PUCT approves AEP Texas Central Company request to increase rates charged to Retail Electric Providers

AUSTIN, Texas, Oct. 18, 2007 -- American Electric Power (NYSE: AEP) said today the Public Utility Commission of Texas (PUCT) has approved an increase in the rates AEP Texas Central Company (TCC) charges Retail Electric Providers (REPs) for the delivery of electricity over its transmission and distribution system.

Based on an initial analysis from TCC, the decision will result in a base rate increase for TCC of approximately $40.8 million, including the expiration of merger credits. The PUCT also approved a $3.5 million increase in service fees. TCC had requested an approximately $70 million base rate increase.

“Although we are disappointed that the commission’s decision did not result in an increase closer to our $70 million request, the increase certainly will help address our financial condition,” said Charles Patton, AEP Texas president and chief operating officer. “Even with this increase, the charges associated with energy delivery in the TCC service territory are only 20 percent of a typical residential customer’s total bill. Given the state’s need for additional electric infrastructure going forward, it will be important for Texas legislators and regulators to re-evaluate how transmission and distribution companies such as TCC receive timely rate relief in order to ensure a safe and secure electric infrastructure.”

If the REPs choose to pass on the entire amount of the increase to end-use customers, residential customers in the TCC service territory using 1,000 kilowatt-hours a month would see an increase of less than $2 per month, or less than 2 percent over what they paid prior to June 2007.

A final order will be issued in the near future, and TCC anticipates the new rates will be effective by December. As allowed by PUCT rules, rates reflecting TCC’s request were put into effect, subject to refund, in May. The difference between the interim rates and the final rates approved by the PUCT will be refunded to the REPs with interest as prescribed by PUCT rules. The REPs will determine whether to pass on all or a portion of the refund to their customers.

TCC is one of two transmission and distribution utilities that comprise AEP Texas, a unit of American Electric Power. TCC provides energy delivery service to a 44,000-square-mile area of south Texas. TCC’s service territory generally includes the southern portion of Texas from just south of San Antonio to the Mexican border and from Bay City west to Eagle Pass. Major cities in TCC’s service area include Corpus Christi, McAllen, Harlingen, Laredo and Victoria. TCC’s service territory is entirely within the Electric Reliability Council of Texas (ERCOT). All of the retail customers in TCC’s service territory have retail choice. TCC provides distribution service to approximately 700,000 end-use customers receiving electric service from 71 retail electric providers.

AEP 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 more than 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 Texas). AEP’s headquarters are in Columbus, Ohio.

This report made by AEP and its Registrant 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; AEP’s ability to recover regulatory assets and stranded costs in connection with deregulation; AEP’s ability to recover increases in fuel and other energy costs through regulated or competitive electric rates; AEP’s ability to build or acquire generating capacity when needed at acceptable prices and terms and to recover those costs through applicable rate cases or competitive rates; new legislation, litigation and government regulation including requirements for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter 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. and related matters); AEP’s ability to constrain operation and maintenance costs; the economic climate and growth in AEP’s service territory and changes in market demand and demographic patterns; inflationary and interest rate 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; 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 the potential for new legislation in Ohio and membership in and integration into regional transmission organizations; 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; other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.

Larry Jones
AEP Texas Corporate Communications

Julie Sloat
Vice President, Investor Relations & Strategic Initiatives