SWEPCO provides notice of Arkansas rate case filing

SHREVEPORT, La., Dec. 10, 2008 – Southwestern Electric Power Company (SWEPCO), a unit of American Electric Power (NYSE: AEP), today submitted to the Arkansas Public Service Commission (APSC) a notice of the company’s plans to file a base rate case in 60 to 90 days.  The amount of the rate request is being determined.

 “SWEPCO has not increased its Arkansas base rates – the price charged for a kilowatt-hour delivered – since 1985,” said Paul Chodak, SWEPCO president and chief operating officer. “Over the past 23 years, the costs to generate and deliver electricity have risen considerably, and SWEPCO has absorbed these higher costs through belt-tightening and significant changes in the way we do business.  As a result, SWEPCO’s rates are over 30 percent below the national average and well below the average rates in Arkansas.  However, we are out of belt notches to tighten. We now need to raise our rates to cover our increased costs so that we can continue to provide our customers low cost reliable electricity in the years ahead.”

SWEPCO has been making substantial investments in its high-voltage transmission system and its local distribution system to reliably serve the growing demand of the company’s Arkansas customers.  SWEPCO also is building new power plants like the Mattison Plant recently completed in northwest Arkansas and the facilities planned for Hempstead County in southwest Arkansas and in Shreveport, La.

Base rates refer to the costs of building, maintaining and operating SWEPCO’s electric system, including power plants, transmission and distribution lines and facilities to serve customers.

Base rates do not include the fuel portion of the customer’s bill, which is a pass-through with no profit to the company. For example, if SWEPCO pays $10 for fuel, the customer pays $10 for fuel. “Increases in electric bills over the past 23 years have been due solely to fuel costs for power generation. In fact, fuel price increases would have been higher if not for SWEPCO’s strategic fuel mix. Most of our baseload generation comes from lower-cost coal and lignite, which offsets some of the impact of volatile natural gas prices,” Chodak said.

“We understand that this request will come at a time when customers are facing higher costs for groceries, housing, medical bills and other expenses. However, recovery of these investments and the increased costs of daily operations through base rates is essential for us to be able to continue meeting the needs of the customers and communities we serve,” he said.

“Electricity remains a good value for the money, and SWEPCO’s rates will still be well below national average rates and very competitive within Arkansas even after the proposed rate change,” Chodak said.

SWEPCO serves more than 473,500 customers in three states, including 113,500 in western Arkansas, 180,000 in Northwest Louisiana, and 180,000 in East and North Texas. SWEPCO’s headquarters are in Shreveport, La.  News releases and other information about SWEPCO can be found at www.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 and north Texas). AEP’s headquarters are in Columbus, Ohio. News releases and other information about AEP can be found at www.aep.com.

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 and performance 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 (including AEP’s ability to obtain any necessary regulatory approvals and permits) 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; 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.


SWEPCO Corporate Communications:
Peter Main, 479-973-2526
Scott McCloud, 318-673-3532

AEP Media Relations and Policy Communications:
Melissa McHenry, 614-716-1120


Julie Sherwood
Director, Investor Relations