<PAGE>   1
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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549
                          ----------------------------
                                    FORM 10-K
                          ----------------------------
(Mark One)

|X|      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999

|_|      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 For the transition period from _____________ to
         ______________

COMMISSION       REGISTRANT; STATE OF INCORPORATION;          I.R.S. EMPLOYER
FILE NUMBER        ADDRESS AND TELEPHONE NUMBER              IDENTIFICATION NO.
-----------      -----------------------------------         ------------------

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                          31-1033833
                 (An Ohio Corporation)
                 1 Riverside Plaza
                 Columbus, Ohio  43215
                 Telephone (614) 223-1000

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

1-2680           COLUMBUS SOUTHERN POWER COMPANY                 31-4154203
                 (An Ohio Corporation)
                 1 Riverside Plaza
                 Columbus, Ohio  43215
                 Telephone (614) 223-1000

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

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

1-6543           OHIO POWER COMPANY                              31-4271000
                 (An Ohio Corporation)
                 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 I(1)(a) and
(b) of Form 10-K and are therefore filing this Form 10-K with the reduced
disclosure format specified in General Instruction I(2) to such Form 10-K.

<PAGE>   2




SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

<TABLE>
<CAPTION>
                                                                                            NAME OF EACH EXCHANGE
    REGISTRANT                              TITLE OF EACH CLASS                              ON WHICH REGISTERED
    ----------                              -------------------                             ---------------------
<S>                               <C>                                                    <C>
AEP Generating Company            None

American Electric                 Common Stock,
  Power Company, Inc.                 $6.50 par value..................................  New York Stock Exchange

Appalachian Power                 Cumulative Preferred Stock,
  Company                             Voting, no par value:
                                       4-1/2%..........................................  Philadelphia Stock Exchange

                                  8-1/4% Junior Subordinated Deferrable
                                       Interest Debentures, Series A,
                                       Due 2026........................................  New York Stock Exchange

                                  8% Junior Subordinated Deferrable
                                       Interest Debentures, Series B,
                                       Due 2027........................................  New York Stock Exchange

                                  7.20% Senior Notes, Series A,
                                       Due 2038........................................  New York Stock Exchange

                                  7.30% Senior Notes, Series B,
                                       Due 2038..........................................New York Stock Exchange

Columbus Southern                 8-3/8% Junior Subordinated Deferrable
  Power Company                        Interest Debentures, Series A,
                                       Due 2025........................................  New York Stock Exchange

                                  7.92% Junior Subordinated Deferrable
                                       Interest Debentures, Series B,
                                       Due 2027........................................  New York Stock Exchange

Indiana Michigan                  8% Junior Subordinated Deferrable
  Power Company                        Interest Debentures, Series A,
                                       Due 2026........................................  New York Stock Exchange

                                  7.60% Junior Subordinated Deferrable
                                       Interest Debentures, Series B,
                                       Due 2038..........................................New York Stock Exchange

Kentucky Power                    8.72% Junior Subordinated Deferrable
  Company                              Interest Debentures, Series A,
                                       Due 2025........................................  New York Stock Exchange

Ohio Power Company                8.16% Junior Subordinated Deferrable
                                       Interest Debentures, Series A,
                                       Due 2025........................................  New York Stock Exchange

                                  7.92% Junior Subordinated Deferrable
                                       Interest Debentures, Series B,
                                       Due 2027..........................................New York Stock Exchange

                                  7 3/8% Senior Notes, Series A,
                                       Due 2038........................................  New York Stock Exchange
</TABLE>

         Indicate by check mark whether the registrants (1) have filed all
reports required to be filed by Section 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.
                                                   ---

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.  X
                                              ---

<PAGE>   3

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

<TABLE>
<CAPTION>
         REGISTRANT                                TITLE OF EACH CLASS
         ----------                                -------------------
<S>                                                <C>
AEP Generating Company                             None

American Electric Power Company, Inc               None

Appalachian Power Company                          None

Columbus Southern Power Company                    None

Indiana Michigan Power Company                     4-1/8% Cumulative Preferred Stock, Non-Voting, $100 par value

Kentucky Power Company                             None

Ohio Power Company                                 4-1/2% Cumulative Preferred Stock, Voting, $100 par value
</TABLE>



<TABLE>
<CAPTION>
                                           AGGREGATE MARKET VALUE
                                          OF VOTING AND NON-VOTING      NUMBER OF SHARES
                                             COMMON EQUITY HELD         OF COMMON STOCK
                                            BY NON-AFFILIATES OF         OUTSTANDING OF
                                             THE REGISTRANTS AT        THE REGISTRANTS AT
                                              FEBRUARY 1, 2000          FEBRUARY 1, 2000
                                         -------------------------   ---------------------
<S>                                      <C>                         <C>
AEP Generating Company                             None                     1,000
                                                                     ($1,000 par value)

American Electric Power Company, Inc          $6,538,856,569             194,103,349
                                                                      ($6.50 par value)

Appalachian Power Company                          None                  13,499,500
                                                                       (no par value)

Columbus Southern Power Company                    None                  16,410,426
                                                                       (no par value)

Indiana Michigan Power Company                     None                   1,400,000
                                                                       (no par value)

Kentucky Power Company                             None                   1,009,000
                                                                       ($50 par value)

Ohio Power Company                                 None                  27,952,473
                                                                       (no par value)
</TABLE>


          NOTE ON MARKET VALUE OF COMMON EQUITY HELD BY NON-AFFILIATES

         All of the common stock of AEP Generating Company, Appalachian Power
Company, Columbus Southern Power Company, Indiana Michigan Power Company,
Kentucky Power Company and Ohio Power Company is owned by American Electric
Power Company, Inc. (see Item 12 herein).

<PAGE>   4

                       DOCUMENTS INCORPORATED BY REFERENCE

<TABLE>
<CAPTION>

                                                                                           PART OF FORM 10-K
                                                                                          INTO WHICH DOCUMENT
DESCRIPTION                                                                                 IS INCORPORATED
-----------                                                                               -------------------
<S>                                                                                       <C>
Portions of Annual Reports of the following companies for the fiscal year                        Part II
ended December 31, 1999:

                  AEP Generating Company
                  American Electric Power Company, Inc.
                  Appalachian Power Company
                  Columbus Southern Power Company
                  Indiana Michigan Power Company
                  Kentucky Power Company
                  Ohio Power Company

Portions of Proxy Statement of American Electric Power Company, Inc. for                         Part III
2000 Annual Meeting of Shareholders, to be filed within 120 days after
December 31, 1999

Portions of Information Statements of the following companies for 2000                           Part III
Annual Meeting of Shareholders, to be filed within 120 days after December 31,
1999

                  Appalachian Power Company
                  Ohio Power Company
</TABLE>


                         ------------------------------


         THIS COMBINED FORM 10-K IS SEPARATELY FILED BY AEP GENERATING COMPANY,
AMERICAN ELECTRIC POWER COMPANY, INC., 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. EXCEPT FOR AMERICAN
ELECTRIC POWER COMPANY, INC., EACH REGISTRANT MAKES NO REPRESENTATION AS TO
INFORMATION RELATING TO THE OTHER REGISTRANTS.

--------------------------------------------------------------------------------
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<PAGE>   5

                                TABLE OF CONTENTS

                                                                          PAGE
                                                                         NUMBER
                                                                         ------

Glossary of Terms........................................................    i

Forward-Looking Information..............................................    1

PART I
      Item      1.  Business.............................................    2
      Item      2.  Properties...........................................   38
      Item      3.  Legal Proceedings....................................   43
      Item      4.  Submission of Matters to a Vote of Security Holders..   44
      Executive Officers of the Registrants..............................   44

PART II
      Item      5.  Market for Registrant's Common Equity and Related
                        Stockholder Matters..............................   46
      Item      6.  Selected Financial Data..............................   47
      Item      7.  Management's Discussion and Analysis of Results of
                        Operations and Financial Condition...............   47
      Item     7A.  Quantitative and Qualitative Disclosures About Market
                        Risk ............................................   48
      Item      8.  Financial Statements and Supplementary Data..........   48
      Item      9.  Changes in and Disagreements with Accountants
                        on Accounting and Financial Disclosure...........   48

PART III
      Item     10.  Directors and Executive Officers of the Registrants..   48
      Item     11.  Executive Compensation...............................   50
      Item     12.  Security Ownership of Certain Beneficial Owners
                         and Management..................................   54
      Item     13.  Certain Relationships and Related Transactions.......   56

PART IV
      Item     14.  Exhibits, Financial Statement Schedules, and Reports
                         on Form 8-K.....................................   56

Signatures...............................................................   58

Index to Financial Statement Schedules...................................  S-1

Independent Auditors' Report.............................................  S-2

Exhibit Index............................................................  E-1

<PAGE>   6

                                GLOSSARY OF TERMS

         When the following terms and abbreviations appear in the text of this
report, they have the meanings indicated below.

TERM                                                        MEANING
<TABLE>
<CAPTION>
<S>                             <C>
AEGCo...........................AEP Generating Company, an electric utility subsidiary of AEP.
AEP ............................American Electric Power Company, Inc.
AEP System or the System........The American Electric Power System, an integrated electric utility system,
                                   owned and operated by AEP's electric utility subsidiaries.
AFUDC...........................Allowance for funds used during construction. Defined in regulatory systems
                                   of accounts as the net cost of borrowed funds used for construction and a
                                   reasonable rate of return on other funds when so used.
APCo............................Appalachian Power Company, an electric utility subsidiary of AEP.
Buckeye.........................Buckeye Power, Inc., an unaffiliated corporation.
CCD Group.......................CSPCo, CG&E and DP&L.
CG&E............................The Cincinnati Gas & Electric Company, an unaffiliated utility company.
Cook Plant......................The Donald C. Cook Nuclear Plant, owned by I&M.
CSPCo...........................Columbus Southern Power Company, an electric utility subsidiary of AEP.
CSW.............................Central and South West Corporation.
DOE.............................United States Department of Energy.
DP&L............................The Dayton Power and Light Company, an unaffiliated utility company.
Federal EPA.....................United States Environmental Protection Agency.
FERC............................Federal Energy Regulatory Commission (an independent commission within
                                   the DOE).
I&M.............................Indiana Michigan Power Company, an electric utility subsidiary of AEP.
IURC............................Indiana Utility Regulatory Commission.
KEPCo...........................Kentucky Power Company, an electric utility subsidiary of AEP.
KPSC............................Kentucky Public Service Commission.
MPSC............................Michigan Public Service Commission.
NEIL............................Nuclear Electric Insurance Limited.
NPDES...........................National Pollutant Discharge Elimination System.
NRC.............................Nuclear Regulatory Commission.
Ohio EPA........................Ohio Environmental Protection Agency.
OPCo............................Ohio Power Company, an electric utility subsidiary of AEP.
OVEC............................Ohio Valley Electric Corporation, an electric utility company in which AEP
                                   and CSPCo own a 44.2% equity interest.
PCBs............................Polychlorinated biphenyls.
PUCO............................The Public Utilities Commission of Ohio.
PUHCA...........................Public Utility Holding Company Act of 1935, as amended.
RCRA............................Resource Conservation and Recovery Act of 1976, as amended.
Rockport Plant..................A generating plant, consisting of two 1,300,000-kilowatt coal-fired
                                   generating units, near Rockport, Indiana.
SEC.............................Securities and Exchange Commission.
Service Corporation.............American Electric Power Service Corporation, a service subsidiary of AEP.
SO(2) Allowance.................An allowance to emit one ton of sulfur dioxide granted under the Clean Air
                                   Act Amendments of 1990.
TVA ............................Tennessee Valley Authority.
VEPCo...........................Virginia Electric and Power Company, an unaffiliated utility company.
Virginia SCC....................Virginia State Corporation Commission.
West Virginia PSC...............Public Service Commission of West Virginia.
Zimmer or Zimmer Plant..........Wm. H. Zimmer Generating Station, commonly owned by CSPCo, CG&E and DP&L.
</TABLE>

                                       i


<PAGE>   7





                      [THIS PAGE INTENTIONALLY LEFT BLANK]


<PAGE>   8
FORWARD-LOOKING INFORMATION
--------------------------------------------------------------------------------

         This report made by AEP and certain of its subsidiaries includes
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements reflect assumptions and
involve a number of risks and uncertainties. Among the factors that could cause
actual results to differ materially from forward-looking statements are:

         o        Electric load and customer growth.

         o        Abnormal weather conditions.

         o        Available sources and costs of fuels.

         o        Availability of generating capacity.

         o        The impact of the proposed merger with CSW, including any
                  regulatory conditions imposed on the merger and the ability of
                  the combined companies to realize the synergies expected as a
                  result of the proposed combination, or the inability to
                  consummate the merger with CSW.

         o        The speed and degree to which competition is introduced to our
                  power generation business.

         o        The structure and timing of a competitive market and its
                  impact on energy prices or fixed rates.

         o        The ability to recover net regulatory assets and other
                  stranded costs in connection with deregulation of generation.

         o        New legislation and government regulations.

         o        The ability of AEP to successfully control its costs.

         o        The success of new business ventures.

         o        International developments affecting AEP's foreign
                  investments.

         o        The effects of fluctuations in foreign currency exchange
                  rates.

         o        The economic climate and growth in AEP's service territory.

         o        Unforeseen events affecting AEP's efforts to restart its
                  nuclear generating units which are on an extended safety
                  related shutdown.

         o        The ability of AEP to challenge successfully new environmental
                  regulations and to litigate successfully claims that AEP
                  violated the Clean Air Act.

         o        Inflationary trends.

         o        Changes in electricity and gas market prices.

         o        Interest rates.

         o        Other risks and unforeseen events.

                                       1

<PAGE>   9

PART I  ========================================================================

Item 1.  BUSINESS
--------------------------------------------------------------------------------

GENERAL

         AEP was incorporated under the laws of the State of New York in 1906
and reorganized in 1925. It is a public utility holding company which owns,
directly or indirectly, all of the outstanding common stock of its domestic
electric utility subsidiaries and varying percentages of other subsidiaries.
Substantially all of the operating revenues of AEP and its subsidiaries are
derived from the furnishing of electric service. In addition, in recent years
AEP has been pursuing various unregulated business opportunities worldwide as
discussed in New Business Development.

         The service area of AEP's domestic electric utility subsidiaries covers
portions of the states of Indiana, Kentucky, Michigan, Ohio, Tennessee, Virginia
and West Virginia. The generating and transmission facilities of AEP's
subsidiaries are physically interconnected, and their operations are
coordinated, as a single integrated electric utility system. Transmission
networks are interconnected with extensive distribution facilities in the
territories served. The electric utility subsidiaries of AEP, which do business
as "American Electric Power," have traditionally provided electric service,
consisting of generation, transmission and distribution, on an integrated basis
to their retail customers.

         At December 31, 1999, the subsidiaries of AEP had a total of 17,306
employees. AEP, as such, has no employees. The operating subsidiaries of AEP
are:

        APCo (organized in Virginia in 1926) is engaged in the generation, sale,
    purchase, transmission and distribution of electric power to approximately
    896,000 retail customers in the southwestern portion of Virginia and
    southern West Virginia, and in supplying electric power at wholesale to
    other electric utility companies and municipalities in those states and in
    Tennessee. At December 31, 1999, APCo and its wholly owned subsidiaries had
    3,290 employees. Among the principal industries served by APCo are coal
    mining, primary metals, chemicals and textile mill products. In addition to
    its AEP System interconnections, APCo also is interconnected with the
    following unaffiliated utility companies: Carolina Power & Light Company,
    Duke Energy Corporation and VEPCo. A comparatively small part of the
    properties and business of APCo is located in the northeastern end of the
    Tennessee Valley. APCo has several points of interconnection with TVA and
    has entered into agreements with TVA under which APCo and TVA interchange
    and transfer electric power over portions of their respective systems.

        CSPCo (organized in Ohio in 1937, the earliest direct predecessor
    company having been organized in 1883) is engaged in the generation, sale,
    purchase, transmission and distribution of electric power to approximately
    655,000 customers in Ohio, and in supplying electric power at wholesale to
    other electric utilities and to municipally owned distribution systems
    within its service area. At December 31, 1999, CSPCo had 1,466 employees.
    CSPCo's service area is comprised of two areas in Ohio, which include
    portions of twenty-five counties. One area includes the City of Columbus and
    the other is a predominantly rural area in south central Ohio. Approximately
    80% of CSPCo's retail revenues are derived from the Columbus area. Among the
    principal industries served are food processing, chemicals, primary metals,
    electronic machinery and paper products. In addition to its AEP System
    interconnections, CSPCo also is interconnected with the following
    unaffiliated utility companies: CG&E, DP&L and Ohio Edison Company.

        I&M (organized in Indiana in 1925) is engaged in the generation, sale,
    purchase, transmission and distribution of electric power to approximately
    559,000 customers in northern and eastern Indiana and southwestern Michigan,
    and in supplying electric power at wholesale to other electric utility
    companies, rural electric cooperatives and municipalities. At December 31,
    1999, I&M had 3,130 employees. Among the principal industries

                                       2
<PAGE>   10

    served are primary metals, transportation equipment, electrical and
    electronic machinery, fabricated metal products, rubber and miscellaneous
    plastic products and chemicals and allied products. Since 1975, I&M has
    leased and operated the assets of the municipal system of the City of Fort
    Wayne, Indiana. In addition to its AEP System interconnections, I&M also is
    interconnected with the following unaffiliated utility companies: Central
    Illinois Public Service Company, CG&E, Commonwealth Edison Company,
    Consumers Energy Company, Illinois Power Company, Indianapolis Power & Light
    Company, Louisville Gas and Electric Company, Northern Indiana Public
    Service Company, PSI Energy Inc. and Richmond Power & Light Company.

        KEPCo (organized in Kentucky in 1919) is engaged in the generation,
    sale, purchase, transmission and distribution of electric power to
    approximately 171,000 customers in an area in eastern Kentucky, and in
    supplying electric power at wholesale to other utilities and municipalities
    in Kentucky. At December 31, 1999, KEPCo had 501 employees. In addition to
    its AEP System interconnections, KEPCo also is interconnected with the
    following unaffiliated utility companies: Kentucky Utilities Company and
    East Kentucky Power Cooperative Inc. KEPCo is also interconnected with TVA.

        Kingsport Power Company (organized in Virginia in 1917) provides
    electric service to approximately 45,000 customers in Kingsport and eight
    neighboring communities in northeastern Tennessee. Kingsport Power Company
    has no generating facilities of its own. It purchases electric power
    distributed to its customers from APCo. At December 31, 1999, Kingsport
    Power Company had 62 employees.

        OPCo (organized in Ohio in 1907 and re-incorporated in 1924) is engaged
    in the generation, sale, purchase, transmission and distribution of electric
    power to approximately 691,000 customers in the northwestern, east central,
    eastern and southern sections of Ohio, and in supplying electric power at
    wholesale to other electric utility companies and municipalities. At
    December 31, 1999, OPCo and its wholly owned subsidiaries had 3,941
    employees. Among the principal industries served by OPCo are primary metals,
    rubber and plastic products, stone, clay, glass and concrete products,
    petroleum refining and chemicals. In addition to its AEP System
    interconnections, OPCo also is interconnected with the following
    unaffiliated utility companies: CG&E, The Cleveland Electric Illuminating
    Company, DP&L, Duquesne Light Company, Kentucky Utilities Company,
    Monongahela Power Company, Ohio Edison Company, The Toledo Edison Company
    and West Penn Power Company.

        Wheeling Power Company (organized in West Virginia in 1883 and
    reincorporated in 1911) provides electric service to approximately 42,000
    customers in northern West Virginia. Wheeling Power Company has no
    generating facilities of its own. It purchases electric power distributed to
    its customers from OPCo. At December 31, 1999, Wheeling Power Company had 74
    employees.

      Another principal electric utility subsidiary of AEP is AEGCo, which was
organized in Ohio in 1982 as an electric generating company. AEGCo sells power
at wholesale to I&M and KEPCo. AEGCo's agreement to sell power to VEPCo expired
December 31, 1999. AEGCo has no employees.

      See Item 2 for information concerning the properties of the subsidiaries
of AEP.

      The Service Corporation provides accounting, administrative, information
systems, engineering, financial, legal, maintenance and other services at cost
to the AEP System companies. The executive officers of AEP and its public
utility subsidiaries are all employees of the Service Corporation.

REGULATION

   General

      AEP and its subsidiaries are subject to the broad regulatory provisions of
PUHCA administered by the SEC. The public utility subsidiaries' retail rates and
certain other matters are

                                       3
<PAGE>   11

subject to regulation by the public utility commissions of the states in which
they operate. Such subsidiaries are also subject to regulation by the FERC under
the Federal Power Act in respect of rates for interstate sale at wholesale and
transmission of electric power, accounting and other matters and construction
and operation of hydroelectric projects. I&M is subject to regulation by the NRC
under the Atomic Energy Act of 1954, as amended, with respect to the operation
of the Cook Plant.

   Possible Change to PUHCA

      The provisions of PUHCA, administered by the SEC, regulate all aspects of
a registered holding company system, such as the AEP System. PUHCA requires that
the operations of a registered holding company system be limited to a single
integrated public utility system and such other businesses as are incidental or
necessary to the operations of the system. In addition, PUHCA governs, among
other things, financings, sales or acquisitions of assets and intra-system
transactions.

      On June 20, 1995, the SEC released a report from its Division of
Investment Management recommending a conditional repeal of PUHCA, including its
limits on financing and on geographic and business diversification. Specific
federal authority, however, would be preserved over access to the books and
records of registered holding company systems, audit authority over registered
holding companies and their subsidiaries and oversight over affiliate
transactions. This authority would be transferred to the FERC. Legislation was
introduced in Congress in 1997 that would repeal PUHCA and transfer certain
federal authority to the FERC as recommended in the SEC report as part of
broader legislation regarding changes in the electric industry. Such legislation
has been reintroduced in 1999. It is expected that a number of bills
contemplating the restructuring of the electric utility industry will be
introduced in the current Congress. See Competition and Business Change. If
PUHCA is repealed, registered holding company systems, including the AEP System,
will be able to compete in the changing industry without the constraints of
PUHCA. Management of AEP believes that removal of these constraints would be
beneficial to the AEP System.

      PUHCA and the rules and orders of the SEC currently require that
transactions between associated companies in a registered holding company system
be performed at cost with limited exceptions. Over the years, the AEP System has
developed numerous affiliated service, sales and construction relationships and,
in some cases, invested significant capital and developed significant operations
in reliance upon the ability to recover its full costs under these provisions.

      Legislation has been introduced in Congress to repeal PUHCA or modify its
provisions governing intra-system transactions. The effect of repeal or
amendment of PUHCA on AEP's intra-system transactions depends on whether the
assurance of full cost recovery is eliminated immediately or phased-in and
whether it is eliminated for all intra-system transactions or only some. If the
cost recovery assurance is eliminated immediately for all intra-system
transactions, it could have a material adverse effect on results of operations
and financial condition of AEP and OPCo.

   Conflict of Regulation

      Public utility subsidiaries of AEP can be subject to regulation of the
same subject matter by two or more jurisdictions. In such situations, it is
possible that the decisions of such regulatory bodies may conflict or that the
decision of one such body may affect the cost of providing service and so the
rates in another jurisdiction. In a case involving OPCo, the U.S. Court of
Appeals for the District of Columbia held that the determination of costs to be
charged to associated companies by the SEC under PUHCA precluded the FERC from
determining that such costs were unreasonable for ratemaking purposes. The U.S.
Supreme Court also has held that a state commission may not conclude that a FERC
approved wholesale power agreement is unreasonable for state ratemaking
purposes. Certain actions that would overturn these decisions or otherwise
affect the jurisdiction of the SEC and FERC are under consideration by the U.S.
Congress and these regulatory bodies. Such conflicts of jurisdiction often
result in litigation and, if resolved adversely to a public utility subsidiary
of AEP, could have a material adverse effect on the results of operations or
financial condition of such subsidiary or AEP.

                                       4
<PAGE>   12

CLASSES OF SERVICE

      The principal classes of service from which the domestic electric utility
subsidiaries of AEP derive revenues and the amount of such revenues (from
kilowatt-hour sales) during the year ended December 31, 1999 are as follows:

<TABLE>
<CAPTION>
                                                                                                                    AEP
                                       AEGCo         APCo        CSPCo        I&M         KEPCo        OPCo      SYSTEM (a)
                                       -----         ----        -----        ---         -----        ----      ----------
                                                                          (IN THOUSANDS)
<S>                                   <C>        <C>          <C>          <C>           <C>        <C>          <C>
Retail
   Residential
      Without Electric Heating ....   $      0   $  232,122   $  359,319   $  263,467    $ 39,460   $  289,705   $1,205,461
      With Electric Heating .......          0      346,040      113,881      114,319      67,196      144,034      822,111
                                      --------   ----------   ----------   ----------    --------   ----------   ----------
          Total Residential .......          0      578,162      473,200      377,786     106,656      433,739    2,027,572
   Commercial .....................          0      301,325      420,612      290,833      62,641      276,539    1,390,453
   Industrial .....................          0      377,373      151,353      364,607      96,660      665,751    1,716,254
   Miscellaneous ..................          0       35,378       17,289        6,708         898        8,222       72,211
                                      --------   ----------   ----------   ----------    --------   ----------   ----------
         Total Retail .............          0    1,292,238    1,062,454    1,039,934     266,855    1,384,251    5,206,490
Wholesale (sales for resale) ......    216,959      269,368      120,374      303,533      80,455      572,136      814,190
                                      --------   ----------   ----------   ----------    --------   ----------   ----------
         Total from KWH Sales .....    216,959    1,561,606    1,182,828    1,343,467     347,310    1,956,387    6,020,680
Provision for Revenue Refunds .....          0        8,687            0       (1,143)          0            0        8,466
                                      --------   ----------   ----------   ----------    --------   ----------   ----------
         Total Net of Provision for
             Revenue Refunds ......    216,959    1,570,293    1,182,828    1,342,324     347,310    1,956,387    6,029,146
Other Operating Revenues ..........        230       80,644       47,166       51,795      26,672       82,876      285,517
                                      --------   ----------   ----------   ----------    --------   ----------   ----------
         Total Electric Operating
             Revenues .............   $217,189   $1,650,937   $1,229,994   $1,394,119    $373,982   $2,039,263   $6,314,663
                                      ========   ==========   ==========   ==========    ========   ==========   ==========
</TABLE>

----------------------------
(a)   Includes revenues of other subsidiaries not shown and elimination of
      intercompany transactions.

SALE OF POWER

         AEP's electric utility subsidiaries own or lease generating stations
with total generating capacity of 23,759 megawatts. See Item 2 for more
information regarding the generating stations. They operate their generating
plants as a single interconnected and coordinated electric utility system and
share the costs and benefits in the AEP System Power Pool. Most of the electric
power generated at these stations is sold, in combination with transmission and
distribution services, to retail customers of AEP's utility subsidiaries in
their service territories. These sales are made at rates that are established by
the public utility commissions of the state in which they operate. See Rates and
Regulation. Some of the electric power is sold at wholesale to non-affiliated
companies.

   AEP System Power Pool

         APCo, CSPCo, I&M, KEPCo and OPCo are parties to the Interconnection
Agreement, dated July 6, 1951, as amended (the Interconnection Agreement),
defining how they share the costs and benefits associated with the System's
generating plants. This sharing is based upon each company's "member-load-
ratio," which is calculated monthly on the basis of each company's maximum peak
demand in relation to the sum of the maximum peak demands of all five companies
during the preceding 12 months. In addition, since 1995, APCo, CSPCo, I&M, KEPCo
and OPCo have been parties to the AEP System Interim Allowance Agreement which
provides, among other things, for the transfer of SO(2) Allowances associated
with transactions under the Interconnection Agreement.

         Power marketing and trading transactions (trading activities) are
conducted by the AEP Power Pool and shared among the parties under the
Interconnection Agreement. Trading activities involve the purchase and sale of
electricity under physical forward contracts at fixed and variable prices and
the trading of electricity contracts including exchange traded futures and
options and over-the-counter options and swaps. The majority of these
transactions represent physical forward contracts in the AEP System's
traditional marketing area and are typically settled by entering into offsetting
contracts. The regulated physical forward contracts are recorded on a net basis
in the month when the contract settles.

         In addition, the AEP Power Pool enters into transactions for the
purchase and sale of electricity options, futures and swaps, and for the forward
purchase and sale of electricity outside of the AEP System's traditional
marketing area.

         The following table shows the net credits or (charges) allocated among
the parties under

                                       5
<PAGE>   13

the Interconnection Agreement and Interim Allowance Agreement during the years
ended December 31, 1997, 1998 and 1999:

<TABLE>
<CAPTION>
                1997(a)            1998(a)             1999(a)
                -------            -------             -------
                                (IN THOUSANDS)
<S>           <C>                <C>                <C>
APCo.......   $(237,000)         $(142,500)         $ (89,100)
CSPCo......    (138,000)          (146,800)          (184,500)
I&M........      67,000            (86,100)           (61,700)
KEPCo......      20,000             34,000             23,700
OPCo.......     288,000            341,400            311,600
</TABLE>

-------------------------
(a)   Includes credits and charges from allowance transfers related to the
      transactions.

   Wholesale Sales of Power to Non-Affiliates

         AEGCo, APCo, CSPCo, I&M, KEPCo and OPCo also sell electric power on a
wholesale basis to non-affiliated electric utilities and power marketers. Such
sales are either made by the AEP System Power Pool and then allocated among
APCo, CSPCo, I&M, KEPCo and OPCo based on member-load-ratios or made by
individual companies pursuant to various long-term power agreements. The
following table shows the net realization (revenue less operating, maintenance,
fuel and federal income tax expenses) of the various companies from such sales
during the years ended December 31, 1997, 1998 and 1999:

<TABLE>
<CAPTION>
                      1997(a)         1998(a)         1999(a)
                      -------         -------         -------
                                (IN THOUSANDS)
<S>                  <C>              <C>              <C>
AEGCo(b).......      $ 26,200         $ 23,500         $ 23,800
APCo(c)........        37,500           40,700           32,900
CSPCo(c).......        18,300           23,000           19,700
I&M(c)(d)......        42,400           47,800           42,300
KEPCo(c).......         7,700            8,700            7,700
OPCo(c)........        30,200           36,900           30,500
                     --------         --------         --------
Total System...      $162,300         $180,600         $156,900
                     ========         ========         ========
</TABLE>
-----------------------

(a)   Such sales do not include wholesale sales to full/partial requirement
      customers of AEP System companies. See the discussion below.

(b)   All amounts for AEGCo are from sales made pursuant to a long-term power
      agreement that expired on December 31, 1999. See AEGCo--Unit Power
      Agreements.

(c)   All amounts, except for I&M, are from System sales which are allocated
      among APCo, CSPCo, I&M, KEPCo and OPCo based upon member-load-ratio. All
      System sales made in 1997, 1998 and 1999 were made on a short-term basis,
      except that $25,900,000, $38,300,000 and $37,400,000, respectively, of the
      contribution to operating income for the total System were from long-term
      System sales.

(d)   In addition to its allocation of System sales, the 1997, 1998 and 1999
      amounts for I&M include $21,100,000, $21,800,000 and $20,800,000,
      respectively, from a long-term agreement to sell 250 megawatts of power
      scheduled to terminate in 2009.

         The AEP System has long-term system agreements to sell the following to
unaffiliated utilities: (1) 205 megawatts of electric power through August 2010;
and (2) 50 megawatts of electric power through August 2001.

         In June 1993, certain municipal customers of APCo filed an application
with the FERC for transmission service in order to reduce by 50 megawatts the
power these customers then purchased under existing Electric Service Agreements
(ESAs) and to purchase power from a third party. APCo maintains that its
agreements with these customers were full-requirements contracts which precluded
the customers from purchasing power from third parties until 1998. On February
10, 1994, the FERC issued an order finding that the ESAs are not full
requirements contracts and that the ESAs give these municipal wholesale
customers the option of substituting alternative sources of power for energy
purchased from APCo. On May 24, 1994, APCo appealed the February 10, 1994 order
of the FERC to the U.S. Court of Appeals for the District of Columbia Circuit.
On July 1, 1994, the FERC ordered the requested transmission service and granted
a complaint filed by the municipal customers directing certain modifications to
the ESAs in order to accommodate their power purchases from the third party.
Following FERC's denial of APCo's requests for rehearing, on December 20, 1995,
APCo appealed the July 1, 1994 orders to the U.S. Court of Appeals for the
District of Columbia. Effective August 1994, these municipal customers reduced
their purchases by 40 megawatts. Certain of these customers further reduced
their purchases by an additional 21 megawatts effective February 1996. On
December 17, 1996, the U.S. Court of Appeals reversed the FERC's order directing
APCo to provide transmission service and remanded the case to the FERC. On April
5, 1999, the FERC found that its previous orders did not violate the Federal
Power Act. On February 29, 2000, the FERC denied APCo's request for rehearing.
The customers terminated their contracts with APCo in 1998.

TRANSMISSION SERVICES

         AEP's electric utility subsidiaries own and operate transmission and
distribution lines and other facilities to deliver electric power. See Item 2
for

                                       6
<PAGE>   14

more information regarding the transmission and distribution lines. AEP's
electric utility subsidiaries operate their transmission lines as a single
interconnected and coordinated system and share the cost and benefits in the AEP
System Transmission Pool. Most of the transmission and distribution services is
sold, in combination with electric power, to retail customers of AEP's utility
subsidiaries in their service territories. These sales are made at rates that
are established by the public utility commissions of the state in which they
operate. See Rates and Regulation. As discussed below, some transmission
services also are separately sold to non-affiliated companies.

   AEP System Transmission Pool

         APCo, CSPCo, I&M, KEPCo and OPCo are parties to the Transmission
Agreement, dated April 1, 1984, as amended (the Transmission Agreement),
defining how they share the costs associated with their relative ownership of
the extra-high-voltage transmission system (facilities rated 345 kv and above)
and certain facilities operated at lower voltages (138 kv and above). Like the
Interconnection Agreement, this sharing is based upon each company's
"member-load-ratio." See Sale of Power.

         The following table shows the net (credits) or charges allocated among
the parties to the Transmission Agreement during the years ended December 31,
1997, 1998 and 1999:

<TABLE>
<CAPTION>
                1997              1998               1999
                ----              ----               ----
                             (IN THOUSANDS)
<S>           <C>               <C>               <C>
APCo........  $  8,400          $ (2,400)         $ (8,300)
CSPCo.......    29,900            35,600            39,000
I&M.........   (46,100)          (44,100)          (43,900)
KEPCo.......    (2,700)           (6,000)           (4,300)
OPCo........    10,500            16,900            17,500
</TABLE>

   Transmission Services for Non-Affiliates

         APCo, CSPCo, I&M, KEPCo, OPCo and other System companies also provide
transmission services for non-affiliated companies. The following table shows
the revenues net of federal income tax expenses of the various companies from
such services during the years ended December 31, 1997, 1998 and 1999:

<TABLE>
<CAPTION>
                       1997            1998             1999
                       ----            ----             ----
                                  (IN THOUSANDS)
<S>                  <C>             <C>              <C>
APCo.............    $18,000         $ 30,600         $ 28,600
CSPCo............     10,200           18,100           18,600
I&M..............     10,500           19,200           19,800
KEPCo............      3,900            6,400            6,800
OPCo.............     27,200           42,100           38,300
                     -------         --------         --------
Total System.....    $69,800         $116,400         $112,100
                     =======         ========         ========
</TABLE>

         The AEP System has contracts with non-affiliated companies for
transmission of approximately 5,400 megawatts of electric power on an annual or
longer basis.

