . . . . . . . .    (3,914)        (1,616)
        Net Cash Flows From Operating Activities . . . . . .    17,008         10,701

INVESTING ACTIVITIES - Construction Expenditures . . . . . .    (1,765)        (1,251)

FINANCING ACTIVITIES:
  Return of Capital to Parent Company. . . . . . . . . . . .    (2,000)          (500)
  Retirement of Long-term Debt . . . . . . . . . . . . . . .   (20,010)          -
  Change in Short-term Debt (net). . . . . . . . . . . . . .     9,225         (4,400)
  Dividends Paid . . . . . . . . . . . . . . . . . . . . . .    (2,572)        (4,500)
        Net Cash Flows Used For Financing Activities . . . .   (15,357)        (9,400)

Net Increase (Decrease) in Cash and Cash Equivalents . . . .      (114)            50
Cash and Cash Equivalents at Beginning of Period . . . . . .       139             22
Cash and Cash Equivalents at End of Period . . . . . . . . .  $     25        $    72


Supplemental Disclosure:
  Cash  paid (received)  for interest net  of capitalized  amounts was $1,819,000 and
  $2,035,000  and  for income taxes was $(562,000) and $(764,000) in  1997  and 1996,
  respectively.

See Notes to Financial Statements.
</TABLE>

<PAGE>
<PAGE>
                      AEP GENERATING COMPANY
                  NOTES TO FINANCIAL STATEMENTS
                           JUNE 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.
<PAGE>
<PAGE>
                      AEP GENERATING COMPANY
     MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

           SECOND QUARTER 1997 vs. SECOND 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 increased $0.1 million or 4% in the second quarter
primarily due to income earned on temporary cash investments.  The
decrease in net income of $0.4 million or 8% for the year-to-date
period is a result of a 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, partially offset by income earned on
temporary cash investments and lower financing costs.
   Income statement items which changed significantly were:
                                     Increase (Decrease)        
                             Second Quarter      Year-to-Date  
                            (in millions)   %  (in millions)   %

Operating Revenues . . . . .    $(1.9)     (3)     $(0.3)    N.M.
Fuel Expense . . . . . . . .     (3.0)    (14)       0.8       2
Other Operation Expense. . .     (0.2)     (8)      (0.3)     (4)
Maintenance Expense. . . . .      1.5      38        0.4       5 
Taxes Other Than Federal
  Income Taxes . . . . . . .     (0.1)     (6)      (0.2)     (8)
Federal Income Taxes . . . .      N.M.    N.M.      (0.3)    (17)
Nonoperating Income. . . . .      0.1      14        0.2      11
Interest Charges . . . . . .      N.M.    N.M.      (0.1)     (6)

N.M. = Not Meaningful

   The decrease in operating revenues for the second quarter is
primarily attributable to a decrease in recoverable fuel expense. 
The decrease for the year-to-date period reflects the decreased
returns previously mentioned, partially offset by an increase in
recoverable operating expenses.
   Fuel expense decreased in the second quarter due to reduced
generation as Rockport Plant Unit 1 was out-of-service for general
boiler inspection and repair.  Although generation decreased, fuel
expense increased in the year-to-date period due to an increase in
the average cost of coal consumed.
   Other operation expense decreased for both comparative periods
as a result of lower general and administrative expenses.
   The general boiler inspection and repair on Rockport Plant Unit
1 accounted for the increased maintenance expense.

<PAGE>
   Taxes other than federal income taxes decreased due to a
reduction in Indiana property tax expense resulting from decreases
in assessed values for personal property and a reduction in the
Indiana supplemental net income tax accrual resulting from lower
pre-tax book income.  Federal income taxes attributable to
operations also decreased due to lower pre-tax book income.
   The increases in nonoperating income reflect the effect of
higher average balances of temporary cash investments during the
current period.
   Year-to-date interest charges declined due to lower average
short-term debt balances.
<PAGE>
<PAGE>
<TABLE>
                    APPALACHIAN POWER COMPANY AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)
<CAPTION>
                                           Three Months Ended        Six Months Ended
                                                June 30,                 June 30,      
                                           1997         1996        1997         1996
                                                         (in thousands)
<S>                                      <C>          <C>         <C>          <C>
OPERATING REVENUES . . . . . . . . . . . $373,084     $379,887    $789,534     $820,859

OPERATING EXPENSES:
  Fuel . . . . . . . . . . . . . . . . .   89,355       91,907     184,259      181,503
  Purchased Power. . . . . . . . . . . .   75,468       76,510     161,008      167,637
  Other Operation. . . . . . . . . . . .   61,427       61,066     125,267      123,809
  Maintenance. . . . . . . . . . . . . .   29,080       36,225      51,890       59,376
  Depreciation and Amortization. . . . .   34,274       33,168      68,249       66,041
  Taxes Other Than Federal Income Taxes.   29,763       29,014      60,036       60,316
  Federal Income Taxes . . . . . . . . .    8,320        8,778      29,094       35,321
          TOTAL OPERATING EXPENSES . . .  327,687      336,668     679,803      694,003
OPERATING INCOME . . . . . . . . . . . .   45,397       43,219     109,731      126,856
NONOPERATING INCOME (LOSS) . . . . . . .       79          (21)        323          576
INCOME BEFORE INTEREST CHARGES . . . . .   45,476       43,198     110,054      127,432
INTEREST CHARGES . . . . . . . . . . . .   30,098       27,092      58,192       55,702
NET INCOME . . . . . . . . . . . . . . .   15,378       16,106      51,862       71,730
PREFERRED STOCK DIVIDEND REQUIREMENTS. .      680        4,100       5,645        8,201
EARNINGS APPLICABLE TO COMMON STOCK. . . $ 14,698     $ 12,006    $ 46,217     $ 63,529
                                                                  

                   CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
                                   (UNAUDITED)

                                           Three Months Ended        Six Months Ended
                                                June 30,                 June 30,      
                                           1997         1996        1997         1996
                                                         (in thousands)

BALANCE AT BEGINNING OF PERIOD . . . . . $211,382     $223,469    $208,472     $199,021 
NET INCOME . . . . . . . . . . . . . . .   15,378       16,106      51,862       71,730
DEDUCTIONS:
  Cash Dividends Declared:
    Common Stock . . . . . . . . . . . .   28,609       27,075      57,218       54,150
    Cumulative Preferred Stock . . . . .      573        3,917       2,077        7,834
  Capital Stock Expense. . . . . . . . .      107          184       3,568          368

BALANCE AT END OF PERIOD . . . . . . . . $197,471     $208,399    $197,471     $208,399

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>
                                                            June 30,      December 31,
                                                              1997            1996    
                                                                 (in thousands)
ASSETS
<S>                                                        <C>             <C>
ELECTRIC UTILITY PLANT:
  Production . . . . . . . . . . . . . . . . . . . . .     $1,912,168      $1,883,271
  Transmission . . . . . . . . . . . . . . . . . . . .      1,067,101       1,054,207
  Distribution . . . . . . . . . . . . . . . . . . . .      1,538,707       1,495,445
  General. . . . . . . . . . . . . . . . . . . . . . .        198,763         188,740
  Construction Work in Progress. . . . . . . . . . . .         78,987          95,469
          Total Electric Utility Plant . . . . . . . .      4,795,726       4,717,132
  Accumulated Depreciation and Amortization. . . . . .      1,825,806       1,782,017

          NET ELECTRIC UTILITY PLANT . . . . . . . . .      2,969,920       2,935,115



OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . .         29,151          29,621



CURRENT ASSETS:
  Cash and Cash Equivalents. . . . . . . . . . . . . .          8,846           7,260
  Accounts Receivable. . . . . . . . . . . . . . . . .        157,611         160,021
  Allowance for Uncollectible Accounts . . . . . . . .         (2,257)           (687)
  Fuel . . . . . . . . . . . . . . . . . . . . . . . .         60,031          52,605
  Materials and Supplies . . . . . . . . . . . . . . .         52,940          56,605
  Accrued Utility Revenues . . . . . . . . . . . . . .         32,041          51,843
  Prepayments. . . . . . . . . . . . . . . . . . . . .         14,657          10,797

          TOTAL CURRENT ASSETS . . . . . . . . . . . .        323,869         338,444


REGULATORY ASSETS. . . . . . . . . . . . . . . . . . .        443,131         451,272


DEFERRED CHARGES . . . . . . . . . . . . . . . . . . .         41,792          46,285

            TOTAL. . . . . . . . . . . . . . . . . . .     $3,807,863      $3,800,737

See Notes to Consolidated Financial Statements.
</TABLE>


<PAGE>
<PAGE>
<TABLE>
                    APPALACHIAN POWER COMPANY AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
<CAPTION>
                                                          June 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. . . . . . . . . . . . . . . . . . .      592,815         575,380
  Retained Earnings. . . . . . . . . . . . . . . . . .      197,471         208,472
          Total Common Shareholder's Equity. . . . . .    1,050,744       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 . . . . . . . . . . . . . . . . . . .    1,494,041       1,365,834

          TOTAL CAPITALIZATION . . . . . . . . . . . .    2,586,890       2,629,959

OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . .      127,408         109,203

CURRENT LIABILITIES:
  Short-term Debt. . . . . . . . . . . . . . . . . . .      103,250          60,700
  Accounts Payable . . . . . . . . . . . . . . . . . .       90,277          85,892
  Taxes Accrued. . . . . . . . . . . . . . . . . . . .       53,255          40,935
  Customer Deposits. . . . . . . . . . . . . . . . . .       13,832          13,750
  Interest Accrued . . . . . . . . . . . . . . . . . .       20,530          20,938
  Other. . . . . . . . . . . . . . . . . . . . . . . .       56,278          80,360

          TOTAL CURRENT LIABILITIES. . . . . . . . . .      337,422         302,575

DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . .      659,893         669,964

DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . .       70,296          72,677

DEFERRED CREDITS . . . . . . . . . . . . . . . . . . .       25,954          16,359

CONTINGENCIES (Note 4)

            TOTAL. . . . . . . . . . . . . . . . . . .   $3,807,863      $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>
                                                                    Six Months Ended
                                                                        June 30,       
                                                                   1997          1996
                                                                     (in thousands)
<S>                                                             <C>           <C>
OPERATING ACTIVITIES:
  Net Income . . . . . . . . . . . . . . . . . . . . . . . . .  $  51,862     $  71,730
  Adjustments for Noncash Items:
    Depreciation and Amortization. . . . . . . . . . . . . . .     68,902        66,694
    Deferred Federal Income Taxes. . . . . . . . . . . . . . .     (6,524)        2,030
    Deferred Investment Tax Credits. . . . . . . . . . . . . .     (2,381)       (2,409)
    Deferred Power Supply Costs (net). . . . . . . . . . . . .      9,093         5,006
  Changes in Certain Current Assets and Liabilities:
    Accounts Receivable (net). . . . . . . . . . . . . . . . .      3,980       (37,278)
    Fuel, Materials and Supplies . . . . . . . . . . . . . . .     (3,761)       16,312
    Accrued Utility Revenues . . . . . . . . . . . . . . . . .     19,802        14,095
    Prepayments. . . . . . . . . . . . . . . . . . . . . . . .     (3,860)      (10,792)
    Accounts Payable . . . . . . . . . . . . . . . . . . . . .      4,385           819
    Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . .     12,320          (774)
    Revenue Refunds Accrued. . . . . . . . . . . . . . . . . .     (1,606)       26,812
  Other (net). . . . . . . . . . . . . . . . . . . . . . . . .     (4,731)      (15,370)
        Net Cash Flows From Operating Activities . . . . . . .    147,481       136,875

