Document:

Exhibit 10(r)(4)

                             AEP ENERGY SERVICES, INC.
                               PHANTOM EQUITY PLAN

                                    Article 1
         Establishment, Purpose, Effective Date and Termination Date

      1.1 The Company hereby establishes the "AEP Energy Services,  Inc. Phantom
Equity Plan" (the "Plan") effective as of July 1, 1997. The Plan shall terminate
as of June 30, 2002.

      1.2  The  purposes  of  the  Plan  are  to  focus   Participants   on  the
profitability of AEP Energy Services,  Inc. that enhances  shareholder value and
provides  Participants  with an  equity  participation  sufficient  to  attract,
motivate and retain qualified executives.

                                    Article 2
                                   Definitions

      2.1 "Adjusted Net Income" means the Pretax Net Income for a Plan Year less
Taxes and less the Capital Charge for the Plan Year as illustrated in Exhibit A.

      2.2   "Annual Bonus Awards" means the bonuses paid within a Plan Year
under the terms of the AEP Energy Services, Inc. Incentive Compensation Plan.

      2.3 "Average Adjusted Net Income" means the sum of the Adjusted Net Income
for each Plan Year divided by the number of Plan Years included in the sum.

      2.4  "Capital"  means the net  equity  investment,  if any,  in AEP Energy
Services,  Inc. made by the Company and/or its affiliates and subsidiaries.  For
these purposes,  net equity  investment shall exclude any net equity  investment
for which a transfer  payment  requirement has been established and reflected in
Pretax Operating Income as defined in the AEP Energy  Services,  Inc.  Incentive
Compensation Plan.

      2.5 "Capital  Charge" means the product of multiplying the average Capital
(calculated  as the average of month end  values) by the average  cost of equity
for each Plan Year.

      2.6   "Company" means American Electric Power Service Corporation, Inc.

      2.7 "Compensation  Committee" means the individuals  holding the following
offices within the Company; Chairman of the Board, President and Chief Executive
Officer;  Executive Vice  President  (President of AEP Energy  Services,  Inc.);
Executive Vice President-Financial  Services; Executive Vice President-Corporate
Services; and Senior Vice President-Human Resources.

      2.8  "Employee  means  either  employees of AEP Energy  Services,  Inc. or
employees  of the  Company,  who are  involved in energy  trading for AEP Energy
Services, Inc. as traders,  managers,  support personnel or marketers as well as
all other employees  identified by the Compensation  Committee whose efforts are
dedicated to energy trading activities.

      2.9   "Equity Multiple" means the factor ten (10.0).

      2.10  "Interest Expense" means the interest charged to AEP Energy
Services, Inc. for the use of borrowed funds.

      2.11 "Interest Income" means interest earned by AEP Energy Services, Inc.

      2.12 "Interim  Participation  Interest"  means a percentage of the Phantom
Equity interest granted to a Participant after July 1, 1997.

      2.13  "Participant" means an Employee who meets the requirements set
forth in Section 3.1.

      2.14  "Participation  Interest"  means a percentage of the Phantom  Equity
interest granted to a Participant as of July 1, 1997.

      2.15 "Phantom Equity" means the value of AEP Energy  Services,  Inc. as of
any Valuation Date determined by multiplying the Average  Adjusted Net Income by
the Equity Multiple and subtracting from the resulting  product the Capital,  as
illustrated in Exhibit B.

      2.16 "Plan Year" means a fiscal  year  commencing  on July 1 and ending on
June 30. The first Plan Year shall  commence on July 1, 1997 and end on June 30,
1998.

      2.17  "Pretax Net Income"  means Pretax  Operating  Income for a Plan Year
less Annual Bonus Awards less Interest Expense as illustrated in Exhibit A.

      2.18  "Pretax Operating Income" means pretax operating income as
defined in the AEP Energy Services, Inc. Incentive Compensation Plan.

      2.19 "Taxes" means an allowance for federal,  state and local income taxes
equal to  thirty-five  percent  (35%) of Pretax  Net  Income.  The  Compensation
Committee  may adjust  the rate  annually  to reflect  changes in tax laws or to
credit AEP Energy  Services,  Inc. for any tax benefits  generated by AEP Energy
Services, Inc.

      2.20 "Valuation Date" means September 30, December 31, March 31 or June 30
of each Plan Year as specified in the Plan.

