<PAGE>
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA
<CAPTION>
                                                                   Year Ended December 31,                                 
                                         1996             1995             1994             1993             1992  
                                                                      (in thousands)                               
<S>                                    <C>              <C>              <C>              <C>              <C>                     
INCOME STATEMENTS DATA:
  Operating Revenues                   $225,892         $231,795         $236,041         $229,273         $239,232
  Operating Expenses                    215,997          218,752          219,625          212,062          221,760
  Operating Income                        9,895           13,043           16,416           17,211           17,472
  Nonoperating Income                     3,695            3,685            3,413            4,668            6,706
  Income Before Interest Charges         13,590           16,728           19,829           21,879           24,178
  Interest Charges                        4,159            8,041            9,719           10,922           11,277
  Net Income                           $  9,431         $  8,687         $ 10,110         $ 10,957         $ 12,901
<CAPTION>
                                                                         December 31,                                           
                                           1996             1995             1994             1993             1992  
                                                                        (in thousands)
<S>                                    <C>              <C>              <C>              <C>              <C>                 
BALANCE SHEETS DATA:
  Electric Utility Plant               $632,257         $631,614         $631,528         $631,032         $627,981
  Accumulated Depreciation              238,532          218,055          199,264          181,587          160,658
  Net Electric Utility Plant           $393,725         $413,559         $432,264         $449,445         $467,323
  Total Assets                         $442,911         $464,879         $479,219         $499,475         $549,367

  Common Stock and
    Paid-in Capital                    $ 45,235         $ 48,735         $ 48,735         $ 55,435         $ 56,735
  Retained Earnings                       1,886            1,955            4,268            1,339           23,173
  Total Common Shareholder's Equity    $ 47,121         $ 50,690         $ 53,003         $ 56,774         $ 79,908

  Long-term Debt (a)                   $ 89,554         $ 89,538         $108,340         $108,188         $162,780

  Total Capitalization and
    Liabilities                        $442,911         $464,879         $479,219         $499,475         $549,367

(a) Including portion due within one year.
</TABLE>
<PAGE>
<PAGE>
MANAGEMENT'S NARRATIVE ANALYSIS
OF RESULTS OF OPERATIONS



     Operating revenues are derived from the sale of Rockport Plant energy
and capacity to two affiliated companies, Indiana Michigan Power Company and
Kentucky Power Company, and one unaffiliated utility, Virginia Electric and
Power Company, pursuant to Federal Energy Regulatory Commission (FERC)
approved long-term unit power agreements.  The unit power agreements provide
for recovery of costs including a FERC approved rate of return on common
equity and a return on other capital net of temporary cash investments.

Net Income Increases and Operating Revenues Decline

     Net income increased $.7 million or 9% as a result of a reduction in
interest charges.  Under the unit power billing mechanism not all of the $4
million reduction in interest charges is reflected in the power bills and
passed on to customers.

     Income statement items which changed significantly were:
                                Increase(Decrease)
(dollars in thousands)           From Previous Year
                                  Amount        %  

Operating Revenues. . . . . . .    $(5.9)       (3)
Fuel Expense. . . . . . . . . .     (6.2)       (6)
Rent Expense-Rockport Plant
 Unit 2 . . . . . . . . . . . .      1.5         2
Other Operation Expense . . . .     (0.9)       (7)
Maintenance Expense . . . . . .      2.1        19
Taxes Other Than Federal 
  Income Taxes. . . . . . . . .      0.6        20
Interest Charges. . . . . . . .     (3.9)      (48)

     The decrease in operating revenues for 1996 reflects a decrease in
recoverable operating expenses as well as a reduction in the return on other
capital due to a decrease in interest expense on long-term debt.

Operating Expenses Decrease

     The decline in fuel expense for 1996 was due to a reduction in
generation coupled with a lower cost per ton of coal consumed.  The reduction
in generation was due to Rockport Plant Unit 2 being out of service for
maintenance.  A favorable $1.6 million settlement in the third quarter of a
coal transportation dispute contributed to the decline in the cost per ton of
coal.

     Rent expense for Rockport Plant Unit 2 increased in 1996 due to the
effect of a favorable determination by the Indiana Department of Revenue that
resulted in a reduction in rent expense in 1995.

