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AEP Shares Plan For Compliance With Proposed EPA Regulations

Company advocates for more time and flexibility to reduce the negative impact of the proposed EPA rules on

customers, jobs and the economy

COLUMBUS, Ohio, June 9, 2011 – American Electric Power (NYSE: AEP) today announced the company’s plan for

complying with a series of regulations proposed by the U.S. Environmental Protection Agency (EPA) that would

impact coal-fueled power plants. Based on the regulations as proposed, AEP’s compliance plan would retire nearly

6,000 megawatts (MW) of coal-fueled power generation; upgrade or install new advanced emissions reduction

equipment on another 10,100 MW; refuel 1,070 MW of coal generation as 932 MW of natural gas capacity; and

build 1,220 MW of natural gas-fueled generation. The cost of AEP’s compliance plan could range from $6 billion to

$8 billion in capital investment through the end of the decade. High demand for labor and materials due to a

constrained compliance time frame could drive actual costs higher than these estimates. The plan, including

retirements, could change significantly depending on the final form of the EPA regulations and regulatory

approvals from state commissions.

The retirements and retrofits in the plan are in addition to more than $7.2 billion that AEP has invested since 1990

to reduce emissions from its coal-fueled generation fleet. Annual emissions of nitrogen oxides from AEP plants are

80 percent lower today than in 1990. Sulfur dioxide emissions from AEP plants are 73 percent lower than in 1990.

The company currently owns nearly 25,000 MW of coal-fueled generation, approximately 65 percent of its total

generating capacity. Coal would fuel approximately 57 percent of AEP’s total generating capacity by the end of

the decade.

“We support regulations that achieve long-term environmental benefits while protecting customers, the economy

and the reliability of the electric grid, but the cumulative impacts of the EPA’s current regulatory path have been

vastly underestimated, particularly in Midwest states dependent on coal to fuel their economies. We have worked

for months to develop a compliance plan that will mitigate the impact of these rules for our customers and preserve

jobs, but because of the unrealistic compliance timelines in the EPA proposals, we will have to prematurely shut

down nearly 25 percent of our current coal-fueled generating capacity, cut hundreds of good power plant jobs,

and invest billions of dollars in capital to retire, retrofit and replace coal-fueled power plants. The sudden increase

in electricity rates and impacts on state economies will be significant at a time when people and states are still

struggling,” said Michael G. Morris, AEP chairman and chief executive officer.

Although some jobs would be created from the installation of emissions reduction equipment, AEP expects a net

loss of approximately 600 power plant jobs with annual wages totaling approximately $40 million as a result of

compliance with the proposed EPA rules.

“We are deeply concerned about the impact of the proposed regulations on our customers and local economies.

Communities that have depended on these plants to provide good jobs and support local services will face

significant reductions in payroll and property taxes in a very short period of time. The economic impact will extend

far beyond direct employment at power plants as thousands of ancillary jobs are supported by every coal-fueled
generating unit. Businesses that have benefited from reasonably priced coal-fueled power will face the impact of

electricity price increases ranging from 10 percent to more than 35 percent just for compliance with these

environmental rules at a time when they are still trying to recover from the economic downturn,” Morris said.

“Although discounted by some, the potential impacts on the reliability of the transmission system, particularly in

the Midwest, are significant. The proposed timelines for compliance aren’t adequate for construction of significant

retrofits or replacement generation, so many coal-fueled plants would be prematurely retired or idled in just a few

years. AEP’s compliance plan alone would abruptly cut generation capacity in the Midwest by more than 5,400

MW. Depending on the year, another 1,500 MW to 5,200 MW of AEP generation would be idled or curtailed for

extended periods as pollution control equipment is installed,” Morris said.

AEP has shared its compliance plan with PJM Interconnection, Southwest Power Pool and North American Electric

Reliability Corp. for use in their evaluation of the impacts of EPA’s proposed rules.

“We will continue to work through the EPA process with the hope that the agency will recognize the cumulative

impact of the proposed rules and develop a more reasonable compliance schedule. We also will continue talking

with lawmakers in Washington about a legislative approach that would achieve the same long-term environmental

goals with less negative impact on jobs and the U.S. economy,” Morris said. “With more time and flexibility, we will

get to the same level of emission reductions, but it will cost our customers less and will prevent premature job

losses, extend the construction job benefits, and ensure the ongoing reliability of the electric system.”

AEP’s current plan for compliance with the rules as proposed includes permanently retiring the following coalfueled power plants:

Glen Lyn Plant, Glen Lyn, Va. – 335 MW (retired by Dec. 31, 2014);

Kammer Plant, Moundsville, W.Va. – 630 MW (retired by Dec. 31, 2014);

Kanawha River Plant, Glasgow, W.Va. – 400 MW (retired by Dec. 31, 2014);

Phillip Sporn Plant, New Haven, W.Va. – 1,050 MW (450 MW expected to retire in 2011, 600 MW retired by Dec.

31, 2014); and

Picway Plant, Lockbourne, Ohio – 100 MW (retired by Dec. 31, 2014).