INVESTING ACTIVITIES:
  Construction Expenditures. . . . . . . . . . . . . . . . . .    (91,759)      (74,210)
  Proceeds from Sale of Property . . . . . . . . . . . . . . .      2,241         1,079
        Net Cash Flows Used For Investing Activities . . . . .    (89,518)      (73,131)

FINANCING ACTIVITIES:
  Capital Contributions from Parent Company. . . . . . . . . .     20,000        25,000
  Issuance of Long-term Debt . . . . . . . . . . . . . . . . .    183,257       200,825
  Change in Short-term Debt (net). . . . . . . . . . . . . . .     42,550       (31,775)
  Retirement of Cumulative Preferred Stock . . . . . . . . . .   (183,842)         -    
  Retirement of Long-term Debt . . . . . . . . . . . . . . . .    (56,378)     (189,164)
  Dividends Paid on Common Stock . . . . . . . . . . . . . . .    (57,218)      (54,150)
  Dividends Paid on Cumulative Preferred Stock . . . . . . . .     (4,746)       (7,834)
        Net Cash Flows Used For Financing Activities . . . . .    (56,377)      (57,098)

Net Increase in Cash and Cash Equivalents. . . . . . . . . . .      1,586         6,646
Cash and Cash Equivalents at Beginning of Period . . . . . . .      7,260         8,664
Cash and Cash Equivalents at End of Period . . . . . . . . . .  $   8,846     $  15,310

Supplemental Disclosure:
  Cash paid for interest net of capitalized amounts was $56,791,000 and $51,719,000 and
  for  income  taxes  was  $24,890,000 and $29,226,000 in  1997 and 1996, respectively.
  Noncash  acquisitions  under  capital  leases were $11,797,000 and $5,584,000 in 1997
  and 1996, respectively.

See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
            APPALACHIAN POWER COMPANY AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           JUNE 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 would be made prior
   to January 1, 2001, from the total rate levels (including the
   Company's current 1.482 cents/kwh fuel factor) proposed by the
   Company.  The Company's filing includes a proposal to shift
   revenue among the Company's customer classes with the effect
   that customer rates could change significantly from year to
   year.  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 six months of 1996, 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 number of 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.

<PAGE>
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 June 30, 1997 would reduce earnings
   by approximately $67 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) in the
   Federal Register.  These standards are expected to result in
   redesignation of a number of areas of the country currently in
   attainment to nonattainment which could ultimately dictate more
   stringent emission restrictions for AEP System generating
   units.

       The new rules provide that the states must first determine
   the attainment status of their areas.  The states then have
   three years to submit a compliance plan and up to ten years
   after designation to come into compliance with the new
   standards.  The compliance deadline could be as late as 2010
   for the ozone standard and 2012-2015 for the fine particulate
   standard.

       Management is reviewing the impact of the new rules,
   however, we are unable to estimate compliance costs without
   knowledge of reductions that the states will find necessary to
   meet the new standards.  If such reductions are significant and
   the Company must bear a significant portion of the cost of
   compliance in the region or county that is in violation of the
   revised standards, it could have a material adverse effect on
   results of operations or 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>
<PAGE>
            APPALACHIAN POWER COMPANY AND SUBSIDIARIES
  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                     AND FINANCIAL CONDITION                   

           SECOND QUARTER 1997 vs. SECOND QUARTER 1996
                               AND
             YEAR-TO-DATE 1997 vs. YEAR-TO-DATE 1996
RESULTS OF OPERATIONS
   Net income declined 5% in the second quarter primarily due to
a reduction in operating revenues and increased interest charges
reflecting an increase in long-term debt outstanding.  For the
year-to-date period net income decreased 28% predominantly due to
a decline in retail revenues reflecting milder winter weather in
1997.
   Income statement lines which changed significantly were:
                                     Increase (Decrease)        
                             Second Quarter       Year-to-Date  
                            (in millions)  %   (in millions)   %

Operating Revenues . . . . .    $(6.8)    (2)      $(31.3)    (4)
Fuel Expense . . . . . . . .     (2.6)    (3)         2.8      2
Purchased Power Expense. . .     (1.0)    (1)        (6.6)    (4)
Maintenance Expense. . . . .     (7.1)   (20)        (7.5)   (13)
Federal Income Taxes . . . .     (0.5)    (5)        (6.2)   (18)
Interest Charges . . . . . .      3.0     11          2.5      4

   The reduction in operating revenues was due to declines in both
retail and wholesale revenues.  Retail revenues declined due to
decreased energy demand from weather-sensitive residential and
commercial customers of 1% and 4%, respectively, in the second
quarter and 9% and 5%, respectively, in the year-to-date period. 
Revenues from wholesale customers decreased 4% in the quarter and
5% in the year-to-date period while wholesale sales increased 7% in
the quarter and 4% in the year-to-date period.  The decreases in
wholesale revenues resulted from a decrease in the average price
per kilowatthour sold.  The increases in wholesale sales resulted
from substantial increases in coal conversion services partially
offset by decreases of 8% in the second quarter and 11% in the
year-to-date period of traditional sales for resale to unaffiliated
utilities.  Coal conversion service sales are for the conversion of
customers' coal to electricity and are priced to exclude customer-provided
fuel.  Traditional sales for resale are for the sale of
electricity generated from the Company's coal and are priced to
include the cost of coal.  The substantial increase in coal
conversion service sales reflects the cost effectiveness of this
service to customers.  The reduction in traditional sales for
resale resulted from the milder winter weather in 1997 and the
increasingly competitive nature of the wholesale power markets.


<PAGE>
   The decrease in fuel expense in the quarter was due to a
decrease in generation.  In the year-to-date period fuel expense
increased due to the operation of the West Virginia power supply
cost recovery mechanism as overcollections of fuel cost were
deferred in accordance with a rate order, partly offset by
decreased coal-fired generation.
   Purchased power expense declined in the year-to-date period as
lower demand led to reduced purchases of energy from the AEP System
Power Pool (Power Pool), partly offset by an increase in Power Pool
capacity charges.  An increase in the Company's prior twelve-month
peak demand relative to the total peak demand of all Power Pool
members caused the increase in Power Pool capacity charges. 
   Maintenance expense decreased as a result of the effects of the
recognition of incremental storm damage expense in accordance with
directions of the Virginia State Corporation Commission in the
second quarter of 1996 and reduced levels of 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.
   Interest charges increased primarily as a result of an increase
in the balance of long-term debt outstanding issued to finance the
reacquisition of preferred stock.  A January 1997 tender offer that
retired $130 million stated value preferred stock on February 28,
1997 and the subsequent reacquisition of $48 million stated value
preferred stock on April 11, 1997 were responsible for a decrease
in preferred stock dividend requirements.
FINANCIAL CONDITION
   Total plant and property additions including capital leases for
the first six months of 1997 were $104 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 $43 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 that was announced in
conjunction with a special meeting of shareholders, 1,298,963
shares of $100 stated value preferred stocks were reacquired.  The
total cost of the stock reacquisition was $134 million.  At the 

<PAGE>
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) in the Federal Register.  These standards
are expected to result in redesignation of a number of areas of the
country currently in attainment to nonattainment which could
ultimately dictate more stringent emission restrictions for AEP
System generating units.
   The new rules provide that the states must first determine the
attainment status of their areas.  The states then have three years
to submit a compliance plan and up to ten years after designation
to come into compliance with the new standards.  The compliance
deadline could be as late as 2010 for the ozone standard and 2012-2015 for
the fine particulate standard.
   Management is reviewing the impact of the new rules, however,
we are unable to estimate compliance costs without knowledge of the
cost of reductions that the states will find necessary to meet the
new standards.  If such reductions are significant and the Company
must bear a significant portion of the cost of compliance in the
region or county that is in violation of the revised standards, it
could have a material adverse effect on results of operations or
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        Six Months Ended
                                                June 30,                 June 30,      
                                           1997         1996        1997         1996
                                                         (in thousands)
<S>                                      <C>          <C>         <C>          <C>
OPERATING REVENUES . . . . . . . . . . . $263,263     $269,023    $528,270     $540,063

OPERATING EXPENSES:
  Fuel . . . . . . . . . . . . . . . . .   37,129       45,169      81,929       92,675
  Purchased Power. . . . . . . . . . . .   45,319       39,971      83,834       83,440
  Other Operation. . . . . . . . . . . .   43,621       46,844      85,751       91,008
  Maintenance. . . . . . . . . . . . . .   19,743       17,409      33,067       31,332
  Depreciation . . . . . . . . . . . . .   22,572       21,966      45,019       43,757
  Amortization of Zimmer 
    Plant Phase-in Costs . . . . . . . .    7,334        7,965      15,741       16,413
  Taxes Other Than Federal Income Taxes.   29,654       28,088      59,623       56,195
  Federal Income Taxes . . . . . . . . .   14,923       14,438      32,908       29,644
          TOTAL OPERATING EXPENSES . . .  220,295      221,850     437,872      444,464
OPERATING INCOME . . . . . . . . . . . .   42,968       47,173      90,398       95,599
NONOPERATING INCOME (LOSS) . . . . . . .      324          385       1,360       (2,520)
INCOME BEFORE INTEREST CHARGES . . . . .   43,292       47,558      91,758       93,079
INTEREST CHARGES . . . . . . . . . . . .   19,862       20,062      39,004       40,457
NET INCOME . . . . . . . . . . . . . . .   23,430       27,496      52,754       52,622
PREFERRED STOCK DIVIDEND REQUIREMENTS. .      533        1,374       1,377        3,044
EARNINGS APPLICABLE TO COMMON STOCK. . . $ 22,897     $ 26,122    $ 51,377     $ 49,578

                                                                  

                   CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
                                   (UNAUDITED)

                                          Three Months Ended        Six Months Ended
                                                June 30,                 June 30,      
                                           1997         1996        1997         1996
                                                         (in thousands)