         On April 24, 1996, the FERC issued orders 888 and 889. These orders
require each public utility that owns or controls interstate transmission
facilities to file an open access network and point-to-point transmission tariff
that offers services comparable to the utility's own uses of its transmission
system. The orders also require utilities to functionally unbundle their
services, by requiring them to use their own tariffs in making off-system and
third-party sales. As part of the orders, the FERC issued a pro-forma tariff
which reflects the Commission's views on the minimum non-price terms and
conditions for non-discriminatory transmission service. In addition, the orders
require all transmitting utilities to establish an Open Access Same-time
Information System (OASIS) which electronically posts transmission information
such as available capacity and prices, and require utilities to comply with
Standards of Conduct which prohibit utilities' system operators from providing
non-public transmission information to the utility's merchant employees. The
orders also allow a utility to seek recovery of certain prudently-incurred
stranded costs that result from unbundled transmission service.

         In December 1999, FERC issued Order 2000, which provides for the
voluntary formation of regional transmission organizations (RTOs), entities
created to operate, plan and control utility transmission assets. Order 2000
also prescribes certain characteristics and functions of acceptable RTO
proposals. The rule requires all public utilities, such as the AEP operating
companies, that are members of an approved or conditionally approved
transmission entity, to file by January 2001 an explanation of how that entity
meets the characteristics and functions specified in the order.

                                       7
<PAGE>   15

         On July 9, 1996, the AEP System companies filed a tariff conforming
with the FERC's pro-forma transmission tariff.

         During 1998 and 1999 AEP engaged in discussions with Consumers Energy
Company, FirstEnergy Corp., Detroit Edison Company and VEPCo regarding the
development of the Alliance RTO which may take the form of an independent system
operator (ISO) or an independent transmission company (Transco), depending upon
the occurrence of certain conditions. The Transco, if formed, would operate
transmission assets that it would own, and also would operate other owners'
transmission assets on a contractual basis. In 1999, these companies filed with
the FERC a proposal to form the RTO. In December 1999, the FERC approved the
Alliance RTO, conditioned upon certain changes to the proposal relating to
governance of the RTO, resolution of intra-RTO conflicts and establishment of a
rate structure. The participants are currently developing a revised proposal to
respond to the concerns expressed in the FERC's order. See Competition and
Business Change -- AEP Position on Competition.

OVEC

         AEP, CSPCo and several unaffiliated utility companies jointly own OVEC,
which supplies the power requirements of a uranium enrichment plant near
Portsmouth, Ohio, owned by the DOE. The aggregate equity participation of AEP
and CSPCo in OVEC is 44.2%. The DOE demand under OVEC's power agreement, which
is subject to change from time to time, is 899,000 kilowatts. On March 1, 2000,
it is scheduled to increase to approximately 1,249,000 kilowatts. The proceeds
from the sale of power by OVEC are designed to be sufficient for OVEC to meet
its operating expenses and fixed costs and to provide a return on its equity
capital. APCo, CSPCo, I&M and OPCo, as sponsoring companies, are entitled to
receive from OVEC, and are obligated to pay for, the power not required by DOE
in proportion to their power participation ratios, which averaged 42.1% in 1999.
The power agreement with DOE terminates on December 31, 2005, subject to early
termination by DOE on not less than three years notice. The power agreement
among OVEC and the sponsoring companies expires by its terms on March 12, 2006.

BUCKEYE

         Contractual arrangements among OPCo, Buckeye and other investor-owned
electric utility companies in Ohio provide for the transmission and delivery,
over facilities of OPCo and of other investor-owned utility companies, of power
generated by the two units at the Cardinal Station owned by Buckeye and back-up
power to which Buckeye is entitled from OPCo under such contractual
arrangements, to facilities owned by 26 of the rural electric cooperatives which
operate in the State of Ohio at 324 delivery points. Buckeye is entitled under
such arrangements to receive, and is obligated to pay for, the excess of its
maximum one-hour coincident peak demand plus a 15% reserve margin over the
1,226,500 kilowatts of capacity of the generating units which Buckeye currently
owns in the Cardinal Station. Such demand, which occurred on July 30, 1999, was
recorded at 1,251,946 kilowatts.

         In January 2000, OPCo and National Power Cooperative, Inc. (NPC), an
affiliate of Buckeye, entered into an agreement, subject to specified
conditions, relating to construction and operation of a 510 mw gas-fired
electric generating peaking facility to be owned by NPC. From the commercial
operation date (expected in early 2002) until the end of 2005, OPCo will be
entitled to the power generated by the facility, and responsible for the fuel
and other costs of the facility. After 2005, NPC and OPCo will be entitled to
80% and 20%, respectively, of the power of the facility, and both parties will
generally be responsible for the fuel and other costs of the facility. OPCo will
also provide certain back-up power to NPC. AEP Resources Service Company will
provide engineering, procurement and construction for the facility.

CERTAIN INDUSTRIAL CUSTOMERS

         Century Aluminum of West Virginia, Inc. (formerly Ravenswood Aluminum
Corporation), and Ormet Corporation operate major aluminum reduction plants in
the Ohio River Valley at Ravenswood, West Virginia, and in the vicinity of
Hannibal, Ohio, respectively. The power requirements of such plants presently
are approximately 357,000 kilowatts for Century and 537,000 kilowatts for Ormet.
OPCo is providing electric

                                       8
<PAGE>   16

service to Century pursuant to a contract approved by the PUCO for the period
July 1, 1996 through July 31, 2003.

         On November 14, 1996, the PUCO approved (1) an interim agreement
pursuant to which OPCo would continue to provide electric service to Ormet for
the period December 1, 1997 through December 31, 1999 and (2) a joint petition
with an electric cooperative to transfer the right to serve Ormet to the
electric cooperative after December 31, 1999. As part of the territorial
transfer, OPCo and Ormet entered into an agreement which contains penalties and
other provisions designed to avoid having OPCo provide involuntary back-up power
to Ormet. Effective January 1, 2000, OPCo transferred its obligation and right
to serve Ormet to the electric cooperative. See Legal Proceedings for a
discussion of litigation involving Ormet.

AEGCO

         Since its formation in 1982, AEGCo's business has consisted of the
ownership and financing of its 50% interest in the Rockport Plant and, since
1989, leasing of its 50% interest in Unit 2 of the Rockport Plant. The operating
revenues of AEGCo are derived from the sale of capacity and energy associated
with its interest in the Rockport Plant to I&M, KEPCo and, through December 31,
1999, VEPCo, pursuant to unit power agreements. Pursuant to these unit power
agreements, AEGCo is entitled to recover its full cost of service from the
purchasers and will be entitled to recover future increases in such costs,
including increases in fuel and capital costs. See Unit Power Agreements.
Pursuant to a capital funds agreement, AEP has agreed to provide cash capital
contributions, or in certain circumstances subordinated loans, to AEGCo, to the
extent necessary to enable AEGCo, among other things, to provide its
proportionate share of funds required to permit continuation of the commercial
operation of the Rockport Plant and to perform all of its obligations, covenants
and agreements under, among other things, all loan agreements, leases and
related documents to which AEGCo is or becomes a party. See Capital Funds
Agreement.

   Unit Power Agreements

         A unit power agreement between AEGCo and I&M (the I&M Power Agreement)
provides for the sale by AEGCo to I&M of all the power (and the energy
associated therewith) available to AEGCo at the Rockport Plant. I&M is
obligated, whether or not power is available from AEGCo, to pay as a demand
charge for the right to receive such power (and as an energy charge for any
associated energy taken by I&M) such amounts, as when added to amounts received
by AEGCo from any other sources, will be at least sufficient to enable AEGCo to
pay all its operating and other expenses, including a rate of return on the
common equity of AEGCo as approved by FERC, currently 12.16%. The I&M Power
Agreement will continue in effect until the date that the last of the lease
terms of Unit 2 of the Rockport Plant has expired unless extended in specified
circumstances.

         Pursuant to an assignment between I&M and KEPCo, and a unit power
agreement between KEPCo and AEGCo, AEGCo sells KEPCo 30% of the power (and the
energy associated therewith) available to AEGCo from both units of the Rockport
Plant. KEPCo has agreed to pay to AEGCo in consideration for the right to
receive such power the same amounts which I&M would have paid AEGCo under the
terms of the I&M Power Agreement for such entitlement. The KEPCo unit power
agreement expires on December 31, 2004.

         A unit power agreement among AEGCo, I&M, VEPCo, and APCo provided for,
among other things, the sale of 70% of the power and energy available to AEGCo
from Unit 1 of the Rockport Plant to VEPCo by AEGCo from January 1, 1987 through
December 31, 1999. VEPCo agreed to pay to AEGCo in consideration for the right
to receive such power those amounts which I&M would have paid AEGCo under the
terms of the I&M Power Agreement for such entitlement. With the expiration of
the VEPCo agreement on December 31, 1999, I&M increased its purchases of energy
from AEGCo to 910 megawatts of Rockport capacity. Approximately 30% of AEGCo's
operating revenue in 1999 was derived from its sales to VEPCo.

   Capital Funds Agreement

         AEGCo and AEP have entered into a capital funds agreement pursuant to
which, among other things, AEP has unconditionally agreed to make

                                       9
<PAGE>   17

cash capital contributions, or in certain circumstances subordinated loans, to
AEGCo to the extent necessary to enable AEGCo to (i) maintain such an equity
component of capitalization as required by governmental regulatory authorities,
(ii) provide its proportionate share of the funds required to permit commercial
operation of the Rockport Plant, (iii) enable AEGCo to perform all of its
obligations, covenants and agreements under, among other things, all loan
agreements, leases and related documents to which AEGCo is or becomes a party
(AEGCo Agreements), and (iv) pay all indebtedness, obligations and liabilities
of AEGCo (AEGCo Obligations) under the AEGCo Agreements, other than
indebtedness, obligations or liabilities owing to AEP. The Capital Funds
Agreement will terminate after all AEGCo Obligations have been paid in full.

INDUSTRY PROBLEMS

         The electric utility industry, including the operating subsidiaries of
AEP, has encountered at various times in the last 15 years significant problems
in a number of areas, including: delays in and limitations on the recovery of
fuel costs from customers; proposed legislation, initiative measures and other
actions designed to prohibit construction and operation of certain types of
power plants and transmission lines under certain conditions and to eliminate or
reduce the extent of the coverage of fuel adjustment clauses; inadequate rate
increases and delays in obtaining rate increases; jurisdictional disputes with
state public utilities commissions regarding the interstate operations of
integrated electric systems; requirements for additional expenditures for
pollution control facilities; increased capital and operating costs;
construction delays due, among other factors, to pollution control and
environmental considerations and to material, equipment and fuel shortages; the
economic effects on net income (which when combined with other factors may be
immediate and adverse) associated with placing large generating units and
related facilities in commercial operation, including the commencement at that
time of substantial charges for depreciation, taxes, maintenance and other
operating expenses, and the cessation of AFUDC with respect to such units;
uncertainties as to conservation efforts by customers and the effects of such
efforts on load growth; depressed economic conditions in certain regions of the
United States; increasingly competitive conditions in the wholesale and retail
markets; availability of capacity; proposals to deregulate certain portions of
the industry and revise the rules and responsibilities under which new
generating capacity is supplied; and substantial increases in construction costs
and difficulties in financing due to high costs of capital, uncertain capital
markets and shortages of cash for construction and other purposes.

SEASONALITY

         Sales of electricity by the AEP System tend to increase and decrease
because of the use of electricity by residential and commercial customers for
cooling and heating and relative changes in temperature.

FRANCHISES

         The operating companies of the AEP System hold franchises to provide
electric service in various municipalities in their service areas. These
franchises have varying provisions and expiration dates. In general, the
operating companies consider their franchises to be adequate for the conduct of
their business.

COMPETITION AND BUSINESS CHANGE

   General

         The public utility subsidiaries of AEP, like many other electric
utilities, have traditionally provided electric generation and energy delivery,
consisting of transmission and distribution services, as a single product to
their retail customers. Proposals are being made and legislation has been
enacted in Ohio and Virginia that would also require electric utilities to sell
distribution services separately. These measures generally allow competition in
the generation and sale of electric power, but not in its transmission and
distribution.

         Competition in the generation and sale of electric power will require
resolution of complex issues, including who will pay for the unused generating
plant of, and other stranded costs incurred by, the utility when a customer
stops buying power from the utility; will all customers

                                       10
<PAGE>   18

have access to the benefits of competition; how will the rules of competition be
established; what will happen to conservation and other regulatory-imposed
programs; how will the reliability of the transmission system be ensured; and
how will the utility's obligation to serve be changed. As a result, it is not
clear how or when competition in generation and sale of electric power will be
instituted. However, as competition in generation and sale of electric power is
instituted, the public utility subsidiaries of AEP believe that they have a
favorable competitive position because of their relatively low costs. If
stranded costs are not recovered from customers, however, the public utility
subsidiaries of AEP, like all electric utilities, will be required by existing
accounting standards to recognize any stranded investment losses.

   AEP Position on Competition

         In October 1995, AEP announced that it favored freedom for customers to
purchase electric power from anyone that they choose. Generation and sale of
electric power would be in the competitive marketplace. To facilitate reliable,
safe and efficient service, AEP supports creation of independent system
operators to operate the transmission system in a region of the United States.
In addition, AEP supports the evolution of regional power exchanges which would
establish a competitive marketplace for the sale of electric power. Transmission
and distribution would remain monopolies and subject to regulation with respect
to terms and price. Regulators would be able to establish distribution service
charges which would provide, as appropriate, for recovery of stranded costs and
regulatory assets. AEP's working model for industry restructuring envisions a
progressive transition to full customer choice. Implementation of these measures
would require legislative changes and regulatory approvals.

   Wholesale

         The public utility subsidiaries of AEP, like the electric industry
generally, face increasing competition to sell available power on a wholesale
basis, primarily to other public utilities and also to power marketers. The
Energy Policy Act of 1992 was designed, among other things, to foster
competition in the wholesale market (a) through amendments to PUHCA,
facilitating the ownership and operation of generating facilities by "exempt
wholesale generators" (which may include independent power producers as well as
affiliates of electric utilities) and (b) through amendments to the Federal
Power Act, authorizing the FERC under certain conditions to order utilities
which own transmission facilities to provide wholesale transmission services for
other utilities and entities generating electric power. The principal factors in
competing for such sales are price (including fuel costs), availability of
capacity and reliability of service. The public utility subsidiaries of AEP
believe that they maintain a favorable competitive position on the basis of all
of these factors. However, because of the availability of capacity of other
utilities and the lower fuel prices in recent years, price competition has been,
and is expected for the next few years to be, particularly important.

      FERC orders 888 and 889, issued in April 1996, provide that utilities must
functionally unbundle their transmission services, by requiring them to use
their own tariffs in making off-system and third-party sales. See Transmission
Services. The public utility subsidiaries of AEP have functionally separated
their wholesale power sales from their transmission functions, as required by
orders 888 and 889.

   Retail

         The public utility subsidiaries of AEP generally have the exclusive
right to sell electric power at retail within their service areas. However, they
do compete with self-generation and with distributors of other energy sources,
such as natural gas, fuel oil and coal, within their service areas. The primary
factors in such competition are price, reliability of service and the capability
of customers to utilize sources of energy other than electric power. With
respect to self-generation, the public utility subsidiaries of AEP believe that
they maintain a favorable competitive position on the basis of all of these
factors. With respect to alternative sources of energy, the public utility
subsidiaries of AEP believe that the reliability of their service and the
limited ability of customers to substitute other cost-effective sources for
electric power place them in a favorable competitive position, even though their

                                       11
<PAGE>   19

prices may be higher than the costs of some other sources of energy.

         Significant changes in the global economy in recent years have led to
increased price competition for industrial companies in the United States,
including those served by the AEP System. Such industrial companies have
requested price reductions from their suppliers, including their suppliers of
electric power. In addition, industrial companies which are downsizing or
reorganizing often close a facility based upon its costs, which may include,
among other things, the cost of electric power. The public utility subsidiaries
of AEP cooperate with such customers to meet their business needs through, for
example, various off-peak or interruptible supply options and believe that, as
low cost suppliers of electric power, they should be less likely to be
materially adversely affected by this competition and may be benefited by
attracting new industrial customers to their service territories.

         The legislatures and/or the regulatory commissions in many states,
including some in AEP's service territory, are considering or have adopted
"retail customer choice" which, in general terms, means the transmission by an
electric utility of electric power generated by an entity of the customer's
choice over its transmission and distribution system to a retail customer in
such utility's service territory. A requirement to transmit directly to retail
customers would have the result of permitting retail customers to purchase
electric power, at the election of such customers, not only from the electric
utility in whose service area they are located but from another electric
utility, an independent power producer or an intermediary, such as a power
marketer. Although AEP's power generation would have competitors under some of
these proposals, its transmission and distribution would not. If competition
develops in retail power generation, the public utility subsidiaries of AEP
believe that they should have a favorable competitive position because of their
relatively low costs.

         Federal: Legislation to provide for retail competition among electric
energy suppliers has been introduced in both the U.S. Senate and House of
Representatives.

         Indiana: In January 2000, Senate Bill 450 was introduced in the Indiana
Senate on behalf of a group of industrial customers. The bill would have allowed
retail electric customers to choose their electricity supply companies. The bill
was not reported out of committee prior to legislative adjournment. AEP
continues to work with other utilities in Indiana to develop a consensus on
customer-choice legislation that can be enacted into law in Indiana. The outcome
of this effort is uncertain.

         Kentucky: During the 1998 Regular Session of the Kentucky legislature,
the Electric Utility Restructuring Task Force was established by resolution. The
final report of the Task Force issued in December 1999 recommended that, during
the 2000 General Assembly, the legislature should not take any action to
restructure the electric utility industry and the legislature should reauthorize
the Task Force. It is unlikely that comprehensive restructuring legislation will
be introduced in Kentucky until the 2002 General Assembly.

         The KPSC on February 18, 2000, issued an order stating its intent to
promulgate regulations governing cost allocation for affiliate transactions and
a code of conduct. There may be legislative action in the 2000 General Assembly
to codify some or all of the concepts outlined by the KPSC order.

         The KPSC Chairwoman leads 23 state public utility commissions in a
coalition entitled Low Cost States Initiative. The coalition's stated purpose is
to ensure that the U.S. Congress gives equal consideration to the issues facing
low-cost states. The coalition is focusing on the following five issues:

         o        A National Voice.

         o        Low Rates.

         o        Rural Electricity Rates.

         o        Stranded Costs and Benefits.

         o        Economic Development.

         Michigan: In June 1995, the MPSC issued an order approving an
experimental five-year retail wheeling program and ordered Consumers Energy
Company (Consumers) and Detroit Edison Company (Detroit Edison), unaffiliated
utilities, to make retail

                                       12
<PAGE>   20

delivery services available to a group of industrial customers, in the amount of
60 megawatts and 90 megawatts, respectively. The experiment, which commences
when each utility needs new capacity, seeks to determine whether a retail
wheeling program best serves the public interest. During the experiment, the
MPSC will collect information regarding the effects of retail wheeling.
Consumers, Detroit Edison and other parties appealed the MPSC's order to the
Michigan Supreme Court and in June 1999 the Supreme Court ruled that the MPSC
lacks the authority to mandate retail wheeling programs, but does have the
authority to set transmission rates for wheeled power if a utility voluntarily
chooses to offer direct retail access service. In response to the court ruling,
Consumers and Detroit Edison committed to participate voluntarily in the MPSC's
restructuring program described below.

         In January 1996, the Governor of Michigan endorsed a proposal of the
Michigan Jobs Commission to promote competition and customer choice in energy
and requested that the MPSC review the existing statutory and regulatory
framework governing Michigan utilities in light of increasing competition in the
utility industry. In December 1996, the MPSC staff issued a report on electric
industry restructuring which recommended a phase-in program from 1997 through
2004 of direct access to electricity suppliers applicable to all customers. On
June 5, 1997, the MPSC entered an order requiring electric utilities (including
I&M) to phase in retail open access for customers, with full customer choice by
2002 (MPSC Order). Under the MPSC Order, customer choice is phased in from 1997
through 2001, 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 MPSC Order essentially adopted the December 1996 MPSC staff
report that recommended full recovery of stranded costs of utilities, including
nuclear generating investment, through the use of a transition charge applicable
to customers exercising choice. While concluding that securitization of stranded
costs would be feasible, the MPSC Order stated that legislative authorization is
required prior to the implementation of any securitization program.

      In January 2000, Senate Bill 937 was introduced in the Michigan Senate,
which is an attempt to codify the MPSC's restructuring orders with certain other
modifications. The bill provides for:

         o        Phase-in period to begin June 1, 2000.

         o        Three-year rate freeze for customers who choose to remain with
                  their incumbent utility.

         o        Recovery of stranded costs during a transition period
                  extending through 2007.

Ohio: In October 1999, electric utility restructuring legislation (Am. Sub. S.B.
No. 3) was enacted into law. The law provides for:

         o        Effective January 1, 2001:

                  o        Customer choice of electricity supplier.

                  o        Residential rate reduction of 5% for the generation
                           portion of rates.

                  o        Freezing of generation rates, including fuel.

         o        PUCO Authorization:

                  o        To address certain major transition issues, including
                           the unbundling of rates and recovery of transition
                           costs. Transition costs can include regulatory
                           assets, stranded costs such as the impairment of
                           generating assets, employee severance and retraining
                           costs, consumer education and other costs. Stranded
                           generation costs are those costs of generation above
                           the market price for electricity that potentially
                           would not be recoverable in a competitive market.

                  o        To approve a transition plan for each electric
                           utility company with a deadline of no later than
                           October 31, 2000 for those approvals.

CSPCo and OPCo filed their transition plans with the PUCO on December 30, 1999.
Their plans included the following:

                                       13
<PAGE>   21

         o        Rate unbundling plan, including tariff terms and conditions
                  necessary for restructuring.

         o        Corporate separation plan.

         o        Application for transition revenues.

         o        Plan for independent operation of transmission facilities.

         o        Other components for the implementation of restructuring.

         Virginia: In March 1999, the Virginia Electric Utility Industry
Restructuring Act and related tax legislation were enacted into law. The
restructuring law requires Virginia utilities to join or establish a regional
transmission entity by January 2001, to which such utilities shall transfer the
management and control of their transmission systems. The law provides for a
transition to retail customer choice from January 1, 2002 through January 1,
2004. The Virginia SCC can delay or accelerate the implementation of choice
based on considerations of reliability, safety, communications or market power,
but in no event shall any delay extend the implementation of customer choice
beyond January 1, 2005. With limited exceptions, the generation of electricity
will no longer be subject to regulation.

      The law provides for capped rates, effective January 1, 2001, for a period
of time ending as late as July 1, 2007. The capped rates may be terminated after
January 1, 2004, upon petition of the Virginia SCC by the utility and a finding
by the Virginia SCC that an effective competitive market exists. If capped rates
continue beyond January 1, 2004, the law provides for a one-time change in the
non-generation components of such rates upon approval by the Virginia SCC. The
Virginia SCC also may adjust the capped rates in connection with the utility's
recovery of fuel costs, changes in taxation by Virginia, and any financial
distress of the utility beyond the utility's control.

         The restructuring law provides for recovery of just and reasonable net
stranded costs to the extent that such costs exceed zero in total value for any
incumbent electric utility through either capped rates or the imposition of a
wires charge upon customers who may depart the incumbent in favor of an
alternative supplier prior to the termination of the rate cap.

         A ten-member legislative task force, to serve from July 1, 1999 through
July 1, 2005, will monitor the work of the Virginia SCC in implementing the law
and review related matters. The task force will report annually to the Governor
and legislature.

         The tax law provides for replacement of gross receipts and certain
other taxes by (i) a consumption tax levied upon customers on the basis of
kilowatt-hour usage and (ii) a state corporate net income tax. The intention of
the tax law is to achieve approximate revenue neutrality for Virginia.

         West Virginia: On January 28, 2000, the West Virginia PSC issued an
order approving an electricity restructuring plan for West Virginia that was
supported by a broad range of interested parties, including AEP. Among other
provisions, the restructuring plan provides for:

         o        Customer choice to begin on January 1, 2001, or at a later
                  date set by the West Virginia PSC after all necessary rules
                  are in place (the "starting date").

         o        Deregulation of generation assets occurring on the starting
                  date.

         o        A transition period of up to 13 years, during which an
                  incumbent utility must provide default service for customers
                  who do not change suppliers unless an alternative default
                  supplier is selected through a West Virginia PSC-sponsored
                  bidding process.

                  o        Default rates for residential and small commercial
                           customers are capped for four years after the
                           starting date, and then increased at pre- defined
                           levels for the next nine years.

                  o        Default rates for industrial and large commercial
                           customers are discounted by 1% for 4.5 years,
                           beginning July 1, 2000, and then increased at pre-
                           defined levels for an additional three years.

                                       14
<PAGE>   22

         o        Metering and billing are deregulated for industrial and large
                  commercial customers on the starting date; metering and
                  billing are deregulated for residential and small commercial
                  customers no later than four years after the starting date.

         On March 11, 2000, the West Virginia legislature approved the
restructuring plan by joint resolution. The joint resolution provides that the
West Virginia PSC cannot implement the plan until the legislature makes
necessary tax law changes to preserve revenues of state and local governments.

    Possible Strategic Responses

         In response to the competitive forces and regulatory changes being
faced by AEP and its public utility subsidiaries, as discussed under this
heading and under Regulation, AEP and its public utility subsidiaries have from
time to time considered, and expect to continue to consider, various strategies
designed to enhance their competitive position and to increase their ability to
adapt to and anticipate changes in their utility business. These strategies may
include business combinations with other companies, internal restructurings
involving the complete or partial separation of their generation, transmission
and distribution businesses, acquisitions of related or unrelated businesses,
and additions to or dispositions of portions of their franchised service
territories. AEP and its public utility subsidiaries may from time to time be
engaged in preliminary discussions, either internally or with third parties,
regarding one or more of these potential strategies. No assurances can be given
as to whether any potential transaction of the type described above may actually
occur, or as to its ultimate effect on the financial condition or competitive
position of AEP and its public utility subsidiaries.

NEW BUSINESS DEVELOPMENT

         AEP has expanded its business to non-regulated energy activities
through several subsidiaries, including AEP Energy Services, Inc. (AEPES), AEP
Resources, Inc. (Resources), AEP Pro Serv, Inc. (formerly AEP Resources Service
Company) (Pro Serv) and AEP Communications, LLC (AEP Communications).

   AEPES

         AEPES markets and trades natural gas and provides gas storage and
transportation services.

   Resources

         Resources' primary business is development of, and investment in,
exempt wholesale generators, foreign utility companies, qualifying cogeneration
facilities and other energy-related domestic and international investment
opportunities and projects. Resources has business development offices in
London, Beijing, Singapore, Sydney, Washington and Houston.

         Resources and another AEP subsidiary have a 50% interest in Yorkshire
Electric Group plc (Yorkshire Electricity) with an indirect wholly-owned
subsidiary of New Century Energies, Inc. Yorkshire Electricity is a United
Kingdom independent regional electricity company. It is principally engaged in
the supply and distribution of electricity. Yorkshire Electricity has two
million distribution customers in its authorized service territory which is
comprised of 3,860 square miles and located centrally in the east coast of
England.

         Resources also indirectly owns CitiPower Pty., an electric distribution
and retail sales company in Victoria, Australia. CitiPower serves approximately
250,000 customers in the city of Melbourne. With about 3,100 miles of
distribution lines in a service area that covers approximately 100 square miles,
CitiPower distributes about 4,800 gigawatt-hours annually.

         Resources' indirect subsidiary, AEP Pushan Power LDC, has a 70%
interest in Nanyang General Light Electric Co., Ltd. (Nanyang Electric), a joint
venture organized to develop and build two 125 megawatt coal-fired generating
units near Nanyang City in the Henan Province of The Peoples Republic of China.
Nanyang Electric was established in 1996 by AEP Pushan Power LDC, Henan Electric
Power Development Co. (15% interest) and Nanyang City Hengsheng Energy
Development Company Limited (formerly Nanyang Municipal Finance Development Co.)
(15% interest). Unit 1 went into service in February 1999 and Unit 2 went into
service in June

                                       15
<PAGE>   23

1999. Resources' share of the total cost of the project of $185,000,000 was
approximately $110,000,000.

         In December 1999, Resources contributed $47,000,000 to acquire a 50%
interest in the Bajio power project in Mexico. The Bajio project is a 600
megawatt natural gas-fired, combined cycle plant and related assets located
approximately 160 miles from Mexico City. Bechtel Power Corporation, an
affiliate of Resources' partner (InterGen), will build the facility, which is
estimated to cost $430,000,000. Approximately 80% of the project costs will be
provided by third party debt, some of which will be supported by letters of
credit issued on behalf of Resources. The facility will be operated and managed
by one or more companies jointly owned by Resources and InterGen. Bajio has a
25-year contract to sell 495 megawatts of the plant's output to Mexico's
federally owned electric system; the remainder is expected to be sold to
industrial customers in the region. Construction is expected to be completed in
the fall of 2001.

         Resources, through AEP Resources Australia Pty., Ltd., a special
purpose subsidiary of Resources, owns a 20% interest in Pacific Hydro Limited.
Pacific Hydro is principally engaged in the development and operation of, and
ownership of interests in, hydroelectric facilities in the Asia Pacific region.
Currently, Pacific Hydro has interests in six hydroelectric units that operate
or are under construction in Australia and the Philippines. The hydroelectric
facilities in which Pacific Hydro had interests as of December 31, 1999
(including those under construction) had total design capacity of approximately
163 megawatts.

         Resources owns midstream gas assets, including:

         o        A 2,000-mile intrastate pipeline system in Louisiana.

         o        Four natural gas processing plants that straddle the pipeline.

         o        A ten billion cubic foot underground natural gas storage
                  facility directly connected to the Henry Hub, the most active
                  gas trading area in North America.

         The pipeline and storage facilities are interconnected to 15 interstate
and 23 intrastate pipelines.

   Pro Serv

         Pro Serv offers engineering, construction, project management and other
consulting services for projects involving transmission, distribution or
generation of electric power both domestically and internationally.

   AEP Communications

         AEP Communications markets energy information, wireless tower
infrastructure and fiber optic services. In 1998, AEP Communications launched
Datapult(SM), a portfolio of energy information data and analysis tools designed
to help customers identify energy- and cost-saving opportunities. AEP
Communications also is expanding its fiber optic network and marketing dedicated
telecommunications bandwidth to other carriers.

   SEC Limitations

         AEP has received approval from the SEC under PUHCA to issue and sell
securities in an amount up to 100% of its average quarterly consolidated
retained earnings balance (such average balance was approximately $1.7 billion
for the twelve months ended December 31, 1999) for investment in exempt
wholesale generators and foreign utility companies. Resources expects to
continue its pursuit of new and existing energy generation and delivery projects
worldwide.

         SEC Rule 58 permits AEP and other registered holding companies to
invest up to 15% of consolidated capitalization in energy-related companies.
AEPES, an energy-related company under Rule 58, is authorized to engage in
energy-related activities, including marketing electricity, gas and other energy
commodities.

   Risk

         These continuing efforts to invest in and develop new business
opportunities offer the potential of earning returns which may exceed those of
traditional AEP rate-regulated operations. However,

                                       16
<PAGE>   24

they also involve a higher degree of risk which must be carefully considered and
assessed. AEP may make additional substantial investments in these and other new
businesses.

         Reference is made to Market Risks under Item 7A herein for a discussion
of certain market risks inherent in AEP business activities.

PROPOSED AEP-CSW MERGER

         AEP and CSW entered into an Agreement and Plan of Merger, dated as of
December 21, 1997, pursuant to which CSW would, on the closing date, merge with
and into a wholly owned merger subsidiary of AEP with CSW being the surviving
corporation. As a result of the merger, each outstanding share of common stock,
par value $3.50 per share, of CSW (other than shares owned by AEP or CSW) shall
be converted into the right to receive 0.6 of a share of common stock, par value
$6.50 per share, of AEP. The combined company will be named American Electric
Power Company, Inc. and will be based in Columbus, Ohio.

         Consummation of the merger is subject to certain conditions, including
the receipt of required regulatory approvals. Assuming the receipt of all
required approvals, completion of the merger is anticipated to occur in the
second quarter of 2000.

         The merger agreement has been extended for six months until June 30,
2000 by both AEP's and CSW's boards of directors. Should the merger approval
process extend beyond June, either AEP or CSW could terminate the merger
agreement.

         On March 15, 2000, the FERC conditionally approved the merger.
Conditions placed on the merger include:

         o        Transfer operational control of AEP's east and west
                  transmission systems to a fully-functioning, FERC-approved
                  regional transmission organization by December 15, 2001. See
                  Transmission Services for Non-Affiliates.

         o        Two interim transmission-related mitigation measures
                  consisting of market monitoring and independent calculation
                  and posting of available transmission capacity to monitor the
                  operation of AEP's east transmission system.

         o        Divestiture of 550 MW of generating capacity comprised of 300
                  MW of capacity in the Southwest Power Pool (SPP) and 250 MW of
                  capacity in the Electric Reliability Council of Texas (ERCOT).
                  The FERC will require AEP and CSW to divest their entire
                  ownership interest in the generating facilities that are to be
                  divested. Alternatively, AEP and CSW may choose to divest the
                  same or greater amount of capacity from different generating
                  plants in their entirety. However, such generating plants must
                  be of similar cost, operation and location characteristics as
                  the generating plants AEP and CSW originally proposed.

         o        AEP and CSW must complete divestiture of the ERCOT capacity by
                  March 15, 2001 and divestiture of the SPP capacity by July 1,
                  2002.

         The FERC found that certain energy sales of SPP and ERCOT capacity
would be reasonable and effective interim mitigation measures until completion
of the required SPP and ERCOT divestitures. The FERC will require the proposed
interim energy sales to be in effect when the merger is consummated.

         AEP and CSW must notify the FERC by March 30, 2000 whether they accept
the condition that they transfer operational control of their transmission
facilities to a fully-functioning, FERC-approved regional transmission
organization by December 15, 2001 and the condition requiring the interim
mitigation sales measures. If AEP and CSW accept the conditions, then AEP and
CSW must make a compliance filing at least 60 days prior to consummation of the
merger describing their plan to implement the interim mitigation measures. AEP
and CSW intend to make this compliance filing on such date to permit completion
of the merger in the second quarter of 2000. AEP and CSW believe they can
address the conditions.

         CSW is a global, diversified public utility holding company based in
Dallas, Texas. CSW owns four domestic electric utility subsidiaries serving 1.8
million customers in portions of the states of Texas, Oklahoma, Louisiana and
Arkansas and a regional electricity company in the United Kingdom. CSW also owns
other international

                                       17
<PAGE>   25

energy operations and non-regulated subsidiaries involved in energy-related
investments, energy efficiency services and financial transactions.

