COLUMBUS, Ohio, April 16, 2002 - American Electric Power (NYSE: AEP) has reached an agreement in principle to acquire approximately 200 parcels of land that make up the southeastern Ohio community of Cheshire for $20 million.

“The decision to buy the property provides us with land that can be used to enhance the operations of our Gen. James M. Gavin plant at Cheshire, including the potential for expanding our barge unloading capabilities to facilitate fuel deliveries to the plant,” said Bill Sigmon, AEP senior vice president - unregulated power generation. “It also addresses the concerns of our neighbors, who experienced unanticipated conditions during the initial operation of new pollution control systems at Gavin last year.

“This is a solution that meets the needs of all involved,” Sigmon said.

Gavin is a two-unit, 2,600-megawatt power plant, capable of generating enough electricity to power 2.6 million average homes.

AEP reached the agreement with lawyers representing residents of Cheshire (population 221). Within the village are approximately 90 residences and several operating businesses.

Attorneys representing residents include Kathy D. Bailey and Barry S. Neuman of Washington, D.C., and Ed Cochran of Cleveland, Ohio.

“Logistics, timing and details associated with conveying property and occupants actually moving from the village are not known specifically at this point,” Sigmon said. “We will work on these details with attorneys representing residents. AEP did not negotiate with individual property owners. We would expect to see this process concluded by the end of 2002.

“The footprint of our Gavin plant has grown significantly since the plant was completed in the mid-1970s,” he said. “Additional space was required for environmental control systems like scrubbers for reducing sulfur dioxide emissions and selective catalytic reduction (SCR) for reducing nitrogen oxide emissions. This equipment has made Gavin one of the nation’s cleanest coal-fired power plants, but it has also extended plant operations closer to the property line. As a result of expansion, the property AEP will be acquiring is more suitable now for power generation activities.”

In addition to the expansion requirements of Gavin, the decision to acquire these properties was made because of concerns expressed by neighbors of the plant during operation of the SCR system in 2001.

During the startup of SCR systems in 2001, plant employees and area residents began to notice that the exhaust plume from the plant’s two 830-foot-high stacks had changed. Ironically, the change seemed to be connected to the recent installation and operation of SCR systems in conjunction with the operation of the systems in place to reduce sulfur dioxide emissions. Subsequent analysis confirmed that the same mechanism used in the SCR systems to reduce nitrogen oxides produced a small increase in the level of sulfur trioxide (SO3). The situation was compounded by weather conditions that periodically forced the stack exhaust plume to the ground producing a "blue haze" at ground level. At no time during the plant´s operation did emissions in the plume exceed any health-based ambient air quality standards or permissible exposure limits established by federal or state regulations.

“While the plant operates with emission levels well within all health-based air quality standards, we understand the concerns of our neighbors and care about the welfare of the community. As part of this agreement, we are resolving all claims of impacts that the residents have,” Sigmon said.

After extensive analysis of this unique phenomenon involving the foremost experts in the world, AEP announced in January its plans to reduce emissions of SO3. The company is installing three separate injection systems at a cost of approximately $7 million on Gavin’s Unit 2. The systems will be completed in May. Flue gases from Unit 1 will bypass its SCR system during the upcoming May-September ozone season. SO3 mitigation systems are being evaluated for all future SCR installations on the AEP system.

American Electric Power is a multinational energy company with a balanced portfolio of energy assets. AEP, the United States’ largest electricity generator, owns and operates more than 42,000 megawatts of generating capacity in the U.S. and select international markets. AEP is a leading wholesale energy marketer, ranking among North America’s top providers of wholesale power and natural gas with a growing wholesale presence in European markets. In addition to electricity generation, AEP owns and operates natural gas pipeline systems, natural gas storage, coal mines, and the fourth-largest inland barge company in the U.S. AEP is also one of the largest electric utilities in the United States, with almost 5 million customers linked to AEP’s wires. The company is based in Columbus, Ohio.

Tom Ayres
American Electric Power

Kathy D. Bailey 202/887-8040
Barry S. Neuman 202/466-2886
Ed Cochran 216/751-5546
Attorneys for Cheshire residents