BALANCE AT BEGINNING OF PERIOD . . . . . $108,727      $78,984    $ 99,582      $74,320
NET INCOME . . . . . . . . . . . . . . .   23,430       27,496      52,754       52,622
DEDUCTIONS:
  Cash Dividends Declared:
    Common Stock . . . . . . . . . . . .   19,671       18,969      39,342       37,938
    Cumulative Preferred Stock . . . . .      438        1,422         875        2,844
  Capital Stock Expense. . . . . . . . .       95           70         166          141
BALANCE AT END OF PERIOD . . . . . . . . $111,953      $86,019    $111,953      $86,019
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>
                                                            June 30,      December 31,
                                                              1997            1996    
                                                                 (in thousands)
ASSETS
<S>                                                        <C>             <C>
ELECTRIC UTILITY PLANT:
  Production . . . . . . . . . . . . . . . . . . . . .     $1,509,654      $1,503,371
  Transmission . . . . . . . . . . . . . . . . . . . .        325,986         326,247
  Distribution . . . . . . . . . . . . . . . . . . . .        912,908         885,267
  General. . . . . . . . . . . . . . . . . . . . . . .        134,210         130,946
  Construction Work in Progress. . . . . . . . . . . .         69,557          54,062
          Total Electric Utility Plant . . . . . . . .      2,952,315       2,899,893

  Accumulated Depreciation . . . . . . . . . . . . . .      1,050,976       1,016,909

          NET ELECTRIC UTILITY PLANT . . . . . . . . .      1,901,339       1,882,984


OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . .         23,624          24,069


CURRENT ASSETS:
  Cash and Cash Equivalents. . . . . . . . . . . . . .         12,844           9,134
  Accounts Receivable (net). . . . . . . . . . . . . .        100,461          63,003
  Fuel . . . . . . . . . . . . . . . . . . . . . . . .         23,397          18,278
  Materials and Supplies . . . . . . . . . . . . . . .         22,492          23,999
  Accrued Utility Revenues . . . . . . . . . . . . . .         53,629          31,826
  Prepayments. . . . . . . . . . . . . . . . . . . . .         41,465          32,330

          TOTAL CURRENT ASSETS . . . . . . . . . . . .        254,288         178,570


REGULATORY ASSETS. . . . . . . . . . . . . . . . . . .        360,449         385,689


DEFERRED CHARGES . . . . . . . . . . . . . . . . . . .         38,880          70,274



            TOTAL. . . . . . . . . . . . . . . . . . .     $2,578,580      $2,541,586

See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
                 COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
<CAPTION>
                                                           June 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. . . . . . . . . . . . . . . . . . .       571,922          574,709
  Retained Earnings. . . . . . . . . . . . . . . . . .       111,953           99,582
          Total Common Shareholder's Equity. . . . . .       724,901          715,317
  Cumulative Preferred Stock - Subject to
    Mandatory Redemption . . . . . . . . . . . . . . .        25,000           25,000
  Long-term Debt . . . . . . . . . . . . . . . . . . .       839,875          882,641

          TOTAL CAPITALIZATION . . . . . . . . . . . .     1,589,776        1,622,958

OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . .        41,175           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. . . . . . . . . . . . . . . . . . .       136,100           51,800
  Accounts Payable . . . . . . . . . . . . . . . . . .        65,454           54,828
  Taxes Accrued. . . . . . . . . . . . . . . . . . . .        91,476          129,429
  Interest Accrued . . . . . . . . . . . . . . . . . .        13,623           13,605
  Other. . . . . . . . . . . . . . . . . . . . . . . .        32,732           32,314

          TOTAL CURRENT LIABILITIES. . . . . . . . . .       435,775          346,616

DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . .       433,693          441,477

DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . .        55,298           57,101

DEFERRED CREDITS . . . . . . . . . . . . . . . . . . .        22,863           33,366

CONTINGENCIES (Note 4)

            TOTAL. . . . . . . . . . . . . . . . . . .    $2,578,580       $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>
                                                                 Six Months Ended
                                                                      June 30,        
                                                               1997             1996
                                                                   (in thousands)
<S>                                                          <C>             <C>
OPERATING ACTIVITIES:
  Net Income . . . . . . . . . . . . . . . . . . . . . . . . $  52,754       $  52,622
  Adjustments for Noncash Items:
    Depreciation . . . . . . . . . . . . . . . . . . . . . .    45,137          43,571
    Deferred Federal Income Taxes. . . . . . . . . . . . . .    (1,385)         (3,789)
    Deferred Investment Tax Credits. . . . . . . . . . . . .    (1,803)         (1,824)
    Deferred Collection of Fuel Costs (net). . . . . . . . .    (7,315)          2,121
    Amortization of Deferred Property Taxes. . . . . . . . .    32,400          30,446
    Amortization of Zimmer Plant Operating Expenses and 
      Carrying Charges . . . . . . . . . . . . . . . . . . .    15,775          15,211
  Changes in Certain Current Assets and Liabilities:
    Accounts Receivable (net). . . . . . . . . . . . . . . .   (37,458)          1,186
    Fuel, Materials and Supplies . . . . . . . . . . . . . .    (3,612)          2,475
    Accrued Utility Revenues . . . . . . . . . . . . . . . .   (21,803)           (699)
    Prepayments. . . . . . . . . . . . . . . . . . . . . . .    (9,135)        (10,840)
    Accounts Payable . . . . . . . . . . . . . . . . . . . .    10,626          (8,809)
    Taxes Accrued. . . . . . . . . . . . . . . . . . . . . .   (37,953)        (29,193)
  Other (net). . . . . . . . . . . . . . . . . . . . . . . .    (4,084)         (4,853)
        Net Cash Flows From Operating Activities . . . . . .    32,144          87,625

INVESTING ACTIVITIES:
  Construction Expenditures. . . . . . . . . . . . . . . . .   (58,623)        (38,642)
  Other. . . . . . . . . . . . . . . . . . . . . . . . . . .     1,470           2,301 
        Net Cash Flows Used For Investing Activities . . . .   (57,153)        (36,341)

FINANCING ACTIVITIES:
  Issuance of Long-term Debt . . . . . . . . . . . . . . . .    38,574            -
  Change in Short-term Debt (net). . . . . . . . . . . . . .    84,300          64,225 
  Retirement of Cumulative Preferred Stock . . . . . . . . .   (52,953)         (7,500)
  Retirement of Long-term Debt . . . . . . . . . . . . . . .      -            (68,255)
  Dividends Paid on Common Stock . . . . . . . . . . . . . .   (39,342)        (37,938)
  Dividends Paid on Cumulative Preferred Stock . . . . . . .    (1,860)         (3,022)
        Net Cash Flows From (Used For) Financing Activities.    28,719         (52,490)

Net Increase (Decrease) in Cash and Cash Equivalents . . . .     3,710          (1,206)
Cash and Cash Equivalents at Beginning of Period . . . . . .     9,134          10,577
Cash and Cash Equivalents at End of Period . . . . . . . . . $  12,844       $   9,371

Supplemental Disclosure:
  Cash paid  for  interest net of capitalized  amounts was $36,976,000 and $39,244,000
  and for income taxes was $26,762,000 and $18,674,000 in 1997 and 1996, respectively.
  Noncash  acquisitions  under  capital  leases were $4,570,000 and $6,941,000 in 1997
  and 1996, respectively.

See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
         COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 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.

3. ZIMMER PHASE-IN PLAN

       In June 1997 the Company completed recovery of the Zimmer
   Plant phase-in plan deferrals and ceased charging a 3.39%
   temporary surcharge.  The temporary surcharge was placed into
   effect on February 1, 1994 to allow the Company to recover 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 through June 26, 1997 when the total
   amount was collected.  The completion of the recovery of
   amounts deferred under the phase-in plan and the cessation of
   the surcharge will 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 June 30, 1997 would reduce earnings by
   approximately $36 million inclusive of interest.  Management
   believes it will ultimately prevail on this issue and will
   vigorously contest any disallowance that may be proposed.




<PAGE>
   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) in the
   Federal Register.  The revised standards are expected to result
   in redesignation of a number of areas of the country currently
   in attainment to nonattainment which could ultimately dictate
   more stringent emission restrictions for AEP System generating
   units.

       The new rules provide that the states must first determine
   the attainment status of their areas.  The states then have
   three years to submit a compliance plan and up to ten years
   after designation to come into compliance with the new
   standards.  The compliance deadline could be as late as 2010
   for the ozone standard and 2012-2015 for the fine particulate
   standard.

       Management is reviewing the impact of the new rules,
   however, we are unable to estimate compliance costs without
   knowledge of reductions that the states will find necessary to
   meet the new standards.  If such reductions are significant and
   the Company must bear a significant portion of the cost of
   compliance in the region or county that is in violation of the
   revised standards, it could have a material adverse effect on
   results of operations or 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>
<PAGE>
         COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
     MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

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

     Net income decreased $4.1 million or 15% in the second quarter
of 1997 due to decreased sales to residential customers, increased
maintenance expense and increased taxes other than federal income
taxes.  Year-to-date net income increased slightly as the second
quarter decline largely offset a first quarter increase that
resulted from an increase in nonoperating income and decreased
interest charges.
   Operating revenues decreased 2% in both the second quarter and
year-to-date periods due predominantly to lower retail fuel clause
revenues which decreased due to the amortization of previously
overcollected fuel costs and gains from the sale of emission
allowances.  The Public Utilities Commission of Ohio fuel clause
adjustment mechanism requires the recordation of a regulatory
liability when fuel is overrecovered.  Therefore, the decrease in
fuel clause revenues did not affect net income since it was offset
by the amortization of a regulatory liability recorded in a prior
period.  Retail revenues decreased 3% in both periods due to
weather-related residential sales decreases which were partly
offset by increases in industrial sales.
   Revenues from wholesale customers increased 5% on a 21%
increase in sales during the second quarter and increased less than
1% on a 15% sales increase during the year-to-date period.  The
modest increase in revenues compared to the increases in sales
resulted from a decrease in the average price per kilowatthour
sold.  The increases in wholesale sales resulted from increased
coal conversion services which are for the conversion of customers'
coal to electricity and are priced to exclude the customer-provided
fuel.  The substantial increase in conversion service sales
reflects the cost effectiveness of this service to customers.
<PAGE>
<PAGE>
    Income statement lines which changed significantly were as
follows:
                                    Increase (Decrease)          
                            Second Quarter        Year-to-Date   
                          (in millions)   %    (in millions)   % 

Fuel Expense. . . . . . . .   $(8.0)    (18)      $(10.7)    (12)
Purchased Power Expense . .     5.3      13          0.4     N.M.
Other Operation Expense . .    (3.2)     (7)        (5.3)     (6)
Maintenance Expense . . . .     2.3      13          1.7       6
Taxes Other Than Federal
 Income Taxes . . . . . . .     1.6       6          3.4       6
Federal Income Taxes. . . .     0.5       3          3.3      11
Nonoperating Income . . . .      -       -           3.9     N.M.

