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SWEPCO Announces Hempstead County as site for New Baseload Generation Power Plant

August 10, 2006

American Electric Power’s (NYSE: AEP) Southwestern Electric Power Company (SWEPCO) announced August 9 the proposed site selection for a new baseload power plant designed to meet the long-term generation demands of the company’s customers. The new coal-fueled plant should be operational by the summer of 2011 at a 2,800-acre location north of Fulton, Ark. in Hempstead County, about 15 miles northeast of Texarkana, Ark. The proposed 600 megawatt plant will create between 1,000-1,400 construction jobs and bring an estimated 110 permanent jobs to the area.

“This announcement brings much needed generation to the Ark-La-Tex and, along with it, upgrades to the transmission system that will vastly improve the ability to move power in this region,” said Michael G. Morris, AEP chairman, president and chief executive officer. “The baseload plant is a significant part of $1.4 billion of planned investments in new generating resources for SWEPCO announced previously this summer.” Other company investments include gas-fired generation in Tontitown, Arkansas and Shreveport, Louisiana.

The Hempstead plant will use an advanced clean coal combustion technology called “ultra-supercritical,” making it one of the first plants of its type to go into operation in the U.S. Ultra-supercritical generation is a new, efficient, pulverized coal technology requiring less coal and creating fewer emissions to produce the same amount of power as existing plants using Powder River Basin (Wyoming) coal.

The cost of the Hempstead county plant is approximately $1.3 billion, of which SWEPCO’s investment will be about 75 percent, and annual payroll is projected to be $12 million.

“SWEPCO believes a coal-fueled plant is the best choice for new baseload generation to fuel the future growth of the economies in our region, allow us to remain a low-cost provider, and prevent over-reliance on natural gas for electricity generation,” said Nick Akins, president and chief operating officer of SWEPCO. “The plant is expected to boost regional economic development efforts in Southwest Arkansas as well as Northeast Texas along the I-30 corridor.”

One other potential site was considered for the new coal plant: the company’s lignite-fired Henry W. Pirkey Power Plant near Hallsville, Texas.

“We evaluated both of these locations based on a number of factors, including the impact on the environment, available transmission, adaptation to generating technologies, and accommodation of unit size, before choosing the Hempstead County location,” Akins said.

Construction will begin once necessary regulatory approvals are obtained. Filings will be made in SWEPCO’s three-state service area of Arkansas, Louisiana and Texas. SWEPCO has an option to purchase the land where the plant will be built.

“AEP is a strong supporter of Integrated Gasification Combined Cycle (IGCC) clean-coal technology for new power generation as demonstrated by AEP operating company plans to build IGCC plants in two of its eastern states. However, the coal used in our SWEPCO region requires different IGCC technology than the GE technology that will be used for AEP’s eastern IGCC plants and we do not have the kind of performance guarantees from the technology provider that would allow us to pursue IGCC technology for this facility,” Akins said. “As such, ultra-supercritical coal generation, with its excellent lower emissions performance, is the best option.” SWEPCO’s fuel mix is expected to remain at 85 percent solid fuel and 15 percent natural gas once all three construction projects are completed, maintaining the company’s favorable fuel costs.

SWEPCO’s new generation plans are the result of a Request for Proposals (RFP) competitive bidding process initiated in December 2005. An Independent Monitor (IM) oversees the process, outlined by the Louisiana Public Service Commission’s Market-Based Mechanism Order, requiring Louisiana utilities to implement competitive procurement processes to acquire or construct incremental generation capacity. The IM actively solicited bids from all potential suppliers, including SWEPCO.

SWEPCO serves 454,000 customers in three states: 112,000 in western Arkansas, 174,000 in Northwest Louisiana, and 168,000 in East Texas. Major cities served in Arkansas are Fayetteville, Texarkana, Springdale and Rogers. The cities of Hope and Bentonville are wholesale customers. News releases and other information about SWEPCO can be found on the World Wide Web 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 36,000 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 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). American Electric Power, based in Columbus, Ohio, is celebrating its 100th anniversary in 2006.

Scott McCloud

Corporate Communications


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