7/18/2006

PSO announces plans for new baseload generation

TULSA, Oklahoma, July 18, 2006 – American Electric Power’s (NYSE: AEP) Public Service Company of Oklahoma (PSO) subsidiary today announced plans to enter into a joint venture agreement with Oklahoma Gas and Electric Company (OG&E) to build a new 950 megawatt coal-fueled electricity generating unit at the site of OG&E’s existing Sooner plant near Red Rock, in north central Oklahoma.

The plan calls for OG&E to construct a highly efficient coal unit to be called the Red Rock Generating Facility. The goal is to employ ultra-supercritical design technology that offers greater efficiencies and lower emissions than other pulverized coal plant designs. PSO will own 50 percent of the new unit, OG&E will own approximately 42 percent and the Oklahoma Municipal Power Authority (OMPA) will own approximately 8 percent. Although final cost estimates for the new facility have not been determined, preliminary cost estimates are approximately $1.8 billion. The facility is expected to be operational in 2011.

“This is a historic announcement for Oklahoma,” said Michael G. Morris, AEP chairman, president and chief executive officer. “We are extremely proud that these fine Oklahoma companies will be coming together for the betterment of customers across the state.”

“This is great news for our customers and for Oklahoma,” said Stuart Solomon, PSO president and chief operating officer. “This new facility will provide reliable, efficient and environmentally responsible power for our customers for many decades to come, supporting their increasing power needs as well as the ongoing growth and development of local and state economies.”

The Red Rock facility will be constructed using best available control technology (BACT) including flue gas desulfurization (commonly called a scrubber) and selective catalytic reduction (SCR) to limit emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx). Based on the goal of achieving the ultra-supercritical design, the new Red Rock facility is expected to be the cleanest unit of its size using coal from the Powder River Basin.

The joint venture is the result of PSO’s December 2005 Request for Proposals (RFP) in which the company sought proposals for new baseload generation to be online in 2011. Six proposals were received by the Feb. 16, 2006 deadline. Those proposals meeting the RFP criteria were evaluated with oversight from a neutral third-party monitor.

The project is contingent upon the successful completion of definitive agreements with OG&E and OMPA, as well as regulatory approvals.

PSO, a unit of American Electric Power (NYSE: AEP), is an electric utility company serving approximately 514,000 customers in eastern and southwestern Oklahoma. Based in Tulsa, PSO has more than 4,000 megawatts of generating capacity, and is the largest provider of wind energy in the state.

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 is the nation’s largest generator of electricity, owning more than 36,000 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 utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia, West Virginia and Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana and east Texas). American Electric Power, based in Columbus, Ohio, is celebrating its 100th anniversary in 2006.




This report made by AEP and certain of its subsidiaries contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and each of its registrant subsidiaries believe that their expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are: electric load and customer growth; weather conditions, including storms; available sources and costs of, and transportation for, fuels and the creditworthiness of fuel suppliers and transporters; availability of generating capacity and the performance of AEP’s generating plants; the ability to recover regulatory assets and stranded costs in connection with deregulation; the ability to recover increases in fuel and other energy costs through regulated or competitive electric rates; new legislation, litigation and government regulation including requirements for reduced emissions of sulfur, nitrogen, mercury, carbon and other substances; timing and resolution of pending and future rate cases, negotiations and other regulatory decisions (including rate or other recovery for new investments, transmission service and environmental compliance);resolution of litigation (including pending Clean Air Act enforcement actions and disputes arising from the bankruptcy of Enron Corp.); AEP´s ability to constrain its operation and maintenance costs; AEP´s ability to sell assets at acceptable prices and on other acceptable terms, including rights to share in earnings derived from the assets subsequent to their sale; the economic climate and growth in AEP´s service territory and changes in market demand and demographic patterns; inflationary trends; AEP´s ability to develop and execute a strategy based on a view regarding prices of electricity, natural gas, and other energy-related commodities; changes in the creditworthiness of the counterparties with whom AEP has contractual arrangements, including participants in the energy trading market; changes in the financial markets, particularly those affecting the availability of capital and AEP´s ability to refinance existing debt at attractive rates; actions of rating agencies, including changes in the ratings of debt; volatility and changes in markets for electricity, natural gas, and other energy-related commodities; changes in utility regulation, including membership in regional transmission structures; accounting pronouncements periodically issued by accounting standard-setting bodies; the performance of AEP´s pension and other postretirement benefit plans; prices for power that AEP generates and sells at wholesale; changes in technology, particularly with respect to new, developing or alternative sources of generation, and other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.

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Stan Whiteford
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