     Other operation expense decreased in 1996 due to the effect of a
provision for severance pay recorded in the fourth quarter of 1995 partly
offset by an increase in a FERC assessment fee.
<PAGE>
     The increase in maintenance expense was due to an increase in AEP
Service Corporation billings for professional services, a write-off of
obsolete materials and a general boiler inspection and repairs performed on
Rockport Unit 2.

     Taxes other than federal income taxes were higher in 1996 due to the
effect of a favorable Indiana property tax accrual adjustment recorded in the
second quarter of 1995.

     Interest charges declined in 1996 due to the refinancing of $90 million
of long-term debt at lower variable interest rates and the retirement of $20
million of long-term debt in the third quarter of 1995.

<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT




To the Shareholder and Board of
Directors of AEP Generating Company:

We have audited the accompanying balance sheets of AEP Generating Company as
of December 31, 1996 and 1995, and the related statements of income, retained
earnings, and cash flows for each of the three years in the period ended
December 31, 1996.  These financial statements are the responsibility of the
Company's management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. 
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of AEP Generating Company as of December 31,
1996 and 1995, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1996 in conformity with
generally accepted accounting principles.


/s/ DELOITTE & TOUCHE LLP

DELOITTE & TOUCHE LLP
Columbus, Ohio
February 25, 1997
<PAGE>
<PAGE>
<TABLE>
STATEMENTS OF INCOME
<CAPTION>
                                                        Year Ended December 31,                    
                                                 1996           1995           1994   
                                                           (in thousands)                       
                                                                           
<S>                                            <C>            <C>            <C>                   
OPERATING REVENUES                             $225,892       $231,795       $236,041 

OPERATING EXPENSES: 
   Fuel                                          93,475         99,635        100,685 
   Rent - Rockport Plant Unit 2                  68,289         66,794         69,290 
   Other Operation                               12,203         13,145         10,978 
   Maintenance                                   13,338         11,203         10,379 
   Depreciation                                  21,648         21,674         21,615 
   Taxes Other Than Federal Income Taxes          3,569          2,962          3,929 
   Federal Income Taxes                           3,475          3,339          2,749 
                TOTAL OPERATING EXPENSES        215,997        218,752        219,625 

OPERATING INCOME                                  9,895         13,043         16,416 

NONOPERATING INCOME                               3,695          3,685          3,413 

INCOME BEFORE INTEREST CHARGES                   13,590         16,728         19,829 

INTEREST CHARGES                                  4,159          8,041          9,719 

NET INCOME                                     $  9,431       $  8,687       $ 10,110 


<CAPTION>
STATEMENTS OF RETAINED EARNINGS
                                                          Year Ended December 31,                    
                                                    1996           1995           1994   
                                                              (in thousands)                      
                                                                          
<S>                                              <C>           <C>            <C>     
RETAINED EARNINGS JANUARY 1                      $1,955        $ 4,268        $ 1,339  

NET INCOME                                        9,431          8,687         10,110  

CASH DIVIDENDS DECLARED                           9,500         11,000          7,181  

RETAINED EARNINGS DECEMBER 31                    $1,886        $ 1,955        $ 4,268  

See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
STATEMENTS OF CASH FLOWS
<CAPTION>
                                                        Year Ended December 31,                    
                                                  1996           1995           1994   
                                                            (in thousands)                                
<S>                                             <C>             <C>           <C>                               
OPERATING ACTIVITIES:
   Net Income                                   $  9,431        $ 8,687       $ 10,110 
   Adjustments for Noncash Items:
      Depreciation                                21,648         21,674         21,615 
      Deferred Federal Income Taxes                5,401          6,947          4,213 
      Deferred Investment Tax Credits             (3,489)        (3,522)        (3,430)
      Amortization of Deferred Gain on Sale and
        Leaseback - Rockport Plant Unit 2         (5,571)        (5,571)        (5,571)
   Changes in Certain Current 
      Assets and Liabilities:
      Accounts Receivable                            149            840         (1,139)
      Fuel, Materials and Supplies                 1,770         (1,293)        (5,547)
      Accounts Payable                            (1,584)          (412)           697 
      Taxes Accrued                                  (94)          (651)           (49)
      Interest Accrued                               (99)        (2,585)            (8)
   Other (net)                                      (125)          (628)         4,953 
        Net Cash Flows From Operating Activities  27,437         23,486         25,844 