N.M. = Not Meaningful

   The decline in fuel expense was due to decreased generation and
the operation of the fuel clause adjustment mechanism which
credited fuel expenses in the current period with the amortization
of deferred fuel costs recorded as a regulatory liability in the
prior period.
   Purchased power expense increased in the second quarter of 1997
due to increased energy charges from the AEP System Power Pool as
Conesville Plant Units 5 and 6 were out of service for a major part
of the second quarter for maintenance.
   The decline in other operation expense was mainly due to the
amortization of deferred gains on the sale of emission allowances,
commensurate with recognition as a reduction to customers bills,
and a decline in employee pensions and benefits expense.
   Maintenance expense increased during the second quarter of 1997
due to scheduled maintenance of boiler plant at Conesville Units 5 
and 6.
   The increase in taxes other than federal income taxes was
primarily due to increased property taxes, as a result of increases
in assessed property values and tax rates, and higher gross
receipts taxes, as a result of the effect of a tax credit recorded
in 1996 and increased revenues during the assessment period.
   Federal income taxes attributable to operations increased
primarily due to changes in certain book/tax differences accounted
for on a flow-through basis for rate-making and financial reporting
purposes.
   Nonoperating income in 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          Six Months Ended
                                               June 30,                   June 30,      
                                           1997        1996           1997        1996
                                                         (in thousands)
<S>                                      <C>         <C>            <C>         <C>
OPERATING REVENUES . . . . . . . . . . . $320,508    $323,494       $661,821    $653,377

OPERATING EXPENSES:
  Fuel . . . . . . . . . . . . . . . . .   53,526      56,532        113,776     116,555
  Purchased Power. . . . . . . . . . . .   34,177      34,653         70,173      69,316
  Other Operation. . . . . . . . . . . .   81,300      78,686        159,911     157,496
  Maintenance. . . . . . . . . . . . . .   30,459      30,107         55,695      56,549
  Depreciation and Amortization. . . . .   35,106      35,086         70,124      69,978
  Amortization of Rockport Plant Unit 1
    Phase-in Plan Deferrals. . . . . . .    3,911       3,911          7,822       7,822
  Taxes Other Than Federal Income Taxes.   15,591      18,440         33,876      38,361
  Federal Income Taxes . . . . . . . . .   16,298      15,649         40,410      33,852

          TOTAL OPERATING EXPENSES . . .  270,368     273,064        551,787     549,929

OPERATING INCOME . . . . . . . . . . . .   50,140      50,430        110,034     103,448
NONOPERATING INCOME (LOSS) . . . . . . .      497         272            965        (365)
INCOME BEFORE INTEREST CHARGES . . . . .   50,637      50,702        110,999     103,083
INTEREST CHARGES . . . . . . . . . . . .   16,729      17,195         32,832      33,809
NET INCOME . . . . . . . . . . . . . . .   33,908      33,507         78,167      69,274
PREFERRED STOCK DIVIDEND REQUIREMENTS. .    1,217       2,910          3,325       5,858
EARNINGS APPLICABLE TO COMMON STOCK. . . $ 32,691    $ 30,597       $ 74,842    $ 63,416
                                                                  

                   CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
                                   (UNAUDITED)

                                          Three Months Ended          Six Months Ended
                                               June 30,                   June 30,      
                                           1997        1996           1997        1996
                                                         (in thousands)

BALANCE AT BEGINNING OF PERIOD . . . . . $282,157    $239,799       $269,071    $235,107
NET INCOME . . . . . . . . . . . . . . .   33,908      33,507         78,167      69,274
DEDUCTIONS:
  Cash Dividends Declared:
    Common Stock . . . . . . . . . . . .   29,065      28,127         58,130      56,254
    Cumulative Preferred Stock . . . . .    1,184       2,359          2,387       5,249
  Capital Stock Expense. . . . . . . . .       33         551            938         609

BALANCE AT END OF PERIOD . . . . . . . . $285,783    $242,269       $285,783    $242,269

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>
                                                            June 30,      December 31,
                                                              1997            1996    
                                                                 (in thousands)
ASSETS
<S>                                                        <C>             <C>
ELECTRIC UTILITY PLANT:
  Production . . . . . . . . . . . . . . . . . . . . .     $2,531,212      $2,525,969
  Transmission . . . . . . . . . . . . . . . . . . . .        880,822         881,407
  Distribution . . . . . . . . . . . . . . . . . . . .        711,603         696,069
  General (including nuclear fuel) . . . . . . . . . .        208,126         189,619
  Construction Work in Progress. . . . . . . . . . . .         96,942          84,605
          Total Electric Utility Plant . . . . . . . .      4,428,705       4,377,669
  Accumulated Depreciation and Amortization. . . . . .      1,917,166       1,861,893

          NET ELECTRIC UTILITY PLANT . . . . . . . . .      2,511,539       2,515,776



NUCLEAR DECOMMISSIONING AND SPENT NUCLEAR
  FUEL DISPOSAL TRUST FUNDS. . . . . . . . . . . . . .        522,856         490,778


OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . .        158,869         154,265



CURRENT ASSETS:
  Cash and Cash Equivalents. . . . . . . . . . . . . .          8,782           8,233
  Accounts Receivable. . . . . . . . . . . . . . . . .        124,234         125,822
  Allowance for Uncollectible Accounts . . . . . . . .         (1,412)           (156)
  Fuel . . . . . . . . . . . . . . . . . . . . . . . .         26,416          23,977
  Materials and Supplies . . . . . . . . . . . . . . .         75,556          77,074
  Accrued Utility Revenues . . . . . . . . . . . . . .         35,735          38,295
  Prepayments. . . . . . . . . . . . . . . . . . . . .         11,196          10,271

          TOTAL CURRENT ASSETS . . . . . . . . . . . .        280,507         283,516



REGULATORY ASSETS. . . . . . . . . . . . . . . . . . .        417,054         421,692



DEFERRED CHARGES . . . . . . . . . . . . . . . . . . .         32,186          31,457



            TOTAL. . . . . . . . . . . . . . . . . . .     $3,923,011      $3,897,484

See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
                 INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
<CAPTION>
                                                           June 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. . . . . . . . . . . . . . . . . . .       732,406          731,272
  Retained Earnings. . . . . . . . . . . . . . . . . .       285,783          269,071
          Total Common Shareholder's Equity. . . . . .     1,074,773        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 . . . . . . . . . . . . . . . . . . .     1,009,723        1,042,104

          TOTAL CAPITALIZATION . . . . . . . . . . . .     2,162,440        2,256,008

OTHER NONCURRENT LIABILITIES:
  Nuclear Decommissioning. . . . . . . . . . . . . . .       341,165          313,845
  Other. . . . . . . . . . . . . . . . . . . . . . . .       200,163          174,903

          TOTAL OTHER NONCURRENT LIABILITIES . . . . .       541,328          488,748

CURRENT LIABILITIES:
  Long-term Debt Due Within One Year . . . . . . . . .        35,000             -   
  Short-term Debt. . . . . . . . . . . . . . . . . . .       103,925           43,500
  Accounts Payable . . . . . . . . . . . . . . . . . .        41,956           61,892
  Taxes Accrued. . . . . . . . . . . . . . . . . . . .        69,137           65,400
  Interest Accrued . . . . . . . . . . . . . . . . . .        15,714           15,281
  Obligations Under Capital Leases . . . . . . . . . .        35,935           29,740
  Other. . . . . . . . . . . . . . . . . . . . . . . .        62,147           66,436

          TOTAL CURRENT LIABILITIES. . . . . . . . . .       363,814          282,249

DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . .       582,706          594,879

DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . .       142,536          146,473

DEFERRED GAIN ON SALE AND LEASEBACK - 
  ROCKPORT PLANT UNIT 2. . . . . . . . . . . . . . . .        94,272           96,125

DEFERRED CREDITS . . . . . . . . . . . . . . . . . . .        35,915           33,002

COMMITMENTS AND CONTINGENCIES (Note 3)

            TOTAL. . . . . . . . . . . . . . . . . . .    $3,923,011       $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>
                                                                  Six Months Ended
                                                                      June 30,        
                                                                1997            1996
                                                                   (in thousands)
<S>                                                          <C>              <C>
OPERATING ACTIVITIES:
  Net Income . . . . . . . . . . . . . . . . . . . . . . . . $  78,167        $ 69,274
  Adjustments for Noncash Items:
    Depreciation and Amortization. . . . . . . . . . . . . .    73,856          73,820
    Amortization of Rockport Plant Unit 1 
      Phase-in Plan Deferrals. . . . . . . . . . . . . . . .     7,822           7,822
    Deferral of Incremental Nuclear
      Refueling Outage Expenses (net). . . . . . . . . . . .    (9,281)         (4,850)
    Deferred Federal Income Taxes. . . . . . . . . . . . . .    (5,770)         (7,712)
    Deferred Investment Tax Credits. . . . . . . . . . . . .    (3,937)         (3,963)
  Changes in Certain Current Assets and Liabilities:
    Accounts Receivable (net). . . . . . . . . . . . . . . .     2,844          (9,172)
    Fuel, Materials and Supplies . . . . . . . . . . . . . .      (921)         (2,596)
    Accrued Utility Revenues . . . . . . . . . . . . . . . .     2,560          11,403
    Accounts Payable . . . . . . . . . . . . . . . . . . . .   (19,936)         (9,679)
    Taxes Accrued. . . . . . . . . . . . . . . . . . . . . .     3,737           2,486
  Other (net). . . . . . . . . . . . . . . . . . . . . . . .    12,224           5,306
        Net Cash Flows From Operating Activities . . . . . .   141,365         132,139

INVESTING ACTIVITIES:
  Construction Expenditures. . . . . . . . . . . . . . . . .   (59,723)        (37,128)
  Other. . . . . . . . . . . . . . . . . . . . . . . . . . .     1,284             853
        Net Cash Flows Used For Investing Activities . . . .   (58,439)        (36,275)

FINANCING ACTIVITIES:
  Issuance of Long-term Debt . . . . . . . . . . . . . . . .    47,728          38,579
  Change in Short-term Debt (net). . . . . . . . . . . . . .    60,425          (3,250)
  Retirement of Cumulative Preferred Stock . . . . . . . . .   (78,838)        (30,555)
  Retirement of Long-term Debt . . . . . . . . . . . . . . .   (50,000)        (46,091)
  Dividends Paid on Common Stock . . . . . . . . . . . . . .   (58,130)        (56,254)
  Dividends Paid on Cumulative Preferred Stock . . . . . . .    (3,562)         (5,780)
        Net Cash Flows Used For Financing Activities . . . .   (82,377)       (103,351)

Net Increase (Decrease) in Cash and Cash Equivalents.  . . .       549          (7,487)
Cash and Cash Equivalents at Beginning of Period . . . . . .     8,233          13,723
Cash and Cash Equivalents at End of Period . . . . . . . . . $   8,782       $   6,236

Supplemental Disclosure:
  Cash paid for interest  net of capitalized  amounts was  $31,019,000 and $32,516,000
  and for income taxes was $39,784,000 and $44,183,000 in 1997 and 1996, respectively.
  Noncash acquisitions  under capital  leases were $50,684,000 and $42,290,000 in 1997
  and 1996, respectively.