                                    Article 3
                                  Participation

      3.1 Employees who are  recommended  for  participation  in the Plan by the
President of AEP Energy Services and whose participation in the Plan is approved
by the Compensation Committee shall become Plan Participants.  At the discretion
of the  Compensation  Committee,  participation  may commence  either (a) on the
start of the first  Plan Year or (b) any date  after the start of the first Plan
Year but not later than the first day of the last Plan Year.

      3.2 The  President of AEP Energy  Services,  Inc.  shall provide a written
notice to each Employee who is selected to  Participate in the Plan. The written
notice  shall  provide a brief  explanation  of the  Participation  Interest  or
Interim  Participation  Interest  granted to the Participant and shall contain a
copy of the Plan.

                                    Article 4
                                 Phantom Equity

      4.1   For any Plan Year the Adjusted Net Income for AEP Energy
Services, Inc. shall be determined by deducting from Pretax Net Income for
such year the following items: Taxes and the Capital Charge, as illustrated
in Exhibit A.

      4.2  Phantom  Equity for the full term of this Plan (July 1, 1997  through
June 30, 2002) shall equal Average  Adjusted Net Income,  as calculated for five
Plan Years, times the Equity Multiple less Capital, as illustrated in Exhibit B.
If Average  Adjusted  Net  Income  for the period is zero (0) or less,  then the
Phantom Equity shall be zero (0).

      4.3  Phantom  Equity for a period of less than five Plan Years shall equal
Average  Adjusted  Net  Income,  as  calculated  for the  number  of Plan  Years
considered,  times the Equity  Multiple  less Capital.  If Average  Adjusted Net
Income for the  calculation  period is zero (0) or less, then the Phantom Equity
for the interim period shall equal zero (0).

                                    Article 5
                             Participation Interest
                                       And
                         Interim Participation Interest

      5.1 The maximum aggregate percentage of Participation Interest and Interim
Participation  Interest that may be awarded and outstanding at any time shall be
fifteen  percent  (15%) of the  Phantom  Equity for the term of this Plan.  If a
Participation  Interest  or Interim  Participation  Interest is  forfeited  by a
Participant  pursuant  to  Sections  5.4 or 5.6,  the  portion of the  forfeited
Participation  Interest or Interim Participation Interest shall be deducted from
the percentages awarded and outstanding at the time of forfeiture.

      5.2 There is no  requirement  that the  maximum  aggregate  percentage  of
Participation Interest and Interim Participation Interest must be awarded. It is
within the  discretion  of the  President of AEP Energy  Services,  Inc. and the
Compensation  Committee as to the aggregate amount of awards to be granted. If a
Participation  Interest  or Interim  Participation  Interest is  forfeited  by a
Participant,  the President of AEP Energy  Services,  Inc. and the  Compensation
Committee  may award the  forfeited  portion of the  Participation  Interest  or
Interim Participation Interest to a new or current Participant.

      5.3   The President of AEP Energy Services, Inc. shall, subject to the
approval of the Compensation Committee, determine the individual
Participation Interest or Interim Participation Interest granted to a
Participant.

      5.4 A Participation  Interest or Interim Participation Interest granted to
a Participant shall be forfeited if before June 30, 2002:

a)    a Participant with less than two years of service voluntarily
         terminates employment;

b)    a Participant with two or more years of service voluntarily terminates
         employment and engages in business in competition with AEP Energy
         Services, Inc.; or

c)    if AEP Energy Services, Inc. terminates the Participant for cause.

      5.5 A Participation  Interest or Interim Participation Interest granted to
a Participant shall not be forfeited if before June 30, 2002:

(a)   AEP Energy Services, Inc. does not renew the Participant's contract, or

(b)      if during the term of an employment  contract  between the  Participant
         and AEP Energy Services,  Inc. both parties mutually agree to terminate
         the  employment  contract and the employment  relationship  between the
         Participant and AEP Energy Services, Inc.

(c)      a Participant with two or more years of service voluntarily  terminates
         employment  and does not engage in  business  in  competition  with AEP
         Energy Services, Inc.