AEP would retire generating units at the following locations but continue operating some generation at the sites:

Big Sandy Plant, Louisa, Ky. – Units 1 and 2 (1,078 MW) retired by Dec. 31, 2014;

Big Sandy Unit 1 would be rebuilt as a 640-MW natural gas plant by Dec. 31, 2015;

Clinch River Plant, Cleveland, Va. – Unit 3 (235 MW) retired by Dec. 31, 2014; Units 1 and 2 (470 MW total) would

be refueled with natural gas with a capacity of 422 MW by Dec. 31, 2014;

Conesville Plant, Conesville, Ohio – Unit 3 (165 MW) retired by Dec. 31, 2012; Units 5 and 6 (800 MW total) would

continue operating with retrofits;

Muskingum River Plant, Beverly, Ohio – Units 1-4 (840 MW) retired by Dec. 31, 2014; Muskingum River Unit 5 (600

MW) may be refueled with natural gas with a capacity of 510 MW by Dec. 31, 2014, depending on regulatory

treatment in Ohio;

Tanners Creek Plant, Lawrenceburg, Ind. – Units 1, 2 and 3 (495 MW) retired by Dec. 31, 2014; Unit 4 (500 MW)

would continue to operate with retrofits; and

Welsh Plant, Pittsburg, Texas – Unit 2 (528 MW) retired by Dec. 31, 2014; Units 1 and 3 (1,056 MW) would

continue to operate with retrofits.
The two coal-fueled generating units at Northeastern Plant (935 MW) in Oolagah, Okla., would be idled for a year

or more while emission reduction equipment is installed. Both units would be idled beginning Jan. 1, 2016. One

unit would return to service by Dec. 31, 2016. The other unit would return to service by Dec. 31, 2017.

AEP will complete construction of the Dresden Plant (580 MW natural gas) in Dresden, Ohio, in 2012.

In addition to the retrofits above, AEP would install or upgrade emissions reduction equipment at seven other coalfueled power plants in Arkansas, Indiana, Louisiana, Ohio and Texas.

American Electric Power is one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11

states. AEP ranks among the nation’s largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the U.S. AEP

also owns the nation’s largest electricity transmission system, a nearly 39,000-mile network that includes more 765-kilovolt extra-high voltage

transmission lines than all other U.S. transmission systems combined. AEP’s transmission system directly or indirectly serves about 10 percent of

the electricity demand in the Eastern Interconnection, the interconnected transmission system that covers 38 eastern and central U.S. states and

eastern Canada, and approximately 11 percent of the electricity demand in ERCOT, the transmission system that covers much of Texas. AEP’s

utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana

Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana and

east Texas). AEP’s headquarters are in Columbus, Ohio.

This report made by American Electric Power and its Registrant Subsidiaries contains forward-looking statements within the meaning of Section

21E of the Securities Exchange Act of 1934. Although AEP and each of its Registrant Subsidiaries believe that their expectations are based on

reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially different

from those projected. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are: the

economic climate and growth in, or contraction within, AEP’s service territory and changes in market demand and demographic patterns;

inflationary or deflationary interest rate trends; volatility in the financial markets, particularly developments affecting the availability of capital on

reasonable terms and developments impairing AEP’s ability to finance new capital projects and refinance existing debt at attractive rates; the

availability and cost of funds to finance working capital and capital needs, particularly during periods when the time lag between incurring costs

and recovery is long and the costs are material; electric load and customer growth; weather conditions, including storms, and AEP’s ability to

recover significant storm restoration costs through applicable rate mechanisms; available sources and costs of, and transportation for, fuels and

the creditworthiness and performance of fuel suppliers and transporters; availability of necessary generating capacity and the performance of

AEP’s generating plants; AEP’s ability to recover Indiana Michigan Power’s Donald C. Cook Nuclear Plant Unit 1 restoration costs through

warranty, insurance and the regulatory process; AEP’s ability to recover regulatory assets and stranded costs in connection with deregulation;

AEP’s ability to recover increases in fuel and other energy costs through regulated or competitive electric rates; AEP’s ability to build or acquire

generating capacity, including the Turk Plant, and transmission line facilities (including the ability to obtain any necessary regulatory approvals

and permits) when needed at acceptable prices and terms and to recover those costs (including the costs of projects that are cancelled) through

applicable rate cases or competitive rates; new legislation, litigation and government regulation, including requirements for reduced emissions of

sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances or additional regulation of flyash and similar combustion

products that could impact the continued operation and cost recovery of AEP’s plants; timing and resolution of pending and future rate cases,

negotiations and other regulatory decisions (including rate or other recovery of new investments in generation, distribution and transmission

service and environmental compliance); resolution of litigation (including AEP’s dispute with Bank of America); AEP’s ability to constrain

operation and maintenance costs; AEP’s ability to develop and execute a strategy based on a view regarding prices of electricity, natural gas and

other energy-related commodities; changes in the creditworthiness of the counterparties with whom AEP has contractual arrangements, including

participants in the energy trading market; actions of rating agencies, including changes in the ratings of debt; volatility and changes in markets

for electricity, natural gas, coal, nuclear fuel and other energy-related commodities; changes in utility regulation, including the implementation of

electric security plans and related regulation in Ohio and the allocation of costs within regional transmission organizations, including PJM and

SPP; accounting pronouncements periodically issued by accounting standard-setting bodies; the impact of volatility in the capital markets on the

value of the investments held by AEP’s pension, other postretirement benefit plans and nuclear decommissioning trust and the impact on future

funding requirements; prices and demand for power that AEP generates and sells at wholesale; changes in technology, particularly with respect

to new, developing or alternative sources of generation; and other risks and unforeseen events, including wars, the effects of terrorism (including

increased security costs), embargoes and other catastrophic events.

MEDIA CONTACT:
Melissa McHenry

Sr. Manager, Media Relations

614/716-1120

ANALYSTS CONTACT:

Bette Jo Rozsa

Managing Director, Investor Relations

614/716-2840