See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
         INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JUNE 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 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 number of 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. COMMITMENTS AND CONTINGENCIES

   Steam Generator Replacement

       The Company has announced plans to replace the four steam
   generators in its Donald C. Cook Nuclear Plant's Unit 1.  The
   replacement will take place during a regularly scheduled
   refueling outage in the spring of the year 2000.  The unit is
   expected to be out of service for about 100 days.  The cost of
   similar steam generator replacement projects in the industry
   have ranged from $150 million to $180 million.  Certain
   construction commitments to produce the steam generator
   components with long lead time production requirements have
   been made.  The plant's Unit 2 steam generators were replaced
   in 1988.

   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 

   <PAGE>
   disallowance of the COLI interest deductions through June 30,
   1997 would reduce earnings by approximately $55 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) in the
   Federal Register.  These standards are expected to result in
   redesignation of a number of areas of the country currently in
   attainment to nonattainment which could ultimately dictate more
   stringent emission restrictions for AEP System generating
   units.

       The new rules provide that the states must first determine
   the attainment status of their areas.  The states then have
   three years to submit a compliance plan and up to ten years
   after designation to come into compliance with the new
   standards.  The compliance deadline could be as late as 2010
   for the ozone standard and 2012-2015 for the fine particulate
   standard.

       Management is reviewing the impact of the new rules,
   however, we are unable to estimate compliance costs without
   knowledge of reductions that the states will find necessary to
   meet the new standards.  If such reductions are significant and
   the Company is to bear a significant portion of the cost of
   compliance in the region or county that is in violation of the
   revised standards, it would have a material adverse effect on
   results of operations or 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>
<PAGE>
         INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                     AND FINANCIAL CONDITION                   

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

RESULTS OF OPERATIONS
   Net income although relatively unchanged for the second
quarter, increased 13% or $8.9 million for the year-to-date period
reflecting an increase in first quarter revenues.  Revenues
increased 1% or $8.4 million in the year-to-date period due
primarily to a 2% increase in retail sales, partly offset by a 2%
decline in wholesale sales.  The increase in retail sales was
largely attributable to increased industrial customer usage. 
Retail revenues also increased due to an increase in fuel clause
recoveries.  Under a fuel clause recovery mechanism unrecovered
fuel costs are deferred for future recovery.
   The decline in wholesale sales reflects a decrease in energy
deliveries to the AEP System Power Pool (Power Pool) due to planned
generating unit outages that reduced the availability of
generation.  Partly offsetting the decline in wholesale sales were
additional Power Pool sales to nonaffiliated companies for coal
conversion and transmission services.  Coal conversion service
sales are for the conversion of customers' coal to electricity. 
The increase in coal conversion service sales reflects the cost
effectiveness of this service to customers.
   Income statement line items which changed significantly were: 
                                   Increase (Decrease)          
                            Second Quarter        Year-to-Date   
                          (in millions)   %    (in millions)   % 

Fuel Expense. . . . . . .     $(3.0)     (5)       $(2.8)     (2)
Other Operation Expense .       2.6       3          2.4       2
Taxes Other Than
 Federal Income Taxes . .      (2.8)    (15)        (4.5)    (12)
Federal Income Taxes. . .       0.6       4          6.6      19
Nonoperating Income . . .       0.2      83          1.3     N.M.

N.M. = Not meaningful

   Fuel expense decreased in both periods due to the reduction in
generation caused by the planned generating unit outages.  Also
contributing to the decrease in the quarter was the use of an
increased proportion of lower cost nuclear generation to coal-fired
generation reflecting the effects of plant maintenance outages in
the second quarter.  Nuclear generation was available for a greater
portion of the second quarter in 1997 than in 1996 since a
refueling and maintenance outage at the Donald C. Cook Nuclear 

<PAGE>
Plant (Cook Nuclear Plant) Unit 1 was completed earlier in the
second quarter of 1997 than a similar refueling and maintenance
outage for Cook Nuclear Plant Unit 2 performed in 1996.  Also
Rockport Unit 1 and Tanners Creek Unit 4 experienced general boiler
and inspection maintenance in the second quarter of 1997 reducing
the availability of coal-fired generation when compared with the
same period in 1996.
   Other operation expense increased in both periods due to
increased administrative and general expenses.
   The decrease in taxes other than federal income taxes in both
periods was the result of lower Indiana and Michigan real and
personal property tax accruals recorded this year as compared with
1996 due to declines in assessed property values.
   Federal income taxes attributable to operations increased in
both periods as a result of an increase in pre-tax operating income
and changes in certain book/tax timing differences accounted for on
a flow-through basis for rate-making and financial reporting
purposes.
   The increase in nonoperating income for the year-to-date period
was due to the effect of a loss on the sale of a western coal
property in the first quarter of 1996.
FINANCIAL CONDITION
   Total plant and property additions including capital leases for
the year-to-date period were $111 million.  During the first six
months of 1997 short-term debt outstanding increased by $60
million.
   In February 1997, the Company issued $48 million of 6.40% First
Mortage Bonds, due 2000.  In May 1997, the Company redeemed $50
million of 8.75% First Mortgage Bonds due 2022.
   As part of a January 1997 tender offer for all of the Company's
outstanding preferred stock that was announced in conjunction with
a special meeting of shareholders, 774,069 shares of $100 par value
preferred stocks were reacquired.  The total cost of the stock
reacquisition was $78 million.  At the 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.
<PAGE>
<PAGE>
STEAM GENERATOR REPLACEMENT
   The Company has announced plans to replace the four steam
generators in its Cook Nuclear Plant's Unit 1.  The replacement
will take place during a regularly scheduled refueling outage in
the spring of the year 2000.  The unit is expected to be out of
service for about 100 days.  The costs of similar steam generator
replacement projects in the industry have ranged from $150 million
to $180 million.  Certain construction commitments to produce the
steam generator components with long lead time production
requirements have been made.  The plant's Unit 2 steam generators
were replaced in 1988.
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) in the Federal Register.  These standards
are expected to result in redesignation of a number of areas of the
country currently in attainment to nonattainment which could
ultimately dictate more stringent emission restrictions for AEP
System generating units.
   The new rules provide that the states must first determine the
attainment status of their areas.  The states then have three years
to submit a compliance plan and up to ten years after designation
to come into compliance with the new standards.  The compliance
deadline could be as late as 2010 for the ozone standard and 2012-2015 for
the fine particulate standard.
   Management is reviewing the impact of the new rules, however,
we are unable to estimate compliance costs without knowledge of
reductions that the states will find necessary to meet the new
standards.  If such reductions are significant and the Company must
bear a significant portion of the cost of compliance in the region
or county that is in violation of the revised standards, it could
have a material adverse effect on results of operations or possibly
financial condition unless such costs are recovered.
<PAGE>
<PAGE>
<TABLE>
                              KENTUCKY POWER COMPANY
                               STATEMENTS OF INCOME
                                   (UNAUDITED)
<CAPTION>
                                           Three Months Ended        Six Months Ended
                                                 June 30,                 June 30,      
                                             1997        1996        1997         1996
                                                          (in thousands)
<S>                                        <C>         <C>         <C>          <C>
OPERATING REVENUES . . . . . . . . . . . . $78,101     $78,730     $166,681     $167,319

OPERATING EXPENSES:
  Fuel . . . . . . . . . . . . . . . . . .  19,463      20,110       38,627       41,790
  Purchased Power. . . . . . . . . . . . .  21,913      22,102       45,143       44,621
  Other Operation. . . . . . . . . . . . .  11,880      11,974       23,889       24,330
  Maintenance. . . . . . . . . . . . . . .   5,571       7,634       10,678       15,354
  Depreciation and Amortization. . . . . .   6,519       6,267       13,059       12,521
  Taxes Other Than Federal Income Taxes. .   2,045       1,744        4,839        4,118
  Federal Income Taxes . . . . . . . . . .   1,281         598        5,777        3,126

         TOTAL OPERATING EXPENSES. . . . .  68,672      70,429      142,012      145,860

OPERATING INCOME . . . . . . . . . . . . .   9,429       8,301       24,669       21,459

NONOPERATING LOSS. . . . . . . . . . . . .    (148)        (95)        (289)        (429)

INCOME BEFORE INTEREST CHARGES . . . . . .   9,281       8,206       24,380       21,030

INTEREST CHARGES . . . . . . . . . . . . .   6,140       5,837       12,108       11,905

NET INCOME . . . . . . . . . . . . . . . . $ 3,141     $ 2,369     $ 12,272     $  9,125


                                                                                   

                         STATEMENTS OF RETAINED EARNINGS
                                   (UNAUDITED)

                                           Three Months Ended        Six Months Ended
                                                 June 30,                 June 30,      
                                             1997        1996        1997         1996
                                                          (in thousands)

BALANCE AT BEGINNING OF PERIOD . . . . . . $86,531     $92,071     $ 84,090      $91,381

NET INCOME . . . . . . . . . . . . . . . .   3,141       2,369       12,272        9,125

CASH DIVIDENDS DECLARED. . . . . . . . . .   6,690       6,066       13,380       12,132

BALANCE AT END OF PERIOD . . . . . . . . . $82,982     $88,374     $ 82,982      $88,374

                    

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>
                                                           June 30,       December 31,
                                                             1997             1996    
                                                                (in thousands)
<S>                                                        <C>              <C>
ASSETS

ELECTRIC UTILITY PLANT:
  Production . . . . . . . . . . . . . . . . . . . . .     $241,828         $244,805
  Transmission . . . . . . . . . . . . . . . . . . . .      264,425          264,563
  Distribution . . . . . . . . . . . . . . . . . . . .      330,282          329,184
  General. . . . . . . . . . . . . . . . . . . . . . .       67,055           64,650
  Construction Work in Progress. . . . . . . . . . . .       67,766           48,400
          Total Electric Utility Plant . . . . . . . .      971,356          951,602
  Accumulated Depreciation and Amortization. . . . . .      290,263          286,640

          NET ELECTRIC UTILITY PLANT . . . . . . . . .      681,093          664,962


OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . .        6,376            6,452


CURRENT ASSETS:
  Cash and Cash Equivalents. . . . . . . . . . . . . .        1,278            1,106
  Accounts Receivable. . . . . . . . . . . . . . . . .       27,541           28,589
  Allowance for Uncollectible Accounts . . . . . . . .         (437)            (272)
  Fuel . . . . . . . . . . . . . . . . . . . . . . . .       11,519            9,244
  Materials and Supplies . . . . . . . . . . . . . . .       12,877           13,175
  Accrued Utility Revenues . . . . . . . . . . . . . .        6,234            8,175
  Prepayments. . . . . . . . . . . . . . . . . . . . .        2,215            2,011     
 