      5.6 If a Participant's  employment is terminated due to the  Participant's
death,  disability  or  retirement  prior to June 30,  2002,  a  portion  of the
Participation   Interest  or  Interim  Participation  Interest  granted  to  the
Participant  shall be forfeited.  If the Participant was granted a Participation
Interest,   the  portion  of  the  Participation  Interest  forfeited  shall  be
determined by multiplying the Participation  Interest  percentage by a fraction,
the numerator of which is the number of full months from the date of termination
to June 30, 2002 and the  denominator of which is sixty (60). If the Participant
was  granted an  Interim  Participation  Interest,  the  portion of the  Interim
Participation  Interest forfeited shall be determined by multiplying the Interim
Participation  Interest percentage by a fraction,  the numerator of which is the
number of full  months  from the date of  termination  to June 30,  2002 and the
denominator of which is the number of months from the Valuation Date the Interim
Participation Interest was granted to June 30, 2002.

      5.7 In the event of a conflict  between the terms  described  in Article 5
herein and the terms of the employment contract agreed to by the Participant and
the Company, the terms of the employment contract shall take precedent.

                                    Article 6
                        Calculation and Payment of Awards

      6.1 Participants who were awarded Participation Interest and who continued
as Plan  Participants  through  June 30,  2002,  will  have  the  value of their
individual  awards  determined by multiplying  the Phantom Equity as of the June
30, 2002 Valuation Date by the percent of their  Participant  Interest award. If
the  Phantom  Equity at the end of the June 30, 2002  Valuation  Date is zero or
less, the Participants will not be entitled to any form of supplemental payment.

      6.2 Unless otherwise defined in the terms of an employment contract agreed
to by the  Participant  and the Company,  Participants  who were awarded Interim
Participation  Interest and who are Plan  Participants as of June 30, 2002, will
have the value of their individual awards determined as follows:  The difference
between  the  Phantom  Equity as of the June 30,  2002  Valuation  Date less the
Phantom Equity  determined as of the Valuation Date  immediately  proceeding the
date the Interim  Participation  Interest  was granted  times the  Participant's
Interim Participation Interest shall equal the value of the Participant's award.

      6.3 Unless otherwise defined in the terms of an employment contract agreed
to by the Participant  and the Company,  Participants  who terminate  employment
before  June  30,  2002  and who do not  forfeit  their  Participation  Interest
pursuant  to  Section  5.5 will  have  the  value  of  their  individual  awards
determined by  multiplying  their  Participant  Interest by the lower of (a) the
Phantom  Equity as of the Valuation  Date  immediately  preceding  their date of
termination or (b) the Phantom Equity as of June 30, 2002.

      6.4 Unless otherwise defined in the terms of an employment contract agreed
to by the Participant  and the Company,  Participants  who terminate  employment
before June 30, 2002 and who do not forfeit all of their Participation  Interest
pursuant  to  Section  5.6 will  have  the  value  of  their  individual  awards
determined  by  multiplying   the  Phantom  Equity  as  of  the  Valuation  Date
immediately   preceding  the  date  of   termination   of  employment  by  their
Participation Interest.

      6.5 Unless otherwise defined in the terms of an employment contract agreed
to by the Participant  and the Company,  Participants  who terminate  employment
before June 30, 2002 and who do not forfeit their Interim Participation Interest
pursuant  to  Section  5.5 will  have  the  value  of  their  individual  awards
determined by multiplying their Interim  Participation  Interest by the lower of
(a)  the  difference  between  the  Phantom  Equity  as of  the  Valuation  Date
immediately preceding the date of termination less the Phantom Equity determined
as  of  the  Valuation   Date   immediately   preceding  the  date  the  Interim
Participation  Interest was granted,  or (b) the difference  between the Phantom
Equity  as of June  30,  2002  less  the  Phantom  Equity  determined  as of the
Valuation date immediately preceding date the Interim Participation Interest was
granted.

      6.6 Unless otherwise define in the terms of an employment  contract agreed
to by the Participant  and the Company,  Participants  who terminate  employment
before June 30, 2002 and who do not forfeit all of their  Interim  Participation
Interest  pursuant to Section 5.6 will have the value of their individual awards
determined  as follows:  The  difference  between  the Phantom  Equity as of the
Valuation Date immediately  preceding the date of termination of employment less
the Phantom Equity determined as of the Valuation Date immediately preceding the
date the Interim  Participation  Interest  was granted  times the  Participant's
Interim Participation Interest shall equal the value of the Participant's award.