INVESTING ACTIVITIES - 
   Construction Expenditures                      (2,170)        (4,017)        (3,909)

FINANCING ACTIVITIES:
   Return of Capital to Parent Company            (3,500)          -            (6,700)
   Issuance of Long-term Debt                       -            88,368           -    
   Retirement of Long-term Debt                     -          (111,347)          -    
   Change in Short-term Debt (net)               (12,150)        14,525         (8,050)
   Dividends Paid                                 (9,500)       (11,000)        (7,181)
        Net Cash Flows Used For
          Financing Activities                   (25,150)       (19,454)       (21,931)
Net Increase in Cash and Cash Equivalents            117             15              4 

Cash and Cash Equivalents January 1                   22              7              3 
Cash and Cash Equivalents December 31           $    139        $    22       $      7 

See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
BALANCE SHEETS
<CAPTION>
                                                                   December 31,           
                                                                1996           1995   
                                                                   (in thousands)        
ASSETS
<S>                                                            <C>            <C>
ELECTRIC UTILITY PLANT:
   Production                                                  $627,926       $627,298
   General                                                        2,931          2,919
   Construction Work in Progress                                  1,400          1,397
                 Total Electric Utility Plant                   632,257        631,614
   Accumulated Depreciation                                     238,532        218,055
                 NET ELECTRIC UTILITY PLANT                     393,725        413,559

CURRENT ASSETS:
   Cash and Cash Equivalents                                        139             22
   Accounts Receivable:
      Affiliated Companies                                       18,835         18,549
      Other                                                          44            479
   Fuel - at average cost                                        17,792         19,008
   Materials and Supplies - at average cost                       4,266          4,820
   Prepayments                                                      804            673
                 TOTAL CURRENT ASSETS                            41,880         43,551

REGULATORY ASSETS                                                 5,857          6,076

DEFERRED CHARGES                                                  1,449          1,693

                     TOTAL                                     $442,911       $464,879

See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
                                                                    December 31,           
                                                                 1996           1995   
                                                                   (in thousands)         
CAPITALIZATION AND LIABILITIES
<S>                                                           <C>            <C>       
CAPITALIZATION:
   Common Stock - Par Value $1,000:
      Authorized and Outstanding - 1,000 Shares               $   1,000      $   1,000
   Paid-in Capital                                               44,235         47,735
   Retained Earnings                                              1,886          1,955
                Total Common Shareholder's Equity                47,121         50,690
   Long-term Debt                                                89,554         89,538
                TOTAL CAPITALIZATION                            136,675        140,228

OTHER NONCURRENT LIABILITIES                                      1,613          1,830

CURRENT LIABILITIES:
   Short-term Debt - Notes Payable                                9,575         21,725
   Accounts Payable:
     General                                                      4,265          4,669
     Affiliated Companies                                         3,245          4,425
   Taxes Accrued                                                  2,903          2,997
   Interest Accrued                                                 271            370
   Rent Accrued - Rockport Plant Unit 2                           4,963          4,963
   Other                                                          3,661          4,138
                TOTAL CURRENT LIABILITIES                        28,883         43,287

DEFERRED GAIN ON SALE AND LEASEBACK -
   ROCKPORT PLANT UNIT 2                                        144,472        150,043

REGULATORY LIABILITIES:
   Deferred Investment Tax Credits                               73,460         76,949
   Amounts Due to Customers for Income Taxes                     33,893         36,517
   Other                                                             66            201
                TOTAL REGULATORY LIABILITIES                    107,419        113,667

DEFERRED INCOME TAXES                                            23,849         15,824

                    TOTAL                                      $442,911       $464,879
</TABLE>
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES:

Organization

     AEP Generating Company (the Company or AEGCo) is a wholly-owned
subsidiary of American Electric Power Company, Inc. (AEP Co., Inc.), a public
utility holding company.  The Company is engaged in the generation and
wholesale sale, under long-term agreements, of electric power to two
affiliates and an unaffiliated utility.

Rate Regulation

     As a subsidiary of AEP Co., Inc., AEGCo is subject to regulation by the
Securities and Exchange Commission (SEC) under the Public Utility Holding
Company Act of 1935 (1935 Act).  Rates are regulated by the Federal Energy
Regulatory Commission (FERC).