          TOTAL CURRENT ASSETS . . . . . . . . . . . .       61,227           62,028


REGULATORY ASSETS. . . . . . . . . . . . . . . . . . .       88,789           88,776


DEFERRED CHARGES . . . . . . . . . . . . . . . . . . .        8,758           11,361


            TOTAL. . . . . . . . . . . . . . . . . . .     $846,243         $833,579

See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
                              KENTUCKY POWER COMPANY
                                  BALANCE SHEETS
                                   (UNAUDITED)
<CAPTION>
                                                            June 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. . . . . . . . . . . . . . . . . .        82,982          84,090
          Total Common Shareholder's Equity. . . . . .       252,182         243,290
  First Mortgage Bonds . . . . . . . . . . . . . . . .       179,358         179,305
  Notes Payable. . . . . . . . . . . . . . . . . . . .        75,000          75,000
  Subordinated Debentures. . . . . . . . . . . . . . .        38,913          38,893

          TOTAL CAPITALIZATION . . . . . . . . . . . .       545,453         536,488

OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . .        21,990          19,467

CURRENT LIABILITIES:
  Short-term Debt. . . . . . . . . . . . . . . . . . .        58,700          51,675
  Accounts Payable . . . . . . . . . . . . . . . . . .        22,167          31,057
  Customer Deposits. . . . . . . . . . . . . . . . . .         3,387           3,409
  Taxes Accrued. . . . . . . . . . . . . . . . . . . .         6,803           5,064
  Interest Accrued . . . . . . . . . . . . . . . . . .         5,113           5,217
  Other. . . . . . . . . . . . . . . . . . . . . . . .        11,427           9,199

          TOTAL CURRENT LIABILITIES. . . . . . . . . .       107,597         105,621

DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . .       154,087         153,538

DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . .        16,391          17,007

DEFERRED CREDITS . . . . . . . . . . . . . . . . . . .           725           1,458

CONTINGENCIES (Note 4)

            TOTAL. . . . . . . . . . . . . . . . . . .      $846,243        $833,579

See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
                              KENTUCKY POWER COMPANY
                             STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<CAPTION>
                                                                 Six Months Ended
                                                                     June 30,       
                                                                1997          1996
                                                                  (in thousands)
<S>                                                           <C>           <C>
OPERATING ACTIVITIES:
  Net Income . . . . . . . . . . . . . . . . . . . . . . . .  $ 12,272      $  9,125
  Adjustments for Noncash Items:
    Depreciation and Amortization. . . . . . . . . . . . . .    13,065        12,557
    Deferred Federal Income Taxes. . . . . . . . . . . . . .       347           415 
    Deferred Investment Tax Credits. . . . . . . . . . . . .      (616)         (622)
  Changes in Certain Current Assets and Liabilities:
    Accounts Receivable (net). . . . . . . . . . . . . . . .     1,213            60 
    Fuel, Materials and Supplies . . . . . . . . . . . . . .    (1,977)       (5,129)
    Accrued Utility Revenues . . . . . . . . . . . . . . . .     1,941         7,247
    Accounts Payable . . . . . . . . . . . . . . . . . . . .    (8,890)       (5,091)
    Taxes Accrued. . . . . . . . . . . . . . . . . . . . . .     1,739        (1,797)
  Other (net). . . . . . . . . . . . . . . . . . . . . . . .     4,644          (123)
        Net Cash Flows From Operating Activities . . . . . .    23,738        16,642

INVESTING ACTIVITIES:
  Construction Expenditures. . . . . . . . . . . . . . . . .   (27,211)      (18,181)
  Proceeds from Sales of Property. . . . . . . . . . . . . .      -              250
        Net Cash Flows Used For Investing Activities . . . .   (27,211)      (17,931)

FINANCING ACTIVITIES:
  Capital Contributions from Parent Company. . . . . . . . .    10,000        10,000 
  Issuance of Long-term Debt . . . . . . . . . . . . . . . .      -           50,000
  Change in Short-term Debt (net). . . . . . . . . . . . . .     7,025        29,975 
  Retirement of Long-term Debt . . . . . . . . . . . . . . .      -          (74,738)
  Dividends Paid . . . . . . . . . . . . . . . . . . . . . .   (13,380)      (12,132)
        Net Cash Flows From Financing Activities . . . . . .     3,645         3,105 

Net Increase in Cash and Cash Equivalents. . . . . . . . . .       172         1,816 
Cash and Cash Equivalents at Beginning of Period . . . . . .     1,106         1,031
Cash and Cash Equivalents at End of Period . . . . . . . . .  $  1,278      $  2,847

Supplemental Disclosure:
  Cash paid for interest  net of capitalized amounts was $12,046,000 and $12,114,000
  and for income taxes was $4,395,000 and $4,505,000 in 1997 and 1996, respectively.
  Noncash acquisitions  under capital leases were $3,571,000 and  $2,831,000 in 1997
  and 1996, respectively.

See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
                      KENTUCKY POWER COMPANY
                  NOTES TO FINANCIAL STATEMENTS
                          JUNE 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.

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 $2.3 million ($1.5
   million after tax) of emission allowance sale proceeds
   (received in 1996), as a reduction of the first twelve months
   of environmental surcharge revenues.  Management believes the
   KPSC's May 27, 1997 order unlawfully requires the Company to
   refund the allowance sale proceeds and intends to pursue a
   favorable resolution of this matter through the appeals
   process. The Company believes, based on the advice of counsel,
   that it is probable it will prevail on the appeal.  It is
   expected that this matter will be resolved in the fourth
   quarter of 1997.  No provision for loss has been recorded.

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 June 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) in the
   Federal Register.  These standards are expected to result in 

   <PAGE>
   redesignation of a number of areas of the country currently in
   attainment to nonattainment which could ultimately dictate more
   stringent emission restrictions for AEP System generating
   units.

       The new rules provide that the states must first determine
   the attainment status of their areas.  The states then have
   three years to submit a compliance plan and up to ten years
   after designation to come into compliance with the new
   standards.  The compliance deadline could be as late as 2010
   for the ozone standard and 2012-2015 for the fine particulate
   standard.

       Management is reviewing the impact of the new rules,
   however, we are unable to estimate compliance costs without
   knowledge of reductions that the states will find necessary to
   meet the new standards.  If such reductions are significant and
   the Company must bear a significant portion of the cost of
   compliance in the region or county that is in violation of the
   revised standards, it could have a material adverse effect on
   results of operations or 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>
<PAGE>
                      KENTUCKY POWER COMPANY
     MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

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

   Although revenues decreased $0.6 million in both the second
quarter and year-to-date periods, net income increased 33% or $0.8
million for the quarter and 34% or $3.1 million for the year-to-date period.
The increase in net income for both periods was
mainly attributable to decreased maintenance expense.
   Operating revenues decreased in the second quarter due to
decreased wholesale energy sales to the AEP System Power Pool
(Power Pool) partly offset by increased retail energy sales. 
Milder weather in 1997 compared with unseasonably warm temperatures
in 1996 accounted for the decrease in sales to the Power Pool. 
Energy sales to retail customers increased mainly due to increased
industrial customer usage.
   Year-to-date operating revenues decreased as a result of
decreased energy sales to retail customers offset in part by an
increase in wholesale revenues.  Residential and commercial energy
sales declined, due to decreased customer usage as a result of
warmer winter weather, more than offsetting an increase in sales to
industrial customers.  Wholesale revenues rose mainly due to an
increase in coal conversion services and transmission services. 
Coal conversion services are for the conversion of customers' coal
to electricity.  The substantial increase in coal conversion
service sales reflects the cost effectiveness of this service to
customers.
   Other income statement items which changed significantly were:
                                      Increase(Decrease)        
                               Second Quarter     Year-to-Date  
                             (in millions)   %  (in millions)  %

Fuel Expense . . . . . . . .     $(0.6)     (3)    $(3.2)     (8)
Maintenance Expense. . . . .      (2.1)    (27)     (4.7)    (30)
Taxes Other Than Federal
 Income Taxes. . . . . . . .       0.3      17       0.7      18
Federal Income Taxes . . . .       0.7     114       2.7      85

   Fuel expense decreased as a result of a decline in fuel
consumed, due to increased plant efficiency and decreased
generation.  The significant decrease in maintenance expense
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 expenditures in 1997.
<PAGE>
<PAGE>
   Taxes other than federal income taxes increased primarily due
to increased state income taxes as a result of an increase in pre-tax
operating income.
   The increase in federal income tax expense attributable to
operations in both periods was primarily due to increases in pre-tax
operating income, changes in certain book/tax differences
accounted for on a flow-through basis for rate-making and financial
reporting purposes and in the year-to-date period the completion of
the amortization of deferred federal income taxes in excess of the
statutory tax rate as ordered by the Kentucky Public Service
Commission.
<PAGE>
<PAGE>
<TABLE>
                       OHIO POWER COMPANY AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)
<CAPTION>
                                              Three Months Ended        Six Months Ended
                                                   June 30,                 June 30,      
                                               1997        1996         1997        1996
                                                             (in thousands)
<S>                                          <C>         <C>          <C>         <C>
OPERATING REVENUES . . . . . . . . . . . . . $447,147    $449,383     $931,447    $954,124
OPERATING EXPENSES:
  Fuel . . . . . . . . . . . . . . . . . . .  144,236     144,426      306,238     322,752
  Purchased Power. . . . . . . . . . . . . .   16,009      16,175       32,468      31,240
  Other Operation. . . . . . . . . . . . . .   79,196      78,985      161,559     161,876
  Maintenance. . . . . . . . . . . . . . . .   33,372      42,083       62,849      71,150
  Depreciation and Amortization. . . . . . .   35,088      34,369       70,028      68,643
  Taxes Other Than Federal Income Taxes. . .   41,950      40,532       83,863      82,735
  Federal Income Taxes . . . . . . . . . . .   28,204      25,530       64,819      60,601
          TOTAL OPERATING EXPENSES . . . . .  378,055     382,100      781,824     798,997
OPERATING INCOME . . . . . . . . . . . . . .   69,092      67,283      149,623     155,127
NONOPERATING INCOME. . . . . . . . . . . . .    2,560         128        7,530       2,262
INCOME BEFORE INTEREST CHARGES . . . . . . .   71,652      67,411      157,153     157,389
INTEREST CHARGES . . . . . . . . . . . . . .   21,333      23,462       41,243      46,904
NET INCOME . . . . . . . . . . . . . . . . .   50,319      43,949      115,910     110,485
PREFERRED STOCK DIVIDEND REQUIREMENTS. . . .      370       2,240        1,908       4,480
EARNINGS APPLICABLE TO COMMON STOCK. . . . . $ 49,949    $ 41,709     $114,002    $106,005