      6.7  Notwithstanding  any  provision  of  this  Plan to the  contrary,  if
pursuant to Section 8.1 this Plan is terminated or if a Plan amendment adversely
affects  the  rights  of  a  Participant's  Participation  Interest  or  Interim
Participation  Interest or adversely  affects the calculation of Phantom Equity,
all  Participation  Interest  and all Interim  Participation  Interest  shall be
deemed  to be fully  vested  as of the date of  termination  or  amendment.  The
determination  of Phantom  Equity  shall be made as of the last  Valuation  Date
immediately  prior to the date of the  termination or the amendment.  Payment of
Participation  Interest or Interim  Participation  Interest shall be made within
four months after the date of termination or the date of the amendment.

      6.8 In the event  American  Electric  Power  Company,  Inc. or the Company
sells or otherwise disposes of AEP Energy Services, Inc. during the term of this
Plan and the acquirer of AEP Energy Services,  Inc. does not continue this Plan,
the  Plan  shall  be  deemed  to have  terminated  as of the date of the sale or
disposition and the value of each  Participant's  Participation  Interest and/or
Interim  Participation  Interest  shall be determined as of the date of the sale
and/or  disposition  with  the  Phantom  Equity  equal  to  the  sale  price  or
disposition price less Capital.

      6.9 All earned Participation  Interest and Interim Participation  Interest
awards shall be paid to the Participant no later than October 31, 2002.

                                    Article 7
                                 Administration

      7.1 The Compensation Committee shall administer the Plan. The Compensation
Committee shall have the authority to interpret the Plan and to prescribe, amend
and rescind rules and regulations  relating to the  administration  of the Plan,
and all such  interpretations,  rules and  regulations  shall be conclusive  and
binding on all Participants.

      7.2 The Compensation Committee may employ agents, attorneys,  accountants,
or other persons and allocate or delegate to them powers, rights, and duties all
as the  Compensation  Committee may consider  necessary or advisable to properly
carry out the administration of the Plan.

                                    Article 8
                                  Miscellaneous

      8.1 The Compensation  Committee shall have the right,  authority and power
to alter, amend, modify,  revoke or terminate the Plan; provided,  however, that
no amendment of the Plan shall  adversely  affect the rights of any  Participant
with respect to Participation  Interest and Interim Participation  Interest that
have been  awarded  prior to the  amendment of the Plan and that no amendment of
the Plan shall adversely affect the calculation of Phantom Equity.

      8.2 No benefits at any time payable under this Plan to a Participant  or a
Participant's estate shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, attachment, garnishment, levy, execution, or
other legal or equitable process, or encumbrance of any kind.

      8.3  Nothing  in this Plan  shall  interfere  with or limit in any way the
right of the Company to terminate any Participant's  employment at any time, nor
confer upon a Participant any right to continue in the employ of the Company.

      8.4 The Plan shall be construed and administered  according to the laws of
the State of Ohio.

      8.5 In the event the Compensation  Committee shall find that a Participant
is unable to care for his or her  affairs  because of illness or  accident,  the
Compensation  Committee may direct that any payment due the  Participant be paid
to the Participant's duly appointed legal  representative,  and any such payment
so made shall be a complete discharge of the liabilities of the Plan.

      8.6 In the event a Participant  dies prior to the complete  payment of the
Participant's  award,  the amount owing to the Participant  shall be paid to the
Participant's designated beneficiary or beneficiaries. A Participant at any time
may, on a form provided by the Compensation Committee, (i) designate one or more
persons  as the  Participant's  beneficiary  and  (ii)  change  the  beneficiary
designation.  In the event there is no record of a beneficiary designation,  all
amounts owed to the  Participant  shall be paid to the  Participant's  surviving
spouse.  If the Participant is not married,  all amounts owed to the Participant
shall be paid to the Participant's estate.

                                    Article 9
                                Change In Control

      9.1  Notwithstanding  any  provision  of this Plan to the  contrary,  if a
Change In Control of American Electric Power Company, Inc. (hereinafter referred
to as the  "Corporation")  occurs,  all Participation  Interests and all Interim
Participation Interest shall be deemed to be fully accrued as of the date of the
Change In Control.  The  determination of Phantom Equity shall be made as of the
last date  before the Change In Control  even if the  valuation  date is not the
last  day of a  Plan  Year.  Payments  of  Participation  Interests  or  Interim
Participant  Interest  shall be made within  four  months  after the date of the
Change In Control.