Basis of Accounting

     As a cost-based rate-regulated entity, AEGCo's financial statements
reflect the actions of the FERC which may result in the recognition of
revenues and expenses in different time periods than enterprises that are not
cost-based rate-regulated.  In accordance with Statement of Financial
Accounting Standards (SFAS) No. 71, "Accounting for the Effects of Certain
Types of Regulation," regulatory assets (deferred expenses) and regulatory
liabilities (deferred income) are recorded to reflect the economic effects of
regulation.

Use of Estimates

     The preparation of these financial statements in conformity with
generally accepted accounting principles requires in certain instances the
use of management's estimates.  Actual results could differ from those
estimates.

Utility Plant

     Electric utility plant is stated at original cost.  Additions, major
replacements and betterments are added to the plant accounts.  Retirements
from the plant accounts and associated removal costs, net of salvage, are
deducted from accumulated depreciation.  The costs of labor, materials and
overheads incurred to operate and maintain utility plant are included in
operating expenses.


Depreciation

     Depreciation is provided on a straight-line basis over the estimated
useful lives of utility plant and is calculated largely through the use of
composite rates by functional class.  The rate for production plant was 3.5%
and for general plant was 3.8%.  Amounts to be used for removal of plant are
recovered through depreciation charges included in the unit power agreements.

<PAGE>
Allowance for Funds Used During Construction (AFUDC)

     AFUDC is a noncash nonoperating income item that is recovered with
regulator approval over the service life of utility plant through depreci-
ation and represents the estimated cost of borrowed and equity funds used to
finance construction projects.  Since there were no significant long-term
construction projects, AFUDC was not significant in 1996, 1995  and 1994.

Rockport Plant

     Rockport Plant consists of two 1,300 megawatt (mw) coal-fired units. 
AEGCo and Indiana Michigan Power Company (I&M), an affiliate, each owns 50%
of one unit (Rockport 1) and each leases a 50% interest in the other unit
(Rockport 2) from unaffiliated lessors under an operating lease.  The gain on
the sale and leaseback of Rockport 2 was deferred and is being amortized,
with related taxes, over the initial lease term which expires in 2022. 
Rockport 1 went into service in 1984 and Rockport 2 went into service in
1989.

Unit Power Agreements

     Revenues are derived from the sale of Rockport Plant capacity and energy
to other utilities.  Under FERC approved unit power agreements, AEGCo's share
of Rockport  Plant  capacity  is sold  to  two  affiliates, I&M and Kentucky
Power Company (KPCo), and an unaffiliated utility, Virginia Electric and
Power Company (VEPCo).  The agreements provide for the sale of 390 mw of
Rockport Plant capacity (15% of each unit) to KPCo through 1999, the sale of
455 mw of Rockport 1 capacity to VEPCo through 1999 and the sale of the
remaining capacity (455 mw of Rockport 2) to I&M.  Under the terms of the I&M
unit power agreement, I&M will purchase AEGCo's entire
<PAGE>
share of the Rockport Plant when the unit power agreements with KPCo and
VEPCo expire.  Approximately 32% in 1996, 34% in 1995 and 36% in 1994 of
operating revenues were derived from sales to VEPCo.

Recovery of Costs

     Pursuant to the unit power agreements, full cost of service recovery is
allowed.  Recovery includes costs of operation, a return on common equity and
a return on other capital net of temporary cash investments.  Included in the
cost of operation is amortization of the deferred gain on the sale of
Rockport 2 and deferred Rockport 2 investment tax credits reducing unit power
prices.

Cash and Cash Equivalents

     Cash and cash equivalents include temporary cash investments with
original maturities of three months or less.

Income Taxes

     The Company follows the liability method of accounting for income taxes
as prescribed by SFAS 109, "Accounting for Income Taxes."  Under the
liability method, deferred income taxes are provided for all temporary
differences between book cost and tax basis of assets and liabilities which
will result in a future tax consequence.  Where deferred taxes are recorded
on temporary differences and not reflected in rates currently, regulatory
assets and liabilities are recorded in accordance with SFAS 71.

Investment Tax Credits

     Based on directives of regulatory commissions, the Company reflected
investment tax credits in rates on a deferral basis.  Deferred investment tax
credits, which represent a regulatory liability, are being amortized over the
life of the related plant investment commensurate with recovery in rates. 
The Company's policy with regard to investment tax credits for nonutility
property was to practice the flow-through method of accounting.