CONSTRUCTION PROGRAM

   New Generation

         The AEP System is continuously involved in assessing the adequacy of
its generation, transmission, distribution and other facilities to plan and
provide for the reliable supply of electric power and energy to its customers.
In this assessment and planning process, assumptions are continually being
reviewed as new information becomes available, and assessments and plans are
modified, as appropriate. Thus, System reinforcement plans are subject to
change, particularly with the anticipated restructuring of the electric utility
industry and the move to increasing competition in the marketplace. See
Competition and Business Change.

         Committed or anticipated capability changes to the AEP System's
generation resources include:

         o        Purchase from an independent power producer's hydro project
                  with an expected capacity value of 28 megawatts, commencing
                  January 1, 2001.

         o        Expiration of the Rockport Unit 2 sale of 250 megawatts to
                  Carolina Power & Light Company, an unaffiliated company, on
                  December 31, 2009.

         Apart from these changes and temporary power purchases that can be
arranged, there are no specific commitments for additions of new generation
resources on the AEP System. In this regard, the most recent resource plan filed
by AEP's electric utility subsidiaries with various state commissions indicates
no need for new generation resources until about the year 2005. When the time
for commitment to additional generation resources approaches, all means for
adding such resources, including self-build and external resource options, will
be considered. However, given the restructuring that is expected to take place
in the industry, the extent of the need of AEP's operating companies for any
additional generation resources in the foreseeable future is highly uncertain.

   Proposed Transmission Facilities

         On September 30, 1997, APCo refiled applications in Virginia and West
Virginia for certificates to build the Wyoming-Cloverdale 765,000-volt line. The
preferred route for this line is approximately 132 miles in length, connecting
APCo's Wyoming Station in southern West Virginia to APCo's Cloverdale Station
near Roanoke, Virginia. APCo's estimated cost is $263,300,000.

         APCo announced this project in 1990. Since then it has been in the
process of trying to obtain federal permits and state certificates. At the
federal level, the U.S. Forest Service (Forest Service) is directing the
preparation of an Environmental Impact Statement (EIS), which is required prior
to granting permits for crossing lands under federal jurisdiction. Permits are
needed from the (i) Forest Service to cross federal forests, (ii) Army Corps of
Engineers to cross the New River and a watershed near the Wyoming Station, and
(iii) National Park Service or Forest Service to cross the Appalachian National
Scenic Trail.

         In June 1996, the Forest Service released a Draft EIS and preliminarily
identified a "No Action Alternative" as its preferred alternative. If this
alternative were incorporated into the Final EIS, APCo would not be authorized
to cross federal forests administered by the Forest Service. The Forest Service
stated that it would not prepare the Final EIS until after Virginia and West
Virginia determined need and routing issues.

         West Virginia: On May 27, 1998, the West Virginia PSC issued an order
granting APCo's application for a certificate with respect to the preferred
route for the Wyoming-Cloverdale 765,000-volt line.

         Virginia: By Hearing Examiner's Ruling of June 9, 1998, the procedural
schedule for the certificate in Virginia was suspended for 90 days to allow APCo
to conduct additional studies. On August 21, 1998, APCo filed a report stating
that a two-phased alternative project could provide electrical transmission
reinforcement comparable to the Wyoming-Cloverdale line.

         By Hearing Examiner's Ruling of September 22, 1998, the proceeding was
continued and APCo was directed to study the first phase of the alternative

                                       18
<PAGE>   26

project, involving a line running from Wyoming Station in West Virginia to
APCo's existing Jacksons Ferry Station in Virginia or any point on the Jacksons
Ferry-Cloverdale 765kV transmission line. APCo estimates that the
Wyoming-Jacksons Ferry line would be between 82-100 miles in length, including
32 miles in West Virginia previously certified. The Hearing Examiner also
ordered APCo and the Virginia SCC Staff to provide at the evidentiary hearing
information on generation alternatives, specifically natural gas generation, to
APCo's proposed transmission line. APCo filed its study in May 1999, identifying
the Jacksons Ferry Project as an alternative project to Cloverdale. A hearing
was to have begun in November 1999, but this has been delayed to May 1, 2000.

         If the Virginia SCC grants a certificate for the Wyoming-Jacksons Ferry
line, APCo will have to amend its certificate from West Virginia.

         Proposed Completion Schedule: If the Virginia SCC and West Virginia PSC
issue the required certificates, APCo will cooperate with the Forest Service to
complete the EIS process and obtain the federal permits. Management estimates
that neither project can be completed before the summer of 2004. However, given
the findings in the Draft EIS, APCo cannot presently predict the schedule for
completion of the state and federal permitting process.

   Construction Expenditures

         The following table shows the construction expenditures by AEGCo, APCo,
CSPCo, I&M, KEPCo, OPCo and the AEP System and their respective consolidated
subsidiaries during 1997, 1998 and 1999 and their current estimate of 2000
construction expenditures, in each case including AFUDC but excluding nuclear
fuel and other assets acquired under leases.

<TABLE>
<CAPTION>
                           1997             1998             1999             2000
                          ACTUAL           ACTUAL           ACTUAL          ESTIMATE
                          ------           ------           ------          --------
                                                (IN THOUSANDS)
<S>                      <C>              <C>              <C>              <C>
AEP System (a)..         $762,000         $792,100         $866,900         $893,900
   AEGCo .......            3,900            6,600            8,300            4,200
   APCo ........          218,100          204,900          211,400          218,500
   CSPCo .......          108,900          115,300          115,300          136,100
   I&M .........          123,400          148,900          165,300          126,100
   KEPCo .......           66,700           43,800           44,300           33,200
   OPCo ........          172,700          185,200          193,900          233,600
</TABLE>

-----------------------
(a)      Includes expenditures of other subsidiaries not shown.

         Reference is made to the footnotes to the financial statements entitled
Commitments and Contingencies incorporated by reference in Item 8, for further
information with respect to the construction plans of AEP and its operating
subsidiaries for the next three years.

         The System construction program is reviewed continuously and is revised
from time to time in response to changes in estimates of customer demand,
business and economic conditions, the cost and availability of capital,
environmental requirements and other factors. Changes in construction schedules
and costs, and in estimates and projections of needs for additional facilities,
as well as variations from currently anticipated levels of net earnings, Federal
income and other taxes, and other factors affecting cash requirements, may
increase or decrease the estimated capital requirements for the System's
construction program.

         From time to time, as the System companies have encountered the
industry problems described above, such companies also have encountered
limitations on their ability to secure the capital necessary to finance
construction expenditures.

         Environmental Expenditures: Expenditures related to compliance with air
and water quality standards, included in the gross additions to plant of the
System, during 1997, 1998 and 1999 and the current estimate for 2000 are shown
below. Substantial expenditures in addition to the amounts set forth below may
be required by the System in future years in connection with the modification
and addition of facilities at generating plants for environmental quality
controls in order to comply with air and water quality standards which have been
or may be adopted.

<TABLE>
<CAPTION>
                        1997            1998            1999             2000
                       ACTUAL          ACTUAL          ACTUAL          ESTIMATE
                       ------          ------          ------          --------
                                                (IN THOUSANDS)
<S>                   <C>             <C>             <C>             <C>
AEGCo ...........     $     0         $   800         $     8         $      0
APCo ............       9,100          25,000          24,500           19,314
CSPCo ...........       1,300           5,300          10,600           13,154
I&M .............         100          13,000           4,500              731
KEPCo ...........       1,300           4,600           1,900              313
OPCo ............      11,800          27,100          37,400           70,888
                      -------         -------         -------         --------
   AEP System....     $23,600         $75,800         $78,908         $104,400
                      =======         =======         =======         ========
</TABLE>

                                       19
<PAGE>   27

FINANCING

         It has been the practice of AEP's operating subsidiaries to finance
current construction expenditures in excess of available internally generated
funds by initially issuing unsecured short-term debt, principally commercial
paper and bank loans, at times up to levels authorized by regulatory agencies,
and then to reduce the short-term debt with the proceeds of subsequent sales by
such subsidiaries of long-term debt securities and cash capital contributions by
AEP. It has been the practice of AEP, in turn, to finance cash capital
contributions to the common stock equities of its subsidiaries by issuing
unsecured short-term debt, principally commercial paper, and then to sell
additional shares of Common Stock of AEP for the purpose of retiring the
short-term debt previously incurred. In 1999, AEP issued approximately 2,287,000
shares of Common Stock pursuant to its Dividend Reinvestment and Stock Purchase
Plan and Employees Savings Plan. Although prevailing interest costs of
short-term bank debt and commercial paper generally have been lower than
prevailing interest costs of long-term debt securities, whenever interest costs
of short-term debt exceed costs of long-term debt, the companies might be
adversely affected by reliance on the use of short-term debt to finance their
construction and other capital requirements.

         During the period 1997-1999, net external funds from financings and
capital contributions by AEP amounted, with respect to APCo, I&M, KEPCo and
OPCo, to approximately 48%, 80%, 71% and 20%, respectively, of the aggregate
construction expenditures shown above. During this same period, the amount of
funds used to retire long-term and short-term debt and preferred stock of AEGCo
and CSPCo exceeded the amount of funds from financings and capital contributions
by AEP.

         The ability of AEP's regulated subsidiaries to issue short-term debt is
limited by regulatory restrictions and, in the case of some of the operating
subsidiaries, by provisions contained in certain debt and other instruments. The
approximate amounts of short-term debt which the companies estimate that they
were permitted to issue under the most restrictive such restriction, at January
1, 2000, and the respective amounts of short-term debt outstanding on that date,
on a corporate basis, are shown in the following tabulation:


<TABLE>
<CAPTION>
                                                                                       TOTAL AEP
     SHORT-TERM DEBT       AEP     AEGCO     APCO    CSPCO     I&M     KEPCO     OPCO   SYSTEM(a)
     ---------------       ---     -----     ----    -----     ---     -----     ----   ---------
                                                       (IN MILLIONS)
<S>                        <C>      <C>      <C>      <C>      <C>      <C>      <C>    <C>
Amount authorized .......  $500     $ 80     $325     $350     $500     $150     $450     $2,415
                           ====     ====     ====     ====     ====     ====     ====     ======
Amount outstanding:
      Notes payable .....  $ --     $ 25     $ --     $ --     $ --     $ --     $  5     $  208
      Commercial paper...    57       --      123       46      224       40      190        680
                           ----     ----     ----     ----     ----     ----     ----     ------
                           $ 57     $ 25     $123     $ 46     $224     $ 40     $195     $  888
                           ====     ====     ====     ====     ====     ====     ====     ======
</TABLE>
-----------------------
(a)      Includes short-term debt of other subsidiaries not shown.

         Reference is made to the footnotes to the financial statements
incorporated by reference in Item 8 for further information with respect to
unused short-term bank lines of credit.

         If one or more of the subsidiaries are unable to continue the issuance
and sale of securities on an orderly basis, such company or companies will be
required to consider the curtailment of construction and other outlays or the
use of alternative financing arrangements, if available, which may be more
costly.

         AEP's subsidiaries have also utilized, and expect to continue to
utilize, additional financing arrangements, such as unsecured debt, leasing
arrangements, including the leasing of utility assets, coal mining and
transportation equipment and facilities and nuclear fuel. Pollution control
revenue bonds have been used in the past and may be used in the future in
connection with the construction of pollution control facilities; however,
Federal tax law has limited the utilization of this type of financing except for
purposes of certain financing of solid waste disposal facilities and of certain
refunding of outstanding pollution control revenue bonds issued before August
16, 1986.


                                       20
<PAGE>   28

         New projects undertaken by Resources and its subsidiaries are generally
financed through equity funds provided by AEP, non-recourse debt incurred on a
project-specific basis, debt issued by Resources or through a combination
thereof. See New Business Development and Item 7 for additional information
concerning Resources and its subsidiaries.

RATES AND REGULATION

   General

         The rates charged by the electric utility subsidiaries of AEP are
approved by the FERC or one of the state utility commissions as applicable. The
FERC regulates wholesale rates and the state commissions regulate retail rates.
In recent years the number of rate increase applications filed by the operating
subsidiaries of AEP with their respective state commissions and the FERC has
decreased. Under current rate regulation, if increases in operating,
construction and capital costs exceed increases in revenues resulting from
previously granted rate increases and increased customer demand, then it may be
appropriate for certain of AEP's electric utility subsidiaries to file rate
increase applications in the future.

         Generally the rates of AEP's operating subsidiaries are determined
based upon the cost of providing service including a reasonable return on
investment. Certain states served by the AEP System allow alternative forms of
rate regulation in addition to the traditional cost-of-service approach.
However, the rates of AEP's operating subsidiaries in those states continue to
be cost-based. The IURC may approve alternative regulatory plans which could
include setting customer rates based on market or average prices, price caps,
index-based prices and prices based on performance and efficiency. The Virginia
SCC may approve (i) special rates, contracts or incentives to individual
customers or classes of customers and (ii) alternative forms of regulation
including, but not limited to, the use of price regulation, ranges of authorized
returns, categories of services and price indexing.

         All of the seven states served by the AEP System, as well as the FERC,
either permit the incorporation of fuel adjustment clauses in a utility
company's rates and tariffs, which are designed to permit upward or downward
adjustments in revenues to reflect increases or decreases in fuel costs above or
below the designated base cost of fuel set forth in the particular rate or
tariff, or permit the inclusion of specified levels of fuel costs as part of
such rate or tariff.

         AEP cannot predict the timing or probability of approvals regarding
applications for additional rate changes, the outcome of action by regulatory
commissions or courts with respect to such matters, or the effect thereof on the
earnings and business of the AEP System. In addition, current rate regulation
may, and in the case of Ohio and Virginia will, be subject to significant
revision. See Competition and Business Change.

      APCo

         Virginia: In June 1997, APCo filed an application with the Virginia SCC
for approval of an alternative regulatory plan (Plan) and proposed, among other
things, an increase of $30,500,000 in base rates on an annual basis to be
effective July 13, 1997. On July 10, 1997, the Virginia SCC issued an order
suspending implementation of the proposed rates until November 11, 1997 when
these rates were placed into effect subject to refund.

         On February 18, 1999, the Virginia SCC approved a stipulation and
settlement agreement among APCo, the Virginia SCC Staff and consumer and major
industrial customer representatives that provides for the following:

         o        Elimination of the $30,500,000 annual increase in base rates
                  that has been collected subject to refund since mid-November
                  1997.

         o        During the period January 1, 1998 through December 31, 2000:

                  o        Reduction in base rates of $6,000,000 from the level
                           in effect prior to the November 1997 increase, with
                           the expectation that rates would remain at the
                           agreed-upon levels.

                  o        APCo's commitment to invest at least $90,000,000 in
                           Virginia distribution facilities to maintain the
                           overall quality and reliability of electric service.

                                       21
<PAGE>   29

                  o        Benchmark rate of return on equity of 10.85% with
                           one-third of earnings above that level to be retained
                           by APCo and the remaining two-thirds to be refunded
                           to ratepayers.

         o        Refund with interest of all amounts collected above the
                  approved rates.

         APCo made the refund with interest as ordered in the amount of
$49,628,000.

         West Virginia: In May 1999, APCo filed with the West Virginia PSC for a
base rate increase of $50,000,000 annually and a reduction in Expanded Net
Energy Cost (ENEC) rates of $38,000,000 annually. On February 7, 2000, APCo and
other parties to the proceeding filed for approval a Joint Stipulation and
Agreement for Settlement with the West Virginia PSC that provides for, among
other things:

         o        No change in either base or ENEC rates after January 1, 2000
                  from those that expired on December 31, 1999 that were part of
                  a prior West Virginia PSC-approved settlement.

         o        Annual ENEC recovery proceedings are suspended and deferral
                  accounting for over- or under-recovery is discontinued
                  effective January 1, 2000.

         o        The net cumulative deferred ENEC recovery balance as
                  established by the prior West Virginia PSC order, which is
                  $66,000,000 at December 31, 1999, shall remain as a regulatory
                  liability until generation is deregulated.

         o        APCo's share of any net savings from the pending merger
                  between AEP and Central and South West Corporation prior to
                  December 31, 2004 shall be retained by APCo.

   CSPCo

         Zimmer Plant: The Zimmer Plant was placed in commercial operation as a
1,300-megawatt coal-fired plant on March 30, 1991. CSPCo owns 25.4% of the
Zimmer Plant with the remainder owned by two unaffiliated companies, CG&E
(46.5%) and DP&L (28.1%).

         From the in-service date of March 1991 until rates went into effect in
May 1992, deferred carrying charges of $43,000,000 were recorded on the Zimmer
Plant investment. Recovery of the deferred carrying charges is being sought
under the transition charge provision of the Ohio electric utility restructuring
law discussed in Competition and Business Change--Ohio.

   I&M

         Reference is made to Cook Nuclear Plant --Cook Plant Shutdown under
Item 2 herein for a discussion of recovery of fuel costs.

    OPCo

         Under the terms of a stipulation agreement approved by the PUCO in
November 1992, beginning December 1, 1994, the cost of coal burned at the Gavin
Plant is subject to a 15-year predetermined price of $1.575 per million Btus
with quarterly escalation adjustments. A 1995 PUCO-approved settlement agreement
fixed the electric fuel component factor at 1.465 cents per kwh for the period
June 1995 through November 1998. After the first to occur of either full
recovery of these costs or November 2009, the price that OPCo can recover for
coal from its affiliated Meigs mine which supplies the Gavin Plant will be
limited to the lower of cost or the then-current market price. The agreements
provide OPCo with the opportunity to recover any operating losses incurred under
the predetermined or fixed price, as well as its investment in, and liabilities
and closing costs associated with, its affiliated mining operations attributable
to its Ohio jurisdiction, to the extent the actual cost of coal burned at the
Gavin Plant is below the predetermined price.

         As a result of the Ohio electric utility restructuring law discussed in
Competition and Business Change--Ohio, beginning in 2001, fuel adjustment
proceedings in Ohio cease, thus ending the recovery mechanism in the 1992 and
1995 agreements and specifically ceasing the escalation feature of the Gavin
cap. Therefore, OPCo must now rely on the transition charge for recovery of the

                                       22
<PAGE>   30

deferred fuel cost regulatory asset balance after December 31, 2000.

         The Muskingum mine, which supplied coal to the Muskingum River Plant
Units 1-4, ceased operation in October 1999 with the exception of a limited
amount of economically viable coal production ancillary to the reclamation
activities. The Windsor mine, which supplies Cardinal Plant Unit 1, is scheduled
to close in April 2000. The Meigs mine is scheduled to close in December 2001.
These mines are closing, in part, as a result of compliance with the Phase II
requirements of the Clean Air Act Amendments of 1990 (see Environmental and
Other Matters -- Air Pollution Control -- Acid Rain). Unless future shutdown
costs and/or the cost of coal production of OPCo's Muskingum, Windsor and Meigs
mines, including amounts deferred, can be recovered, AEP's and OPCo's results of
operations would be adversely affected.

FUEL SUPPLY

         The following table shows the sources of power generated by the AEP
System:

<TABLE>
<CAPTION>
                              1995   1996   1997    1998   1999
                              ----   ----   ----    ----   ----
<S>                           <C>    <C>    <C>     <C>    <C>
Coal.......................    88%    87%    92%     99%    99%
Nuclear....................    11%    12%     7%      0%     0%
Hydroelectric and other....     1%     1%     1%      1%     1%
</TABLE>

         Variations in the generation of nuclear power are primarily related to
refueling outages and, for 1997 through 1999, the shutdown of the Cook Plant to
respond to issues raised by the NRC. See Cook Nuclear Plant -- Cook Plant
Shutdown.

   Coal

         The Clean Air Act Amendments of 1990 provide for the issuance of annual
allowance allocations covering sulfur dioxide emissions at levels below historic
emission levels for many coal-fired generating units of the AEP System. Phase I
of this program began in 1995 and Phase II begins in 2000, with both phases
requiring significant changes in coal supplies and suppliers. The full extent of
such changes, particularly in regard to Phase II, however, has not been
determined. See Environmental and Other Matters -- Air Pollution Control -- Acid
Rain for the current compliance plan.

         In order to meet emission standards for existing and new emission
sources, the AEP System companies will, in any event, have to obtain coal
supplies, in addition to coal reserves now owned by System companies, through
the acquisition of additional coal reserves and/or by entering into additional
supply agreements, either on a long-term or spot basis, at prices and upon terms
which cannot now be predicted.

         No representation is made that any of the coal rights owned or
controlled by the System will, in future years, produce for the System any major
portion of the overall coal supply needed for consumption at the coal-fired
generating units of the System. Although AEP believes that in the long run it
will be able to secure coal of adequate quality and in adequate quantities to
enable existing and new units to comply with emission standards applicable to
such sources, no assurance can be given that coal of such quality and quantity
will in fact be available. No assurance can be given either that statutes or
regulations limiting emissions from existing and new sources will not be further
revised in future years to specify lower sulfur contents than now in effect or
other restrictions. See Environmental and Other Matters herein.

         The FERC has adopted regulations relating, among other things, to the
circumstances under which, in the event of fuel emergencies or shortages, it
might order electric utilities to generate and transmit electric power to other
regions or systems experiencing fuel shortages, and to rate-making principles by
which such electric utilities would be compensated. In addition, the Federal
Government is authorized, under prescribed conditions, to allocate coal and to
require the transportation thereof, for the use of power plants or major
fuel-burning installations.

         System companies have developed programs to conserve coal supplies at
System plants which involve, on a progressive basis, limitations on sales of
power and energy to neighboring utilities, appeals to customers for voluntary
limitations of electric usage to essential needs, curtailment of sales to
certain industrial customers, voltage reductions and, finally, mandatory
reductions in cases where current coal supplies fall below minimum levels. Such
programs have been filed and reviewed with

                                       23
<PAGE>   31

officials of Federal and state agencies and, in some cases, the state regulatory
agency has prescribed actions to be taken under specified circumstances by
System companies, subject to the jurisdiction of such agencies.

         The mining of coal reserves is subject to Federal requirements with
respect to the development and operation of coal mines, and to state and Federal
regulations relating to land reclamation and environmental protection, including
Federal strip mining legislation enacted in August 1977. Continual evaluation
and study is given to possible divestiture of coal properties in light of
Federal and state environmental and mining laws and regulations.

         Western coal purchased by System companies is transported by rail to an
affiliated terminal on the Ohio River for transloading to barges for delivery to
generating stations on the river. Subsidiaries of AEP lease approximately 4,055
coal hopper cars to be used in unit train movements, as well as 15 towboats, 451
jumbo barges and 145 standard barges. Subsidiaries of AEP also own or lease coal
transfer facilities at various other locations.

         The System generating companies procure coal from coal reserves which
are owned or mined by subsidiaries of AEP, and through purchases pursuant to
long-term contracts, or on a spot purchase basis, from unaffiliated producers.
The following table shows the amount of coal delivered to the AEP System during
the past five years, the proportion of such coal which was obtained either from
coal-mining subsidiaries, from unaffiliated suppliers under long-term contracts
or through spot or short-term purchases, and the average delivered price of spot
coal purchased by System companies:

<TABLE>
<CAPTION>
                                                                      1995        1996        1997       1998       1999
                                                                      ----        ----        ----       ----       ----
<S>                                                                <C>          <C>        <C>         <C>        <C>
Total coal delivered to
   AEP operated plants (thousands of tons).......................  46,867       51,030     54,292      54,004     54,306
Sources (percentage):
   Subsidiaries..................................................     14%          13%        14%         14%        11%
   Long-term contracts...........................................     75%          71%        66%         66%        64%
   Spot or short-term purchases..................................     11%          16%        20%         20%        24%
Average price per ton of spot-purchased coal.....................  $25.15       $23.85     $24.38      $25.05     $27.18
</TABLE>

      The average cost of coal consumed during the past five years by all AEP
System companies, AEGCo, APCo, CSPCo, I&M, KEPCo and OPCo is shown in the
following tables:

<TABLE>
<CAPTION>
                                                                    1995          1996       1997         1998       1999
                                                                    ----          ----       ----         ----       ----
                                                                                         DOLLARS PER TON
                                                                                         ---------------
<S>                                                                <C>          <C>         <C>          <C>        <C>
AEP System Companies...........................................    $ 32.52      $ 31.70     $ 31.77      $ 32.60    $ 32.94
   AEGCo.......................................................      18.80        18.22       19.30        19.37      20.79
   APCo........................................................      38.86        37.60       36.09        34.81      33.29
   CSPCo.......................................................      33.23        31.70       31.69        31.63      29.94
   I&M.........................................................      23.25        22.99       23.68        22.61      24.54
   KEPCo.......................................................      26.91        27.25       26.76        27.42      26.76
   OPCo........................................................      37.58        35.96       36.00        38.94      40.56

                                                                                     CENTS PER MILLION BTU'S
                                                                                     -----------------------
AEP System Companies...........................................     145.26       140.48      140.23       143.51     143.07
   AEGCo.......................................................     112.87       109.25      115.21       112.63     116.90
   APCo........................................................     156.96       152.54      146.54       141.76     135.40
   CSPCo.......................................................     140.79       134.60      134.44       134.15     127.42
   I&M.........................................................     125.50       121.16      123.36       118.02     121.90
   KEPCo.......................................................     114.77       114.42      110.37       112.15     109.91
   OPCo........................................................     157.62       151.55      151.66       164.44     169.23
</TABLE>

                                       24
<PAGE>   32
         The coal supplies at AEP System plants vary from time to time depending
on various factors, including customers' usage of electric power, space
limitations, the rate of consumption at particular plants, labor unrest and
weather conditions which may interrupt deliveries. At December 31, 1999, the
System's coal inventory was approximately 50 days of normal System usage. This
estimate assumes that the total supply would be utilized by increasing or
decreasing generation at particular plants.

         The following tabulation shows the total consumption during 1999 of the
coal-fired generating units of AEP's principal electric utility subsidiaries,
coal requirements of these units over the remainder of their useful lives and
the average sulfur content of coal delivered in 1999 to these units. Reference
is made to Environmental and Other Matters for information concerning current
emissions limitations in the AEP System's various jurisdictions and the effects
of the Clean Air Act Amendments.

<TABLE>
<CAPTION>
                                                                                                    AVERAGE SULFUR CONTENT
                                                                       ESTIMATED REQUIRE-             OF DELIVERED COAL
                                              TOTAL CONSUMPTION       MENTS FOR REMAINDER       -----------------------------
                                                 DURING 1999            OF USEFUL LIVES                      POUNDS OF SO(2)
                                           (IN THOUSANDS OF TONS)    (IN MILLIONS OF TONS)      BY WEIGHT   PER MILLION BTU'S
                                           ----------------------    ---------------------      ---------   -----------------
<S>                                        <C>                        <C>                       <C>         <C>
AEGCo (a)...............................             4,510                     225               0.3%            0.7
APCo....................................            12,206                     432               0.8%            1.3
CSPCo...................................             5,849(b)                   234(b)           2.7%            4.5
I&M (c).................................             6,948                     254               0.6%            1.2
KEPCo...................................             3,099                      93               1.1%            1.8
OPCo....................................            19,088                     623               2.1%            3.6
</TABLE>

------------------------
(a)      Reflects AEGCo's 50% interest in the Rockport Plant
(b)      Includes coal requirements for CSPCo's interest in Beckjord, Stuart and
         Zimmer Plants.
(c)      Includes I&M's 50% interest in the Rockport Plant.

         AEGCo: See Fuel Supply -- I&M for a discussion of the coal supply for
the Rockport Plant.

         APCo: Substantially all of the coal consumed at APCo's generating
plants is obtained from unaffiliated suppliers under long-term contracts and/or
on a spot purchase basis.

         The average sulfur content by weight of the coal received by APCo at
its generating stations approximated 0.8% during 1999, whereas the maximum
sulfur content permitted, for emission standard purposes, for existing plants in
the regions in which APCo's generating stations are located ranged between 0.78%
and 2% by weight depending in some circumstances on the calorific value of the
coal which can be obtained for some generating stations.

         CSPCo: CSPCo has coal supply agreements with unaffiliated suppliers for
the delivery of approximately 3,150,000 tons per year through 2001. Some of this
coal is washed to improve its quality and consistency for use principally at
Unit 4 of the Conesville Plant.

         CSPCo has been informed by CG&E and DP&L that, with respect to the CCD
Group units partly owned but not operated by CSPCo, sufficient coal has been
contracted for or is believed to be available for the approximate lives of the
respective units operated by them. Under the terms of the operating agreements
with respect to CCD Group units, each operating company is contractually
responsible for obtaining the needed fuel.

         I&M: I&M has two coal supply agreements with unaffiliated suppliers
pursuant to which the suppliers are delivering low sulfur coal from surface
mines in Wyoming, principally for consumption by the Rockport Plant. Under these
agreements, the suppliers will sell to I&M, for consumption by I&M at the
Rockport Plant or consignment to other System companies, coal with an average
sulfur content not exceeding 1.2 pounds of sulfur dioxide per million Btu's of
heat input. One contract with remaining deliveries of 46,510,000 tons expires on

                                       25
<PAGE>   33

December 31, 2014 and another contract with remaining deliveries of 32,175,000
tons expires on December 31, 2004.

         All of the coal consumed at I&M's Tanners Creek Plant is obtained from
unaffiliated suppliers under long-term contracts and/or on a spot purchase
basis.

         KEPCo: Substantially all of the coal consumed at KEPCo's Big Sandy
Plant is obtained from unaffiliated suppliers under long-term contracts and/or
on a spot purchase basis. KEPCo has coal supply agreements with unaffiliated
suppliers pursuant to which KEPCo will receive approximately 2,300,000 tons of
coal in 2000. To the extent that KEPCo has additional coal requirements, it may
purchase coal from the spot market and/or suppliers under contract to supply
other System companies.

         OPCo: The coal consumed at OPCo's generating plants is obtained from
both affiliated and unaffiliated suppliers. The coal obtained from unaffiliated
suppliers is purchased under long-term contracts and/or on a spot purchase
basis.

         OPCo and certain of its coal-mining subsidiaries own or control coal
reserves in the State of Ohio containing approximately 184,000,000 tons of clean
recoverable coal and ranging in sulfur content between 3.4% and 4.5% sulfur by
weight (weighted average, 3.8%), which reserves are presently being mined. OPCo
and certain of its mining subsidiaries own an additional 113,000,000 tons of
clean recoverable coal in Ohio which ranges in sulfur content between 2.4% and
3.4% sulfur by weight (weighted average 2.7%). Recovery of this coal would
require substantial development.

         OPCo and certain of its coal-mining subsidiaries also own or control
coal reserves in the State of West Virginia which contain approximately
100,000,000 tons of clean recoverable coal ranging in sulfur content between
1.4% and 4.0% sulfur by weight (weighted average, 2.1%) of which approximately
23,000,000 tons can be recovered based upon existing mining plans and
projections and employing current mining practices and techniques.

   Nuclear

         I&M has made commitments to meet certain of the nuclear fuel
requirements of the Cook Plant. The nuclear fuel cycle consists of:

         o        Mining and milling of uranium ore to uranium concentrates.

         o        Conversion of uranium concentrates to uranium hexafluoride.

         o        Enrichment of uranium hexafluoride.

         o        Fabrication of fuel assemblies.

         o        Utilization of nuclear fuel in the reactor.

         o        Disposition of spent fuel.

         Steps currently are being taken, based upon the planned fuel cycles for
the Cook Plant, to review and evaluate I&M's requirements for the supply of
nuclear fuel. I&M has made and will make purchases of uranium in various forms
in the spot, short-term, and mid-term markets until it decides that deliveries
under long-term supply contracts are warranted.

         For purposes of the storage of high-level radioactive waste in the form
of spent nuclear fuel, I&M has completed modifications to its spent nuclear fuel
storage pool. AEP anticipates that the Cook Plant has storage capacity to permit
normal operations through 2012.

         I&M's costs of nuclear fuel consumed do not assume any residual or
salvage value for residual plutonium and uranium.

   Nuclear Waste and Decommissioning

         The Nuclear Waste Policy Act of 1982, as amended, establishes Federal
responsibility for the permanent off-site disposal of spent nuclear fuel and
high-level radioactive waste. Disposal costs are paid by fees assessed against
owners of nuclear plants and deposited into the Nuclear Waste Fund created by
the Act. In 1983, I&M entered into a contract with DOE for the disposal of spent
nuclear fuel. Under terms of the contract, for the disposal of nuclear fuel
consumed after April 6, 1983 by I&M's Cook Plant, I&M is paying to the fund a
fee of one

                                       26
<PAGE>   34

mill per kilowatt-hour, which I&M is currently recovering from customers. For
the disposal of nuclear fuel consumed prior to April 7, 1983, I&M must pay the
U.S. Treasury a fee estimated at approximately $72,000,000, exclusive of
interest of $127,000,000 at December 31, 1999. The aggregate amount has been
recorded as long-term debt. Because of the current uncertainties surrounding
DOE's program to provide for permanent disposal of spent nuclear fuel, I&M has
not yet paid any of the pre-April 1983 fee. At December 31, 1999, funds
collected from customers to pay the pre-April 1983 fee and accrued interest
approximated the long-term liability. In November 1996, the IURC and MPSC issued
orders approving flexible funding procedures in which any excess funds collected
for pre-April 7, 1983 spent nuclear fuel disposal would be deposited into I&M's
nuclear decommissioning trust funds.

         On May 30, 1995, I&M and a group of unaffiliated utilities owning and
operating nuclear plants filed a petition for review in the U.S. Court of
Appeals for the District of Columbia Circuit requesting that the court issue a
declaration that the Nuclear Waste Policy Act of 1982 (NWPA) imposes on DOE an
unconditional obligation to begin acceptance of spent nuclear fuel and high
level radioactive waste by January 31, 1998. On July 23, 1996, the court ruled
that the NWPA creates an obligation for DOE, reciprocal to the utilities'
obligation to pay, to start disposing of the spent nuclear fuel and high level
radioactive waste no later than January 31, 1998. The court remanded the case to
DOE, holding that determination of a remedy was premature, since DOE had not yet
defaulted on its obligations.

         In December 1996, I&M received a letter from DOE advising that DOE
anticipates that it will be unable to begin acceptance of spent nuclear fuel and
high level radioactive waste for disposal in a repository or interim storage
facility by January 31, 1998. On January 31, 1997, in anticipation of DOE's
breach of their statutory and contractual obligations, I&M along with 35
unaffiliated utilities and 33 states filed joint petitions for review in the
U.S. Court of Appeals for the District of Columbia Circuit requesting that the
court permit the utilities to suspend further payments into the nuclear waste
fund, authorize escrow of the payments, and order further action on the part of
DOE to meet its obligations under the NWPA. On November 12, 1997, the Court of
Appeals issued a decision granting in part and denying in part the utilities'
request for relief. The court ordered DOE to proceed with contractual remedies
and to refrain from concluding that DOE's delay is unavoidable due to the lack
of a repository or the lack of interim storage authority. The court, however,
declined to order DOE to begin disposing of fuel. On January 31, 1998, the
deadline for DOE's performance, the DOE failed to begin disposing of the
utilities' spent nuclear fuel. DOE estimates its planned site for spent nuclear
fuel will not be ready until at least 2010.

