COLUMBUS, Ohio, Dec.10, 2001 - American Electric Power (NYSE: AEP) and a world-class team of partners will conduct the first U.S. demonstration to test the combined power quality and peak shaving capabilities of the sodium sulfur (NAS^TM) battery, an advanced electrical energy storage technology that promises vast improvements over conventional batteries.

The demonstration project at an AEP office in suburban Columbus is expected to be in service by mid-2002. The cost, performance and benefits of NAS technology will be evaluated during the following two years.

AEP, AEP EmTech, LLC, an AEP subsidiary, Tokyo Electric Power Company (TEPCO) and NGK Insulators, Ltd. (NGK) finalized agreement Dec. 4 with the signing of a Memorandum of Understanding (MOU). The MOU sets forth the interests of each party and their intent to conduct the demonstration project at an AEP office in Gahanna, a suburb of Columbus, and other mutually agreed projects. The Gahanna demonstration project will serve to showcase NAS battery potential and will include an NAS Information Center to support U.S. market development efforts.

Signatories to the MOU were Tom Shockley, AEP vice chairman and chief operating officer, John Harper, president of AEP EmTech, Sueharu Iwashina, director and deputy general manager of Research and Development of TEPCO, and Eiji Hamamoto, managing director of NGK.

TEPCO and NGK have successfully developed, tested and demonstrated the NAS battery in Japan for a broad range of applications. As a result, TEPCO will offer commercial NAS battery systems to their commercial and industrial customers, beginning in April 2002. Accordingly, NGK has committed to expand to a commercial-scale NAS battery production facility in Japan, with start-up projected by April 2003.

The U.S. market for such applications of NAS battery systems is projected to be $250-300 million per year, based on a market study funded by AEP EmTech.

Coincident with the finalization of the MOU, officials of AEP EmTech and NGK signed a contract for NGK to supply two NAS battery modules that will provide up to 500 kilowatts (kW) of power quality protection for up to five minutes plus 100 kW of peak shaving capacity for up to seven hours per day during peak power demand periods.

AEP is also finalizing a separate contract with ABB, Inc., for the power electronics package that will integrate the direct current (DC) battery installation with the AEP office building’s alternating current (AC) electrical system.

The AEP installation has been optimized to provide a high rating of power quality protection for modern office buildings’ sensitive electronic operations plus supply electrical load during peak load periods. “Power quality has become increasingly important as commercial and industrial customers need uninterrupted power for electronic controls and processes. Even momentary voltage sags or spikes are not acceptable to many customers,” Shockley said.

“Further, with a NAS battery installation sited to serve a local peak load, you get a ‘distributed resource’ to replace some of the peak electricity from a central station generating plant and distribution system. By storing off-peak energy at night, this improves utilization of the utility’s generation and transmission and distribution assets and yields cost-effective premium power to the utility’s customers. Such a distributed resource, we believe, has the potential for broad markets in the U.S. and other countries,” Shockley said.

AEP tested a 12.5-kW NAS battery from February through November this year. “We put this battery through its paces at our Dolan Technology Center in Groveport, Ohio,” Harper said. “We tested its ability to be discharged and recharged repeatedly, its ability to supply electrical load for over seven hours on peak and its ability to supply uninterrupted high power during short-term power outages. The battery performed quite well.

“Among the NAS battery’s advantages over conventional lead acid batteries are its higher efficiency, longer life cycle, higher energy density and, hence, reduced space requirements plus greatly reduced maintenance costs. We believe that the NAS battery is superior in many ways to other energy storage technologies currently available, and the price will decline as production levels continue to increase, making NAS more competitive with other technologies.”

American Electric Power is a multinational energy company based in Columbus, Ohio. AEP owns and operates more than 38,000 megawatts of generating capacity, making it America’s largest generator of electricity. The company is also a leading wholesale energy marketer and trader, ranking second in the U.S. in wholesale electricity and wholesale natural gas volume. AEP provides retail electricity to more than 7 million customers worldwide and has holdings in the U.S. and select international markets. Wholly owned subsidiaries are involved in power engineering and construction services, energy management and telecommunications.

AEP EmTech, LLC, is a wholly owned subsidiary of AEP that provides research and testing services for various distributed energy resources and can provide funding for promising technologies to advance them to commercial usage.

TEPCO, based in Tokyo, serves some 27 million customers in the metropolitan Tokyo area, making it the largest investor-owned electric utility in the world. TEPCO supplies approximately one-third of the electric demand in Japan. Its subsidiaries are engaged in fuel supply, property management, construction, telecommunications, information technology and environmental protection.

NGK Insulators Ltd., headquartered in Nagoya, Japan, is the world’s largest maker of electrical insulators. NGK produces ceramic insulators and other equipment for power transmission and distribution lines and substations, makes fine ceramic components for automobiles, printers and semiconductors and manufactures cast aluminum auto wheels. NGK’s engineering group designs and constructs water and sewage treatment systems.

ABB, headquartered in Zurich, Switzerland, is a global leader in power and automation technologies for utility and industry customers. This includes advanced power electronics for large-scale energy storage, distributed generation and power quality applications. With U.S. headquarters in Norwalk, Conn., ABB employs about 16,000 at manufacturing and other facilities in 40 U.S. states. Worldwide, the ABB Group, with about 160,000 employees in more than 100 countries, reported revenues of about $23 billion in 2000.