LPSC staff, SWEPCO agree on Louisiana formula rate plan

SHREVEPORT, La., April 3, 2008 - American Electric Power (NYSE:AEP) subsidiary Southwestern Electric Power Company (SWEPCO) today announced an agreement with the Louisiana Public Service Commission (LPSC) staff on a rate plan for the company’s 176,000 Louisiana customers, pending full LPSC approval. The Commission is expected to act on the agreement at its April 16 Open Session.

Following Commission approval, SWEPCO will adopt formula rates to establish Louisiana base rates and to have earnings reviewed annually. The initial impact on base rates will be determined during a review beginning in April, with adjusted rates effective with August 2008 bills.

Separate from base rates, the cost of fuel will continue to be handled as it has historically with no profit to the company. Fuel costs are adjusted regularly throughout the year, subject to regulatory review.

Also as part of the settlement, the company agreed to a $5 million credit rider effective with August 2008 bills. As a result of the rider, residential customers using 1,000 kWh will see a decrease of approximately $0.37 per month. The three-year agreement also lowers depreciation rates for some company assets.

"This agreement will implement a more efficient structure of formula rates that replaces the lengthy and costly process associated with traditional rate cases," said Venita McCellon-Allen, SWEPCO president and chief operating officer. "While the LPSC will continue its regulation of SWEPCO customers’ rates, the new structure provides a better process for timely recovery of investments in infrastructure that maintain and improve reliability for our customers."

Under the agreement, SWEPCO´s rate of return is set at 10.565 percent. Previously the company was allowed to earn 11.1 percent. The formula rate plan contains a sharing provision between the company and customers, triggering rate adjustments if the earned return is outside an established "bandwidth" of 10.015% to 11.115%.


SWEPCO serves over 464,000 customers in three states, including 112,000 in western Arkansas, 176,000 in Northwest Louisiana, and 176,000 in East Texas and the North Texas Panhandle. News releases and other information about SWEPCO can be found at http://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 Texas). AEP’s headquarters are in Columbus, Ohio.

Mike Young
Manager, Corporate Communications
318 673-3458