Debt

     Losses on reacquired debt are deferred and amortized over the term of
the reacquired debt in accordance with rate-making treatment.  If the debt is
refinanced the reacquisition costs are deferred and amortized over the term
of the replacement debt commensurate with their recovery in billings.

     Debt discount and debt issuance expenses are amortized over the term of
the related debt, with the amortization included in interest charges.


<PAGE>
2. LONG-TERM DEBT AND LINES OF CREDIT:

     Installment purchase contracts were entered into in connection with the
issuance of pollution control revenue bonds by the City of Rockport, Indiana
as follows:
                                     December 31,      
                                  1996          1995
                                    (in thousands)

     Series 1995 A due 2025 (a)  $45,000        $45,000
     Series 1995 B due 2025 (a)   45,000         45,000
     Unamortized Discount           (446)          (462)

     Total                       $89,554        $89,538 

(a)  The adjustable interest rate can be a daily, weekly, commercial
     paper or term rate as designated by the Company.  Initially the
     Company selected a daily rate which ranged from 1.8% to 5.1% during
     1996 and 3.0% to 5.95% during 1995 and averaged 3.4% in 1996 and
     3.91% in 1995.

     Under the terms of the installment purchase contracts, AEGCo is required
to pay amounts sufficient to enable the payment of interest and principal on
the related pollution control revenue bonds issued to refinance the construc-
tion costs of pollution control facilities at the Rockport Plant.  On the
Series 1995 A and B bonds the principal is payable at maturity or on the
demand of the bondholders.  The Company has agreements that provide for
brokers to remarket bonds tendered.  In the event the bonds cannot be
remarketed, AEGCo has a standby bond purchase agreement with a bank that
provides for the bank to purchase any bonds not remarketed.  The purchase
agreement expires in 2000.

     Short-term debt borrowings are limited by provisions of the 1935 Act to
$100 million.  The standby bond purchase agreement further limits total debt
borrowings (long and short term excluding the installment purchase contracts)
to $80 million.  Lines of credit are shared with American Electric Power
(AEP) System companies and at December 31, 1996 and 1995 were available in
the amounts of $115 million and $88 million, respectively.  Commitment fees
of approximately 1/8 of 1% of the unused short-term lines of credit are
required to maintain the lines of credit.  At December 31, 1996 and 1995,
outstanding short-term debt consisted of notes payable of $9.6 million and
$21.7 million, respectively, with year-end weighted average interest rates of
6.8% and 5.9%, respectively.

3. LEASES:

     Future minimum operating lease payments for the lease of Rockport 2 are
$74 million per year for 1997 through 2001 and total $1.58 billion for 2002
through the end of the lease term in 2022.

  There were no other material lease commitments at December 31, 1996 and
1995.


<PAGE>
4.  FAIR VALUE OF FINANCIAL INSTRUMENTS:

     The carrying amounts of cash and cash equivalents, accounts receivable,
short-term debt and accounts payable approximate fair value because of the
short-term maturity of these instruments.  Fair values for long-term debt
approximate carrying value and are based on quoted market prices for the same
or similar issues and the current interest rates offered for instruments of
the same remaining maturities.

5. FEDERAL INCOME TAXES:
<TABLE>
<CAPTION>
  The details of federal income taxes as reported are as follows:
                                                       Year Ended December 31,
                                                     1996        1995        1994  
                                                           (in thousands)
<S>                                                <C>         <C>          <C>
Charged (Credited) to Operating Expenses (net):
  Current                                          $(1,928)    $(3,613)     $(1,464)
  Deferred                                           5,403       6,952        4,213 
    Total                                            3,475       3,339        2,749 
Charged (Credited) to Nonoperating Income (net):
  Current                                              117          92          (10)
  Deferred                                              (2)         (5)      -      
  Deferred Investment Tax Credits                   (3,489)     (3,522)      (3,430)
    Total                                           (3,374)     (3,435)      (3,440)
Total Federal Income Taxes as Reported            $    101     $   (96)     $  (691)