                                                                        

                   CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
                                   (UNAUDITED)

                                              Three Months Ended        Six Months Ended
                                                   June 30,                 June 30,      
                                               1997        1996         1997        1996
                                                             (in thousands)

BALANCE AT BEGINNING OF PERIOD . . . . . . . $609,934    $546,611     $584,015    $518,029
NET INCOME . . . . . . . . . . . . . . . . .   50,319      43,949      115,910     110,485
DEDUCTIONS:  
  Cash Dividends Declared:
    Common Stock . . . . . . . . . . . . . .   86,647      35,714      124,209      71,428
    Cumulative Preferred Stock . . . . . . .      370       2,194        2,459       4,388
  Capital Stock Expense. . . . . . . . . . .     -             47           21          93

BALANCE AT END OF PERIOD . . . . . . . . . . $573,236    $552,605     $573,236    $552,605

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>
                                                               June 30,      December 31,
                                                                 1997            1996    
                                                                    (in thousands)
ASSETS
<S>                                                           <C>             <C>
ELECTRIC UTILITY PLANT:
  Production . . . . . . . . . . . . . . . . . . . . . . . .  $2,572,319      $2,556,507
  Transmission . . . . . . . . . . . . . . . . . . . . . . .     827,109         820,636
  Distribution . . . . . . . . . . . . . . . . . . . . . . .     880,366         872,936
  General (including mining assets). . . . . . . . . . . . .     680,922         680,443
  Construction Work in Progress. . . . . . . . . . . . . . .      86,244          66,099
          Total Electric Utility Plant . . . . . . . . . . .   5,046,960       4,996,621
  Accumulated Depreciation and Amortization. . . . . . . . .   2,278,774       2,216,534

          NET ELECTRIC UTILITY PLANT . . . . . . . . . . . .   2,768,186       2,780,087



OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . . . . .     106,900         106,485



CURRENT ASSETS:
  Cash and Cash Equivalents. . . . . . . . . . . . . . . . .      48,127          24,003
  Accounts Receivable. . . . . . . . . . . . . . . . . . . .     221,694         232,734
  Allowance for Uncollectible Accounts . . . . . . . . . . .      (1,969)         (1,433)
  Fuel . . . . . . . . . . . . . . . . . . . . . . . . . . .     116,801         113,361
  Materials and Supplies . . . . . . . . . . . . . . . . . .      75,090          75,908
  Accrued Utility Revenues . . . . . . . . . . . . . . . . .      34,572          38,852
  Prepayments. . . . . . . . . . . . . . . . . . . . . . . .      56,511          44,203

          TOTAL CURRENT ASSETS . . . . . . . . . . . . . . .     550,826         527,628



REGULATORY ASSETS. . . . . . . . . . . . . . . . . . . . . .     540,369         540,123


DEFERRED CHARGES . . . . . . . . . . . . . . . . . . . . . .      82,934         137,843


            TOTAL. . . . . . . . . . . . . . . . . . . . . .  $4,049,215      $4,092,166

See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
                       OHIO POWER COMPANY AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
<CAPTION>
                                                                June 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. . . . . . . . . . . . . . . . . . . . .      573,236         584,015
          Total Common Shareholder's Equity. . . . . . . . .    1,356,722       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 . . . . . . . . . . . . . . . . . . . . . .      969,590       1,002,436

          TOTAL CAPITALIZATION . . . . . . . . . . . . . . .    2,355,737       2,516,746

OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . . . . .      264,612         245,032

CURRENT LIABILITIES:
  Long-term Debt Due Within One Year . . . . . . . . . . . .      129,472          67,293
  Short-term Debt. . . . . . . . . . . . . . . . . . . . . .      112,225          41,302
  Accounts Payable . . . . . . . . . . . . . . . . . . . . .       84,261          89,399
  Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . .      143,199         162,798
  Interest Accrued . . . . . . . . . . . . . . . . . . . . .       17,021          18,094
  Obligations Under Capital Leases . . . . . . . . . . . . .       26,788          24,153
  Other. . . . . . . . . . . . . . . . . . . . . . . . . . .       88,525          84,385

          TOTAL CURRENT LIABILITIES. . . . . . . . . . . . .      601,491         487,424

DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . . . . .      729,157         738,626

DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . . . . .       44,619          46,308

DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . . . .       53,599          58,030

CONTINGENCIES (Note 3)

            TOTAL. . . . . . . . . . . . . . . . . . . . . .   $4,049,215      $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>
                                                                     Six Months Ended
                                                                         June 30,       
                                                                    1997          1996
                                                                      (in thousands)
<S>                                                              <C>           <C>
OPERATING ACTIVITIES:
  Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 115,910     $ 110,485
  Adjustments for Noncash Items:
    Depreciation, Depletion and Amortization . . . . . . . . . .    86,888        82,863
    Deferred Federal Income Taxes. . . . . . . . . . . . . . . .    (1,530)        1,180
    Deferred Fuel Costs (net). . . . . . . . . . . . . . . . . .   (13,695)       (2,368)
    Amortization of Deferred Property Taxes. . . . . . . . . . .    38,193        39,099
  Changes in Certain Current Assets and Liabilities:
    Accounts Receivable (net). . . . . . . . . . . . . . . . . .    11,576         1,009
    Fuel, Materials and Supplies . . . . . . . . . . . . . . . .    (2,622)       (8,691)
    Accrued Utility Revenues . . . . . . . . . . . . . . . . . .     4,280         3,152
    Prepayments. . . . . . . . . . . . . . . . . . . . . . . . .   (12,308)      (16,469)
    Accounts Payable . . . . . . . . . . . . . . . . . . . . . .    (5,138)      (25,365)
    Taxes Accrued. . . . . . . . . . . . . . . . . . . . . . . .   (19,599)      (23,203)
  Other (net). . . . . . . . . . . . . . . . . . . . . . . . . .    25,521        33,939
        Net Cash Flows From Operating Activities . . . . . . . .   227,476       195,631

INVESTING ACTIVITIES:
  Construction Expenditures. . . . . . . . . . . . . . . . . . .   (63,411)      (44,831)
  Proceeds from Sale of Property and Other . . . . . . . . . . .     4,784         5,529
        Net Cash Flows Used For Investing Activities . . . . . .   (58,627)      (39,302)

FINANCING ACTIVITIES:
  Issuance of Long-term Debt . . . . . . . . . . . . . . . . . .    98,958          -
  Change in Short-term Debt (net). . . . . . . . . . . . . . . .    70,923       108,521
  Retirement of Cumulative Preferred Stock . . . . . . . . . . .  (117,601)         -
  Retirement of Long-term Debt . . . . . . . . . . . . . . . . .   (70,337)     (158,649)
  Dividends Paid on Common Stock . . . . . . . . . . . . . . . .  (124,209)      (71,428)
  Dividends Paid on Cumulative Preferred Stock . . . . . . . . .    (2,459)       (4,388)
        Net Cash Flows Used For Financing Activities . . . . . .  (144,725)     (125,944)

Net Increase in Cash and Cash Equivalents. . . . . . . . . . . .    24,124        30,385
Cash and Cash Equivalents at Beginning of Period . . . . . . . .    24,003        44,000
Cash and Cash Equivalents at End of Period . . . . . . . . . . . $  48,127     $  74,385

Supplemental Disclosure:
  Cash paid for interest net  of capitalized amounts was $40,976,000 and $46,627,000 and
  for income  taxes  was  $48,063,000  and  $39,244,000 in  1997 and  1996, respectively.
  Noncash acquisitions under capital leases were $20,299,000 and $14,108,000 in 1997 and
  1996, respectively.

See Notes to Consolidated Financial Statements.
</TABLE>

<PAGE>
<PAGE>
               OHIO POWER COMPANY AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           JUNE 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 half of 1997 the Company issued $50
        million of 7.92% Junior Subordinated Deferrable Interest
        Debentures due 2027 and a coal mining subsidiary received
        $50 million under a sale-leaseback agreement accounted for
        as a financing.  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 retired $70 million of long-term debt; $20
        million  at maturity and $50 million of 8.75% First Mortage
        Bonds due in 2022 under maintenance provisions at 100%.  In
        March 1997 the Company, as part of a tender offer,
        reacquired and retired the following number of 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
        June 30, 1997 would reduce earnings by approximately $99
        million inclusive of interest.  Management believes it will
        ultimately prevail on this issue and will vigorously contest
        any disallowance that may be proposed.


<PAGE>
        <PAGE>
        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) in the
        Federal Register.  These standards are expected to result in
        redesignation of a number of areas of the country currently
        in attainment to nonattainment which could ultimately
        dictate more stringent emission restrictions for AEP System
        generating units.

             The new rules provide that the states must first
        determine the attainment status of their areas.  The states
        then have three years to submit a compliance plan and up to
        ten years after designation to come into compliance with the
        new standards.  The compliance deadline could be as late as
        2010 for the ozone standard and 2012-2015 for the fine
        particulate standard.

             Management is reviewing the impact of the new rules,
        however, we are unable to estimate compliance costs without
        knowledge of reductions that the states will find necessary
        to meet the new standards.  If such reductions are
        significant and the Company must bear a significant portion
        of the cost of compliance in the region or county that is in
        violation of the revised standards, it could have a material
        adverse effect on results of operations or 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>
<PAGE>
               OHIO POWER COMPANY AND SUBSIDIARIES
  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                     AND FINANCIAL CONDITION                   

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

RESULTS OF OPERATIONS
        Net income increased $6.4 million or 14% in the second
quarter and $5.4 million or 5% in the year-to-date period due to
reduced maintenance and financing costs and increased
nonoperating income.
        Operating revenues decreased in both periods as a result of
a 3% reduction in retail energy sales and a reduction in the
contract price for the sale of electricity to a major industrial
customer. The effects of milder weather and a labor strike at
another major industrial customer reduced retail sales.
        Energy sales to wholesale customers were up 31% in the
second quarter of 1997 and 14% in the year-to-date period
primarily due to an increase in energy supplied to the AEP System
Power Pool (Power Pool) and coal conversion services to power
marketers.  Coal conversion services are for the conversion of
customers' coal to electricity.  The substantial increase in coal
conversion service sales reflects the cost effectiveness of this
service to customers.  The energy supplied to the Power Pool rose
due to the unavailability of an affiliate's nuclear unit. 
Although energy sales increased in both periods, wholesale
revenues increased only 9% in the quarter and were flat in the
year-to-date period reflecting a decrease in the average price
per kilowatthour sold.  The average price decreased since Power
Pool sales are at cost and conversion services are priced to
exclude customer-provided fuel.
<PAGE>
<PAGE>
        Other income statement items which changed significantly
were:
                                     Increase (Decrease)        
                             Second Quarter       Year-to-Date  
                            (in millions)  %   (in millions)   %

