## AEP- News Releases- AEP Places Carbon Capture Commercialization On Hold, Citing... Page 1of3

•,'..._ I I

liJ 

### Home Newsroom Corporate News Releases



# AEP Places Carbon Capture Commercialization On Hold, Citing Uncertain Status Of Climate Policy, Weak Economy

COLUMBUS, Ohio, July 14, 2011 -American Electric Power (NYSE: AEP) is terminating its cooperative agreementwith the U.S

. Department of Energy and placing its plans to advance carbon dioxide capture and storage (CCS) technology to commercial scale on hold, citing the current uncertain status of U.S. climate policy and the continued weak economy as contributors to the decision. "We are placing the project on hold until economic and policy conditions create a viable path forward," said Michael G. Morris, AEP chairman and chiefexecutive officer

."With the help ofAlstom,the Department of Energy and other partners,we have advanced CCS technology more than any other power generatorwith our successful two-year projectto validate the technology

. But at this time it doesn't make economic sense to continue work on the commercial-scale CCS project beyond the current engineering phase.

"We are clearly in a classic 'which comes first?' situation," Morris said. "The commercialization ofthis technology is vital ifowners ofcoal-fueled generation are to comply with potential future climate regulations without prematurely retiring efficient, cost-effective generating capacity

. But as a regulated utility, it is impossible to gain regulatory approval to recover ourshare ofthe costsforvalidating and deploying the technology without federal requirements to reduce greenhouse gas emissions already in place. The uncertainty also makes it difficult to attract partners to help fund the industry's share." In 2009, AEP was selected by the Department of Energy (DOE) to receive funding of up to $334 million through the Clean Coal Power Initiative to pay part ofthe costs for installation ofa commercial-scale CCS system atAEP's Mountaineer coal-fueled power plant in New Haven, W.Va. The system would capture at least 90 percent ofthe carbon dioxide (C02) from 235 megawatts ofthe plant's 1,300 megawatts ofcapacity

. The captured C02,approximately 1

.5 million metrictons peryear, would be treated and compressed,then injected into suitable geologic formations for permanent storage approximately 1

.5 miles below the surface

. Plans were forthe project to be completed in four phases,with the system to begin commercial operation in 2015. AEP has informed the DOE that it will complete the first phase ofthe project (front-end engineering and design, development ofan environmental impact statement and development of a detailed Phase II and Phase Ill schedule) but will not move to the second phase

. DOE's share ofthe cost for completion ofthe first phase is expected to be approximately $16 million, halfthe expensesthat qualify underthe DOE agreement.



## https:/ /www.aep.com/newsroom/newsreleases/?id=1704 8/2/2015

## AEP -NewsReleases

- AEP Places CarbonCapture CommercializationOnHold, Citing

... Page 2 of3

AEP and partnerAlstom began operating a smaller-scale validation ofthe technology in October 2009 at the Mountaineer Plant, the first fully-integrated capture and storage facility in the world. That system captured up to 90 percent ofthe C02 from a slipstream offlue gas equivalentto 20 megawatts ofgenerating capacity and injected it into suitable geologicformations for permanent storage approximately 1.5 miles below the surface. The validation project, which received no federal funds, was closed as planned in May after meeting project goals. Between October 2009 and May 2011, the life ofthe validation project, the CCS system operated more than 6,500 hours, captured more than 50,000 metrictons ofC02 and permanently stored morethan 37,000 metric tons ofC02. "The lessons we learned from the validation project were incorporated into the Phase I engineering forthe commercial-scale project," Morris said.
American Electric Power is one ofthe 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 ofelectricity, owning nearly 38,000 megawatts ofgenerating capacity in the U.S. AEP also owns the nation's largestelectricity 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 ofthe 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 ofthe electricity demand in ERCOT, the transmission system that covers much ofTexas. 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 ofOklahoma, 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 21 E ofthe Securities Exchange Act of 1934. Although AEP and each ofits Registrant Subsidiaries believe thattheir expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially differentfrom 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 ofcapital 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 offunds 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 offuel suppliers and transporters; availability of necessary generating capacity and the performance ofAEP'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 ofprojects that are cancelled) through applicable rate cases or competitive rates; new legislation, litigation and government regulation, including requirements for reduced emissions ofsulfur, nitrogen, mercury, carbon, sootorparticulate matterand other substances or additional regulation offly ash and similar combustion products that could impactthe continued operation and cost recovery ofAEP's plants; timing and resolution ofpending 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 ofAmerica); 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 otherenergy-related commodities; changes in the creditworthiness ofthe counterparties with whom AEP has contractual arrangements, including participants in the energy trading market; actions of rating agencies, including changes in the ratings ofdebt; volatility and changes in markets for electricity, natural gas, coal, nuclearfuel and other energy-related commodities; changes in utility regulation, including the implementation ofelectric security plans and related regulation in Ohio and the allocation ofcosts within regional transmission organizations, including PJM and SPP; accounting pronouncements periodically issued by accounting standardsetting bodies; the impact ofvolatility in the capital markets on the value ofthe investments held by AEP's pension, other postretirement benefit plans and nucleardecommissioning trust and the impact on future funding requirements; prices and demand for powerthatAEP 

## https://www.aep.com/newsroornlnewsreleases/?id=1704 8/2/2015

## AEP -NewsReleases

- AEP Places CarbonCapture CommercializationOnHold, Citing

... Page 3of3

generates and sells atwholesale; changes in technology, particularly with respect to new, developing oralternative sources ofgeneration; and other risks. and unforeseen events, including wars, the effects ofterrorism (including increased security costs), embargoes and other catastrophic events.



## MEDIA CONTACT: Pat D. Hemlepp Director, Corporate Media Relations 

## 614/716-1620 ANALYSTS CONTACT: Julie Sherwood Director, Investor Relations 

## 614fi16-2663



## https:/ /www.aep.com/newsroornlnewsreleases/?id=1704 8/2/2015