         On June 8, 1998, I&M filed a complaint in the U.S. Court of Federal
Claims seeking damages in excess of $150,000,000 due to the U.S. Department of
Energy's partial material breach of its unconditional contractual deadline to
begin disposing of spent nuclear fuel and high level nuclear waste generated by
the Cook Nuclear Plant. Similar lawsuits have been filed by other utilities. On
April 6, 1999, the court granted DOE's motion to dismiss a lawsuit file by an
unaffiliated utility. On May 20, 1999, the other utility appealed this decision
to the U.S. Court of Appeals for the Federal Circuit. I&M's case has been stayed
pending final resolution of the other utility's appeal.

         Studies completed in 1997 estimate decommissioning and low-level
radioactive waste disposal costs for the Cook Plant to range from $700,000,000
to $1.152 billion in 1997 nondiscounted dollars. The wide range is caused by
variables in assumptions, including the estimated length of time spent nuclear
fuel must be stored at the Cook Plant subsequent to ceasing operations, which
depends on future developments in the federal government's spent nuclear fuel
disposal program. Continued delays in the federal fuel disposal program can
result in increased decommissioning costs. I&M is recovering decommissioning
costs in its three rate-making jurisdictions based on at least the lower end of
the range in the most recent respective decommissioning study available at the
time of the rate proceeding (the study range utilized in the Indiana rate case,
I&M's primary jurisdiction, was $588,000,000 to $1.102

                                       27
<PAGE>   35

billion in 1991 dollars). I&M records decommissioning costs in other operation
expense and records a noncurrent liability equal to the decommissioning cost
recovered in rates which was $28,000,000 in 1999, $29,000,000 in 1998, and
$28,000,000 in 1997. At December 31, 1999 and 1998, I&M had recognized a
decommissioning liability of $501,000,000 and $446,000,000, respectively. I&M
will continue to reevaluate periodically the cost of decommissioning and to seek
regulatory approval to revise its rates as necessary.

         Funds recovered through the rate-making process for disposal of spent
nuclear fuel consumed prior to April 7, 1983 and for nuclear decommissioning
have been segregated and deposited in external funds for the future payment of
such costs. Trust fund earnings decrease the amount to be recovered from
ratepayers.

         The ultimate cost of retiring I&M's Cook Plant may be materially
different from the estimates contained in the site-specific study and the
funding targets as a result of the:

         o        Type of decommissioning plan selected.

         o        Escalation of various cost elements (including, but not
                  limited to, general inflation).

         o        Further development of regulatory requirements governing
                  decommissioning.

         o        Limited availability to date of significant experience in
                  decommissioning such facilities.

         o        Technology available at the time of decommissioning differing
                  significantly from that assumed in these studies.

         o        Availability of nuclear waste disposal facilities.

Accordingly, management is unable to provide assurance that the ultimate cost of
decommissioning the Cook Plant will not be significantly greater than current
projections.

         Low-Level Waste: The Low-Level Waste Policy Act of 1980 (LLWPA)
mandates that the responsibility for the disposal of low-level waste rests with
the individual states. Low-level radioactive waste consists largely of ordinary
refuse and other items that have come in contact with radioactive materials. To
facilitate this approach, the LLWPA authorized states to enter into regional
compacts for low-level waste disposal subject to Congressional approval. The
LLWPA also specified that, beginning in 1986, approved compacts may prohibit the
importation of low-level waste from other regions, thereby providing a strong
incentive for states to enter into compacts. Michigan, the state where the Cook
Plant is located, was a member of the Midwest Compact, but its membership was
revoked in 1991. As a result, Michigan is responsible for developing a disposal
site for the low-level waste generated in Michigan.

         Although Michigan amended its law regarding low-level waste site
development in 1994 to allow a volunteer to host a facility, little progress has
been made to date. A bill was introduced in 1996 to further address the issue
but no action was taken. Development of required legislation and progress with
the site selection process has been inhibited by many factors, and management is
unable to predict when a new disposal site for Michigan low-level waste will be
available.

         On July 1, 1995, the disposal site in South Carolina reopened to accept
waste from most areas of the U.S., including Michigan. This was the first
opportunity for the Cook Plant to dispose of low-level waste since 1990. To the
extent practicable, the waste formerly placed in storage and the waste presently
generated are now being sent to the disposal site.

   Energy Policy Act -- Nuclear Fees

         The Energy Policy Act of 1992 (Energy Act), contains a provision to
fund the decontamination and decommissioning of uranium enrichment facilities
formerly owned by DOE. Funding is to be provided from a combination of sources
including assessments against electric utilities which purchased enrichment
services from DOE facilities. I&M's remaining estimated liability is
$32,000,000, subject to inflation adjustments, and is payable in annual
assessments over the next seven years. I&M recorded a regulatory asset
concurrent with the

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<PAGE>   36

recording of the liability. The payments are being recorded and recovered as
fuel expense over a 15-year period ending in 2007.

         I&M has joined with 25 other utility plaintiffs in filing a complaint
in the U.S. District Court for the Southern District of New York seeking a
declaratory judgment that the annual decontamination and decommissioning
assessments are unconstitutional. I&M's claims for refund of previously paid
assessments remain pending in the U.S. Court of Federal Claims. I&M is seeking
to stay the Court of Federal Claims action pending the outcome of the District
Court action.

ENVIRONMENTAL AND OTHER MATTERS

         AEP's subsidiaries are subject to regulation by federal, state and
local authorities with regard to air and water-quality control and other
environmental matters, and are subject to zoning and other regulation by local
authorities. In addition to imposing continuing compliance obligations, these
laws and regulations authorize the imposition of substantial penalties for
noncompliance, including fines, injunctive relief and other sanctions.

         It is expected that costs related to environmental requirements will
eventually be reflected in the rates of AEP's electric utility subsidiaries and
that AEP's electric utility subsidiaries will be able to provide for required
environmental controls. However, some customers may curtail or cease operations
as a consequence of higher energy costs. There can be no assurance that all such
costs will be recovered. Moreover, legislation recently adopted by certain
states and proposed at the state and federal level governing restructuring of
the electric utility industry may also affect the recovery of certain costs. See
Competition and Business Change.

         Except as noted herein, AEP's subsidiaries that own or operate
generating, transmission and distribution facilities are in substantial
compliance with pollution control laws and regulations.

   Air Pollution Control

         For the AEP System, compliance with the Clean Air Act (CAA) is
requiring substantial expenditures that generally are being recovered through
increases in the rates of AEP's operating subsidiaries. However, there can be no
assurance that all such costs will be recovered. See Construction Program --
Construction Expenditures.

         Acid Rain: The Acid Rain Program (Title IV) of the Clean Air Act
Amendments of 1990 (CAAA) created an emission allowance program pursuant to
which utilities are authorized to emit a designated quantity of sulfur dioxide
(SO(2)), measured in tons per year, on an aggregate basis. There are two phases
of SO(2) control under the Acid Rain Program. Phase I, effective January 1,
1995, required SO(2) emission reductions from certain units that emitted SO(2)
above a rate of 2.5 pounds per million Btu heat input in 1985.

         Phase II, which affects all fossil fuel-fired steam generating units
with capacity greater than 25 megawatts imposes more stringent SO(2) emission
control requirements beginning January 1, 2000. If a unit emitted SO(2) in 1985
at a rate in excess of 1.2 pounds per million Btu heat input, the Phase II
allowance allocation is premised upon an emission rate of 1.2 pounds at 1985
utilization levels.

         In addition to regulating SO(2) emissions, Title IV of the CAAA
regulates emissions of nitrogen oxides (NOx). Federal EPA has promulgated NOx
emission limitations for all boiler types in the AEP System at levels
significantly below original design. All emission limitations were to be
achieved by January 1, 2000 on a unit-by-unit or System-wide average basis.

         Title I National Ambient Air Quality Standards Attainment: The CAA
contains additional provisions, other than the Acid Rain Program, which could
require reductions in emissions of NOx and other pollutants from fossil
fuel-fired power plants. See NOx SIP Call and Section 126 Petitions below.

         In July 1997, Federal EPA revised the ozone and particulate matter
National Ambient Air Quality Standards (NAAQS), creating a new eight-hour ozone
standard and establishing a new standard for particulate matter less than 2.5
microns in diameter (PM(2.5)). Both of these new standards have the potential to
affect adversely the operation of AEP System generating units. In May 1999, the
U.S.

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<PAGE>   37

Court of Appeals for the District of Columbia Circuit remanded the ozone and
PM(2.5) NAAQS to Federal EPA. Following denial of a request for rehearing and
rehearing en banc by the Circuit Court, Federal EPA and several others filed
petitions for a writ of certiorari with the U.S. Supreme Court on January 27,
2000.

         In September 1998, Federal EPA issued revisions to the New Source
Performance Standards applicable to new and modified fossil fuel-fired power
plants. The emission limit is set at a level which will require the use of post
combustion control equipment. The final rule effectively requires selective
catalytic reduction or comparable technology to control NOx emissions from new
or modified coal-fired boilers. On September 21, 1999, the U.S. Court of Appeals
for the District of Columbia Circuit vacated the standard with respect to
modified sources. On December 21, 1999, the court issued an opinion upholding
the standard as it applies to new sources.

         NOx SIP Call: On October 27, 1998, Federal EPA published in the Federal
Register a final rule (NOx transport SIP call or NOx SIP Call) concluding that
certain State Implementation Plans are deficient because they allow NOx
emissions that contribute excessively to ozone non-attainment in downwind
states. Federal EPA's NOx transport SIP call establishes state-by-state NOx
emission budgets for the five-month ozone season to be met beginning May 1,
2003. The NOx budgets apply to 22 eastern states and the District of Columbia
and are premised mainly on the assumption of controlling power plant NOx
emissions projected for the year 2007 to 0.15 lb. per million Btu (approximately
85% below 1990 levels), although the reductions could be substantially greater
for certain State Implementation Plans. The NOx transport SIP call purported to
implement both the new eight-hour ozone standard and the one-hour ozone
standard. Federal EPA subsequently stayed its reliance on the eight-hour
standard for purposes of the NOx SIP Call. The SIP call was accompanied by a
proposed Federal Implementation Plan, which could be implemented in any state
that fails to submit an approvable SIP by September 1999. The NOx reductions
called for by Federal EPA are targeted at coal-fired electric utilities and may
adversely impact the ability of electric utilities to obtain new and modified
source permits or to operate affected facilities without making significant
capital expenditures. In October 1998, the AEP System operating companies joined
with certain other utilities seeking a review of the final NOx SIP Call rule in
the U.S. Court of Appeals for the District of Columbia Circuit.

         In May 1999, the court issued a stay of the September 1999 SIP
submittal date. On March 3, 2000, the court issued a decision upholding the
major provisions of the NOx SIP Call rule. The court did not take any action to
lift the stay of the SIP submittal date.

         Preliminary estimates indicate that compliance with the revised NOx SIP
Call rule could result in required capital expenditures as follows:

                                          (IN MILLIONS)
   AEP System..........................      $1,600
      AEGCo............................         125
      APCo.............................         365
      CSPCo............................         136
      I&M..............................         202
      KEPCo............................         106
      OPCo.............................         624

Compliance costs cannot be estimated with certainty and the actual costs
incurred to comply could be significantly different from this preliminary
estimate depending upon the compliance alternatives selected to achieve
reductions in NOx emissions. Unless such costs are recovered from customers
through regulated rates and/or reflected in the future market price of
electricity if generation is deregulated, they could have a material adverse
effect on results of operations, cash flows and possibly financial condition.

         Section 126 Petitions: In August 1997, eight northeastern states
(Connecticut, Maine, Massachusetts, New Hampshire, New York, Pennsylvania, Rhode
Island, and Vermont) filed petitions with Federal EPA under Section 126 of the
CAA, claiming that NOx emissions from certain named sources in midwestern
states, including all the coal-fired plants of AEP's operating subsidiaries,
prevent those states from attaining the ozone NAAQS. Among other things, the
petitioners

                                       30
<PAGE>   38
generally seek NOx emission reductions 85% below 1990 levels from the utility
sources in midwestern states, as in the NOx SIP Call. On May 25, 1999, Federal
EPA published in the Federal Register a final rule, which granted certain of
these petitions. On January 18, 2000, Federal EPA revised and limited the rule
to implementation of the one-hour ozone standard. The revised rule imposes
reduction requirements comparable to the NOx SIP Call beginning May 1, 2003 for
most of AEP's coal fired generating units. Certain AEP System companies and
other utilities appealed the revised rule to the U.S. Court of Appeals for the
District of Columbia Circuit on January 18, 2000.

         In 1999, Delaware, the District of Columbia, Maryland and New Jersey
filed additional Section 126 petitions seeking similar relief. No action has yet
been taken on those petitions.

         Hazardous Air Pollutants: Hazardous air pollutant emissions from
utility boilers are potentially subject to control requirements under Title III
of the CAAA. The CAAA specifically directed Federal EPA to study potential
public health impacts of hazardous air pollutants emitted from electric utility
steam generating units. Federal EPA was required to report the results of this
study to Congress by November 1993 and to regulate emissions of these hazardous
pollutants if necessary. On February 25, 1998, Federal EPA issued a final report
to Congress citing as potential health and environmental threats, mercury and
three other hazardous air pollutants present in power plant emissions. Noting
uncertainty regarding health effects and the absence of control technology for
mercury, no immediate regulatory action was proposed regarding emission
reductions.

         In addition, Federal EPA is required to study the deposition of
hazardous pollutants in the Great Lakes, the Chesapeake Bay, Lake Champlain, and
other coastal waters. As part of this assessment, Federal EPA is authorized to
adopt regulations to prevent serious adverse effects to public health and
serious or widespread environmental effects. In 1998, Federal EPA determined
that the CAA, including the provisions discussed in the paragraph above, is
adequate to address any adverse public health or environmental effects
associated with the atmospheric deposition of hazardous air pollutants in the
Great Lakes.

         Federal EPA was also required to study mercury emissions and report its
findings to Congress by 1994. Federal EPA presented that report to Congress in
December 1997. The report identifies electric utilities as being the third
leading emitter of mercury. Presently, mercury emissions from electric utilities
are not regulated under the CAA. However, Federal EPA intends to engage in
further studies of mercury emissions, which may lead to additional regulation in
the future.

         Permitting and Enforcement: The CAAA expanded the enforcement authority
of the federal government by:

         o        Increasing the range of civil and criminal penalties for
                  violations of the CAA and enhancing administrative civil
                  provisions.

         o        Imposing a national operating permit system, emission fee
                  program and enhanced monitoring, recordkeeping and reporting
                  requirements.

         Section 103 of the Comprehensive Environmental Response, Compensation,
and Liability Act and Section 304 of the Emergency Planning and Community
Right-to-Know Act require notification to state and federal authorities of
releases of reportable quantities (RQs) of hazardous and extremely hazardous
substances. A number of these substances are emitted by AEP's power plants and
other sources. Until recently, emissions of these substances, whether expressly
limited in a permit or otherwise subject to federal review or waiver (e.g.,
mercury), were deemed "federally permitted releases" which did not require
emergency notification. On December 21, 1999, Federal EPA published interim
guidance in the Federal Register, which provides that any hazardous substance or
extremely hazardous substance not expressly and individually limited in a permit
that is emitted at levels above an RQ must be reported. Specifically,
constituents of regulated pollutants (e.g., metals contained in particulate
matter) are not deemed to be federally permitted. Recognizing that this interim
guidance would cause sources to reevaluate their air releases, Federal EPA
issued a memorandum on

                                       31
<PAGE>   39

February 15, 2000 announcing its decision to exercise enforcement discretion for
facilities that failed to report air releases prior to December 21, 1999. AEP is
reevaluating its air releases and will provide supplemental information as
appropriate.

         Global Climate Change: In December 1997, delegates from 167 nations,
including the United States, agreed to a treaty, known as the "Kyoto Protocol,"
establishing legally-binding emission reductions for gases suspected of causing
climate change. If the U.S. becomes a party to the treaty it will be bound to
reduce emissions of carbon dioxide (CO(2)), methane and nitrous oxides by 7%
below 1990 levels and emissions of hydrofluorcarbons, perfluorocarbons and
sulfur hexafluoride 7% below 1995 levels in the years 2008-2012. The Protocol
was available for signature from March 16, 1998 to March 15, 1999 and requires
ratification by at least 55 nations that account for at least 55% of developed
countries' 1990 emissions of CO(2) to enter into force.

         Although the United States has agreed to the treaty and signed it on
November 12, 1998, President Clinton has indicated that he will not submit the
treaty to the Senate for ratification until it contains requirements for
"meaningful participation by key developing countries" and the rules,
procedures, methodology and guidelines of the treaty's market-based policy
instruments, joint implementation programs and compliance enforcement provisions
have been negotiated. At the Fourth Conference of the Parties, held in Buenos
Aires, Argentina, in November 1998, the parties agreed to a work plan to
complete negotiations on outstanding issues with a view toward approving them at
the Sixth Conference of the Parties to be held in November 2000.

         Since the AEP System is a significant emitter of carbon dioxide, its
results of operations, cash flows and financial condition could be adversely
affected by the imposition of limitations on CO(2) emissions if compliance costs
cannot be fully recovered from customers. In addition, any such severe program
to reduce CO(2) emissions could impose substantial costs on industry and society
and erode the economic base that AEP's operations serve. However, it is
management's belief that the Kyoto Protocol is highly unlikely to be ratified or
implemented in the U. S.

         West Virginia SO(2) Limits: West Virginia promulgated SO(2)
limitations, which Federal EPA approved in February 1978. The emission
limitations for the Mitchell Plant have been approved by Federal EPA for primary
ambient air quality (health-related) standards only. West Virginia is obligated
to reanalyze SO(2) emission limits for the Mitchell Plant with respect to
secondary ambient air quality (welfare-related) standards. Because the CAA
provides no specific deadline for approval of emission limits to achieve
secondary ambient air quality standards, it is not certain when Federal EPA will
take dispositive action regarding the Mitchell Plant.

         On August 4, 1994, Federal EPA issued a Notice of Violation to OPCo
alleging that Kammer Plant was operating in violation of the applicable
federally enforceable SO(2) emission limit. On May 20, 1996, the Notice of
Violation and an enforcement action subsequently filed by Federal EPA were
resolved through the entry of a consent decree in the U.S. District Court for
the Northern District of West Virginia. As of December 31, 1999, Kammer Plant
had achieved compliance with an SO(2) emission limit of 2.7 lb. mm/Btu design
heat input, pursuant to the provisions of the consent decree and the federally
approved West Virginia State Implementation Plan.

         Short Term SO(2) Limits: On January 2, 1997, Federal EPA proposed a new
intervention level program under the authority of Section 303 of the CAA to
address five minute peak SO(2) concentrations believed to pose a health risk to
certain segments of the population. The proposal establishes a "concern" level
and an "endangerment" level. States must investigate exceedances of the concern
level and decide whether to take corrective action. If the endangerment level is
exceeded, the state must take action to reduce SO(2) levels. The effects of this
proposed intervention program on AEP operations cannot be predicted at this
time.

         Regional Haze: On July 1, 1999, Federal EPA finalized rules to regulate
regional haze attributable to anthropogenic emissions. The primary goal of

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<PAGE>   40

the new regional haze program is to address visibility impairment in and around
"Class I" protected areas, such as national parks and wilderness areas. Because
regional haze precursor emissions are believed by Federal EPA to travel long
distances, Federal EPA proposes to regulate such precursor emissions in every
state. Under the proposal, each state must develop a regional haze control
program that imposes controls necessary to steadily reduce visibility impairment
in Class I areas on the worst days and that ensures that visibility remains good
on the best days.

         The AEP System is a significant emitter of fine particulate matter and
its precursors that could be linked to the creation of regional haze. Federal
EPA's regional haze rule may have an adverse financial impact on AEP as it may
trigger the requirement to install costly new pollution control devices to
control emissions of fine particulate matter and its precursors (including SO(2)
and NOx). The actual impact of the regional haze regulations cannot be
determined at this time. AEP System operating companies and other utilities
filed a petition seeking a review of the regional haze rule in the U.S. Court of
Appeals for the District of Columbia Circuit on August 30, 1999.

         New Source Review: On July 21, 1992, Federal EPA published final
regulations in the Federal Register governing application of new source rules to
generating plant repairs and pollution control projects undertaken to comply
with the CAA. Generally, the rule provides that plants undertaking pollution
control projects will not trigger New Source Review requirements. The Natural
Resources Defense Council and a group of utilities, including five AEP System
companies, have filed petitions in the U.S. Court of Appeals for the District of
Columbia Circuit seeking a review of the regulations. In July 1998, Federal EPA
requested comment on proposed revisions to the New Source Review rules which
would change New Source Review applicability criteria by eliminating exemptions
contained in the current regulation.

         New Source Review Litigation: In February 1999, Federal EPA (Regions
III and V) issued a request under Section 114 of the CAA seeking documents and
information regarding capital and maintenance expenditures at AEP's Cardinal,
Gavin, Mitchell, Muskingum River and Sporn plants. Federal EPA conducted a
review of the accounting records of AEGCo, APCo, CSPCo, I&M, KEPCo and OPCo in
the summer of 1998. Federal EPA subsequently issued Section 114 requests for
Amos, Clinch River, Conesville, Kammer, Kanawha River and Tanners Creek plants.
On November 3, 1999, the Department of Justice (DOJ), on Federal EPA's behalf,
filed a complaint in the U.S. District Court for the Southern District of Ohio
that alleges AEP made modifications to generating units at certain of its
coal-fired generating plants over the course of the past 25 years that extend
unit operating lives or restore or increase unit generating capacity without a
preconstruction permit in violation of the CAA. The complaint named Cardinal,
Mitchell, Muskingum River, Sporn and Tanners Creek plants. Federal EPA also
issued Notices of Violation to AEP alleging similar violations at certain other
AEP plants.

         A number of unaffiliated utilities (one of which operates a unit which
AEP owns a portion of) also received Notices of Violation, complaints or
administrative orders. One of the unaffiliated utilities, Tampa Electric
Company, has settled its litigation with the federal government.

         The court has granted the states of Connecticut, New Jersey and New
York leave to intervene in Federal EPA's action against AEP under the CAA. On
March 17, 2000, the states of Maryland, Massachusetts, New Hampshire, Rhode
Island and Vermont petitioned the court for leave to intervene in Federal EPA's
action. AEP has not opposed these intervention requests and believes the court
will grant them. On November 18, 1999, a number of environmental groups filed a
lawsuit against power plants owned by AEP alleging similar violations to those
in the Federal EPA complaint and Notices of Violation.

         On March 1, 2000, DOJ filed an amended complaint that added allegations
for certain of the AEP plants previously named in the complaint as well as
counts for Amos, Clinch River, Conesville, Kammer and Kanawha River plants. The
plants included in the amended complaint are named by the environmental groups
plaintiff and, along with

                                       33
<PAGE>   41

Gavin, are also named by the intervenor states. In addition to the allegations
regarding New Source Review and New Source Performance Standard violations, DOJ
included allegations regarding visible particulate emission violations for
Cardinal and Muskingum River plants in connection with Notices of Violation
issued by Region V, Federal EPA, on November 30, 1999.

         The CAA authorizes civil penalties of up to $27,500 per day per
violation at each generating unit ($25,000 per day prior to January 30, 1997).
Civil penalties, if ultimately imposed by the court, and the cost of any
required new pollution control equipment, if the court accepts Federal EPA's
contentions, could be substantial.

         In the event AEP does not prevail, any capital and operating costs of
additional pollution control equipment that may be required as well as any
penalties imposed could materially adversely affect future results of
operations, cash flows and possibly financial condition unless such costs can be
recovered through regulated rates, and where states are deregulating generation,
unbundled transition period generation rates, wires charges and future market
prices for energy.

   Water Pollution Control

         The Clean Water Act prohibits the discharge of pollutants to waters of
the United States from point sources except pursuant to an NPDES permit issued
by Federal EPA or a state under a federally authorized state program.

         Under the Clean Water Act, effluent limitations requiring application
of the best available technology economically achievable are to be applied, and
those limitations require that no pollutants be discharged if Federal EPA finds
elimination of such discharges is technologically and economically achievable.

         The Clean Water Act provides citizens with a cause of action to enforce
compliance with its pollution control requirements. Since 1982, many such
actions against NPDES permit holders have been filed. To date, no AEP System
plants have been named in such actions.

         All System generating plants are operating with NPDES permits. Under
Federal EPA's regulations, operation under an expired NPDES permit is authorized
provided an application is filed at least 180 days prior to expiration. Renewal
applications are being prepared or have been filed for renewal of NPDES permits
that expire in 2000.

         The NPDES permits generally require that certain thermal impact study
programs be undertaken. These studies have been completed for all System plants.
Thermal variances are in effect for all plants with once-through cooling water.
The thermal variances for Conesville and Muskingum River plants impose thermal
management conditions that could result in load curtailment under certain
conditions, but the cost impacts are not expected to be significant. Based on
favorable results of in-stream biological studies, the thermal temperature
limits for both Conesville and Muskingum River plants were raised in the renewed
permits issued in 1996. Consequently, the potential for load curtailment and
adverse cost impacts is further reduced.

         Section 316(b) of the Clean Water Act requires that cooling water
intake structures reflect the best technology available (BTA) for minimizing
adverse environmental impact. Under a court established schedule, Federal EPA is
required to develop regulations defining adverse impacts and BTA by August 2001.
As part of the rulemaking, Federal EPA has issued questionnaires to electric
generating power plants, including AEP System plants, requesting information on
impingement and entrainment of aquatic organisms from existing plant cooling
water intakes. Federal EPA's rulemaking could result in a definition of BTA that
would require retrofitting of certain plant intake structures. Such changes
would involve costs for AEP System companies, but the significance of these
costs cannot be determined at this time.

         Certain mining operations conducted by System companies as discussed
under Fuel Supply are also subject to federal and state water pollution control
requirements, which may entail substantial expenditures for control facilities,
not included at present in the System's construction cost estimates set forth
herein.

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<PAGE>   42

         The Federal Water Quality Act of 1987 requires states to adopt
stringent water quality standards for a large category of toxic pollutants and
to identify specialized control measures for dischargers to waters where it is
shown through the use of total maximum daily loads (TMDLs) that water quality
standards are not being met. Implementation of these provisions could result in
significant costs to the AEP System if biological monitoring requirements and
water quality-based effluent limits are placed in NPDES permits.

         In March 1995, Federal EPA finalized a set of rules that establish
minimum water quality standards, anti-degradation policies and implementation
procedures for more stringently controlling releases of toxic pollutants into
the Great Lakes system. This regulatory package is called the Great Lakes Water
Quality Initiative (GLWQI). The most direct compliance cost impact could be
related to I&M's Cook Plant. Based on Federal EPA's current policy on intake
credits and site specific variables and Michigan's implementation strategy,
management does not presently expect the GLWQI will have a significant adverse
impact on Cook Plant operations. If Indiana and Ohio eventually adopt the GLWQI
criteria for statewide application, AEP System plants located in those states
could be adversely affected, although the significance depends on the
implementation strategy of those states.

         Oil Pollution Act: The Oil Pollution Act of 1990 (OPA) defines certain
facilities that, due to oil storage volume and location, could reasonably be
expected to cause significant and substantial harm to the environment by
discharging oil. Such facilities must operate under approved spill response
plans and implement spill response training and drill programs. OPA imposes
substantial penalties for failure to comply. AEP companies with oil handling and
storage facilities meeting the OPA criteria have in place required response
plans, training and drill programs.

   Solid and Hazardous Waste

         Section 311 of the Clean Water Act imposes substantial penalties for
spills of Federal EPA-listed hazardous substances into water and for failure to
report such spills. The Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA) expanded the reporting requirements to cover the release
of hazardous substances generally into the environment, including water, land
and air. AEP's subsidiaries store and use some of these hazardous substances,
including PCBs contained in certain capacitors and transformers, but the
occurrence and ramifications of a spill or release of such substances cannot be
predicted.

         CERCLA, RCRA and similar state laws provide governmental agencies with
the authority to require clean-up of hazardous waste sites and releases of
hazardous substances into the environment and to seek compensation for damages
to natural resources. Since liability under CERCLA is strict, joint and several,
and can be applied retroactively, AEP System companies which previously disposed
of PCB-containing electrical equipment and other hazardous substances may be
required to participate in remedial activities at such disposal sites should
environmental problems result. OPCo is the only AEP System company which is a
defendant in a cost-recovery lawsuit related to clean-up liability at a Federal
EPA-identified CERCLA site. OPCo settled its alleged liability at this site
under terms of a consent decree and is awaiting formal dismissal from the case.

         AEP System companies are identified as Potentially Responsible Parties
(PRPs) for four additional federal sites, including CSPCo at two sites and I&M
at two sites. Management's present estimates do not anticipate material clean-up
costs for identified sites for which AEP subsidiaries have been declared PRPs or
are defendants in CERCLA cost recovery litigation. However, if for reasons not
currently identified significant costs are incurred for clean-up, future results
of operations and possibly financial condition could be adversely affected
unless the costs can be recovered through rates.

         Regulations issued by Federal EPA under the Toxic Substances Control
Act govern the use, distribution and disposal of PCBs, including PCBs in
electrical equipment. Deadlines for removing certain PCB-containing electrical
equipment from service have been met.

                                       35
<PAGE>   43

         In addition to handling hazardous substances, the System companies
generate solid waste associated with the combustion of coal, the vast majority
of which is fly ash, bottom ash and flue gas desulfurization wastes. These
wastes presently are considered to be non-hazardous under RCRA and applicable
state law and the wastes are treated and disposed of in surface impoundments or
landfills in accordance with state permits or authorization or are beneficially
utilized. As required by RCRA, Federal EPA evaluated whether high volume coal
combustion wastes (such as fly ash, bottom ash and flue gas desulfurization
wastes) should be regulated as hazardous waste. In August 1993, Federal EPA
issued a regulatory determination that such high volume coal combustion wastes
should not be regulated as hazardous waste. For low volume coal combustion
wastes, such as metal and boiler cleaning wastes, which are traditionally
co-managed with high volume wastes, Federal EPA will gather additional
information and make a regulatory determination by April 2000. Until that time,
these low volume wastes are provisionally excluded from regulation under the
hazardous waste provisions of RCRA when mixed with and co-managed with high
volume coal combustion wastes. If Federal EPA determines that certain low volume
coal combustion wastes should be subject to RCRA Subtitle C hazardous waste
regulations, AEP System companies may incur additional waste management
expenses. The significance of these costs cannot be determined at this time.

         All presently generated hazardous waste is being disposed of at
permitted off-site facilities in compliance with applicable federal and state
laws and regulations. For System facilities that generate such wastes, System
companies have filed the requisite notices and are complying with RCRA and
applicable state regulations for generators. Nuclear waste produced at the Cook
Plant regulated under the Atomic Energy Act is excluded from regulation under
RCRA.

         Underground Storage Tanks: Federal EPA's technical requirements for
underground storage tanks containing petroleum required retrofitting or
replacement of an appreciable number of tanks. Compliance costs for tank
replacement were not significant. Some limited site remediation associated with
tank removal is ongoing, but these costs are not expected to be significant.

   Electric and Magnetic Fields (EMF)

         EMF is found everywhere there is electricity. Electric fields are
created by the presence of electric charges. Magnetic fields are produced by the
flow of those charges. This means that EMF is created by electricity flowing in
transmission and distribution lines, household wiring, and appliances.

         A number of studies in the past several years have examined the
possibility of adverse health effects from EMF. While some of the
epidemiological studies have indicated some association between exposure to EMF
and health effects, the majority of studies have indicated no such association.

         The Energy Policy Act of 1992 established a coordinated Federal EMF
research program which ended in 1998. The program funding was $65,000,000, half
of which was provided by private parties including utilities. AEP contributed
over $400,000 to this program. In 1999, the National Institute of Environmental
Health Sciences (NIEHS), as required by the Act, provided a report to Congress
summarizing the results of this program. The report concluded that "the
probability that ...EMF is truly a health hazard is currently small" and that
the evidence that exists for health effects is "insufficient to warrant
aggressive regulatory actions." Nevertheless, the NIEHS identified several areas
where further research might be warranted. AEP has supported EMF research
through the years and continues to fund the Electric Power Research Institute's
EMF research program, contributing over $400,000 to this program in 1999 and
intending to contribute a similar amount in 2000. See Research and Development.

         AEP's participation in these programs is a continuation of its efforts
to monitor and support further research and to communicate with its customers
and employees about this issue. Residential customers of AEP are provided
information and field measurements on request, although there is no scientific
basis for interpreting such measurements.

                                       36
<PAGE>   44

         A number of lawsuits based on EMF-related grounds have been filed
against electric utilities. A suit was filed on May 23, 1990 against I&M
involving claims that EMF from a 345 KV transmission line caused adverse health
effects. On March 23, 1998 the court ruled that the plaintiffs failed to prove
that I&M caused any of the injuries claimed by the plaintiffs. This part of the
trial court's decision was upheld on appeal. Certain issues unrelated to health
effects are pending at the trial court. No specific amount has been requested
for damages in this case and no trial date has been set.

         Some states have enacted regulations to limit the strength of magnetic
fields at the edge of transmission line rights-of-way. No state which the AEP
System serves has done so. In March 1993, The Ohio Power Siting Board issued its
amended rules providing for additional consideration of the possible effects of
EMF in the certification of electric transmission facilities. Applicants are
required to address possible health effects and discuss the consideration of
design alternatives with respect to estimates of EMF levels. These rules were
reissued in 1998 with no change to EMF language.

         Management cannot predict the ultimate impact of the question of EMF
exposure and adverse health effects. If further research shows that EMF exposure
contributes to increased risk of cancer or other health problems, or if the
courts conclude that EMF exposure harms individuals and that utilities are
liable for damages, or if states limit the strength of magnetic fields to such a
level that the current electricity delivery system must be significantly
changed, then the results of operations and financial condition of AEP and its
operating subsidiaries could be materially adversely affected unless these costs
can be recovered from ratepayers.



RESEARCH AND DEVELOPMENT

         AEP and its subsidiaries are involved in over 100 research projects
which are directed toward:

         o        Developing more efficient methods of burning coal.

         o        Reducing the emissions resulting from the combustion of coal.

         o        Utilizing combustion by-products of coal.

         o        Exploring new methods of generating electricity.

         o        Exploring the application of new electrotechnologies.

         o        Improving the efficiency and reliability of power
                  transmission, distribution and utilization.

         AEP System operating companies are members of the Electric Power
Research Institute (EPRI), an organization founded in 1973 that manages research
and development initiatives, primarily on behalf of the U.S. electric utility
industry. These initiatives include technical programs to improve power
production, delivery and use. EPRI's more than 700 members represent over 90% of
the kilowatt sales in the U.S., but also include competitive power producers,
international organizations and others. Total AEP dues to EPRI were $14,000,000
for 1999, $15,400,000 for 1998 and $15,300,000 for 1997.