   The following is a reconciliation of the difference between the amount of
federal income taxes computed by multiplying book income before federal income
taxes by the statutory tax rate, and the amount of federal income taxes
reported.
<CAPTION>
                                                    Year Ended December 31,
                                                  1996        1995        1994  
                                                         (in thousands)
<S>                                              <C>         <C>         <C>
Net Income                                       $9,431      $8,687      $10,110 
Federal Income Taxes                                101         (96)        (691)
Pre-tax Book Income                              $9,532      $8,591     $  9,419 

Federal Income Taxes on Pre-tax Book Income 
  at Statutory Rate (35%)                       $ 3,336     $ 3,007      $ 3,297 
Increase (Decrease) in Federal Income Taxes
  Resulting From the Following Items:
  Depreciation                                    1,110       1,082        1,139 
  Allowance for Funds Used During Construction   (1,070)      (1,070)   (1,070)
  Rockport Plant Unit 2 Investment Tax Credits
    included in Taxable Income (net)                374         374          374 
  Investment Tax Credits (net)                   (3,489)     (3,522)      (3,430)
  Federal Income Tax Accrual Adjustments           -           -            (900)
  Other                                            (160)         33         (101)
Total Federal Income Taxes as Reported          $   101    $    (96)      $ (691)

Effective Federal Income Tax Rate                  1.1%         N.M.          N.M.
N.M.= Not Meaningful
</TABLE>
<PAGE>
 The following tables show the elements of the net deferred tax liabilities
and the significant temporary differences giving rise to such deferrals:

                                                 December 31,        
                                           1996              1995
                                               (in thousands)

Deferred Tax Assets                      $   94,229     $   97,302
Deferred Tax Liabilities                   (118,078)      (113,126) 
  Net Deferred Tax Liabilities           $  (23,849)    $  (15,824)

Property Related Temporary Differences    $ (82,550)      $(78,390)
Net Deferred Gain on Sale and
  Leaseback - Rockport Plant Unit 2          50,565         52,515
All Other (net)                               8,136         10,051
    Total Net Deferred Tax Liabilities     $(23,849)      $(15,824)

  The Company joins in the filing of a consolidated federal income tax return
with its affiliates in the AEP System.  The allocation of the AEP System's
current consolidated federal income tax to the System companies is in
accordance with SEC rules under the 1935 Act.  These rules permit the
allocation of the benefit of current tax losses to the System companies
giving rise to them in determining their current tax expense.  The tax loss
of the System parent company, AEP Co., Inc., is allocated to its subsidiaries
with taxable income. 
With the exception of the loss of the parent company, the method of
allocation approximates a separate return result for each company in the
consolidated group.

  The AEP System has settled with the Internal Revenue Service (IRS) all
issues from the audits of the consolidated federal income tax returns for
years prior to 1991.  Returns for the years 1991 through 1993 are presently
being audited by the IRS.  In the opinion of management, the final settlement
of open years will not have a material effect on results of operations.

<PAGE>
6. COMMON SHAREHOLDER'S EQUITY:

   In 1996  and 1994, the Company returned capital to its parent in the
amounts of $3.5 million and $6.7 million, respectively.  There were no other
material transactions affecting common stock and paid-in capital in 1996,
1995 and 1994.

7. RELATED PARTY TRANSACTIONS:

Operating revenues include sales of energy under long-term unit power
agreements to two AEP System companies of $153 million, $154 million and $152
million for the years ended December 31, 1996, 1995 and 1994, respectively.

I&M operates the Rockport Plant and bills the Company for its share of
operating costs which are included in the Statements of Income.

American Electric Power Service Corporation (AEPSC) provides certain
managerial and professional services to AEP System companies.  The costs of
the services are billed by AEPSC on a direct-charge basis to the extent
practicable and on reasonable bases of proration for indirect costs. The
charges for services are made at cost and include no compensation for the use
of equity capital, all of which is furnished to AEPSC by AEP Co., Inc. 
Billings from AEPSC are expensed or capitalized depending on the nature of
the services rendered.  AEPSC and its billings are subject to the regulation
of the SEC under the 1935 Act.


8. SUPPLEMENTARY INFORMATION:

                                      Year Ended December 31,     
                                  1996        1995         1994
                                          (in thousands)

Cash was paid (received) for:
  Interest (net of 
    capitalized amounts)         $ 3,834     $10,234      $ 9,367
  Income Taxes                    (1,763)     (3,516)      (1,143)