      9.2 A  "Change  in  Control"  of the  Corporation  shall be deemed to have
occurred  if (i) any  "person"  or "group"  (as such terms are used in  Sections
13(d) and 14(d) of the Securities Exchange Ace of 1934 ("Exchange Act")),  other
than any company  owned,  directly or  indirectly,  by the  shareholders  of the
Corporation in substantially the same proportions as their ownership of stock of
the  Corporation or a trustee or other  fiduciary  holding  securities  under an
employee  benefit plan of the  Corporation,  becomes the "beneficial  owner" (as
defined in Rule 13d-3 under the Exchange Act),  directly or indirectly,  of more
than 25 percent of the then outstanding  voting stock of the  Corporation,  (ii)
during any period of two consecutive years,  individuals who at the beginning of
such period constitute the Board,  together with any new Directors (other than a
director  nominated by a person (x) who has entered  into an agreement  with the
Corporation to effect a transaction  described in Section 9.2 (i), (iii) or (iv)
hereof or (y) who publicly  announces an intention to take or to consider taking
actions  (including,  but not limited to, an actual or threatened proxy contest)
which if  consummated  would  constitute a Change In Control)  whose election or
nomination  for election was  approved by a vote of at least  two-thirds  of the
Directors then still in office who were either Directors at the beginning of the
period or whose  election or nomination for election was previously so approved,
cease for any reason to  constitute  at least a majority of the Board;  or (iii)
the Corporation's  shareholders consummation of a merger or consolidation of the
Corporation with any other entity,  other than a merger or  consolidation  which
would result in the voting securities of the Corporation outstanding immediately
prior thereto  continuing to represent  (either by remaining  outstanding  or by
being  converted  into voting  securities of the  surviving  entity) at least 50
percent of the total voting power  represented  by the voting  securities of the
Corporation or such surviving entity  outstanding  immediately after such merger
or consolidation;  or (iv) the shareholders of the Corporation approve a plan of
complete  liquidation  of the  Corporation,  or an  agreement  for  the  date or
disposition of the Corporation (in one transaction or a series of  transactions)
of all or substantially all the Corporation's assets.

      Notwithstanding the foregoing,  a Change in Control shall not be deemed to
occur as a result of the  consummation  of the  transaction  contemplated in the
Agreement and Plan of Merger by and among the Corporation,  Augusta  Acquisition
Corporation  and Central  and South West  Corporation  dated as of December  21,
1997,  nor  thereafter  as a  result  of any  event in (i) or  (iii)  above,  if
Directors  who were  members  of the  Board  prior  to such  event  continue  to
constitute a majority of the Board after such event.

      For  purposes  of this  Section  9.2,  "Board"  shall  mean  the  Board of
Directors of the  Corporation,  and "Director" shall mean an individual who is a
member of the Board.

                                    EXHIBIT A

                            AEP ENERGY SERVICES, INC.
                               PHANTOM EQUITY PLAN

           Computation of Pretax Net Income and Adjusted Net Income

                             Pretax Operating Income

                  Plus        Interest Income

                  Less        Annual Bonus Awards

                  Less        Interest Expense

                  Equals      Pretax Net Income

                  Less        Taxes

                  Less        Capital Charge

                  Equals      Adjusted Net Income

                                    EXHIBIT B

                            AEP ENERGY SERVICES, INC.
                               PHANTOM EQUITY PLAN

                          COMPUTATION OF PHANTOM EQUITY

                           Average Adjusted Net Income

                  Times       Equity Multiple

                  Less        Capital

                  Equals      Phantom EquityDate:       January 3, 2001

Subject:

From:       J. H. Vipperman

To:         S. Tomasky

            In consideration of the prior experience you brought to AEP, you are
            being provided 20 years'  additional  retirement  plan service.  The
            additional  years  of  service,  along  with  your  actual  years of
            service,  will be used in  computing  your  benefit  under the final
            average pay formula and the cash balance formula.

            Under the cash balance formula with the additional service, you will
            receive the maximum company credit (8.5%) on compensation  beginning
            in 2001. You will be vested in the retirement  benefits earned under
            both the qualified  Retirement  Plan and the AEP Excess Benefit Plan
            after the completion of five years of service.

            c:  M. S. Ackerman

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