         Total research and development expenditures by AEP and its
subsidiaries, including EPRI dues, were approximately $17,000,000 for the year
ended December 31, 1999, $24,100,000 for the year ended December 31, 1998 and
$23,600,000 for the year ended December 31, 1997. This includes expenditures of
$700,000 for 1999, $3,300,000 for 1998 and $4,600,000 for 1997 related to
pressurized fluidized-bed combustion, a process in which sulfur is removed
during coal combustion and nitrogen oxide formation is minimized.

                                       37
<PAGE>   45





Item 2.  PROPERTIES
--------------------------------------------------------------------------------

         At December 31, 1999, subsidiaries of AEP owned (or leased where
indicated) generating plants with the net power capabilities (winter rating)
shown in the following table:

<TABLE>
<CAPTION>
                                                                                NET KILOWATT
       OWNER, PLANT TYPE AND NAME                 LOCATION (NEAR)                 CAPABILITY
       --------------------------                 ---------------                 ----------
<S>                                               <C>                           <C>
AEP GENERATING COMPANY:
Steam -- Coal-Fired:
      Rockport Plant (AEGCo share)                Rockport, Indiana               1,300,000(a)
                                                                                 ----------
APPALACHIAN POWER COMPANY:
Steam -- Coal-Fired:
      John E. Amos, Units 1 & 2                   St. Albans, West Virginia       1,600,000
      John E. Amos, Unit 3 (APCo share)           St. Albans, West Virginia         433,000(b)
      Clinch River                                Carbo, Virginia                   705,000
      Glen Lyn                                    Glen Lyn, Virginia                335,000
      Kanawha River                               Glasgow, West Virginia            400,000
      Mountaineer                                 New Haven, West Virginia        1,300,000
      Philip Sporn, Units 1 & 3                   New Haven, West Virginia          308,000
Hydroelectric -- Conventional:
      Buck                                        Ivanhoe, Virginia                  10,000
      Byllesby                                    Byllesby, Virginia                 20,000
      Claytor                                     Radford, Virginia                  76,000
      Leesville                                   Leesville, Virginia                40,000
      London                                      Montgomery, West Virginia          16,000
      Marmet                                      Marmet, West Virginia              16,000
      Niagara                                     Roanoke, Virginia                   3,000
      Reusens                                     Lynchburg, Virginia                12,000
      Winfield                                    Winfield, West Virginia            19,000
Hydroelectric -- Pumped Storage:
      Smith Mountain                              Penhook, Virginia                 565,000
                                                                                 ----------
                                                                                  5,858,000
                                                                                 ----------
COLUMBUS SOUTHERN POWER COMPANY:
Steam -- Coal-Fired:
      Beckjord, Unit 6                            New Richmond, Ohio                 53,000(c)
      Conesville, Units 1-3, 5 & 6                Coshocton, Ohio                 1,165,000
      Conesville, Unit 4                          Coshocton, Ohio                   339,000(c)
      Picway, Unit 5                              Columbus, Ohio                    100,000
      Stuart, Units 1-4                           Aberdeen, Ohio                    608,000(c)
      Zimmer                                      Moscow, Ohio                      330,000(c)
                                                                                 ----------
                                                                                  2,595,000
                                                                                 ----------
INDIANA MICHIGAN POWER COMPANY:
Steam -- Coal-Fired:
      Rockport Plant (I&M share)                  Rockport, Indiana               1,300,000(a)
      Tanners Creek                               Lawrenceburg, Indiana             995,000
Steam -- Nuclear:
</TABLE>

                                       38
<PAGE>   46

<TABLE>
<CAPTION>
                                                                                NET KILOWATT
       OWNER, PLANT TYPE AND NAME                 LOCATION (NEAR)                 CAPABILITY
       --------------------------                 ---------------                 ----------
<S>                                               <C>                           <C>
      Donald C. Cook                              Bridgman, Michigan              2,110,000
Gas Turbine:
      Fourth Street                               Fort Wayne, Indiana                18,000(d)
Hydroelectric -- Conventional
      Berrien Springs                             Berrien Springs, Michigan           3,000
      Buchanan                                    Buchanan, Michigan                  2,000
      Constantine                                 Constantine, Michigan               1,000
      Elkhart                                     Elkhart, Indiana                    1,000
      Mottville                                   Mottville, Michigan                 1,000
      Twin Branch                                 Mishawaka, Indiana                  3,000
                                                                                 ----------
                                                                                  4,434,000
                                                                                 ----------
KENTUCKY POWER COMPANY:
Steam -- Coal-Fired:
      Big Sandy                                   Louisa, Kentucky                1,060,000
                                                                                 ----------
OHIO POWER COMPANY:
Steam-- Coal-Fired:
      John E. Amos, Unit 3 (OPCo share)           St. Albans, West Virginia         867,000(b)
      Cardinal, Unit 1                            Brilliant, Ohio                   600,000
      General James M. Gavin                      Cheshire, Ohio                  2,600,000(e)
      Kammer                                      Captina, West Virginia            630,000
      Mitchell                                    Captina, West Virginia          1,600,000
      Muskingum River                             Beverly, Ohio                   1,425,000
      Philip Sporn, Units 2, 4 & 5                New Haven, West Virginia          742,000
Hydroelectric-- Conventional:
      Racine                                      Racine, Ohio                       48,000
                                                                                 ----------
                                                                                  8,512,000
                                                                                 ----------
                                                  Total Generating Capability    23,759,000
                                                                                 ==========
SUMMARY:
Total Steam--
      Coal-Fired.............................................................    20,795,000
      Nuclear................................................................     2,110,000
Total Hydroelectric--
      Conventional...........................................................       271,000
      Pumped Storage.........................................................       565,000
      Other..................................................................        18,000
                                                                                 ----------

                                    Total Generating Capability..............    23,759,000
                                                                                 ==========
</TABLE>

--------------------
(a)      Unit 1 of the Rockport Plant is owned one-half by AEGCo and one-half by
         I&M. Unit 2 of the Rockport Plant is leased one-half by AEGCo and
         one-half by I&M. The leases terminate in 2022 unless extended.
(b)      Unit 3 of the John E. Amos Plant is owned one-third by APCo and
         two-thirds by OPCo.
(c)      Represents CSPCo's ownership interest in generating units owned in
         common with CG&E and DP&L.
(d)      Leased from the City of Fort Wayne, Indiana. Since 1975, I&M has leased
         and operated the assets of the municipal system of the City of Fort
         Wayne, Indiana under a 35-year lease with a provision for an additional
         15-year extension at the election of I&M.
(e)      The scrubber facilities at the Gavin Plant are leased. The lease
         terminates in 2010 unless extended.

         See Item 1 under Fuel Supply, for information concerning coal reserves
owned or controlled by subsidiaries of AEP.

         The following table sets forth the total overhead circuit miles of
transmission and distribution lines of the AEP System, APCo,


                                       39
<PAGE>   47

CSPCo, I&M, KEPCo and OPCo and that portion of the total representing
765,000-volt lines:

<TABLE>
<CAPTION>
                               TOTAL OVERHEAD
                              CIRCUIT MILES OF
                               TRANSMISSION AND      CIRCUIT MILES OF
                              DISTRIBUTION LINES    765,000-VOLT LINES
                              ------------------    ------------------
<S>                           <C>                   <C>
AEP System (a)..............        129,106(b)             2,022
   APCo.....................         50,008                  642
   CSPCo (a)................         14,947                   --
   I&M......................         20,938                  614
   KEPCo....................         10,352                  258
   OPCo ....................         29,756                  509
</TABLE>

----------------------
(a)      Includes 766 miles of 345,000-volt jointly owned lines.
(b)      Includes lines of other AEP System companies not shown.

TITLES

         The AEP System's electric generating stations are generally located on
lands owned in fee simple. The greater portion of the transmission and
distribution lines of the System has been constructed over lands of private
owners pursuant to easements or along public highways and streets pursuant to
appropriate statutory authority. The rights of the System in the realty on which
its facilities are located are considered by it to be adequate for its use in
the conduct of its business. Minor defects and irregularities customarily found
in title to properties of like size and character may exist, but such defects
and irregularities do not materially impair the use of the properties affected
thereby. System companies generally have the right of eminent domain whereby
they may, if necessary, acquire, perfect or secure titles to or easements on
privately-held lands used or to be used in their utility operations.

         Substantially all the physical properties of APCo, CSPCo, I&M, KEPCo
and OPCo are subject to the lien of the mortgage and deed of trust securing the
first mortgage bonds of each such company.

SYSTEM TRANSMISSION LINES AND FACILITY SITING

         Legislation in the states of Indiana, Kentucky, Michigan, Ohio,
Virginia, and West Virginia requires prior approval of sites of generating
facilities and/or routes of high-voltage transmission lines. Delays and
additional costs in constructing facilities have been experienced as a result of
proceedings conducted pursuant to such statutes, as well as in proceedings in
which operating companies have sought to acquire rights-of-way through
condemnation, and such proceedings may result in additional delays and costs in
future years.

PEAK DEMAND

         The AEP System is interconnected through 121 high-voltage transmission
interconnections with 25 neighboring electric utility systems. The all-time and
1999 one-hour peak System demands were 25,940,000 and 23,392,000 kilowatts,
respectively (which included 7,314,000 and 3,408,000 kilowatts, respectively, of
scheduled deliveries to unaffiliated systems which the System might, on
appropriate notice, have elected not to schedule for delivery) and occurred on
June 17, 1994 and June 10, 1999, respectively. The net dependable capacity to
serve the System load on such date, including power available under contractual
obligations, was 23,457,000 and 23,919,000 kilowatts, respectively. The all-time
and 1999 one-hour internal peak demands were 19,557,000 and 19,952,000
kilowatts, respectively, and occurred on February 5, 1996 and July 30, 1999,
respectively. The net dependable capacity to serve the System load on such date,
including power dedicated under contractual arrangements, was 23,765,000 and
23,829,000 kilowatts, respectively. The all-time one-hour integrated and
internal net system peak demands and 1999 peak demands for AEP's generating
subsidiaries are shown in the following tabulation:

<TABLE>
<CAPTION>
ALL-TIME ONE-HOUR INTEGRATED       1999 ONE-HOUR INTEGRATED
   NET SYSTEM PEAK DEMAND           NET SYSTEM PEAK DEMAND
------------------------------     --------------------------
                        (IN THOUSANDS)
           NUMBER OF                  NUMBER OF
           KILOWATTS       DATE       KILOWATTS       DATE
           -----------     ------     -----------    -------
<S>        <C>       <C>              <C>      <C>
APCo.......  8,303   January 17, 1997  6,676   January 5, 1999
CSPCo......  4,172   June 17, 1994     4,139   July 30, 1999
I&M........  5,027   June 17, 1994     4,798   June 10, 1999
KEPCo......  1,711   January 17, 1997  1,561   January 5, 1999
OPCo.......  7,291   June 17, 1994     6,626   June 8, 1999
</TABLE>

<TABLE>
<CAPTION>
ALL-TIME ONE-HOUR INTEGRATED       1999 ONE-HOUR INTEGRATED
  NET INTERNAL PEAK DEMAND         NET INTERNAL PEAK DEMAND
------------------------------     --------------------------
                       (IN THOUSANDS)
           NUMBER OF                  NUMBER OF
           KILOWATTS       DATE       KILOWATTS       DATE
           -----------     ------     -----------    -------
<S>        <C>       <C>               <C>     <C>
APCo ......  6,908   February 5, 1996  6,070   January 5, 1999
CSPCo......  3,804   July 30, 1999     3,804   July 30, 1999
I&M........  4,127   July 30, 1999     4,127   July 30, 1999
KEPCo.....   1,558   January 27, 2000  1,432   January 5, 1999
OPCo.......  5,705   June 11, 1999     5,705   June 11, 1999
</TABLE>

                                       40
<PAGE>   48

HYDROELECTRIC PLANTS

         AEP has 17 facilities, of which 16 are licensed through FERC. The
license for the hydroelectric plant at Elkhart, Indiana expires in 2000. In
1995, a notice of intent to relicense the Elkhart project was filed. The
application was filed in 1998. The license for the Mottville hydroelectric plant
in Michigan expires in 2003. A notice of intent to relicense was filed in 1998.

COOK NUCLEAR PLANT

         Unit 1 of the Cook Plant, which was placed in commercial operation in
1975, has a nominal net electric rating of 1,020,000 kilowatts. Unit 1's
availability factor was -0-% during 1999 and -0-% during 1998. Unit 2, of
slightly different design, has a nominal net electrical rating of 1,090,000
kilowatts and was placed in commercial operation in 1978. Unit 2's availability
factor was -0-% during 1999 and -0-% during 1998. The Cook Plant was shut down
in September 1997 to respond to issues raised regarding the operability of
certain safety systems. See Cook Plant Shutdown.

         Units 1 and 2 are licensed by the NRC to operate at 100% of rated
thermal power to October 25, 2014 and December 23, 2017, respectively. However,
for economic or other reasons, operation of the Cook Plant for the full term of
its operating licenses cannot be assured.

         Costs associated with the operation, maintenance and retirement of
nuclear plants continue to be of greater significance and less predictable than
costs associated with other sources of generation, in large part due to changing
regulatory requirements and safety standards, availability of nuclear waste
disposal facilities and experience gained in the construction and operation of
nuclear facilities. I&M may also incur costs and experience reduced output at
its Cook Plant because of the design criteria prevailing at the time of
construction and the age of the plant's systems and equipment. Nuclear
industry-wide and Cook Plant initiatives have contributed to slowing the growth
of operating and maintenance costs. However, the ability of I&M to obtain
adequate and timely recovery of costs associated with the Cook Plant, including
replacement power, any unamortized investment at the end of the Cook Plant's
useful life (whether scheduled or premature), the carrying costs of that
investment and retirement costs, is not assured. See Competition and Business
Change.

   Cook Plant Shutdown

         On September 9 and 10, 1997, during a NRC architect engineer design
inspection, questions regarding the operability of certain safety systems caused
AEP operations personnel to shut down Units 1 and 2 of the Cook Plant. On
September 19, 1997, the NRC issued a Confirmatory Action Letter requiring AEP to
address the issues identified in the letter.

         In April 1998 the NRC notified I&M that it had convened a Restart Panel
for Cook Plant. In July 1998 the NRC provided a list of the required restart
activities and in October the NRC expanded the list. In order to identify and
resolve the issues necessary to restart the Cook units, AEP has been meeting
with the Panel on a regular basis until the units are returned to service.

         The NRC notified I&M, in a February 2, 2000, letter, that the
Confirmatory Action Letter has been closed. Closing of the Confirmatory Action
Letter is one of the key approvals needed for restart of the Cook Plant.

         In July 1998 AEP received an "adverse trend letter" from the NRC
indicating that NRC senior managers determined that there had been a slow
decline in performance at the Cook Plant during the 18-month period preceding
the letter. The letter indicated that the NRC will closely monitor efforts to
address issues at Cook Plant through additional inspection activities.

         In October 1998 the NRC issued AEP a Notice of Violation and proposed a
$500,000 civil penalty for alleged violations at the Cook Plant discovered
during five inspections conducted between August 1997 and April 1998. AEP paid
the penalty.

         Unit 2 of the Cook Plant is scheduled to restart in April 2000. Unit 1
is currently undergoing steam generator replacement, but restart work has begun

                                       41
<PAGE>   49

and will accelerate following Unit 2 start-up. Unit 1 restart is scheduled for
September 2000. Any issues or difficulties encountered in the testing of
equipment as part of the restart process could delay the scheduled restart
dates. When maintenance and other activities required for restart are complete,
AEP will seek concurrence from the NRC to return the Cook Plant to service.

         Costs associated with the steam generator replacement for Unit 1 are
estimated to be approximately $165,000,000, which will be accounted for as a
capital investment unrelated to the restart. At December 31, 1999, $119,000,000
has been spent on the steam generator replacement.

         The cost of electricity supplied to retail customers has increased due
to the outage of the Cook Plant because higher cost coal-fired generation and
coal-based purchased power has been substituted for the unavailable lower cost
nuclear generation. With regulator approvals, actual replacement energy fuel
costs that exceeded the costs reflected in billings were recorded as a
regulatory asset under the Indiana and Michigan retail jurisdictional fuel cost
recovery mechanisms.

         Indiana Settlement: On March 30, 1999, the IURC approved a settlement
agreement resolving all matters related to the recovery of replacement energy
costs due to the extended Cook Plant outage. The settlement agreement provided
for, among other things:

         o        Acredit of $55,000,000, including interest, to Indiana retail
                  customers that was refunded through customer bills during the
                  months of July, August and September 1999. The credit returned
                  to customers Cook replacement fuel costs previously recovered.

         o        Authorization to defer any unrecovered fuel revenues accrued
                  between September 9, 1997 and December 31, 1999, including the
                  $55,000,000 credited to customers.

         o        Authorization to defer up to $150,000,000 in incremental
                  operation and maintenance restart costs for the Cook Plant
                  above the base rate level incurred during 1999.

         o        Amortization of the fuel recoveries and restart cost deferrals
                  over a five-year period ending December 31, 2003.

         o        Subject to certain force majeure provisions, a freeze in base
                  rates through December 31, 2003 and a cap on fuel recovery
                  charges through March 1, 2004.

         o        Incremental nuclear decommissioning trust fund deposits of
                  $2,500,000 annually over a five-year period ending December
                  31, 2003.

         Michigan Settlement: On December 16, 1999, the MPSC approved a
settlement agreement for two open Michigan power supply cost recovery
reconciliation cases that resolves all issues related to the Cook Plant extended
outage. The settlement agreement provides for the following:

         o        Limits I&M's ability to increase base rates and freezes the
                  power supply cost recovery factor for five years.

         o        Permits the deferral of up to $50,000,000 in 1999 of
                  jurisdictional non-fuel restart nuclear operation and
                  maintenance expenses.

         o        Authorizes the amortization of power supply cost recovery
                  revenues accrued from September 9, 1997 to December 31, 1999
                  and non-fuel nuclear operation and maintenance cost deferrals
                  over a five-year period ending December 31, 2003.

         Expenses to restart the Cook units are estimated to total approximately
$574,000,000. Through December 31, 1999, $373,000,000 has been spent. The costs
of the Cook outage and restart efforts will have a material adverse effect on
future results of operations and possibly financial condition through 2003 and
on cash flows through 2000. If the Cook units are not returned to service as
scheduled, their continued outage would make the adverse effect greater on
future results of operations, cash flows and financial condition.

   Nuclear Incident Liability

         The Price-Anderson Act limits public liability for a nuclear incident
at any licensed reactor in the

                                       42
<PAGE>   50

United States to $9.9 billion. I&M has insurance coverage for liability from a
nuclear incident at its Cook Plant. Such coverage is provided through a
combination of private liability insurance, with the maximum amount available of
$200,000,000, and mandatory participation for the remainder of the $9.9 billion
liability, in an industry retrospective deferred premium plan which would, in
case of a nuclear incident, assess all licensees of nuclear plants in the U.S.
Under the deferred premium plan, I&M could be assessed up to $176,000,000
payable in annual installments of $20,000,000 in the event of a nuclear incident
at Cook or any other nuclear plant in the U.S. There is no limit on the number
of incidents for which I&M could be assessed these sums.

         I&M also has property damage, decontamination and decommissioning
insurance for loss resulting from damage to the Cook Plant facilities in the
amount of $2.75 billion. Coverage is provided by Energy Insurance Bermuda (EIB)
and Nuclear Electric Insurance Limited (NEIL). If EIB's and NEIL's losses exceed
their available resources, I&M would be subject to a total retrospective premium
assessment of up to $16,704,380. NRC regulations require that, in the event of
an accident, whenever the estimated costs of reactor stabilization and site
decontamination exceed $100,000,000, the insurance proceeds must be used, first,
to return the reactor to, and maintain it in, a safe and stable condition and,
second, to decontaminate the reactor and reactor station site in accordance with
a plan approved by the NRC. The insurers then would indemnify I&M for
decommissioning costs in excess of funds already collected for decommissioning
and for property damage up to $3.0 billion less any amounts used for
stabilization and decontamination. See Fuel Supply -- Nuclear Waste.

         The NEIL extra-expense programs provide insurance to cover extra costs
resulting from a prolonged accidental outage of a nuclear unit. I&M's policy
insures against such increased costs up to approximately $3,500,000 per week
(starting 12 weeks after the outage) for 52 weeks and $2,800,000 per week for
the next 110 weeks, or 80% of those amounts per unit if both units are down for
the same reason. If NEIL's losses exceed its available resources, I&M would be
subject to a total retrospective premium assessment of up to $5,485,760.

POTENTIAL UNINSURED LOSSES

         Some potential losses or liabilities may not be insurable or the amount
of insurance carried may not be sufficient to meet potential losses and
liabilities, including liabilities relating to damage to the Cook Plant and
costs of replacement power in the event of a nuclear incident at the Cook Plant.
Future losses or liabilities which are not completely insured, unless allowed to
be recovered through rates, could have a material adverse effect on results of
operations and the financial condition of AEP, I&M and other AEP System
companies.

Item 3.  LEGAL PROCEEDINGS
--------------------------------------------------------------------------------

         On February 28, 1994, Ormet Corporation filed a complaint in the U.S.
District Court, Northern District of West Virginia, against AEP, OPCo, the
Service Corporation and two of its employees, Federal EPA and the Administrator
of Federal EPA. Ormet is the operator of a major aluminum reduction plant in
Ohio and was a customer of OPCo until December 31, 1999. See Certain Industrial
Customers. Pursuant to the Clean Air Act Amendments of 1990, OPCo received SO2
Allowances for its Kammer Plant. See Environmental and Other Matters. Ormet's
complaint sought a declaration that it is the owner of approximately 89% of the
Phase I and Phase II SO2 allowances issued for use by the Kammer Plant. In March
1995, the District Court dismissed the complaint for lack of jurisdiction and,
in October 1996, the U.S. Court of Appeals for the Fourth Circuit reversed this
decision. In March 1999, the District Court granted the motion of OPCo and the
Service Corporation for summary judgment and dismissed the case. Ormet filed an
appeal in the U.S. Court of Appeals for the Fourth Circuit in March 1999. On
November 30, 1999, the court held oral argument.

                            -------------------------

                                       43
<PAGE>   51

         The Internal Revenue Service (IRS) agents auditing the AEP System's
consolidated federal income tax returns requested a ruling from their National
Office that certain interest deductions claimed by AEP relating to its corporate
owned life insurance (COLI) program should not be allowed. As a result of a suit
filed in U.S. District Court (discussed below) this request for ruling was
withdrawn by the IRS agents. Adjustments have been or will be proposed by the
IRS disallowing COLI interest deductions for taxable years 1991-96. A
disallowance of the COLI interest deductions through December 31, 1999 would
reduce earnings (including interest) as follows:

                                    (in millions)
AEP System........................      $317
   APCo...........................        79
   CSPCo..........................        43
   I&M............................        66
   KEPCo..........................         8
   OPCo...........................       118

         AEP made payments of taxes and interest attributable to COLI interest
deductions for taxable years 1991-98 to avoid the potential assessment by the
IRS of any additional above- market rate interest on the contested amount. The
payments to the IRS are included on the consolidated balance sheet in other
assets pending the resolution of this matter. AEP is seeking refund through
litigation of all amounts paid plus interest.

         In order to resolve this issue, AEP filed suit against the U.S. in the
U.S. District Court for the Southern District of Ohio in March 1998. In 1999 a
U.S. Tax Court judge decided in a case involving an unaffiliated company that a
corporate taxpayer's COLI interest deduction should be disallowed.
Notwithstanding the decision in this case, management has made no provision for
any possible adverse earnings impact from this matter because it believes, and
has been advised by outside counsel, that it has a meritorious position. In the
event the resolution of this matter is unfavorable, it could have a material
adverse impact on results of operations, cash flows and financial condition.

                             ----------------------

         See Item 1 for a discussion of certain environmental and rate matters.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
--------------------------------------------------------------------------------

AEP, APCO, I&M AND OPCO.  None.

AEGCO, CSPCO AND KEPCO.  Omitted pursuant to Instruction I(2)(c).

                              ---------------------

EXECUTIVE OFFICERS OF THE REGISTRANTS

         AEP. The following persons are, or may be deemed, executive officers of
AEP. Their ages are given as of March 1, 2000.

<TABLE>
<CAPTION>
NAME                             AGE                                         OFFICE (a)
----                             ---                                         ----------
<S>                              <C>    <C>
E. Linn Draper, Jr............    58    Chairman of the Board, President and Chief Executive Officer of AEP and of the
                                        Service Corporation
Paul D. Addis.................    46    Executive Vice President of the Service Corporation
Donald M. Clements, Jr........    50    Executive Vice President-Corporate Development of the Service
                                        Corporation
Henry W. Fayne................    53    Executive Vice President-Financial Services of the Service Corporation
William J. Lhota..............    60    Executive Vice President of the Service Corporation
Susan Tomasky.................    46    Executive Vice President of the Service Corporation
J. H. Vipperman...............    59    Executive Vice President-Corporate Services of the Service Corporation
</TABLE>

-----------------------
(a)      All of the executive officers listed above have been employed by the
         Service Corporation or System companies in various capacities (AEP, as
         such, has no employees) during the past five years, except for Mr.
         Addis and Ms. Tomasky. Prior to joining the Service Corporation in
         February 1997 in his present position, Mr. Addis was Executive Vice
         President (1992-1993) and President (1993-January 1997) of Louis
         Dreyfus Electric Power, Inc. and President of Duke/Louis Dreyfus LLC
         (1995-January 1997). Mr. Addis became an executive officer of AEP
         effective January 1, 2000. Prior to joining the Service Corporation in
         July 1998 as Senior Vice President, Ms. Tomasky was a partner with the
         law firm of Hogan & Hartson (August 1997-July 1998) and General Counsel
         of the Federal Energy Regulatory Commission (May 1993-August 1997). Ms.
         Tomasky became an executive officer of AEP effective with her promotion
         to Executive Vice President on January 26, 2000. All of the above
         officers are appointed annually for a one-year term by the board of
         directors of AEP, the board of directors of the Service Corporation, or
         both, as the case may be.

                                       44
<PAGE>   52

         APCO. The names of the executive officers of APCo, the positions they
hold with APCo, their ages as of March 1, 2000, and a brief account of their
business experience during the past five years appears below. The directors and
executive officers of APCo are elected annually to serve a one-year term.

<TABLE>
<CAPTION>
NAME                             AGE                               POSITION (a)                                 PERIOD
----                             ---                               ------------                                 ------
<S>                              <C>    <C>                                                                <C>
E. Linn Draper, Jr............    58    Director                                                           1992-Present
                                        Chairman of the Board and Chief Executive Officer                  1993-Present
                                        Vice President                                                     1992-1993
                                        Chairman of the Board, President and Chief Executive
                                             Officer of AEP and the Service Corporation                    1993-Present
                                        President of AEP                                                   1992-1993
                                        President and Chief Operating Officer of the
                                             Service Corporation                                           1992-1993

Henry W. Fayne................    53    Director                                                           1995-Present
                                        Vice President                                                     1998-Present
                                        Vice President and Chief Financial Officer of AEP                  1998-Present
                                        Executive Vice President-Financial Services of the
                                             Service Corporation                                           1998-Present
                                        Senior Vice President-Corporate Planning & Budgeting
                                             of the Service Corporation                                    1995-1998
                                        Senior Vice President-Controller of the
                                             Service Corporation                                           1993-1995

William J. Lhota..............    60    Director                                                           1990-Present
                                        President and Chief Operating Officer                              1996-Present
                                        Vice President                                                     1989-1995
                                        Executive Vice President of the Service Corporation                1993-Present
                                        Executive Vice President-Operations of the Service
                                             Corporation                                                   1989-1993

J. H. Vipperman...............    59    Director                                                           1985-Present
                                        Vice President                                                     1996-Present
                                        President and Chief Operating Officer                              1990-1995
                                        Executive Vice President-Corporate Services of the
                                             Service Corporation                                           1998-Present
                                        Executive Vice President-Energy Delivery of the
                                             Service Corporation                                           1996-1997
</TABLE>
----------------------
(a)      Positions are with APCo unless otherwise indicated.

         OPCO. The names of the executive officers of OPCo, the positions they
hold with OPCo, their ages as of March 1, 2000, and a brief account of their
business experience during the past five years appear below. The directors and
executive officers of OPCo are elected annually to serve a one-year term.

<TABLE>
<CAPTION>
NAME                            AGE                               POSITION (a)                                 PERIOD
----                            ---                               ------------                                 ------
<S>                             <C>   <C>                                                                <C>
E. Linn Draper, Jr..........    58    Director                                                           1992-Present
                                      Chairman of the Board and Chief Executive Officer                  1993-Present
                                      Vice President                                                     1992-1993
                                      Chairman of the Board, President and Chief Executive
                                           Officer of AEP and the Service Corporation                    1993-Present
                                      President of AEP                                                   1992-1993
                                      President and Chief Operating Officer of the Service
                                           Corporation                                                   1992-1993
</TABLE>

                                       45
<PAGE>   53
<TABLE>
<CAPTION>
NAME                            AGE                               POSITION (a)                                 PERIOD
----                            ---                               ------------                                 ------
<S>                             <C>   <C>                                                                <C>
Henry W. Fayne..............    53    Director                                                           1993-Present
                                      Vice President                                                     1998-Present
                                      Vice President and Chief Financial Officer of AEP                  1998-Present
                                      Executive Vice President-Financial Services of the
                                           Service Corporation                                           1998-Present
                                      Senior Vice President-Corporate Planning & Budgeting
                                           of the Service Corporation                                    1995-1998
                                      Senior Vice President-Controller of the
                                           Service Corporation                                           1993-1995

William J. Lhota............    60    Director                                                           1989-Present
                                      President and Chief Operating Officer                              1996-Present
                                      Vice President                                                     1989-1995
                                      Executive Vice President of the Service Corporation                1993-Present
                                      Executive Vice President-Operations of the Service
                                           Corporation                                                   1989-1993

J. H. Vipperman.............    59    Director and Vice President                                        1996-Present
                                      Executive Vice President-Corporate Services of the
                                           Service Corporation                                           1998-Present
                                      Executive Vice President-Energy Delivery of the
                                           Service Corporation                                           1996-1997
                                      President and Chief Operating Officer of APCo                      1990-1995
</TABLE>
---------------------
(a)      Positions are with OPCo unless otherwise indicated.

PART II=========================================================================

Item 5.  MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
--------------------------------------------------------------------------------

         AEP. AEP Common Stock is traded principally on the New York Stock
Exchange. The following table sets forth for the calendar periods indicated the
high and low sales prices for the Common Stock as reported on the New York Stock
Exchange Composite Tape and the amount of cash dividends paid per share of
Common Stock.

<TABLE>
<CAPTION>
                                                                    PER SHARE
                                                                   MARKET PRICE
                                                             ----------------------
QUARTER ENDED                                                   HIGH          LOW       DIVIDEND
-------------                                                   ----          ---       --------
<S>                                                           <C>           <C>         <C>
March 1998............................................        51-11/16      47-13/16     .60
June 1998.............................................        50-3/4        44-11/16     .60
September 1998........................................        48-13/16      42-1/16      .60
December 1998.........................................        53-5/16       45-5/16      .60
March 1999............................................        48-3/16       39-5/16      .60
June 1999.............................................        44-1/16       37-7/16      .60
September 1999........................................        37-7/8        33-1/2       .60
December 1999.........................................        35-13/16      30-9/16      .60
</TABLE>

         At December 31, 1999, AEP had approximately 125,000 shareholders of
record.

AEGCO, APCO, CSPCO, I&M, KEPCO AND OPCO. The information required by this item
is not applicable as the common stock of all these companies is held solely by
AEP.

                                       46
<PAGE>   54

Item 6.  SELECTED FINANCIAL DATA
--------------------------------------------------------------------------------

         AEGCO. Omitted pursuant to Instruction I(2)(a).

         AEP. The information required by this item is incorporated herein by
reference to the material under Selected Consolidated Financial Data in the AEP
1999 Annual Report (for the fiscal year ended December 31, 1999).

         APCO. The information required by this item is incorporated herein by
reference to the material under Selected Consolidated Financial Data in the APCo
1999 Annual Report (for the fiscal year ended December 31, 1999).

         CSPCO. Omitted pursuant to Instruction I(2)(a).

         I&M. The information required by this item is incorporated herein by
reference to the material under Selected Consolidated Financial Data in the I&M
1999 Annual Report (for the fiscal year ended December 31, 1999).

         KEPCO. Omitted pursuant to Instruction I(2)(a).

         OPCO. The information required by this item is incorporated herein by
reference to the material under Selected Consolidated Financial Data in the OPCo
1999 Annual Report (for the fiscal year ended December 31, 1999).

Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
         FINANCIAL CONDITION
--------------------------------------------------------------------------------

         AEGCO. Omitted pursuant to Instruction I(2)(a). Management's narrative
analysis of the results of operations and other information required by
Instruction I(2)(a) is incorporated herein by reference to the material under
Management's Narrative Analysis of Results of Operations in the AEGCo 1999
Annual Report (for the fiscal year ended December 31, 1999).

         AEP. The information required by this item is incorporated herein by
reference to the material under Management's Discussion and Analysis of Results
of Operations and Financial Condition in the AEP 1999 Annual Report (for the
fiscal year ended December 31, 1999).

         APCO. The information required by this item is incorporated herein by
reference to the material under Management's Discussion and Analysis of Results
of Operations and Financial Condition in the APCo 1999 Annual Report (for the
fiscal year ended December 31, 1999).

         CSPCO. Omitted pursuant to Instruction I(2)(a). Management's narrative
analysis of the results of operations and other information required by
Instruction I(2)(a) is incorporated herein by reference to the material under
Management's Narrative Analysis of Results of Operations in the CSPCo 1999
Annual Report (for the fiscal year ended December 31, 1999).

         I&M. The information required by this item is incorporated herein by
reference to the material under Management's Discussion and Analysis of Results
of Operations and Financial Condition in the I&M 1999 Annual Report (for the
fiscal year ended December 31, 1999).

         KEPCO. Omitted pursuant to Instruction I(2)(a). Management's narrative
analysis of the results of operations and other information required by
Instruction I(2)(a) is incorporated herein by reference to the material under
Management's Narrative Analysis of Results of Operations in the KEPCo 1999
Annual Report (for the fiscal year ended December 31, 1999).

         OPCO. The information required by this item is incorporated herein by
reference to the material under Management's Discussion and Analysis of Results
of Operations and Financial Condition in the OPCo 1999 Annual Report (for the
fiscal year ended December 31, 1999).

                                       47
<PAGE>   55

Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------------------------------------------------------------------------------

         AEGCO. The information required by this item is incorporated herein by
reference to the material under Management's Narrative Analysis of Results of
Operations in the AEGCo 1999 Annual Report (for the fiscal year ended December
31, 1999).

         AEP. The information required by this item is incorporated herein by
reference to the material under Management's Discussion and Analysis of Results
of Operations and Financial Condition in the AEP 1999 Annual Report (for the
fiscal year ended December 31, 1999).

         APCO. The information required by this item is incorporated herein by
reference to the material under Management's Discussion and Analysis of Results
of Operations and Financial Condition in the APCo 1999 Annual Report (for the
fiscal year ended December 31, 1999).

