9/11/2002

AEP TO MOTHBALL 16 TEXAS GAS-FIRED PLANTS IF NOT NEEDED BY ERCOT FOR GRID RELIABILITY

COLUMBUS, Ohio, Sept. 11, 2002 - American Electric Power (NYSE: AEP) has asked the Electricity Reliability Council of Texas (ERCOT) to determine which of AEP’s 16 gas-fired power plants in ERCOT may be required for “reliability must run” or “RMR” status. Plants not required for reliability purposes will be mothballed by the end of the year, a move that will improve AEP’s financial performance.

An RMR plant is one required to run to ensure reliability of the electricity grid, even if electricity from that plant is not required to meet market needs. Mothballed plants can be returned to service if market conditions change.

ERCOT has committed to provide AEP with guidance on which units will be required for RMR and to negotiate interim contracts by the end of this month to ensure cost recovery for the units. The interim contracts will provide time for ERCOT to continue its analysis of its longer-term needs.

“Many new plants have been built in Texas as a response to deregulation,” said Eric van der Walde, executive vice president - wholesale for AEP. “These new plants are more efficient and have pushed wholesale power prices lower, which is good for the Texas market. It’s reached a point where we are buying power for a price below the production costs of 16 of our gas-fired plants. The plants have been idle for much of the year, except when called on by ERCOT for reliability purposes.

“This decision will improve AEP’s financial performance,” van der Walde said. “The interim contracts with ERCOT will allow us to get cost recovery for plants with RMR status. We will reduce our operating and maintenance costs by mothballing the other plants. Both steps will enhance our earnings.”

A decision to mothball the plants will have no effect on Texas electricity prices or availability. The 16 plants have a total generating capacity of 3,866 megawatts.

Employees of plants moved to inactive status will receive a severance package and outplacement services.

AEP’s West Texas Utilities and Central Power and Light subsidiaries operate the 16 gas-fired plants in ERCOT. AEP plants in the Southwest Power Pool (SPP) region of Texas, which are operated by AEP’s Southwestern Electric Power Co. (SWEPCo) subsidiary, are not affected by the decision. Electricity competition has not been introduced in SPP.

If all 16 plants become inactive, AEP will have 6,074 megawatts of active generating capacity in Texas, including 2,663 in ERCOT.

AEP’s gas-fired plants in ERCOT are:

Plant Location Capacity (MW)
Abilene Abilene 15
B.M. Davis Corpus Christi 647
E.S. Joslin Point Comfort 235
Fort Phantom Abilene 337
Fort Stockton Fort Stockton 5
J.L. Bates Mission 166
La Palma San Benito 242
Lake Pauline Quanah 40
Laredo Laredo 168
Lon C. Hill Corpus Christi 511
Nueces Bay Corpus Christi 514
Oak Creek Bronte 75
Paint Creek Stamford 218
Rio Pecos Girvin 122
San Angelo San Angelo 110
Victoria Victoria 461

 

 

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.

 

Pat D. Hemlepp
Director, Corporate Media Relations
American Electric Power
614/223-1620