Fuel Expense . . . . . . .      $(0.2)     -      $(16.5)     (5)
Maintenance Expense. . . .       (8.7)   (21)       (8.3)    (12)
Federal Income Taxes . . .        2.7     10         4.2       7
Nonoperating Income. . . .        2.4    N.M.        5.3     233
Interest Charges . . . . .       (2.1)    (9)       (5.7)    (12)

N.M. = Not Meaningful

        The decrease in fuel expense in the year-to-date period was
mainly due to a decline in generation resulting from the reduced
demand for energy in the first quarter of 1997 reflecting the
milder weather and the unavailability of certain of the Company's
generating units.
        Maintenance expense decreased in both periods due to a
decrease in production plant maintenance work during the second
quarter.  Both units of the Gavin Plant were out of service for
inspection and repairs in the second quarter of 1996 whereas in
the second quarter of 1997 these units did not have major outages
for maintenance.
        The increase in both periods in federal income tax expense
attributable to operations was due to an increase in pre-tax
operating income and in the comparative year-to-date period due
to changes in certain book/tax differences accounted for on a
flow-through basis for rate-making and financial reporting
purposes.
        Nonoperating income increased in both periods reflecting the
positive effect of a loss recorded in June 1996 on emission
allowances.  Also contributing to the year-to-date increase was
recognition in March 1997 of a gain on the sale of emission
allowances.
        A refinancing program reduced outstanding debt and lowered
average interest rates resulting in decreased interest charges. 
A January 1997 tender offer that retired $119 million par value
preferred stock on February 28, 1997 was responsible for a
decrease in preferred stock dividend requirements.
<PAGE>
<PAGE>
FINANCIAL CONDITION
        Total plant and property additions including capital leases
for the first six months of 1997 were $84 million.
        During the first six months of 1997, the Company and a
subsidiary retired $70 million principal amount of long-term debt
with interest rates ranging from 7.19% to 8.75%, issued $100
million of long-term obligations at rates of 6.98% and 7.92% and
increased short-term debt by $71 million.
        As part of the January 1997 tender offer for all of the
Company's outstanding preferred stock that was announced in
conjunction with a special meeting of shareholders, 1,190,062
shares of $100 par value preferred stocks were reacquired.  The
total cost of the stock reacquisition was $118 million.  At the
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.
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) in the Federal Register.  These
standards are expected to result in redesignation of a number of
areas of the country currently in attainment to nonattainment
which could ultimately dictate more stringent emission
restrictions for AEP System generating units.
        The new rules provide that the states must first determine
the attainment status of their areas.  The states then have three
years to submit a compliance plan and up to ten years after
designation to come into compliance with the new standards.  The
compliance deadline could be as late as 2010 for the ozone
standard and 2012-2015 for the fine particulate standard.
<PAGE>
<PAGE>
        Management is reviewing the impact of the new rules,
however, we are unable to estimate compliance costs without
knowledge of reductions that the states will find necessary to
meet the new standards.  If such reductions are significant and
the Company must bear a significant portion of the cost of
compliance in the region or county that is in violation of the
revised standards, it could have a material adverse effect on
results of operations or possibly financial condition unless such
costs are recovered.
<PAGE>
<PAGE>
                   PART II.  OTHER INFORMATION


Item 4.  Submission of Matters to a Vote of Security Holders.

American Electric Power Company, Inc. ("AEP")

        The annual meeting of shareholders was held in Kingsport,
Tennessee on April 23, 1997.  The holders of shares entitled to
vote at the meeting or their proxies cast votes at the meeting
with respect to the following four matters, as indicated below:

        1.   Election of 12 directors to hold office until the next
             annual meeting and until their successors are duly
             elected.  Each nominee for director was elected by a
             vote of the shareholders as follows:

             Number of Shares         Number of
                Nominee              Voted For    Votes Withheld

             Peter J. DeMaria         154,830,048     2,091,583
             John P. DesBarres        154,644,655     2,276,976
             E. Linn Draper, Jr.      154,676,011     2,245,620
             Robert M. Duncan         154,633,578     2,288,053
             Robert W. Fri            154,753,183     2,168,448
             Lester A. Hudson, Jr.    154,779,240     2,142,391
             Leonard J. Kujawa        154,705,529     2,216,102
             Gerald P. Maloney        154,823,818     2,097,813
             Angus E. Peyton          154,620,060     2,301,571
             Donald G. Smith          154,803,572     2,118,059
             Linda Gillespie Stuntz   154,717,848     2,203,783
             Morris Tanenbaum         154,687,800     2,233,831

        2.   Approve the appointment by the Board of Directors of
             Deloitte & Touche LLP as independent auditors of AEP for
             the year 1997.  The proposal was approved by a vote of
             the shareholders as follows:

             Votes FOR       155,049,794      
             Votes AGAINST       775,823      
             Votes ABSTAINED   1,096,014      
             Broker NON-VOTES*          0



                               II-1
        <PAGE>
        3.   Approve the Deferred Compensation and Stock Plan for
             Non-Employee Directors.  The proposal was approved by a
             vote of the shareholders as follows:

             Votes FOR       142,784,266      
             Votes AGAINST     9,625,655      
             Votes ABSTAINED   4,511,710      
             Broker NON-VOTES*          0

        4.   Approve amendments to the Restated Certificate of
             Incorporation and By-Laws to reduce the minimum required
             number of directors from 12 to nine.  The proposal was
             approved by a vote of the shareholders as follows:

             Votes FOR       131,652,720      
             Votes AGAINST     2,984,508      
             Votes ABSTAINED   2,104,958      
             Broker NON-VOTES* 20,179,445

             *A non-vote occurs when a nominee holding shares for a
             beneficial owner votes on one proposal, but does not
             vote on another proposal because the nominee does not
             have discretionary voting power and has not received
             instructions from the beneficial owner.



                               II-2
<PAGE>
Appalachian Power Company ("APCo")

        The annual meeting of stockholders was held on April 22,
1997 at 1 Riverside Plaza, Columbus, Ohio.  At the meeting,
13,499,500 votes were cast FOR each of the following seven
persons for election as directors and there were no votes with-
held and such persons were elected directors to hold office for
one year or until their successors are elected and qualify:

             Peter J. DeMaria    Gerald P. Maloney
             E. Linn Draper, Jr. James J. Markowsky
             Henry W. Fayne      Joseph H. Vipperman
             William J. Lhota

        No other business was transacted at the meeting.

Indiana Michigan Power Company ("I&M")

        The annual meeting of stockholders was held on April 22,
1997 at 1 Riverside Plaza, Columbus, Ohio.  At the meeting,
1,400,000 votes were cast FOR each of the following thirteen
persons for election as directors and there were no votes with-
held and such persons were elected directors to hold office for
one year or until their successors are elected and qualify:

             Karl G. Boyd             Gerald P. Maloney
             C. R. Boyle, III         James J. Markowsky
             G. A. Clark              David B. Synowiec
             Peter J. DeMaria         Joseph H. Vipperman
             William N. D'Onofrio     William E. Walters
             E. Linn Draper, Jr.      Earl H. Wittkamper
             William J. Lhota

        No other business was transacted at the meeting.

Ohio Power Company ("OPCo")

        The annual meeting of shareholders was held on May 6, 1997
at 1 Riverside Plaza, Columbus, Ohio.  At the meeting, 27,952,473
votes were cast FOR each of the following seven persons for elec-
tion as directors and there were no votes withheld and such per-
sons were elected directors to hold office for one year or until
their successors are elected and qualify:

             Peter J. DeMaria         Gerald P. Maloney
             E. Linn Draper, Jr.      James J. Markowsky
             Henry W. Fayne           Joseph H. Vipperman
             William J. Lhota

        No other business was transacted at the meeting.
Item 5.  Other Information.

AEP and I&M

        Reference is made to page 9 of the Annual Report on Form 10-K for
the year ended December 31, 1996 ("1996 10-K") for a dis-
cussion of competition and retail wheeling in Michigan.  On June
5, 1997, the Michigan Public Service Commission ("MPSC") entered
an order requiring electric utilities to phase in retail open
access for customers, with full customer choice by 2002.  Under
the order, customer choice is phased in from 1997 through 2001, 






                               II-3

<PAGE>
at the rate of 2.5% of each utility's customer load per year,
with all customers becoming eligible to choose their electric
supplier effective January 1, 2002.  The order essentially
adopted the December 1996 MPSC staff report that recommended full
recovery of stranded costs of utilities, including nuclear gen-
erating investment, through the use of a transition charge
applicable to customers exercising choice.  The order found
securitization of stranded costs to be feasible, but also found
that legislation is required before securitization can be used. 
As required by the order, on July 31, 1997, I&M filed its imple-
mentation proposal and tariff provisions.  A number of petitions
for rehearing and clarification of the June 5 order have been
filed, including one by I&M on July 3, 1997, and other unaffili-
ated parties have commenced judicial appeals.

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

        Reference is made to page 22 of the 1996 10-K for a discus-
sion of the assessment of long range transport of ozone precur-
sors and other air quality issues.

        On June 19, 1997, the Ozone Transport Assessment Group
("OTAG") adopted recommendations to the United States Environ-
mental Protection Agency ("Federal EPA") regarding source
controls for nitrogen oxides ("NOx") and volatile organic com-
pounds.  Recommended utility source controls for NOx range from
current Clean Air Act requirements to reductions of up to 85%
from 1990 emission levels.  Federal EPA is expected to issue
proposed State Implementation Plan deficiency notices ("SIP
calls") to states within the OTAG region in September 1997.  The
SIP calls will prescribe state-by-state NOx emission reduction
requirements.  Opportunity will be provided to comment on the
appropriateness of Federal EPA's action.


                               II-4
<PAGE>
<PAGE>
        On July 9, 1997, Federal EPA published in the Federal
Register notice of proposed New Source Performance Standard
changes for NOx emissions from utility boilers.  The more
stringent proposed revision, if finalized, will apply to utility
boilers constructed, modified or reconstructed after the date of
the proposal.

        On July 31, 1997, Federal EPA published in the Federal
Register proposed Regional Haze rules governing prevention and
remediation of visibility impairment in mandatory Class I federal
areas (national parks and wilderness areas).  These proposed
regulations are expected to target emissions from coal-fired
power plants in conjunction with control requirements associated
with the revised ozone and fine particulate National Ambient Air
Quality Standards.

Item 6.  Exhibits and Reports on Form 8-K.

        (a)  Exhibits:

        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     Items Reported

        AEP          April 1, 1997      Item 5. Other Events

        AEP          April 1, 1997      Item 7. Financial
                                        Statements and Exhibits

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

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


                               II-5

<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:  August 12, 1997      


                               II-6