         CSPCO. The information required by this item is incorporated herein by
reference to the material under Management's Narrative Analysis of Results of
Operations in the CSPCo 1999 Annual Report (for the fiscal year ended December
31, 1999).

         I&M. The information required by this item is incorporated herein by
reference to the material under Management's Discussion and Analysis of Results
of Operations and Financial Condition in the I&M 1999 Annual Report (for the
fiscal year ended December 31, 1999).

         KEPCO. The information required by this item is incorporated herein by
reference to the material under Management's Narrative Analysis of Results of
Operations in the KEPCo 1999 Annual Report (for the fiscal year ended December
31, 1999).

         OPCO. The information required by this item is incorporated herein by
reference to the material under Management's Discussion and Analysis of Results
of Operations and Financial Condition in the OPCo 1999 Annual Report (for the
fiscal year ended December 31, 1999).

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
--------------------------------------------------------------------------------

         AEGCO, AEP, APCO, CSPCO, I&M, KEPCO, AND OPCO. The information required
by this item is incorporated herein by reference to the financial statements and
supplementary data described under Item 14 herein.

Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE
--------------------------------------------------------------------------------

         AEGCO, AEP, APCO, CSPCO, I&M, KEPCO AND OPCO. None.

PART III =======================================================================

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
--------------------------------------------------------------------------------

         AEGCO. Omitted pursuant to Instruction I(2)(c).

         AEP. The information required by this item is incorporated herein by
reference to the material under Nominees for Director of the definitive proxy
statement of AEP for the 2000 annual meeting of shareholders, to be filed within
120 days after December 31, 1999. Reference also is made to the information
under the caption Executive Officers of the Registrants in Part I of this
report.

                                       48
<PAGE>   56

         APCO. The information required by this item is incorporated herein by
reference to the material under Election of Directors of the definitive
information statement of APCo for the 2000 annual meeting of stockholders, to be
filed within 120 days after December 31, 1999. Reference also is made to the
information under the caption Executive Officers of the Registrants in Part I of
this report.

         CSPCO. Omitted pursuant to Instruction I(2)(c).

         I&M. The names of the directors and executive officers of I&M, the
positions they hold with I&M, their ages as of March 1, 2000, and a brief
account of their business experience during the past five years appear below.
The directors and executive officers of I&M are elected annually to serve a
one-year term.

<TABLE>
<CAPTION>
NAME                             AGE                           POSITION (a)(b)(c)                              PERIOD
----                             ---                           ------------------                              ------
<S>                              <C>    <C>                                                             <C>
E. Linn Draper, Jr............    58    Director                                                         1992-Present
                                        Chairman of the Board and Chief Executive Officer                1993-Present
                                        Vice President                                                   1992-1993
                                        Chairman of the Board, President and Chief Executive
                                            Officer of AEP and of the Service Corporation                1993-Present
                                        President of AEP                                                 1992-1993
                                        President and Chief Operating Officer of the Service
                                            Corporation                                                  1992-1993

Henry W. Fayne................    53    Director and Vice President                                      1998-Present
                                        Vice President and Chief Financial Officer of AEP                1998-Present
                                        Executive Vice President-Financial Services of the
                                             Service Corporation                                         1998-Present
                                        Senior Vice President-Corporate Planning &
                                             Budgeting of the Service Corporation                        1995-1998
                                        Senior Vice President-Controller of the
                                             Service Corporation                                         1993-1995

William J. Lhota..............    60    Director                                                         1989-Present
                                        President and Chief Operating Officer                            1996-Present
                                        Vice President                                                   1989-1995
                                        Executive Vice President of the Service Corporation              1993-Present
                                        Executive Vice President-Operations of the Service
                                            Corporation                                                  1989-1993

Armando A. Pena...............    55    Director, Vice President and Chief Financial Officer             1998-Present
                                        Treasurer                                                        1995-Present
                                        Chief Financial Officer of the Service Corporation               1998-Present
                                        Senior Vice President-Finance of the Service
                                             Corporation                                                 1996-Present
                                        Treasurer of AEP and the Service Corporation                     1995-Present

J. H. Vipperman...............    59    Director and Vice President                                      1996-Present
                                        Executive Vice President-Corporate Services of the
                                            Service Corporation                                          1998-Present
                                        Executive Vice President-Energy Delivery of the                  1996-1997
                                            Service Corporation
                                        President and Chief Operating Officer of APCo                    1990-1995

K. G. Boyd....................    48    Director                                                         1997-Present
                                        Indiana Region Manager                                           1997-Present
                                        Fort Wayne District Manager                                      1994-1997
</TABLE>

                                       49
<PAGE>   57
<TABLE>
<CAPTION>
NAME                             AGE                           POSITION (a)(b)(c)                              PERIOD
----                             ---                           ------------------                              ------
<S>                              <C>    <C>                                                             <C>

Jeffrey A. Drozda.............    32    Director                                                         1999-Present
                                        Governmental Affairs Manager-Indiana                             1997-Present
                                        Federal Regulatory Affairs Manager                               1996-1997
                                        Executive Assistant-Public Utilities Commission of Ohio          1993-1996

Mark W. Marano...............     38    Director                                                         1999-Present
                                        Director, Business Services (Cook Nuclear Plant)                 1999-Present
                                        Director, Nuclear Site & Business Support-Florida Power          1997-1999
                                            Corp.
                                        Manager, Corrective Action/Quality Services-Public
                                            Service Electric & Gas                                       1995-1997

John R. Sampson...............    47    Director and Vice President                                      1999-Present
                                        Indiana & Michigan State President                               1999-Present
                                        Site Vice President, Cook Nuclear Plant                          1998-1999
                                        Plant Manager, Cook Nuclear Plant                                1996-1998

D. B. Synowiec................    56    Director                                                         1995-Present
                                        Plant Manager, Rockport Plant                                    1990-Present

W. E. Walters.................    52    Director                                                         1991-Present
                                        Michiana Region Manager                                          1994-Present
                                        Executive Assistant to President                                 1987-1994

E. H. Wittkamper..............    61    Director                                                         1996-Present
                                        Director of System Operations (Fort Wayne)                       1996
                                        System Operations Manager (Fort Wayne)                           1990-1996
</TABLE>
-----------------
(a)      Positions are with I&M unless otherwise indicated.
(b)      Dr. Draper is a director of BCP Management, Inc., which is the general
         partner of Borden Chemicals and Plastics L.P., and CellNet Data
         Systems, Inc. and Mr. Lhota is a director of Huntington Bancshares
         Incorporated and State Auto Financial Corporation.
(c)      Dr. Draper and Messrs. Fayne, Lhota and Pena are directors of AEGCo,
         APCo, CSPCo, KEPCo and OPCo. Dr. Draper is also a director of AEP. Mr.
         Vipperman is a director of APCo, CSPCo, KEPCo and OPCo.

         KEPCO. Omitted pursuant to Instruction I(2)(c).

         OPCO. The information required by this item is incorporated herein by
reference to the material under the heading Election of Directors of the
definitive information statement of OPCo for the 2000 annual meeting of
shareholders, to be filed within 120 days after December 31, 1999. Reference
also is made to the information under the caption Executive Officers of the
Registrants in Part I of this report.

Item 11.  EXECUTIVE COMPENSATION
--------------------------------------------------------------------------------

         AEGCO. Omitted pursuant to Instruction I(2)(c).

         AEP. The information required by this item is incorporated herein by
reference to the material under Directors Compensation and Stock Ownership
Guidelines, Executive Compensation and the performance graph of the definitive
proxy statement of AEP for the 2000 annual meeting of shareholders to be filed
within 120 days after December 31, 1999.

         APCO. The information required by this item is incorporated herein by
reference to the material under Executive Compensation of the definitive
information statement of APCo for the 2000 annual meeting of stockholders, to be
filed within 120 days after December 31, 1999.

         CSPCO. Omitted pursuant to Instruction I(2)(c).

         KEPCO. Omitted pursuant to Instruction I(2)(c).

                                       50
<PAGE>   58

         OPCO. The information required by this item is incorporated herein by
reference to the material under Executive Compensation of the definitive
information statement of OPCo for the 2000 annual meeting of shareholders, to be
filed within 120 days after December 31, 1999.

         I&M. Certain executive officers of I&M are employees of the Service
Corporation. The salaries of these executive officers are paid by the Service
Corporation and a portion of their salaries has been allocated and charged to
I&M. The following table shows for 1999, 1998 and 1997 the compensation earned
from all AEP System companies by the chief executive officer and four other most
highly compensated executive officers (as defined by regulations of the SEC) of
I&M at December 31, 1999.

Summary Compensation Table

<TABLE>
<CAPTION>
                                                                                             LONG TERM
                                                                      ANNUAL                COMPENSATION
                                                                   COMPENSATION          ---------------------      ALL OTHER
                                                                --------------------           PAYOUTS            COMPENSATION
                                                                SALARY       BONUS       ---------------------        ($)(2)
             NAME AND PRINCIPAL POSITION              YEAR       ($)        ($)(1)        LTIP PAYOUTS ($)(1)
          ----------------------------------         -------    -------    ---------     ---------------------    ------------
<S>                                                  <C>       <C>          <C>          <C>                      <C>
E. LINN DRAPER, JR. - Chairman of the board,         1999      820,000      208,280             -0-                 103,218
    president and chief executive officer of the     1998      780,000      194,376           345,906               104,941
    Company and the Service Corporation;  chairman   1997      720,000      327,744           951,132                31,620
    and chief executive officer of other
    subsidiaries

WILLIAM J. LHOTA - Executive vice president and      1999      400,000       71,120             -0-                  55,690
    director of the Service Corporation;             1998      380,000       82,859           134,266                56,493
    president, chief operating officer and           1997      355,000      141,396           364,436                20,570
    director of other subsidiaries

JAMES J. MARKOWSKY - Executive vice president -      1999      370,000       65,786             -0-                  51,047
    power generation and director of the Service     1998      350,000       76,317           127,115                51,859
    Corporation; vice president and director of      1997      325,000      129,447           338,382                18,020
    other subsidiaries (3)

JOSEPH H. VIPPERMAN - Executive vice president       1999      330,000       58,674             -0-                  63,006
    -corporate services and director of the          1998      310,000       67,595            82,859                58,435
    Service Corporation; vice president and
    director of other subsidiaries (4)

HENRY W. FAYNE - Executive vice president -          1999      315,000       56,007             -0-                  34,885
    financial services and director of the Service   1998      290,000       63,234            61,555                34,124
    Corporation; vice president and director of
    other subsidiaries (4)
</TABLE>
------------------------
(1)  Amounts in the Bonus column reflect awards under the Senior Officer Annual
     Incentive Compensation Plan. Payments are made in March of the succeeding
     fiscal year for performance in the year indicated. Amounts for 1999 are
     estimates but should not change significantly.

     Amounts in the Long Term Compensation column reflect performance share unit
     targets earned under the Performance Share Incentive Plan for three-year
     performance periods.

     See below under Long Term Incentive Plans - Awards in 1999.

(2)  Amounts in the All Other Compensation column include (i) AEP's matching
     contributions under the AEP Employees Savings Plan and the AEP Supplemental
     Savings Plan, a non-qualified plan designed to supplement the AEP Savings
     Plan, and (ii) subsidiary companies director fees. For 1998 and 1999, the
     amounts also include split-dollar insurance. Split-dollar insurance
     represents the present value of the interest projected to accrue for the
     employee's benefit on the current year's insurance premium paid by AEP.
     Cumulative net life insurance premiums paid are recovered by AEP at the
     later of retirement or 15 years. Detail of the 1999 amounts in the All
     Other Compensation column is shown below.

<TABLE>
<CAPTION>
                Item                       Dr. Draper       Mr. Lhota     Dr. Markowsky     Mr. Vipperman      Mr. Fayne
                ----                       ----------       ---------     -------------     -------------      ---------
<S>                                        <C>              <C>           <C>               <C>                <C>
Savings Plan Matching Contributions         $  3,462         $  4,800         $  3,381         $  3,762         $  4,800
Supplemental Savings Plan Matching
  Contributions                               21,138            7,200            7,719            6,138            4,650
Split-Dollar Insurance                        68,638           33,710           29,967           47,106           17,105
Subsidiaries Directors Fees                    9,980            9,980            9,980            6,000            8,330
                                            --------         --------         --------         --------         --------
Total All Other Compensation                $103,218         $ 55,690         $ 51,047         $ 63,006         $ 34,885
                                            ========         ========         ========         ========         ========
</TABLE>

(3)  Dr. Markowsky resigned effective February 1, 2000.

(4)  No 1997 compensation information is reported for Messrs. Vipperman and
     Fayne because they were not executive officers in these years.

                                       51
<PAGE>   59
Long-Term Incentive Plans -- Awards In 1999

         Each of the awards set forth below establishes performance share unit
targets, which represent units equivalent to shares of Common Stock, pursuant to
the Company's Performance Share Incentive Plan. Since it is not possible to
predict future dividends and the price of AEP Common Stock, credits of
performance share units in amounts equal to the dividends that would have been
paid if the performance share unit targets were established in the form of
shares of Common Stock are not included in the table.

         The ability to earn performance share unit targets is tied to achieving
specified levels of total shareholder return (TSR) relative to the S&P Electric
Utility Index. Notwithstanding AEP's TSR ranking, no performance share unit
targets are earned unless AEP shareholders realize a positive TSR over the
relevant three performance period. The Human Resources Committee may, at its
discretion, reduce the number of performance share unit targets otherwise
earned. In accordance with the performance goals established for the periods set
forth below, the threshold, target and maximum awards are equal to 25%, 100% and
200%, respectively, of the performance share unit targets. No payment will be
made for performance below the threshold.

         Payments of earned awards are deferred in the form of restricted stock
units (equivalent to shares of AEP Common Stock) until officers have met the
equivalent stock ownership target. Once officers meet and maintain their
respective targets, they may elect either to continue to defer or to receive
further earned awards in cash and/or Common Stock.

<TABLE>
<CAPTION>
                                                                                      ESTIMATED FUTURE PAYOUTS OF
                                                                                     PERFORMANCE SHARE UNITS UNDER
                                                           PERFORMANCE                NON-STOCK PRICE-BASED PLAN
                                        NUMBER OF          PERIOD UNTIL       --------------------------------------------
                                       PERFORMANCE          MATURATION         THRESHOLD         TARGET        MAXIMUM
            NAME                       SHARE UNITS          OR PAYOUT             (#)             (#)            (#)
      -----------------               ---------------    -----------------    -------------     ---------    -------------
<S>                                    <C>               <C>                  <C>               <C>           <C>
E. L. Draper, Jr...................         8,728           1999-2001              2,182           8,728        17,456
W. J. Lhota........................         2,980           1999-2001                745           2,980         5,960
J. J. Markowsky....................         2,794           1999-2001                698           2,794         5,588
J. H. Vipperman....................         2,459           1999-2001                615           2,459         4,918
H. W. Fayne........................         2,347           1999-2001                587           2,347         4,694
</TABLE>

   Retirement Benefits

         The American Electric Power System Retirement Plan provides pensions
for all employees of AEP System companies (except for employees covered by
certain collective bargaining agreements), including the executive officers of
the Company. The Retirement Plan is a noncontributory defined benefit plan.

         The following table shows the approximate annual annuities under the
Retirement Plan that would be payable to employees in certain higher salary
classifications, assuming retirement at age 65 after various periods of service.


Pension Plan Table

<TABLE>
<CAPTION>
                                                        YEARS OF ACCREDITED SERVICE
     HIGHEST AVERAG        -------------------------------------------------------------------------------------------
     ANNUAL EARNINGS           15             20              25              30              35               40
     ---------------       --------        --------        --------        --------        --------         --------
<S>                        <C>             <C>             <C>             <C>             <C>              <C>
       $  300,000          $ 69,345        $ 92,460        $115,575        $138,690        $161,805         $181,755
          400,000            93,345         124,460         155,575         186,690         217,805          244,405
          500,000           117,345         156,460         195,575         234,690         273,805          307,055
          700,000           165,345         220,460         275,575         330,690         385,805          432,355
          900,000           213,345         284,460         355,575         426,690         497,805          557,655
        1,200,000           285,345         380,460         475,575         570,690         665,805          745,605
</TABLE>

         The amounts shown in the table are the straight life annuities payable
under the Retirement Plan without reduction for the joint and survivor annuity.
Retirement benefits listed in the table are not subject to any deduction for
Social Security or other offset amounts. The retirement annuity is reduced 3%
per

                                       52
<PAGE>   60

year in the case of retirement between ages 55 and 62. If an employee retires
after age 62, there is no reduction in the retirement annuity.

         The Company maintains a supplemental retirement plan which provides for
the payment of benefits that are not payable under the Retirement Plan due
primarily to limitations imposed by Federal tax law on benefits paid by
qualified plans. The table includes supplemental retirement benefits.

         Compensation upon which retirement benefits are based, for the
executive officers named in the Summary Compensation Table above, consists of
the average of the 36 consecutive months of the officer's highest aggregate
salary and Senior Officer Annual Incentive Compensation Plan awards, shown in
the "Salary" and "Bonus" columns, respectively, of the Summary Compensation
Table, out of the officer's most recent 10 years of service. As of December 31,
1999, the number of full years of service applicable for retirement benefit
calculation purposes for such officers were as follows: Dr. Draper, seven years;
Mr. Lhota, 34 years; Dr. Markowsky, 28 years; Mr. Vipperman, 37 years; and Mr.
Fayne, 24 years.

         Dr. Draper has a contract with the Company and AEP Service Corporation
which provides him with a supplemental retirement annuity that credits him with
24 years of service in addition to his years of service credited under the
Retirement Plan less his actual pension entitlement under the Retirement Plan
and any pension entitlement from the Gulf States Utilities Company Trusteed
Retirement Plan, a plan sponsored by his prior employer.

         Eight AEP System employees (including Messrs. Fayne, Lhota and
Vipperman and Dr. Markowsky) whose pensions may be adversely affected by
amendments to the Retirement Plan made as a result of the Tax Reform Act of
1986 are eligible for certain supplemental retirement benefits. Such payments,
if any, will be equal to any reduction occurring because of such amendments.
Assuming retirement in 2000 of the executive officers named in the Summary
Compensation Table (including Dr. Markowsky who resigned effective February 1,
2000), none of them would receive any supplemental benefits.

         AEP made available a voluntary deferred-compensation program in 1982
and 1986, which permitted certain members of AEP System management to defer
receipt of a portion of their salaries. Under this program, a participant was
able to defer up to 10% or 15% annually (depending on the terms of the program
offered), over a four-year period, of his or her salary, and receive
supplemental retirement or survivor benefit payments over a 15-year period. The
amount of supplemental retirement payments received is dependent upon the amount
deferred, age at the time the deferral election was made, and number of years
until the participant retires. The following table sets forth, for the executive
officers named in the Summary Compensation Table, the amounts of annual
deferrals and, assuming retirement at age 65, annual supplemental retirement
payments under the 1982 and 1986 programs.


<TABLE>
<CAPTION>
                                               1982 PROGRAM                                   1986 PROGRAM
                                -------------------------------------------    -------------------------------------------
                                                        ANNUAL AMOUNT OF                                ANNUAL AMOUNT OF
                                      ANNUAL              SUPPLEMENTAL                ANNUAL              SUPPLEMENTAL
                                      AMOUNT               RETIREMENT                 AMOUNT               RETIREMENT
                                     DEFERRED                PAYMENT                 DEFERRED                PAYMENT
       NAME                      (4-YEAR PERIOD)        (15-YEAR PERIOD)         (4-YEAR PERIOD)        (15-YEAR PERIOD)
      --------                  -------------------    --------------------    -------------------    --------------------
<S>                              <C>                    <C>                      <C>                   <C>
J. H. Vipperman...............      $ 11,000               $ 90,750                   $ 10,000              $ 67,500
H. W. Fayne...................      $      0               $      0                   $  9,000              $ 95,400
</TABLE>

Severance Plan and Change-In-Control Agreements

         SEVERANCE PLAN. In connection with the proposed merger with Central and
South West Corporation, AEP's Board of Directors adopted a severance plan on
February 24, 1999, effective March 1, 1999, that includes Dr. Markowsky and
Messrs. Lhota, Vipperman and Fayne. The severance plan provides for payments and
other benefits if, at any time before the second anniversary of the merger
consummation date (or, if

                                       53
<PAGE>   61

the merger has not occurred, before the expiration of the severance plan which
will occur upon the termination of the merger agreement), the officer's
employment is terminated (i) by AEP without "cause" or (ii) by the officer
because of a detrimental change in responsibilities or a reduction in salary or
benefits. Under the severance plan, the officer will receive:

         o        A lump sum payment equal to three times the officer's annual
                  base salary plus target annual incentive under the Senior
                  Officer Annual Incentive Compensation Plan.

         o        Maintenance for a period of three additional years of all
                  medical and dental insurance benefits substantially similar to
                  those benefits to which the officer was entitled immediately
                  prior to termination, reduced to the extent comparable
                  benefits are otherwise received.

         o        Outplacement services not to exceed a cost of $30,000 or use
                  of an office and secretarial services for up to one year.

         AEP's obligation for the payments and benefits under the severance plan
is subject to the waiver by the officer of any other severance benefits that may
be provided by AEP. In addition, the officer agrees to refrain from the
disclosure of confidential information relating to AEP.

         Dr. Markowsky resigned effective February 1, 2000 and has received a
lump sum payment in accordance with the terms of the severance plan.

         CHANGE-IN-CONTROL AGREEMENTS. AEP has change-in-control agreements with
Dr. Draper and Messrs. Lhota, Vipperman and Fayne. If there is a
"change-in-control" of AEP and the employee's employment is terminated by AEP or
by the employee for reasons substantially similar to those in the severance
plan, these agreements provide for substantially the same payments and benefits
as the severance plan with the following additions:

         o        Three years of service credited for purposes of determining
                  non-qualified retirement benefits.

         o        Transfer to the employee of title to AEP's automobile then
                  assigned to the employee.

         o        Payment, if required, to make the employee whole for any
                  excise tax imposed by Section 4999 of the Internal Revenue
                  Code.

         "Change-in-control" means:

         o        The acquisition by any person of the beneficial ownership of
                  securities representing 25% or more of AEP's voting stock.

         o        A change in the composition of a majority of the Board of
                  Directors under certain circumstances within any two-year
                  period.

         o        Approval by the shareholders of the liquidation of AEP,
                  disposition of all or substantially all of the assets of AEP
                  or, under certain circumstances, a merger of AEP with another
                  corporation.

                          -----------------------------

         Directors of I&M receive a fee of $100 for each meeting of the Board of
Directors attended in addition to their salaries.

                         -----------------------------

         The AEP System is an integrated electric utility system and, as a
result, the member companies of the AEP System have contractual, financial and
other business relationships with the other member companies, such as
participation in the AEP System savings and retirement plans and tax returns,
sales of electricity, transportation and handling of fuel, sales or rentals of
property and interest or dividend payments on the securities held by the
companies' respective parents.

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------------------------

         AEGCO. Omitted pursuant to Instruction I(2)(c).

         AEP. The information required by this item is incorporated herein by
reference to the material under Share Ownership of Directors and Executive
Officers of the definitive proxy statement of AEP

                                       54
<PAGE>   62

for the 2000 annual meeting of shareholders to be filed within 120 days after
December 31, 1999.

         APCO. The information required by this item is incorporated herein by
reference to the material under Share Ownership of Directors and Executive
Officers in the definitive information statement of APCo for the 2000 annual
meeting of stockholders, to be filed within 120 days after December 31, 1999.

         CSPCO. Omitted pursuant to Instruction I(2)(c).

         I&M. All 1,400,000 outstanding shares of Common Stock, no par value, of
I&M are directly and beneficially held by AEP. Holders of the Cumulative
Preferred Stock of I&M generally have no voting rights, except with respect to
certain corporate actions and in the event of certain defaults in the payment of
dividends on such shares.

         The table below shows the number of shares of AEP Common Stock and
stock-based units that were beneficially owned, directly or indirectly, as of
January 1, 2000, by each director and nominee of I&M and each of the executive
officers of I&M named in the summary compensation table, and by all directors
and executive officers of I&M as a group. It is based on information provided to
I&M by such persons. No such person owns any shares of any series of the
Cumulative Preferred Stock of I&M. Unless otherwise noted, each person has sole
voting power and investment power over the number of shares of AEP Common Stock
and stock-based units set forth opposite his name. Fractions of shares and units
have been rounded to the nearest whole number.

<TABLE>
<CAPTION>
                                                                                                     STOCK
NAME                                                                             SHARES(a)          UNITS(b)        TOTAL
----                                                                             ---------          --------        -----
<S>                                                                              <C>                <C>           <C>
Karl G. Boyd...........................................................            1,897                 287        2,184
E. Linn Draper, Jr.....................................................            8,670(c)           89,257       97,927
Jeffrey A. Drozda......................................................              149(c)(d)            --          149
Henry W. Fayne.........................................................            5,091              10,424       15,515
William J. Lhota.......................................................           17,364(c)(e)        15,174       32,538
Mark W. Marano.........................................................              159                 133          292
James J. Markowsky.....................................................            2,871(d)           13,923       16,794
Armando A. Pena........................................................            5,307               5,239       10,546
John R. Sampson........................................................              230                 315          545
David B. Synowiec......................................................              171                 395          566
Joseph H. Vipperman....................................................           11,569(c)(e)         4,549       16,118
William E. Walters.....................................................            6,762                 312        7,074
Earl H. Wittkamper.....................................................            3,561(c)              315        3,876
All Directors and Executive Officers...................................          149,032(e)(f)       140,323      289,355
</TABLE>

-------------------------
(a)      Includes share equivalents held in the AEP Employees Savings Plan in
         the amounts listed below:

<TABLE>
<CAPTION>
                               AEP EMPLOYEES SAVINGS                                           AEP EMPLOYEES SAVINGS
         NAME                 PLAN (SHARE EQUIVALENTS)           NAME                         PLAN (SHARE EQUIVALENTS)
         ----                 ------------------------           ----                         ------------------------
<S>                                              <C>        <S>                                                 <C>
       Mr. Boyd.............................     1,897           Mr. Pena...................................     3,792
       Dr. Draper...........................     3,449           Mr. Sampson................................       230
       Mr. Drozda...........................       127           Mr. Synowiec...............................       171
       Mr. Fayne............................     4,553           Mr. Vipperman..............................    10,790
       Mr. Lhota............................    15,184           Mr. Walters................................     6,762
       Mr. Marano...........................       159           Mr. Wittkamper.............................     2,025
       Dr. Markowsky........................     3,888      All Directors and Executive Officers............    53,027
</TABLE>

         With respect to the share equivalents held in the AEP Employees Savings
         Plan, such persons have sole voting power, but the investment/
         disposition power is subject to the terms of the Plan.
(b)      This column includes amounts deferred in stock units and held under
         AEP's officer benefit plans.
(c)      Includes the following numbers of shares held in joint tenancy with a
         family member: Dr. Draper, 5,221; Mr. Drozda, 16; Mr. Lhota, 2,180; Mr.
         Vipperman, 71; and Mr. Wittkamper, 1,536.
(d)      Includes 6 and 21 shares held by family members of Mr. Drozda and Dr.
         Markowsky, respectively, over which beneficial ownership is disclaimed.
(e)      Does not include, for Messrs. Lhota and Vipperman, 85,231 shares in the
         American Electric Power System Educational Trust Fund over which
         Messrs. Lhota and Vipperman share voting and investment power as
         trustees (they disclaim beneficial ownership). The amount of shares
         shown for all directors and executive officers as a group includes
         these shares.
(f)      Represents less than 1% of the total number of shares outstanding

                                       55
<PAGE>   63
         KEPCO. Omitted pursuant to Instruction I(2)(c).

         OPCO. The information required by this item is incorporated herein by
reference to the material under Share Ownership of Directors and Executive
Officers in the definitive information statement of OPCo for the 2000 annual
meeting of shareholders, to be filed within 120 days after December 31, 1999

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------------------------------

         AEP, APCO, I&M AND OPCO. None.

         AEGCO, CSPCO, AND KEPCO. Omitted pursuant to Instruction I(2)(c).

PART IV ========================================================================

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
--------------------------------------------------------------------------------

(a)   The following documents are filed as a part of this report:

1.         FINANCIAL STATEMENTS:

           The following financial statements have been incorporated herein by
           reference pursuant to Item 8.
<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                        ----
<S>                                                                                     <C>
       AEGCo:
           Independent Auditors' Report; Statements of Income for the years
           ended December 31, 1999, 1998, and 1997; Statements of Retained
           Earnings for the years ended December 31, 1999, 1998 and 1997;
           Statements of Cash Flows for the years ended December 31, 1999, 1998
           and 1997; Balance Sheets as of December 31, 1999 and 1998; Notes to
           Financial Statements

       AEP and its subsidiaries consolidated:
           Consolidated Statements of Income for the years ended December 31,
           1999, 1998 and 1997; Consolidated Statements of Comprehensive Income
           for the years ended December 31, 1999, 1998 and 1997; Consolidated
           Balance Sheets as of December 31, 1999 and 1998; Consolidated
           Statements of Cash Flows for the years ended December 31, 1999, 1998
           and 1997; Consolidated Statements of Common Shareholders' Equity for
           the years ended December 31, 1999, 1998 and 1997; Notes to
           Consolidated Financial Statements; Schedule of Consolidated
           Cumulative Preferred Stocks of Subsidiaries at December 31, 1999 and
           1998; Schedule of Consolidated Long-term Debt of Subsidiaries at
           December 31, 1999 and 1998; Independent Auditors' Report.

       APCo:
           Independent Auditors' Report; Consolidated Statements of Income for
           the years ended December 31, 1999, 1998 and 1997; Consolidated
           Balance Sheets as of December 31, 1999 and 1998; Consolidated
           Statements of Cash Flows for the years ended December 31, 1999, 1998
           and 1997; Consolidated Statements of Retained Earnings for the years
           ended December 31, 1999, 1998 and 1997; Notes to Consolidated
           Financial Statements.

       CSPCo:
           Consolidated Statements of Income for the years ended December 31,
           1999, 1998 and 1997; Consolidated Statements of Retained Earnings for
           the years ended December 31, 1999, 1998 and 1997; Consolidated
           Balance Sheets as of December 31, 1999 and 1998; Consolidated
           Statements of Cash Flows for the years ended December 31, 1999, 1998
           and 1997; Notes to Consolidated Financial Statements; Independent
           Auditors' Report.
</TABLE>

                                       56
<PAGE>   64
<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                        ----
<S>                                                                                     <C>

       I&M:
           Independent Auditors' Report; Consolidated Statements of Income for
           the years ended December 31, 1999, 1998 and 1997; Consolidated
           Balance Sheets as of December 31, 1999 and 1998; Consolidated
           Statements of Cash Flows for the years ended December 31, 1999, 1998
           and 1997; Consolidated Statements of Retained Earnings for the years
           ended December 31, 1999, 1998 and 1997; Notes to Consolidated
           Financial Statements.

       KEPCo:
           Independent Auditors' Report; Statements of Income for the years
           ended December 31, 1999, 1998 and 1997; Statements of Retained
           Earnings for the years ended December 31, 1999, 1998 and 1997;
           Balance Sheets as of December 31, 1999 and 1998; Statements of Cash
           Flows for the years ended December 31, 1999, 1998 and 1997; Notes to
           Financial Statements.

       OPCo:
           Consolidated Statements of Income for the years ended December 31,
           1999, 1998 and 1997; Consolidated Statements of Cash Flows for the
           years ended December 31, 1999, 1998 and 1997; Consolidated Balance
           Sheets as of December 31, 1999 and 1998; Consolidated Statements of
           Retained Earnings for the years ended December 31, 1999, 1998 and
           1997; Notes to Consolidated Financial Statements; Independent
           Auditors' Report.

2.         FINANCIAL STATEMENT SCHEDULES:

           Financial Statement Schedules are listed in the Index to Financial
           Statement Schedules (Certain schedules have been omitted because the
           required information is contained in the notes to financial
           statements or because such schedules are not required or are not
           applicable.)                                                                 S-1

           Independent Auditors' Report                                                 S-2

3.         EXHIBITS:

           Exhibits for AEGCo, AEP, APCo, CSPCo, I&M, KEPCo and OPCo are listed
           in the Exhibit Index and are incorporated herein by reference                E-1
</TABLE>


(b)   REPORTS ON FORM 8-K:

<TABLE>
<CAPTION>
   Company Reporting              Date of Report        Item Reported
   -----------------              --------------        -------------
<S>                             <C>                   <C>
   AEGCo, AEP, APCo, CSPCo,     December 15, 1999     Item 5.  Other Events
   I&M, KEPCo and OPCo                                Item 7.  Financial Statements and Exhibits
</TABLE>

                                       57
<PAGE>   65

                                   SIGNATURES

         PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) 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 SIGNATURE OF THE
UNDERSIGNED COMPANY SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING REFERENCE
TO SUCH COMPANY AND ANY SUBSIDIARIES THEREOF.

                                  AEP GENERATING COMPANY


                                     BY:           /S/  A. A. PENA
                                         ---------------------------------
                                         (A. A. PENA, VICE PRESIDENT, TREASURER
                                         AND CHIEF FINANCIAL OFFICER)

Date:  March 20, 2000

         PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. THE SIGNATURE OF
EACH OF THE UNDERSIGNED SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING
REFERENCE TO THE ABOVE-NAMED COMPANY AND ANY SUBSIDIARIES THEREOF.

<TABLE>
<CAPTION>
                       SIGNATURE                                        TITLE                DATE
                       ---------                                        -----                ----
<S>                                                 <C>                                 <C>
(I)      PRINCIPAL EXECUTIVE OFFICER:
            *E. LINN DRAPER, JR.                            President,
                                                     Chief Executive Officer
                                                           and Director


(II)     PRINCIPAL FINANCIAL OFFICER:
                 /S/ A. A. PENA                     Vice President, Treasurer,          March 20, 2000
---------------------------------------------        Chief Financial Officer
                     (A. A. PENA)                          and Director

(III)    PRINCIPAL ACCOUNTING OFFICER:
               /S/ L. V. ASSANTE                       Controller and                   March 20, 2000
---------------------------------------------        Chief Accounting Officer
                    (L. V. ASSANTE)

(IV)     A MAJORITY OF THE DIRECTORS:
                *HENRY W. FAYNE
              *JOHN R. JONES, III
                  *WM. J. LHOTA

*By:             /S/ A. A. PENA
    -----------------------------------------
        (A. A. PENA, ATTORNEY-IN-FACT)                                                  March 20, 2000

</TABLE>

                                       58
<PAGE>   66

                                   SIGNATURES

         PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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.

                                       AMERICAN ELECTRIC POWER COMPANY, INC.


