3/30/2011

SWEPCO, City of Hope sign water supply agreement for Turk Plant construction

SHREVEPORT, La., March 30, 2011 — Southwestern Electric Power Co. (SWEPCO), a unit of American Electric Power (NYSE: AEP), and the City of Hope, Ark., acting through the Hope Water & Light Commission, have signed a short-term agreement to provide start-up water during construction of the John W. Turk, Jr. Power Plant in Hempstead County, Ark.

The agreement will help SWEPCO keep the Turk Plant on its current construction schedule and help avoid further increases in costs to its customers due to delays in construction.

The water supplied to SWEPCO will allow the plant to perform start-up and testing activities, but will not support full operations once the plant is completed.

“We have a long-standing and valued relationship with the City of Hope,” said Venita McCellon-Allen, president and chief operating officer of SWEPCO. SWEPCO has provided electrical service to the citizens of Hope through a wholesale contract with Hope Water & Light since 1982. 

“We deeply appreciate the city’s willingness to support the Turk project through an agreement that benefits both Hope’s water customers and SWEPCO’s electric customers,” McCellon-Allen said. 

Hope draws water from the Little River for its customers, but it has unused capacity. Under this agreement, SWEPCO will draw on some of that unused capacity to fill its make-up water pond at the Turk Plant.

The agreement expires Dec. 31, 2012. SWEPCO expects the plant to be finished and ready for full commercial operation by then.

In addition to paying the cost of pumping the water to the Turk Plant, SWEPCO will pay for needed improvements and maintenance to the city’s utility equipment, including the upgrade of 30-year-old pumping facilities currently in use. The upgrade will provide more efficient and reliable service for all of Hope’s customers. SWEPCO also will fund a study of potential erosion control improvements near Hope’s water intake structure.

Any water supply requested for the Turk Plant will be subordinate to Hope’s existing customer needs.

Nothing in the agreement violates the federal court’s preliminary injunction which has halted completion of the Turk Plant’s own water intake facility at the Little River, McCellon-Allen said. But by drawing water from the Hope facility, SWEPCO can maintain its current construction schedule yet remain in compliance with the pending preliminary injunction. SWEPCO will continue to defend vigorously the permit that SWEPCO received from the Corps of Engineers, and seek to complete its own intake structure for normal plant operations.

The water agreement will help keep construction of this $1.7 billion, 600-megawatt plant on track. More than 1,600 workers are at work building the Turk Plant. The plant will employ 110 people when it begins operation. Construction is approximately 59 percent complete.

“This agreement helps us continue construction so that we can stay on schedule toward projected completion in late 2012 in order to serve our customers in the most cost-effective manner,” McCellon-Allen said.
In Arkansas the plant will serve SWEPCO’s wholesale customers — the cities of Hope, Bentonville and Prescott — and the 490,000 members of Electric Cooperatives of Arkansas. Arkansas Electric Cooperative Corp. (AECC) is part-owner of the plant.

SWEPCO serves more than 520,000 customers in western Arkansas, northwest Louisiana, northeast Texas and the Texas Panhandle. SWEPCO’s headquarters are in Shreveport, La. News releases and other information about SWEPCO can be found at www.swepco.com.

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 and north Texas). AEP’s headquarters are in Columbus, Ohio. News releases and other information about AEP can be found at www.aep.com.

Corporate Communications
Peter Main, 479-973-2526