                                           BY:          /S/  H. W. FAYNE
                                              ----------------------------------
                                                  (H. W. FAYNE, VICE PRESIDENT
                                                  AND CHIEF FINANCIAL OFFICER)


Date:  March 20, 2000

         PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
                       SIGNATURE                                          TITLE                            DATE
                       ---------                                          -----                            ----
<S>                                                             <C>                                    <C>
(I)      PRINCIPAL EXECUTIVE OFFICER:
              *E. LINN DRAPER, JR.                               Chairman of the Board,
                                                                       President,
                                                                 Chief Executive Officer
                                                                      and Director

(II)     PRINCIPAL FINANCIAL OFFICER:

                /S/ H. W. FAYNE                                    Vice President and                  March 20, 2000
----------------------------------------------                   Chief Financial Officer
                  (H. W. FAYNE)

(III)    PRINCIPAL ACCOUNTING OFFICER:
                /S/ L. V. ASSANTE                                     Controller and                   March 20, 2000
----------------------------------------------                   Chief Accounting Officer
                  (L. V. ASSANTE)

(IV)     A MAJORITY OF THE DIRECTORS:
              *JOHN P. DESBARRES
              *ROBERT M. DUNCAN
                *ROBERT W. FRI
            *LESTER A. HUDSON, JR.
              *LEONARD J. KUJAWA
               *DONALD G. SMITH
           *LINDA GILLESPIE STUNTZ
            *KATHRYN D. SULLIVAN
              *MORRIS TANENBAUM

*By:              /S/ H. W. FAYNE
    ------------------------------------------
         (H. W. FAYNE, ATTORNEY-IN-FACT)                                                               March 20, 2000
</TABLE>

                                       59
<PAGE>   67
                                   SIGNATURES

         PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) 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 SIGNATURE OF THE
UNDERSIGNED COMPANY SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING REFERENCE
TO SUCH COMPANY AND ANY SUBSIDIARIES THEREOF.

                                  APPALACHIAN POWER COMPANY
                                  COLUMBUS SOUTHERN POWER COMPANY
                                  KENTUCKY POWER COMPANY
                                  OHIO POWER COMPANY

                                      BY:              /S/  A. A. PENA
                                          --------------------------------------
                                          (A. A. PENA, VICE PRESIDENT, TREASURER
                                           AND CHIEF FINANCIAL OFFICER)

Date:  March 20, 2000

         PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. THE SIGNATURE OF
EACH OF THE UNDERSIGNED SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING
REFERENCE TO THE ABOVE-NAMED COMPANY AND ANY SUBSIDIARIES THEREOF.

<TABLE>
<CAPTION>
                       SIGNATURE                             TITLE                            DATE
                       ---------                             -----                            ----
<S>                                             <C>                                     <C>
(I)      PRINCIPAL EXECUTIVE OFFICER:
              *E. LINN DRAPER, JR.                 Chairman of the Board,
                                                  Chief Executive Officer
                                                         and Director

(II)     PRINCIPAL FINANCIAL OFFICER:
                /S/ A. A. PENA                   Vice President, Treasurer,             March 20, 2000
---------------------------------------------     Chief Financial Officer
                          (A. A. PENA)

(III)    PRINCIPAL ACCOUNTING OFFICER:
               /S/ L. V. ASSANTE                       Controller and                   March 20, 2000
---------------------------------------------     Chief Accounting Officer
                (L. V. ASSANTE)

(IV)     A MAJORITY OF THE DIRECTORS:
               *HENRY W. FAYNE
                *WM. J. LHOTA
              *J. H. VIPPERMAN

*By:            /S/ A. A. PENA
    -----------------------------------------
           (A. A. PENA, ATTORNEY-IN-FACT)                                               March 20, 2000
</TABLE>


                                       60
<PAGE>   68
                                   SIGNATURES

         PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) 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 SIGNATURE OF THE
UNDERSIGNED COMPANY SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING REFERENCE
TO SUCH COMPANY AND ANY SUBSIDIARIES THEREOF.

                                 INDIANA MICHIGAN POWER COMPANY


                                     BY:             /S/  A. A. PENA
                                         --------------------------------------
                                         (A. A. PENA, VICE PRESIDENT, TREASURER
                                         AND CHIEF FINANCIAL OFFICER)

Date:  March 20, 2000

         PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. THE SIGNATURE OF
EACH OF THE UNDERSIGNED SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING
REFERENCE TO THE ABOVE-NAMED COMPANY AND ANY SUBSIDIARIES THEREOF.

<TABLE>
<CAPTION>
                        SIGNATURE                                 TITLE                              DATE
                        ---------                                 -----                              ----
<S>                                                    <C>                                     <C>
(I)      PRINCIPAL EXECUTIVE OFFICER:
                  *E. LINN DRAPER, JR.                  Chairman of the Board,
                                                        Chief Executive Officer
                                                               and Director

(II)     PRINCIPAL FINANCIAL OFFICER:
                     /S/ A. A. PENA                    Vice President, Treasurer,              March 20, 2000
------------------------------------------------        Chief Financial Officer
                       (A. A. PENA)                        and Director

(III)    PRINCIPAL ACCOUNTING OFFICER:
                    /S/ L. V. ASSANTE                         Controller and                   March 20, 2000
------------------------------------------------       Chief Accounting Officer
                     (L. V. ASSANTE)

(IV)     A MAJORITY OF THE DIRECTORS:
                  *K. G. BOYD
               *JEFFREY A. DROZDA
                 *HENRY W. FAYNE
                  *WM. J. LHOTA
                 *MARK W. MARANO
                *JOHN R. SAMPSON
                 *D. B. SYNOWIEC
                *J. H. VIPPERMAN
                 *W. E. WALTERS
                *E. H. WITTKAMPER

*By:               /s/ A. A. PENA
         ---------------------------------------
             (A. A. PENA, ATTORNEY-IN-FACT)                                                    March 20, 2000

</TABLE>

                                       61
<PAGE>   69

                     INDEX TO FINANCIAL STATEMENT SCHEDULES

                                                                            Page

INDEPENDENT AUDITORS' REPORT ...........................................    S-2

The following financial statement schedules for the years ended
December 31, 1999, 1998 and 1997 are included in this report on
the pages indicated.

AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
        Schedule II-- Valuation and Qualifying Accounts and Reserves....    S-3

APPALACHIAN POWER COMPANY AND SUBSIDIARIES
        Schedule II-- Valuation and Qualifying Accounts and Reserves....    S-3

COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
        Schedule II-- Valuation and Qualifying Accounts and Reserves ...    S-3

INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
        Schedule II-- Valuation and Qualifying Accounts and Reserves....    S-4

KENTUCKY POWER COMPANY
        Schedule II-- Valuation and Qualifying Accounts and Reserves ...    S-4

OHIO POWER COMPANY AND SUBSIDIARIES
        Schedule II-- Valuation and Qualifying Accounts and Reserves....    S-4

                                      S-1

<PAGE>   70

                          INDEPENDENT AUDITORS' REPORT


AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARIES:

      We have audited the consolidated financial statements of American Electric
Power Company, Inc. and its subsidiaries and the financial statements of certain
of its subsidiaries, listed in Item 14 herein, as of December 31, 1999 and 1998,
and for each of the three years in the period ended December 31, 1999, and have
issued our reports thereon dated February 22, 2000 (March 3, 2000 as to Note 7
for American Electric Power Company, Inc. and its subsidiaries; Note 6 for
Appalachian Power Company and its subsidiaries, Columbus Southern Power Company
and its subsidiaries, Indiana Michigan Power Company and its subsidiaries,
Kentucky Power Company and Ohio Power Company and its subsidiaries; and Note 3
for AEP Generating Company); such financial statements and reports are included
in the respective 1999 Annual Report and are incorporated herein by reference.
Our audits also included the financial statement schedules of American Electric
Power Company, Inc. and its subsidiaries and of certain of its subsidiaries,
listed in Item 14. These financial statement schedules are the responsibility of
the respective Company's management. Our responsibility is to express an opinion
based on our audits. In our opinion, such financial statement schedules, when
considered in relation to the corresponding basic financial statements taken as
a whole, present fairly in all material respects the information set forth
therein.




DELOITTE & TOUCHE LLP
Columbus, Ohio
February 22, 2000

                                      S-2
<PAGE>   71

<TABLE>
<CAPTION>
===========================================================================================================================

                              AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
                               SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
===========================================================================================================================
                 COLUMN A                       COLUMN B               COLUMN C                COLUMN D        COLUMN E
---------------------------------------------------------------------------------------------------------------------------
                                                                       ADDITIONS
                                                             ------------------------------
                                               BALANCE AT     CHARGED TO     CHARGED TO                       BALANCE AT
                                               BEGINNING       COSTS AND       OTHER                            END OF
                DESCRIPTION                    OF PERIOD       EXPENSES       ACCOUNTS       DEDUCTIONS         PERIOD
---------------------------------------------------------------------------------------------------------------------------
                                                                            (IN THOUSANDS)
<S>                                            <C>             <C>           <C>             <C>              <C>
DEDUCTED FROM ASSETS:
   Accumulated Provision for
     Uncollectible Accounts:
        Year Ended December 31, 1999.......     $11,075         $18,816        $15,746(a)      $33,185(b)       $12,452
                                                =======         =======        =======         =======          =======
        Year Ended December 31, 1998.......     $ 6,760         $23,646        $ 8,290(a)      $27,621(b)       $11,075
                                                =======         =======        =======         =======          =======
        Year Ended December 31, 1997.......     $ 3,692         $20,650        $ 8,953(a)      $26,535(b)       $ 6,760
                                                =======         =======        =======         =======          =======
---------------------
(a)      Recoveries on accounts previously written off.
(b)      Uncollectible accounts written off.
===========================================================================================================================
</TABLE>

<TABLE>
<CAPTION>
===========================================================================================================================
                                         APPALACHIAN POWER COMPANY AND SUBSIDIARIES
                              SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

===========================================================================================================================
                 COLUMN A                       COLUMN B               COLUMN C                COLUMN D        COLUMN E
---------------------------------------------------------------------------------------------------------------------------
                                                                       ADDITIONS
                                                             ------------------------------
                                               BALANCE AT     CHARGED TO     CHARGED TO                       BALANCE AT
                                               BEGINNING       COSTS AND       OTHER                            END OF
                DESCRIPTION                    OF PERIOD       EXPENSES       ACCOUNTS        DEDUCTIONS        PERIOD
---------------------------------------------------------------------------------------------------------------------------
                                                                            (IN THOUSANDS)
<S>                                            <C>            <C>            <C>              <C>             <C>
DEDUCTED FROM ASSETS:
   Accumulated Provision for
     Uncollectible Accounts:
        Year Ended December 31, 1999.......      $2,234          $5,492        $1,995(a)        $7,112(b)       $2,609
                                                 ======          ======        ======           ======          ======
        Year Ended December 31, 1998.......      $1,333          $5,093        $1,306(a)        $5,498(b)       $2,234
                                                 ======          ======        ======           ======          ======
        Year Ended December 31, 1997.......      $  687          $3,621        $  666(a)        $3,641(b)       $1,333
                                                 ======          ======        ======           ======          ======
---------------------
(a)      Recoveries on accounts previously written off.
(b)      Uncollectible accounts written off.
===========================================================================================================================
</TABLE>

<TABLE>
<CAPTION>
==========================================================================================================================
                                       COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
                               SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
==========================================================================================================================
                 COLUMN A                       COLUMN B               COLUMN C                COLUMN D        COLUMN E
---------------------------------------------------------------------------------------------------------------------------
                                                                       ADDITIONS
                                                             ------------------------------
                                               BALANCE AT     CHARGED TO     CHARGED TO                       BALANCE AT
                                               BEGINNING       COSTS AND       OTHER                            END OF
                DESCRIPTION                    OF PERIOD       EXPENSES       ACCOUNTS        DEDUCTIONS        PERIOD
---------------------------------------------------------------------------------------------------------------------------
                                                                            (IN THOUSANDS)
<S>                                            <C>            <C>            <C>              <C>             <C>
DEDUCTED FROM ASSETS:
   Accumulated Provision for
     Uncollectible Accounts:
        Year Ended December 31, 1999.......      $2,598          $3,334        $10,782(a)     $13,669(b)        $3,045
                                                 ======          ======        =======        =======           ======
        Year Ended December 31, 1998.......      $1,058          $7,551        $ 5,278(a)     $11,289(b)        $2,598
                                                 ======          ======        ========       =======           ======
        Year Ended December 31, 1997.......      $1,032          $6,815        $ 6,380(a)     $13,169(b)        $1,058
                                                 ======          ======        ========       =======           ======
---------------------
(a)      Recoveries on accounts previously written off.
(b)      Uncollectible accounts written off.
===========================================================================================================================
</TABLE>
                                      S-3
<PAGE>   72

<TABLE>
<CAPTION>
===========================================================================================================================
                                     INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
                              SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
===========================================================================================================================
                 COLUMN A                       COLUMN B               COLUMN C                COLUMN D        COLUMN E
---------------------------------------------------------------------------------------------------------------------------
                                                                       ADDITIONS
                                                             ------------------------------
                                               BALANCE AT     CHARGED TO     CHARGED TO                       BALANCE AT
                                               BEGINNING       COSTS AND       OTHER                            END OF
                DESCRIPTION                    OF PERIOD       EXPENSES       ACCOUNTS       DEDUCTIONS         PERIOD
---------------------------------------------------------------------------------------------------------------------------
                                                                            (IN THOUSANDS)
<S>                                            <C>            <C>            <C>             <C>              <C>
DEDUCTED FROM ASSETS:
   Accumulated Provision for
     Uncollectible Accounts:
        Year Ended December 31, 1999.........      $2,027         $3,966         $1,367(a)     $5,512(b)      $1,848
                                                   ======         ======         ======        ======         ======
        Year Ended December 31, 1998.........      $1,188         $4,630         $  221(a)     $4,012(b)      $2,027
                                                   ======         ======         ======        ======         ======
        Year Ended December 31, 1997.........      $  156         $4,411         $  798(a)     $4,177(b)      $1,188
                                                   ======         ======         ======        ======         ======
---------------------
(a)      Recoveries on accounts previously written off.
(b)      Uncollectible accounts written off.
==========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
=========================================================================================================================
                                                   KENTUCKY POWER COMPANY
                              SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                 COLUMN A                       COLUMN B               COLUMN C                COLUMN D        COLUMN E
---------------------------------------------------------------------------------------------------------------------------
                                                                       ADDITIONS
                                                             ------------------------------
                                               BALANCE AT     CHARGED TO     CHARGED TO                       BALANCE AT
                                               BEGINNING       COSTS AND       OTHER                            END OF
                DESCRIPTION                    OF PERIOD       EXPENSES       ACCOUNTS       DEDUCTIONS         PERIOD
---------------------------------------------------------------------------------------------------------------------------
                                                                            (IN THOUSANDS)
<S>                                            <C>            <C>            <C>             <C>              <C>
DEDUCTED FROM ASSETS:
   Accumulated Provision for
     Uncollectible Accounts:
        Year Ended December 31, 1999.........       $848          $1,032         $467(a)       $1,710(b)        $637
                                                    ====          ======         ====          ======           ====
        Year Ended December 31, 1998.........       $525          $1,280         $392(a)       $1,349(b)        $848
                                                    ====          ======         ====          ======           ====
        Year Ended December 31, 1997.........       $272          $1,482         $347(a)       $1,576(b)        $525
                                                    ====          ======         ====          ======           ====
---------------------
(a)      Recoveries on accounts previously written off.
(b)      Uncollectible accounts written off.
==========================================================================================================================
</TABLE>

<TABLE>
<CAPTION>
===========================================================================================================================
                                          OHIO POWER COMPANY AND SUBSIDIARIES
                              SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
===========================================================================================================================
                 COLUMN A                       COLUMN B               COLUMN C                COLUMN D        COLUMN E
---------------------------------------------------------------------------------------------------------------------------
                                                                       ADDITIONS
                                                             ------------------------------
                                               BALANCE AT     CHARGED TO     CHARGED TO                       BALANCE AT
                                               BEGINNING       COSTS AND       OTHER                            END OF
                DESCRIPTION                    OF PERIOD       EXPENSES       ACCOUNTS        DEDUCTIONS        PERIOD
---------------------------------------------------------------------------------------------------------------------------
                                                                            (IN THOUSANDS)
<S>                                            <C>            <C>            <C>              <C>             <C>
DEDUCTED FROM ASSETS:
   Accumulated Provision for
     Uncollectible Accounts:
        Year Ended December 31, 1999.........      $1,678         $4,730         $1,273(a)     $5,458(b)       $2,223
                                                   ======         ======         ======        ======          ======
        Year Ended December 31, 1998.........      $2,501         $3,255         $  941(a)     $5,019(b)       $1,678
                                                   ======         ======         ======        ======          ======
        Year Ended December 31, 1997.........      $1,433         $4,008         $  675(a)     $3,615(b)       $2,501
                                                   ======         ======         ======        ======          ======
---------------------
(a)      Recoveries on accounts previously written off.
(b)      Uncollectible accounts written off.
==========================================================================================================================
</TABLE>
                                      S-4

<PAGE>   73
                               EXHIBIT INDEX

         Certain of the following exhibits, designated with an asterisk(*), are
filed herewith. The exhibits not so designated have heretofore been filed with
the Commission and, pursuant to 17 C.F.R. 229.10(d) and 240.12b-32, are
incorporated herein by reference to the documents indicated in brackets
following the descriptions of such exhibits. Exhibits, designated with a dagger
(++) are management contracts or compensatory plans or arrangements
required to be filed as an exhibit to this form pursuant to Item 14(c) of this
report.

<TABLE>
<CAPTION>
EXHIBIT NUMBER                                          DESCRIPTION
--------------                                          -----------
<S>                <C>     <C>
AEGCo
   3(a)            --      Copy of Articles of Incorporation of AEGCo [Registration Statement on Form 10 for the Common
                           Shares of AEGCo, File No. 0-18135, Exhibit 3(a)].
   3(b)            --      Copy of the Code of Regulations of AEGCo [Registration Statement on Form 10 for the Common
                           Shares of AEGCo, File No. 0-18135, Exhibit 3(b)].
  10(a)            --      Copy of Capital Funds Agreement dated as of December 30, 1988 between AEGCo and AEP
                           [Registration Statement No. 33-32752, Exhibit 28(a)].
  10(b)(1)         --      Copy of Unit Power Agreement dated as of March 31, 1982 between AEGCo and I&M, as amended
                           [Registration Statement No. 33-32752, Exhibits 28(b)(1)(A) and 28(b)(1)(B)].
  10(b)(2)         --      Copy of Unit Power Agreement, dated as of August 1, 1984, among AEGCo, I&M and KEPCo
                           [Registration Statement No. 33-32752, Exhibit 28(b)(2)].
  10(b)(3)         --      Copy of Agreement, dated as of October 1, 1984, among AEGCo, I&M, APCo and Virginia Electric
                           and Power Company [Registration Statement No. 33-32752, Exhibit 28(b)(3)].
  10(c)            --      Copy of Lease Agreements, dated as of December 1, 1989, between AEGCo and Wilmington Trust
                           Company, as amended [Registration Statement No. 33-32752, Exhibits 28(c)(1)(C), 28(c)(2)(C),
                           28(c)(3)(C), 28(c)(4)(C), 28(c)(5)(C) and 28(c)(6)(C); Annual Report on Form 10-K of AEGCo
                           for the fiscal year ended December 31, 1993, File No. 0-18135, Exhibits 10(c)(1)(B),
                           10(c)(2)(B), 10(c)(3)(B), 10(c)(4)(B), 10(c)(5)(B) and 10(c)(6)(B)].
 *13               --      Copy of those portions of the AEGCo 1999 Annual Report (for the fiscal year
                           ended December 31, 1999) which are incorporated by reference in this filing.
 *24               --      Power of Attorney.
 *27               --      Financial Data Schedules.

AEP++
   3(a)            --      Copy of Restated Certificate of Incorporation of AEP, dated October 29, 1997
                           [Quarterly Report on Form 10-Q of AEP for the quarter ended September 30, 1997,
                           File No. 1-3525, Exhibit 3(a)].
   3(b)            --      Copy of Certificate of Amendment of the Restated Certificate of Incorporation of AEP,
                           dated January 13, 1999 [Annual Report on Form 10-K of AEP for the fiscal year ended
                           December 31, 1998, File No. 1-3525, Exhibit 3(b)].
   3(c)            --      Composite copy of the Restated Certificate of Incorporation of AEP, as amended
                           [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1998,
                           File No. 1-3525, Exhibit 3(c)].
   3(d)            --      Copy of By-Laws of AEP, as amended through January 28, 1998 [Annual Report on
                           Form 10-K of AEP for the fiscal year ended December 31, 1997, File No. 1-3525,
                           Exhibit 3(b)].
  10(a)            --      Interconnection Agreement, dated July 6, 1951, among APCo, CSPCo, KEPCo, OPCo and I&M and
                           with the Service Corporation, as amended [Registration Statement No. 2-52910, Exhibit 5(a);
                           Registration Statement No. 2-61009, Exhibit 5(b); and Annual Report on Form 10-K of AEP for
                           the fiscal year ended December 31, 1990, File No. 1-3525, Exhibit 10(a)(3)].
</TABLE>

                                       E-1
<PAGE>   74


<TABLE>
<CAPTION>
EXHIBIT NUMBER                                          DESCRIPTION
--------------                                          -----------
AEP++ (CONTINUED)
<S>                <C>     <C>

   10(b)           --      Copy of Transmission Agreement, dated April 1, 1984, among APCo, CSPCo, I&M, KEPCo, OPCo and
                           with the Service Corporation as agent, as amended [Annual Report on Form 10-K of AEP for the
                           fiscal year ended December 31, 1985, File No. 1-3525, Exhibit 10(b); and Annual Report on
                           Form 10-K of AEP for the fiscal year ended December 31, 1988, File No. 1-3525, Exhibit
                           10(b)(2)].
   10(c)           --      Copy of Lease Agreements, dated as of December 1, 1989, between AEGCo or I&M and Wilmington
                           Trust Company, as amended [Registration Statement No. 33-32752, Exhibits 28(c)(1)(C),
                           28(c)(2)(C), 28(c)(3)(C), 28(c)(4)(C), 28(c)(5)(C) and 28(c)(6)(C); Registration Statement
                           No. 33-32753, Exhibits 28(a)(1)(C), 28(a)(2)(C), 28(a)(3)(C), 28(a)(4)(C), 28(a)(5)(C) and
                           28(a)(6)(C); and Annual Report on Form 10-K of AEGCo for the fiscal year ended December 31,
                           1993, File No. 0-18135, Exhibits 10(c)(1)(B), 10(c)(2)(B), 10(c)(3)(B), 10(c)(4)(B),
                           10(c)(5)(B) and 10(c)(6)(B); Annual Report on Form 10-K of I&M for the fiscal year ended
                           December 31, 1993, File No. 1-3570, Exhibits 10(e)(1)(B), 10(e)(2)(B), 10(e)(3)(B),
                           10(e)(4)(B), 10(e)(5)(B) and 10(e)(6)(B)].
   10(d)           --      Lease Agreement dated January 20, 1995 between OPCo and JMG Funding, Limited Partnership, and
                           amendment thereto (confidential treatment requested) [Annual Report on Form 10-K of OPCo for
                           the fiscal year ended December 31, 1994, File No. 1-6543, Exhibit 10(l)(2)].
   10(e)           --      Modification No. 1 to the AEP System Interim Allowance Agreement, dated July 28, 1994, among
                           APCo, CSPCo, I&M, KEPCo, OPCo and the Service Corporation [Annual Report on Form 10-K of AEP
                           for the fiscal year ended December 31, 1996, File No. 1-3525, Exhibit 10(l)].
  10(f)(1)         --      Agreement and Plan of Merger, dated as of December 21, 1997, By and Among American Electric
                           Power Company, Inc., Augusta Acquisition Corporation and Central and South West Corporation
                           [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1997, File No.
                           1-3525, Exhibit 10(f)].
  10(f)(2)         --      Amendment No. 1, dated as of December 31, 1999, to the Agreement and Plan of Merger [Current
                           Report on Form 8-K of AEP dated December 15, 1999, File No. 1-3525, Exhibit 10].
 +10(g)(1)         --      AEP Deferred Compensation Agreement for certain executive officers [Annual Report
                           on Form 10-K of AEP for the fiscal year ended December 31, 1985, File No.
                           1-3525, Exhibit 10(e)].
 +10(g)(2)         --      Amendment to AEP Deferred Compensation Agreement for certain executive officers [Annual
                           Report on Form 10-K of AEP for the fiscal year ended December 31, 1986, File No. 1-3525,
                           Exhibit 10(d)(2)].
 +10(h)            --      AEP Accident Coverage Insurance Plan for directors [Annual Report on Form 10-K of
                           AEP for the fiscal year ended December 31, 1985, File No. 1-3525, Exhibit 10(g)].
 +10(i)(1)         --      AEP Deferred Compensation and Stock Plan for Non-Employee Directors [Annual
                           Report on Form 10-K of AEP for the fiscal year ended December 31, 1996, File
                           No. 1-3525, Exhibit 10(f)(1)].
 +10(i)(2)         --      AEP Stock Unit Accumulation Plan for Non-Employee Directors [Annual Report on
                           Form 10-K of AEP for the fiscal year ended December 31, 1996, File No. 1-3525,
                           Exhibit 10(f)(2)].
 +10(j)(1)(A)      --      AEP System Excess Benefit Plan, Amended and Restated as of August 1, 1999
                           [Quarterly Report on Form 10-Q of AEP for the quarter ended September 30, 1999,
                           File No. 1-3525, Exhibit 10(a)].
 +10(j)(1)(B)      --      Guaranty by AEP of the Service Corporation Excess Benefits Plan [Annual Report on
                           Form 10-K of AEP for the fiscal year ended December 31, 1990, File No. 1-3525,
                           Exhibit 10(h)(1)(B)].
</TABLE>

                                     E-2
<PAGE>   75

<TABLE>
<CAPTION>
EXHIBIT NUMBER                                          DESCRIPTION
--------------                                          -----------
AEP++ (CONTINUED)
<S>                <C>     <C>
+10(j)(2)          --      AEP System Supplemental Savings Plan, Amended and Restated as of November 1, 1999
                           (Non-Qualified) [Quarterly Report on Form 10-Q of AEP for the quarter ended September 30,
                           1999, File No. 1-3525, Exhibit 10(b)].
+10(j)(3)          --      Service Corporation Umbrella Trust for Executives [Annual Report on Form 10-K of AEP
                           for the fiscal year ended December 31, 1993, File No. 1-3525, Exhibit 10(g)(3)].
+10(k)             --      Employment Agreement between E. Linn Draper, Jr. and AEP and the Service Corporation [Annual
                           Report on Form 10-K of AEGCo for the fiscal year ended December 31, 1991, File No. 0-18135,
                           Exhibit 10(g)(3)].
+10(l)(1)          --      AEP System Senior Officer Annual Incentive Compensation Plan [Annual Report on Form 10-K of AEP
                           for the fiscal year ended December 31, 1996, File No. 1-3525, Exhibit 10(i)(1)].
+10(l)(2)          --      American Electric Power System Performance Share Incentive Plan, as Amended and Restated through
                           February 26, 1997 [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1996,
                           File No. 1-3525, Exhibit 10(i)(2)].
+10(m)             --      AEP System Survivor Benefit Plan, effective January 27, 1998 [Quarterly Report on Form 10-Q of
                           AEP for the quarter ended September 30, 1998, File No. 1-3525, Exhibit 10].
+10(n)             --      Letter agreement between AEP and Donald M. Clements, Jr. dated August 19, 1994 [Annual Report
                           on Form 10-K of AEP for the fiscal year ended December 31, 1998, File No. 1-3525, Exhibit 10(n)].
+10(o)             --      AEP Senior Executive Severance Plan for Merger with Central and South West Corporation, effective
                           March 1, 1999 [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1998,
                           File No. 1-3525, Exhibit 10(o)].
+*10(p)            --      AEP Change In Control Agreement.
 *13               --      Copy of those portions of the AEP 1999 Annual Report (for the fiscal year ended December 31, 1999)
                           which are incorporated by reference in this filing.
 *21               --      List of subsidiaries of AEP.
 *23               --      Consent of Deloitte & Touche LLP.
 *24               --      Power of Attorney.
 *27               --      Financial Data Schedules.

APCo++
   3(a)            --      Copy of Restated Articles of Incorporation of APCo, and amendments thereto to November 4,
                           1993 [Registration Statement No. 33-50163, Exhibit 4(a); Registration Statement No. 33-53805,
                           Exhibits 4(b) and 4(c)].
   3(b)            --      Copy of Articles of Amendment to the Restated Articles of Incorporation of APCo, dated June 6, 1994
                           [Annual Report on Form 10-K of APCo for the fiscal year ended December 31, 1994, File No. 1-3457,
                           Exhibit 3(b)].
   3(c)            --      Copy of Articles of Amendment to the Restated Articles of Incorporation of APCo, dated March 6,
                           1997 [Annual Report on Form 10-K of APCo for the fiscal year ended December 31, 1996, File No. 1-3457,
                           Exhibit 3(c)].
   3(d)            --      Composite copy of the Restated Articles of Incorporation of APCo (amended as of March 7, 1997)
                           [Annual Report on Form 10-K of APCo for the fiscal year ended December 31, 1996, File No. 1-3457,
                           Exhibit 3(d)].
  *3(e)            --      Copy of By-Laws of APCo (amended as of June 1, 1998).
</TABLE>

                                      E-3

<PAGE>   76
<TABLE>
<CAPTION>
EXHIBIT NUMBER                                               DESCRIPTION
--------------                                               -----------
APCo++ (CONTINUED)
<S>                <C>     <C>
    4(a)           --      Copy of Mortgage and Deed of Trust, dated as of December 1, 1940, between APCo and Bankers
                           Trust Company and R. Gregory Page, as Trustees, as amended and supplemented [Registration
                           Statement No. 2-7289, Exhibit 7(b); Registration Statement No. 2-19884, Exhibit 2(1);
                           Registration Statement No. 2-24453, Exhibit 2(n); Registration Statement No. 2-60015,
                           Exhibits 2(b)(2), 2(b)(3), 2(b)(4), 2(b)(5), 2(b)(6), 2(b)(7), 2(b)(8), 2(b)(9), 2(b)(10),
                           2(b)(12), 2(b)(14), 2(b)(15), 2(b)(16), 2(b)(17), 2(b)(18), 2(b)(19), 2(b)(20), 2(b)(21), 2(b)(22),
                           2(b)(23), 2(b)(24), 2(b)(25), 2(b)(26), 2(b)(27) and 2(b)(28); Registration Statement No. 2-64102,
                           Exhibit 2(b)(29); Registration Statement No. 2-66457, Exhibits (2)(b)(30) and 2(b)(31); Registration
                           Statement No. 2-69217, Exhibit 2(b)(32); Registration Statement No. 2-86237, Exhibit 4(b);
                           Registration Statement No. 33-11723, Exhibit 4(b); Registration Statement No. 33-17003,
                           Exhibit 4(a)(ii), Registration Statement No. 33-30964, Exhibit 4(b); Registration Statement
                           No. 33-40720, Exhibit 4(b); Registration Statement No. 33-45219, Exhibit 4(b); Registration Statement
                           No. 33-46128, Exhibits 4(b) and 4(c); Registration Statement No. 33-53410, Exhibit 4(b); Registration
                           Statement No. 33-59834, Exhibit 4(b); Registration Statement No. 33-50229, Exhibits 4(b) and 4(c);
                           Registration Statement No. 33-58431, Exhibits 4(b), 4(c), 4(d) and 4(e); Registration Statement
                           No. 333-01049, Exhibits 4(b) and 4(c); Registration Statement No. 333-20305, Exhibits 4(b) and 4(c);
                           Annual Report on Form 10-K of APCo for the fiscal year ended December 31, 1996, File No. 1-3457,
                           Exhibit 4(b); Annual Report on Form 10-K of APCo for the fiscal year ended December 31, 1998,
                           Exhibit 4(b)].
    4(b)          --       Indenture (for unsecured debt securities), dated as of January 1, 1998, between APCo and The Bank
                           of New York, As Trustee [Registration Statement No. 333-45927, Exhibits 4(a) and 4(b);
                           Registration Statement No. 333-49071, Exhibit 4(b); Registration Statement No. 333-84061,
                           Exhibits 4(b) and 4(c)].
   *4(c)          --       Company Order and Officers' Certificate, dated October 19, 1999, establishing certain terms of the
                           7.45% Senior Notes, Series D, due 2004.
  10(a)(1)        --       Copy of Power Agreement, dated October 15, 1952, between OVEC and United States of America,
                           acting by and through the United States Atomic Energy Commission, and, subsequent to January
                           18, 1975, the Administrator of the Energy Research and Development Administration, as amended
                           [Registration Statement No. 2-60015, Exhibit 5(a); Registration Statement No. 2-63234,
                           Exhibit 5(a)(1)(B); Registration Statement No 2-66301, Exhibit 5(a)(1)(C); Registration
                           Statement No. 2-67728, Exhibit 5(a)(1)(D); Annual Report on Form 10-K of APCo for the fiscal
                           year ended December 31, 1989, File No. 1-3457, Exhibit 10(a)(1)(F); and Annual Report on Form
                           10-K of APCo for the fiscal year ended December 31, 1992, File No. 1-3457, Exhibit
                           10(a)(1)(B)].
  10(a)(2)        --       Copy of Inter-Company Power Agreement, dated as of July 10, 1953, among OVEC and the
                           Sponsoring Companies, as amended [Registration Statement No. 2-60015, Exhibit 5(c);
                           Registration Statement No. 2-67728, Exhibit 5(a)(3)(B); and Annual Report on Form 10-K of
                           APCo for the fiscal year ended December 31, 1992, File No. 1-3457, Exhibit 10(a)(2)(B)].
  10(a)(3)        --       Copy of Power Agreement, dated July 10, 1953, between OVEC and Indiana-Kentucky Electric
                           Corporation, as amended [Registration Statement No. 2-60015, Exhibit 5(e)].
  10(b)           --       Copy of Interconnection Agreement, dated July 6, 1951, among APCo, CSPCo, KEPCo, OPCo and I&M
                           and with the Service Corporation, as amended [Registration Statement No. 2-52910, Exhibit
                           5(a); Registration Statement No. 2-61009, Exhibit 5(b); Annual Report on Form 10-K of AEP for
                           the fiscal year ended December 31, 1990, File No. 1-3525, Exhibit 10(a)(3)].
</TABLE>
                                      E-4

<PAGE>   77
<TABLE>
<CAPTION>
EXHIBIT NUMBER                                               DESCRIPTION
--------------                                               -----------
APCo++ (CONTINUED)
<S>                <C>     <C>
  10(c)            --      Copy of Transmission Agreement, dated April 1, 1984, among APCo, CSPCo, I&M, KEPCo, OPCo and
                           with the Service Corporation as agent, as amended [Annual Report on Form 10-K of AEP for the
                           fiscal year ended December 31, 1985, File No. 1-3525, Exhibit 10(b); Annual Report on Form
                           10-K of AEP for the fiscal year ended December 31, 1988, File No. 1-3525, Exhibit 10(b)(2)].
  10(d)            --      Copy of Modification No. 1 to the AEP System Interim Allowance Agreement, dated July 28,
                           1994, among APCo, CSPCo, I&M, KEPCo, OPCo and the Service Corporation [Annual Report on Form
                           10-K of AEP for the fiscal year ended December 31, 1996, File No. 1-3525, Exhibit 10(l)].
  10(e)(1)         --      Agreement and Plan of Merger, dated as of December 21, 1997, By and Among American Electric
                           Power Company, Inc., Augusta Acquisition Corporation and Central and South West Corporation
                           [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1997, File No.
                           1-3525, Exhibit 10(f)].
  10(e)(2)         --      Amendment No. 1, dated as of December 31, 1999, to the Agreement and Plan of Merger [Current
                           Report on Form 8-K of APCo dated December 15, 1999, File No. 1-3457, Exhibit 10].
 +10(f)(1)         --      AEP Deferred Compensation Agreement for certain executive officers [Annual Report on Form 10-K of AEP
                           for the fiscal year ended December 31, 1985, File No. 1-3525, Exhibit 10(e)].
 +10(f)(2)         --      Amendment to AEP Deferred Compensation Agreement for certain executive officers [Annual Report on Form
                           10-K of AEP for the fiscal year ended December 31,1986, File No. 1-3525, Exhibit 10(d)(2)].
 +10(g)(1)         --      AEP System Senior Officer Annual Incentive Compensation Plan [Annual Report on Form 10-K of AEP
                           for the fiscal year ended December 31, 1996, File No. 1-3525, Exhibit 10(i)(1)].
 +10(g)(2)         --      American Electric Power System Performance Share Incentive Plan as Amended and Restated through
                           February 26, 1997 [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1996,
                           File No. 1-3525, Exhibit 10(i)(2)].
 +10(h)(1)         --      AEP System Excess Benefit Plan, Amended and Restated as of August 1, 1999 [Quarterly Report on
                           Form 10-Q of AEP for the quarter ended September 30, 1999, File No. 1-3525, Exhibit 10(a)].
 +10(h)(2)         --      AEP System Supplemental Savings Plan, Amended and Restated as of November 1, 1999 (Non-Qualified)
                           [Quarterly Report on Form 10-Q of AEP for the quarter ended September 30, 1999, File No. 1-3525,
                           Exhibit 10(b)].
 +10(h)(3)         --      Umbrella Trust for Executives [Annual Report on Form 10-K of AEP for the fiscal year ended December
                           31, 1993, File No. 1-3525, Exhibit 10(g)(3)].
 +10(i)            --      Employment Agreement between E. Linn Draper, Jr. and AEP and the Service Corporation [Annual
                           Report on Form 10-K of AEGCo for the fiscal year ended December 31, 1991, File No. 0-18135,
                           Exhibit 10(g)(3)].
 +10(j)            --      AEP System Survivor Benefit Plan, effective January 27, 1998 [Quarterly Report on Form 10-Q of
                           AEP for the quarter ended September 30, 1998, File No. 1-3525, Exhibit 10].
 +10(k)            --      AEP Senior Executive Severance Plan for Merger with Central and South West Corporation, effective
                           March 1, 1999[Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1998, File No.
                           1-3525, Exhibit 10(o)].
 +10(l)            --      AEP Change In Control Agreement [Annual Report on Form 10-K of AEP for the fiscal year ended December
                           31, 1999, File No. 1-3525, Exhibit 10(p)].
 *12               --      Statement re: Computation of Ratios.
 *13               --      Copy of those portions of the APCo 1999 Annual Report (for the fiscal year ended December 31, 1999)
                           which are incorporated by reference in this filing.
</TABLE>

                                   E-5

<PAGE>   78

<TABLE>
<CAPTION>
EXHIBIT NUMBER                                               DESCRIPTION
--------------                                               -----------
APCo++ (CONTINUED)
<S>                <C>     <C>

  21               --      List of subsidiaries of APCo [Annual Report on Form 10-K of AEP for the fiscal year ended
                           December 31, 1999, File No. 1-3525, Exhibit 21].
 *23               --      Consent of Deloitte & Touche LLP.
 *24               --      Power of Attorney.
 *27               --      Financial Data Schedules.

CSPCo++
   3(a)            --      Copy of Amended Articles of Incorporation of CSPCo, as amended to March 6, 1992 [Registration
                           Statement No. 33-53377, Exhibit 4(a)].
   3(b)            --      Copy of Certificate of Amendment to Amended Articles of Incorporation of CSPCo, dated May 19, 1994
                           [Annual Report on Form 10-K of CSPCo for the fiscal year ended December 31, 1994, File No. 1-2680,
                           Exhibit 3(b)].
   3(c)            --      Composite copy of Amended Articles of Incorporation of CSPCo, as amended [Annual Report on
                           Form 10-K of CSPCo for the fiscal year ended December 31, 1994, File No. 1-2680, Exhibit 3(c)].
   3(d)            --      Copy of Code of Regulations and By-Laws of CSPCo [Annual Report on Form 10-K of CSPCo for the fiscal
                           year ended December 31, 1987, File No. 1-2680, Exhibit 3(d)].
   4(a)            --      Copy of Indenture of Mortgage and Deed of Trust, dated September 1, 1940, between CSPCo and
                           City Bank Farmers Trust Company (now Citibank, N.A.), as trustee, as supplemented and amended
                           [Registration Statement No. 2-59411, Exhibits 2(B) and 2(C); Registration Statement No.
                           2-80535, Exhibit 4(b); Registration Statement No. 2-87091, Exhibit 4(b); Registration
                           Statement No. 2-93208, Exhibit 4(b); Registration Statement No. 2-97652, Exhibit 4(b);
                           Registration Statement No. 33-7081, Exhibit 4(b); Registration Statement No. 33-12389,
                           Exhibit 4(b); Registration Statement No. 33-19227, Exhibits 4(b), 4(e), 4(f), 4(g) and 4(h);
                           Registration Statement No. 33-35651, Exhibit 4(b); Registration Statement No. 33-46859,
                           Exhibits 4(b) and 4(c); Registration Statement No. 33-50316, Exhibits 4(b) and 4(c);
                           Registration Statement No. 33-60336, Exhibits 4(b), 4(c) and 4(d); Registration Statement No.
                           33-50447, Exhibits 4(b) and 4(c); Annual Report on Form 10-K of CSPCo for the fiscal year
                           ended December 31, 1993, File No. 1-2680, Exhibit 4(b)].
   4(b)            --      Copy of Indenture (for unsecured debt securities), dated as of September 1, 1997, between CSPCo and
                           Bankers Trust Company, as Trustee [Registration Statement No. 333-54025, Exhibits 4(a), 4(b), 4(c)
                           and 4(d); Annual Report on Form 10-K of CSPCo for the fiscal year ended December 31, 1998, File
                           No. 1-2680, Exhibits 4(c) and 4(d)].
  10(a)(1)         --      Copy of Power Agreement, dated October 15, 1952, between OVEC and United States of America,
                           acting by and through the United States Atomic Energy Commission, and, subsequent to January
                           18, 1975, the Administrator of the Energy Research and Development Administration, as amended
                           [Registration Statement No. 2-60015, Exhibit 5(a); Registration Statement No. 2-63234,
                           Exhibit 5(a)(1)(B); Registration Statement No. 2-66301, Exhibit 5(a)(1)(C); Registration
                           Statement No. 2-67728, Exhibit 5(a)(1)(B); Annual Report on Form 10-K of APCo for the fiscal
                           year ended December 31, 1989, File No. 1-3457, Exhibit 10(a)(1)(F); and Annual Report on Form
                           10-K of APCo for the fiscal year ended December 31, 1992, File No. 1-3457, Exhibit
                           10(a)(1)(B)].
  10(a)(2)         --      Copy of Inter-Company Power Agreement, dated July 10, 1953, among OVEC and the Sponsoring
                           Companies, as amended [Registration Statement No. 2-60015, Exhibit 5(c); Registration
                           Statement No. 2-67728, Exhibit 5(a)(3)(B); and Annual Report on Form 10-K of APCo for the
                           fiscal year ended December 31, 1992, File No. 1-3457, Exhibit 10(a)(2)(B)].
</TABLE>

                                      E-6

<PAGE>   79

<TABLE>
<CAPTION>
EXHIBIT NUMBER                                               DESCRIPTION
--------------                                               -----------
CSPCo++ (CONTINUED)
<S>                <C>     <C>

  10(a)(3)         --      Copy of Power Agreement, dated July 10, 1953, between OVEC and Indiana-Kentucky Electric Corporation,
                           as amended [Registration Statement No. 2-60015, Exhibit 5(e)].
  10(b)            --      Copy of Interconnection Agreement, dated July 6, 1951, among APCo, CSPCo, KEPCo, OPCo and I&M
                           and the Service Corporation, as amended [Registration Statement No. 2-52910, Exhibit 5(a);
                           Registration Statement No. 2-61009, Exhibit 5(b); and Annual Report on Form 10-K of AEP for
                           the fiscal year ended December 31, 1990, File No. 1-3525, Exhibit 10(a)(3)].
  10(c)            --      Copy of Transmission Agreement, dated April 1, 1984, among APCo, CSPCo, I&M, KEPCo, OPCo, and
                           with the Service Corporation as agent, as amended [Annual Report on Form 10-K of AEP for the
                           fiscal year ended December 31, 1985, File No. 1-3525, Exhibit 10(b); and Annual Report on
                           Form 10-K of AEP for the fiscal year ended December 31, 1988, File No. 1-3525, Exhibit
                           10(b)(2)].
  10(d)            --      Copy of Modification No. 1 to the AEP System Interim Allowance Agreement, dated July 28,
                           1994, among APCo, CSPCo, I&M, KEPCo, OPCo and the Service Corporation [Annual Report on Form
                           10-K of AEP for the fiscal year ended December 31, 1996, File No. 1-3525, Exhibit 10(l)].
  10(e)(1)         --      Agreement and Plan of Merger, dated as of December 21, 1997, By and Among American Electric
                           Power Company, Inc., Augusta Acquisition Corporation and Central and South West Corporation
                           [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1997, File No.
                           1-3525, Exhibit 10(f)].
  10(e)(2)         --      Amendment No. 1, dated as of December 31, 1999, to the Agreement and Plan of Merger [Current
                           Report on Form 8-K of CSPCo dated December 15, 1999, File No. 1-2680, Exhibit 10].
 *12               --      Statement re: Computation of Ratios.
 *13               --      Copy of those portions of the CSPCo 1999 Annual Report (for the fiscal year ended December 31, 1999)
                           which are incorporated by reference in this filing.
 *23               --      Consent of Deloitte & Touche LLP.
 *24               --      Power of Attorney.
 *27               --      Financial Data Schedules.

I&M++
  3(a)             --      Copy of the Amended Articles of Acceptance of I&M and amendments thereto [Annual Report on Form 10-K of
                           I&M for fiscal year ended December 31, 1993, File No.1-3570, Exhibit 3(a)].
  3(b)             --      Copy of Articles of Amendment to the Amended Articles of Acceptance of I&M, dated March 6, 1997
                           [Annual Report on Form 10-K of I&M for fiscal year ended December 31, 1996, File No. 1-3570, Exhibit
                           3(b)].
  3(c)             --      Composite Copy of the Amended Articles of Acceptance of I&M (amended as of March 7, 1997)
                           [Annual Report on Form 10-K of I&M for fiscal year ended December 31, 1996, File No. 1-3570, Exhibit
                           3(c)].
  3(d)             --      Copy of the By-Laws of I&M (amended as of January 1, 1996) [Annual Report on Form 10-K of I&M for
                           fiscal year ended December 31, 1995, File No. 1-3570, Exhibit 3(c)].

</TABLE>
                                      E-7
<PAGE>   80

<TABLE>
<CAPTION>
EXHIBIT NUMBER                                               DESCRIPTION
--------------                                               -----------
I&M++ (CONTINUED)
<S>                <C>     <C>
    4(a)           --      Copy of Mortgage and Deed of Trust, dated as of June 1, 1939, between I&M and Irving Trust
                           Company (now The Bank of New York) and various individuals, as Trustees, as amended and
                           supplemented [Registration Statement No. 2-7597, Exhibit 7(a); Registration Statement No.
                           2-60665, Exhibits 2(c)(2), 2(c)(3), 2(c)(4), 2(c)(5), 2(c)(6), 2(c)(7), 2(c)(8), 2(c)(9),
                           2(c)(10), 2(c)(11), 2(c)(12), 2(c)(13), 2(c)(14), 2(c)(15), (2)(c)(16), and 2(c)(17);
                           Registration Statement No. 2-63234, Exhibit 2(b)(18); Registration Statement No. 2-65389,
                           Exhibit 2(a)(19); Registration Statement No. 2-67728, Exhibit 2(b)(20); Registration
                           Statement No. 2-85016, Exhibit 4(b); Registration Statement No. 33-5728, Exhibit 4(c);
                           Registration Statement No. 33-9280, Exhibit 4(b); Registration Statement No. 33-11230,
                           Exhibit 4(b); Registration Statement No. 33-19620, Exhibits 4(a)(ii), 4(a)(iii), 4(a)(iv) and
                           4(a)(v); Registration Statement No. 33-46851, Exhibits 4(b)(i), 4(b)(ii) and 4(b)(iii);
                           Registration Statement No. 33-54480, Exhibits 4(b)(I) and 4(b)(ii); Registration Statement
                           No. 33-60886, Exhibit 4(b)(i); Registration Statement No. 33-50521, Exhibits 4(b)(I),
                           4(b)(ii) and 4(b)(iii); Annual Report on Form 10-K of I&M for fiscal year ended December 31,
                           1993, File No. 1-3570, Exhibit 4(b); Annual Report on Form 10-K of I&M for fiscal year ended
                           December 31, 1994, File No. 1-3570, Exhibit 4(b); Annual Report on Form 10-K of I&M for
                           fiscal year ended December 31, 1996, File No. 1-3570, Exhibit 4(b)].
    4(b)           --      Copy of Indenture (for unsecured debt securities), dated as of October 1, 1998, between I&M and
                           The Bank of New York, as Trustee [Registration Statement No. 333-88523, Exhibits 4(a), 4(b) and 4(c)].
   *4(c)           --      Copy of Company Order and Officers' Certificate, dated November 23, 1999, establishing
                           certain terms of the Floating Rate Notes, Series A, due 2000.
  10(a)(1)         --      Copy of Power Agreement, dated October 15, 1952, between OVEC and United States of America,
                           acting by and through the United States Atomic Energy Commission, and, subsequent to January
                           18, 1975, the Administrator of the Energy Research and Development Administration, as amended
                           [Registration Statement No. 2-60015, Exhibit 5(a); Registration Statement No. 2-63234,
                           Exhibit 5(a)(1)(B); Registration Statement No. 2-66301, Exhibit 5(a)(1)(C); Registration
                           Statement No. 2-67728, Exhibit 5(a)(1)(D); Annual Report on Form 10-K of APCo for the fiscal
                           year ended December 31, 1989, File No. 1-3457, Exhibit 10(a)(1)(F); and Annual Report on Form
                           10-K of APCo for the fiscal year ended December 31, 1992, File No. 1-3457, Exhibit
                           10(a)(1)(B)].
  10(a)(2)         --      Copy of Inter-Company Power Agreement, dated as of July 10, 1953, among OVEC and the
                           Sponsoring Companies, as amended [Registration Statement No. 2-60015, Exhibit 5(c);
                           Registration Statement No. 2-67728, Exhibit 5(a)(3)(B); Annual Report on Form 10-K of APCo
                           for the fiscal year ended December 31, 1992, File No. 1-3457, Exhibit 10(a)(2)(B)].
  10(a)(3)         --      Copy of Power Agreement, dated July 10, 1953, between OVEC and Indiana-Kentucky Electric
                           Corporation, as amended [Registration Statement No. 2-60015, Exhibit 5(e)].
  10(a)(4)         --      Copy of Inter-Company Power Agreement, dated as of July 10, 1953, among OVEC and the
                           Sponsoring Companies, as amended [Registration Statement No. 2-60015, Exhibit 5(c);
                           Registration Statement No. 2-67728, Exhibit 5(a)(3)(B); Annual Report on Form 10-K of APCo
                           for the fiscal year ended December 31, 1992, File No. 1-3457, Exhibit 10(a)(2)(B)].
  10(a)(5)         --      Copy of Power Agreement, dated July 10, 1953, between OVEC and Indiana-Kentucky Electric
                           Corporation, as amended [Registration Statement No. 2-60015, Exhibit 5(e)].
</TABLE>
                                      E-8
<PAGE>   81

<TABLE>
<CAPTION>
EXHIBIT NUMBER                                               DESCRIPTION
--------------                                               -----------
<S>                <C>     <C>
I&M++ (CONTINUED)
  10(b)            --      Copy of Interconnection Agreement, dated July 6, 1951, among APCo, CSPCo, KEPCo, I&M, and
                           OPCo and with the Service Corporation, as amended [Registration Statement No. 2-52910,
                           Exhibit 5(a); Registration Statement No. 2-61009, Exhibit 5(b); and Annual Report on Form
                           10-K of AEP for the fiscal year ended December 31, 1990, File No. 1-3525, Exhibit 10(a)(3)].
  10(c)            --      Copy of Transmission Agreement, dated April 1, 1984, among APCo, CSPCo, I&M, KEPCo, OPCo and
                           with the Service Corporation as agent, as amended [Annual Report on Form 10-K of AEP for the
                           fiscal year ended December 31, 1985, File No. 1-3525, Exhibit 10(b); and Annual Report on
                           Form 10-K of AEP for the fiscal year ended December 31, 1988, File No. 1-3525, Exhibit
                           10(b)(2)].
  10(d)            --      Copy of Modification No. 1 to the AEP System Interim Allowance Agreement, dated July 28,
                           1994, among APCo, CSPCo, I&M, KEPCo, OPCo and the Service Corporation [Annual Report on Form
                           10-K of AEP for the fiscal year ended December 1, 1996, File No. 1-3525, Exhibit 10(l)].
  10(e)            --      Copy of Nuclear Material Lease Agreement, dated as of December 1, 1990, between I&M and DCC
                           Fuel Corporation [Annual Report on Form 10-K of I&M for the fiscal year ended December 31,
                           1993, File No. 1-3570, Exhibit 10(d)].
  10(f)            --      Copy of Lease Agreements, dated as of December 1, 1989, between I&M and Wilmington Trust
                           Company, as amended [Registration Statement No. 33-32753, Exhibits 28(a)(1)(C), 28(a)(2)(C),
                           28(a)(3)(C), 28(a)(4)(C), 28(a)(5)(C) and 28(a)(6)(C); Annual Report on Form 10-K of I&M for
                           the fiscal year ended December 31, 1993, File No. 1-3570, Exhibits 10(e)(1)(B), 10(e)(2)(B),
                           10(e)(3)(B), 10(e)(4)(B), 10(e)(5)(B) and 10(e)(6)(B)].
  10(g)(1)         --      Agreement and Plan of Merger, dated as of December 21, 1997, By and Among American Electric
                           Power Company, Inc., Augusta Acquisition Corporation and Central and South West Corporation
                           [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1997, File No.
                           1-3525, Exhibit 10(f)].
  10(g)(2)         --      Amendment No. 1, dated as of December 31, 1999, to the Agreement and Plan of Merger [Current
                           Report on Form 8-K of I&M dated December 15, 1999, File No. 1-3570, Exhibit 10].
 *12               --      Statement re: Computation of Ratios.
 *13               --      Copy of those portions of the I&M 1999 Annual Report (for the fiscal year ended December 31, 1999)
                           which are incorporated by reference in this filing.
  21               --      List of subsidiaries of I&M [Annual Report on Form 10-K of AEP for the fiscal year ended
                           December 31, 1999, File No. 1-3525, Exhibit 21].
 *23               --      Consent of Deloitte & Touche LLP.
 *24               --      Power of Attorney.
 *27               --      Financial Data Schedules.

KEPCo++

   3(a)            --      Copy of Restated Articles of Incorporation of KEPCo [Annual Report on Form 10-K of KEPCo for the
                           fiscal year ended December 31, 1991, File No. 1-6858, Exhibit 3(a)].
   3(b)            --      Copy of By-Laws of KEPCo (amended as of January 1, 1996) [Annual Report on Form 10-K of KEPCo for the
                           fiscal year ended December 31, 1995, File No. 1-6858,Exhibit 3(b)].
   4(a)            --      Copy of Mortgage and Deed of Trust, dated May 1, 1949, between KEPCo and Bankers Trust
                           Company, as supplemented and amended [Registration Statement No. 2-65820, Exhibits 2(b)(1),
                           2(b)(2), 2(b)(3), 2(b)(4), 2(b)(5), and  2(b)(6); Registration Statement No. 33-39394,
                           Exhibits 4(b) and 4(c); Registration Statement No. 33-53226, Exhibits 4(b) and 4(c);
                           Registration Statement No. 33-61808, Exhibits 4(b) and 4(c), Registration Statement No.
                           33-53007, Exhibits 4(b), 4(c) and 4(d)].
</TABLE>

                                   E-9

<PAGE>   82

<TABLE>
<CAPTION>

EXHIBIT NUMBER                                               DESCRIPTION
--------------                                               -----------
<S>                <C>     <C>
KEPCo++ (CONTINUED)

   4(b)            --      Copy of Indenture (for unsecured debt securities), dated as of September 1, 1997, between KEPCo and
                           Bankers Trust Company, as Trustee [Registration Statement No. 333-75785, Exhibits 4(a), 4(b), 4(c)
                           and 4(d)].
  *4(c)            --      Copy of Company Order and Officers' Certificate, dated November 2, 1999, establishing certain terms of
                           the Floating Rate Notes, Series A, due 2000.
  10(a)            --      Copy of Interconnection Agreement, dated July 6, 1951, among APCo, CSPCo, KEPCo, I&M and OPCo
                           and with the Service Corporation, as amended [Registration Statement No. 2-52910, Exhibit
                           5(a);Registration Statement No. 2-61009, Exhibit 5(b); and Annual Report on Form 10-K of AEP
                           for the fiscal year ended December 31, 1990, File No. 1-3525, Exhibit 10(a)(3)].
  10(b)            --      Copy of Transmission Agreement, dated April 1, 1984, among APCo, CSPCo, I&M, KEPCo, OPCo and
                           with the Service Corporation as agent, as amended [Annual Report on Form 10-K of AEP for the
                           fiscal year ended December 31, 1985, File No. 1-3525, Exhibit 10(b); and Annual Report on
                           Form 10-K of AEP for the fiscal year ended December 31, 1988, File No. 1-3525, Exhibit
                           10(b)(2)].
  10(c)            --      Copy of Modification No. 1 to the AEP System Interim Allowance Agreement, dated July 28,
                           1994, among APCo, CSPCo, I&M, KEPCo, OPCo and the Service Corporation [Annual Report on Form
                           10-K of AEP for the fiscal year ended December 31, 1996, File No. 1-3525, Exhibit 10(l)].
  10(d)(1)         --      Agreement and Plan of Merger, dated as of December 21, 1997, By and Among American Electric
                           Power Company, Inc., Augusta Acquisition Corporation and Central and South West Corporation
                           [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1997, File No.
                           1-3525, Exhibit 10(f)].
  10(d)(2)         --      Amendment No. 1, dated as of December 31, 1999, to the Agreement and Plan of Merger [Current
                           Report on Form 8-K of KEPCo dated December 15, 1999, File No. 1-6858, Exhibit 10].
 *12               --      Statement re: Computation of Ratios.
 *13               --      Copy of those portions of the KEPCo 1999 Annual Report (for the fiscal year ended December 31, 1999)
                           which are incorporated by reference in this filing.
 *23               --      Consent of Deloitte & Touche LLP.
 *24               --      Power of Attorney.
 *27               --      Financial Data Schedules.

OPCo++

  3(a)             --      Copy of Amended Articles of Incorporation of OPCo, and amendments thereto to December 31, 1993
                           [Registration Statement No. 33-50139, Exhibit 4(a); Annual Report on Form 10-K of OPCo for the fiscal
                           year ended December 31, 1993, File No. 1-6543, Exhibit 3(b)].
  3(b)             --      Certificate of Amendment to Amended Articles of Incorporation of OPCo, dated May 3, 1994
                           [Annual Report on Form 10-K of OPCo for the fiscal year ended December 31, 1994, File No.
                           1-6543, Exhibit 3(b)].
  3(c)             --      Copy of Certificate of Amendment to Amended Articles of Incorporation of OPCo, dated March 6,
                           1997 [Annual Report on Form 10-K of OPCo for the fiscal year ended December 31, 1996, File
                           No. 1-6543, Exhibit 3(c)].
  3(d)             --      Composite copy of the Amended Articles of Incorporation of OPCo (amended as of March 7, 1997)
                           [Annual Report on Form 10-K of OPCo for the fiscal year ended December 31, 1996, File No. 1-6543,
                           Exhibit 3(d)].
  3(e)             --      Copy of Code of Regulations of OPCo [Annual Report on Form 10-K of OPCo for the fiscal year ended
                           December 31, 1990, File No. 1-6543, Exhibit 3(d)].
</TABLE>
                                      E-10

<PAGE>   83
<TABLE>
<CAPTION>
EXHIBIT NUMBER                                               DESCRIPTION
--------------                                               -----------
<S>                <C>     <C>
OPCo++ (CONTINUED)
    4(a)           --      Copy of Mortgage and Deed of Trust, dated as of October 1, 1938, between OPCo and
                           Manufacturers Hanover Trust Company (now Chemical Bank), as Trustee, as amended and
                           supplemented [Registration Statement No. 2-3828, Exhibit B-4; Registration Statement No.
                           2-60721, Exhibits 2(c)(2), 2(c)(3), 2(c)(4), 2(c)(5), 2(c)(6), 2(c)(7), 2(c)(8), 2(c)(9),
                           2(c)(10), 2(c)(11), 2(c)(12), 2(c)(13), 2(c)(14), 2(c)(15), 2(c)(16), 2(c)(17), 2(c)(18),
                           2(c)(19), 2(c)(20), 2(c)(21), 2(c)(22), 2(c)(23), 2(c)(24), 2(c)(25), 2(c)(26), 2(c)(27),
                           2(c)(28), 2(c)(29), 2(c)(30), and 2(c)(31); Registration Statement No. 2-83591, Exhibit 4(b);
                           Registration Statement No. 33-21208, Exhibits 4(a)(ii), 4(a)(iii) and 4(a)(iv); Registration
                           Statement No. 33-31069, Exhibit 4(a)(ii); Registration Statement No. 33-44995, Exhibit
                           4(a)(ii); Registration Statement No. 33-59006, Exhibits 4(a)(ii), 4(a)(iii) and 4(a)(iv);
                           Registration Statement No. 33-50373, Exhibits 4(a)(ii), 4(a)(iii) and 4(a)(iv); Annual Report
                           on Form 10-K of OPCo for the fiscal year ended December 31, 1993, File No. 1-6543, Exhibit 4(b)].
    4(b)           --      Copy of Indenture (for unsecured debt securities), dated as of September 1, 1997, between OPCo and
                           Bankers Trust Company, as Trustee [Registration Statement No. 333-49595, Exhibits 4(a), 4(b) and
                           4(c); Annual Report on Form 10-K for the fiscal year ended December 31, 1998, Exhibits 4(c) and 4(d)].
   *4(c)           --      Copy of Company Order and Officers' Certificate, dated June 9, 1999, establishing certain terms of the
                           6.75% Senior Notes, Series B, due 2004.
   *4(d)           --      Copy of Company Order and Officers' Certificate, dated September 1, 1999, establishing certain terms
                           of the 7% Senior Notes, Series C, due 2004.
  10(a)(1)         --      Copy of Power Agreement, dated October 15, 1952, between OVEC and United States of America,
                           acting by and through the United States Atomic Energy Commission, and, subsequent to January
                           18, 1975, the Administrator of the Energy Research and Development Administration, as amended
                           [Registration Statement No. 2-60015, Exhibit 5(a); Registration Statement No. 2-63234,
                           Exhibit 5(a)(1)(B); Registration Statement No. 2-66301, Exhibit 5(a)(1)(C); Registration
                           Statement No. 2-67728, Exhibit 5(a)(1)(D); Annual Report on Form 10-K of APCo for the fiscal
                           year ended December 31, 1989, File No. 1-3457, Exhibit 10(a)(1)(F); Annual Report on Form
                           10-K of APCo for the fiscal year ended December 31, 1992, File No. 1-3457, Exhibit 10(a)(1)(B)].
  10(a)(2)         --      Copy of Inter-Company Power Agreement, dated July 10, 1953, among OVEC and the Sponsoring
                           Companies, as amended [Registration Statement No. 2-60015, Exhibit 5(c); Registration
                           Statement No. 2-67728, Exhibit 5(a)(3)(B); Annual Report on Form 10-K of APCo  for the fiscal
                           year ended December 31, 1992, File No. 1-3457, Exhibit 10(a)(2)(B)].
  10(a)(3)         --      Copy of Power Agreement, dated July 10, 1953, between OVEC and Indiana-Kentucky Electric Corporation,
                           as amended [Registration Statement No. 2-60015, Exhibit 5(e)].
  10(b)            --      Copy of Interconnection Agreement, dated July 6, 1951, among APCo, CSPCo, KEPCo, I&M and OPCo
                           and with the Service Corporation, as amended [Registration Statement No. 2-52910, Exhibit
                           5(a); Registration Statement No. 2-61009, Exhibit 5(b); Annual Report on Form 10-K of AEP for
                           the fiscal year ended December 31, 1990, File 1-3525, Exhibit 10(a)(3)].
  10(c)            --      Copy of Transmission Agreement, dated April 1, 1984, among APCo, CSPCo, I&M, KEPCo, OPCo and
                           with the Service Corporation as agent [Annual Report on Form 10-K of AEP for the fiscal year
                           ended December 31, 1985, File No. 1-3525, Exhibit 10(b); Annual Report on Form 10-K of AEP
                           for the fiscal year ended December 31, 1988, File No. 1-3525, Exhibit 10(b)(2)].
</TABLE>
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<PAGE>   84
<TABLE>
<CAPTION>
EXHIBIT NUMBER                                              DESCRIPTION
--------------                                              -----------
<S>                <C>     <C>
OPCo++ (CONTINUED)
  10(d)            --      Copy of Modification No. 1 to the AEP System Interim Allowance Agreement, dated July 28,
                           1994, among APCo, CSPCo, I&M, KEPCo, OPCo and the Service Corporation [Annual Report on Form
                           10-K of AEP for the fiscal year ended December 31, 1996, File No. 1-3525, Exhibit 10(l)].
  10(e)            --      Copy of Amendment No. 1, dated October 1, 1973, to Station Agreement dated January 1, 1968,
                           among OPCo, Buckeye and Cardinal Operating Company, and amendments thereto [Annual Report on
                           Form 10-K of OPCo for the fiscal year ended December 31, 1993, File No. 1-6543, Exhibit
                           10(f)].
  10(f)            --      Lease Agreement dated January 20, 1995 between OPCo and JMG Funding, Limited Partnership, and
                           amendment thereto (confidential treatment requested) [Annual Report on Form 10-K of OPCo for
                           the fiscal year ended December 31, 1994, File No. 1-6543, Exhibit 10(l)(2)].
  10(g)(1)         --      Agreement and Plan of Merger, dated as of December 21, 1997, by and among American Electric
                           Power Company, Inc., Augusta Acquisition Corporation and Central and South West Corporation
                           [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1997, File No.
                           1-3525, Exhibit 10(f)].
  10(g)(2)         --      Amendment No. 1, dated as of December 31, 1999, to the Agreement and Plan of Merger [Current
                           Report on Form 8-K of OPCo dated December 15, 1999, File No. 1-6543, Exhibit 10].
 +10(h)(1)         --      AEP Deferred Compensation Agreement for certain executive officers [Annual Report on Form 10-K of
                           OPCo for the fiscal year ended December 31, 1985, File No. 1-3525, Exhibit 10(e)].
 +10(h)(2)         --      Amendment to AEP Deferred Compensation Agreement for certain executive officers [Annual Report on Form
                           10-K of AEP for the fiscal year ended December 31, 1986, File No. 1-3525, Exhibit 10(d)(2)].
 +10(i)(1)         --      AEP System Senior Officer Annual Incentive Compensation Plan [Annual Report on Form 10-K of AEP
                           for the fiscal year ended December 31, 1996, File No. 1-3525, Exhibit 10(i)(1)].
 +10(i)(2)         --      American Electric Power System Performance Share Incentive Plan, as Amended and Restated through
                           February 26, 1997 [Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1996, File
                           No. 1-3525, Exhibit 10(i)(2)].
 +10(j)(1)         --      AEP System Excess Benefit Plan, Amended and Restated as of August 1, 1999 [Quarterly Report on
                           Form 10-Q of AEP for the quarter ended September 30, 1999, File No. 1-3525, Exhibit 10(a)].
 +10(j)(2)         --      AEP System Supplemental Savings Plan, Amended and Restated as of November 1, 1999 (Non-Qualified)
                           [Quarterly Report on Form 10-Q of AEP for the quarter ended September 30, 1999, File No. 1-3525, Exhibit
                           10(b)].
 +10(j)(3)         --      Umbrella Trust for Executives [Annual Report on Form 10-K of AEP for the fiscal year ended December
                           31, 1993, File No. 1-3525, Exhibit 10(g)(3)].
 +10(k)            --      Employment Agreement between E. Linn Draper, Jr. and AEP and the Service Corporation [Annual
                           Report on Form 10-K of AEGCo for the fiscal year ended December 31, 1991, File No. 0-18135,
                           Exhibit 10(g)(3)].
 +10(l)            --      AEP System Survivor Benefit Plan, effective January 27, 1998 [Quarterly Report on Form 10-Q of
                           AEP for the quarter ended September 30, 1998, File No. 1-3525, Exhibit 10].
 +10(m)            --      AEP Senior Executive Severance Plan for Merger with Central and South West Corporation, effective
                           March 1, 1999[Annual Report on Form 10-K of AEP for the fiscal year ended December 31, 1998, File No.
                           1-3525, Exhibit 10(o)].
 +10(n)            --      AEP Change In Control Agreement [Annual Report on Form 10-K of AEP for the fiscal year ended December
                           31, 1999, File No. 1-3525, Exhibit 10(p)].
 *12               --      Statement re: Computation of Ratios.
</TABLE>
                                      E-12

<PAGE>   85
<TABLE>
<CAPTION>
EXHIBIT NUMBER                                                   DESCRIPTION
--------------                                                   -----------
<S>                <C>    <C>
OPCo++ (CONTINUED)
 *13               --      Copy of those portions of the OPCo 1999 Annual
                           Report (for the fiscal year ended December 31, 1999)
                           which are incorporated by reference in this filing.
  21               --      List of subsidiaries of OPCo [Annual Report on Form 10-K of AEP for the fiscal year ended
                           December 31, 1999, File No. 1-3525, Exhibit 21].
 *23               --      Consent of Deloitte & Touche LLP.
 *24               --      Power of Attorney.
 *27               --      Financial Data Schedules.
</TABLE>

                        ================================

++Certain instruments defining the rights of holders of long-term debt of
the registrants included in the financial statements of registrants filed
herewith have been omitted because the total amount of securities authorized
thereunder does not exceed 10% of the total assets of registrants. The
registrants hereby agree to furnish a copy of any such omitted instrument to the
SEC upon request.

                                      E-13