6/8/2001

TEXAS SUPREME COURT UPHOLDS PUCT RULING
ALLOWING CPL TO SECURITIZE $797 MILLION

AUSTIN, Texas, June 7, 2001 - The Texas Supreme Court on Wednesday upheld an earlier decision by the Public Utility Commission of Texas (PUCT) allowing American Electric Power’s (NYSE: AEP) Central Power and Light (CPL) subsidiary to securitize approximately $764 million of regulatory assets. Securitizing the amounts will result in customer savings of at least $95 million during the 14 years following introduction of retail competition.

The PUCT in March 2000 gave final approval to a settlement allowing CPL to securitize approximately $764 million of regulatory assets plus other qualified costs currently estimated to be up to $33 million. However, several parties appealed the decision to state district court and, when those appeals were rejected, appealed the PUCT’s decision to the Texas Supreme Court.

Utilities can refinance, or securitize, regulatory assets and other qualified costs with lower-cost transition bonds. Securitization allows the costs, which are being collected from customers through current rates, to be paid off sooner, resulting in lower future prices for customers. Securitization is similar to a homeowner refinancing a home mortgage to take advantage of a better interest rate and a much earlier mortgage payoff. Plans are being finalized to issue the securitization bonds prior to the end of the year.

Texas Senate Bill 7 on Electric Utility Restructuring provides the mechanism for recovery of costs left stranded as a result of implementing retail competition. This mechanism is the securitization, or the subsequent refinancing, of the debt and equity associated with facilities built under a regulated market structure.

CPL customers will not see any change in current rates as a result of the securitization. Senate Bill 7 froze existing base rates until Jan. 1, 2002. At that point, residential and small commercial customers (those having an electric load of less than 1 megawatt) who remain customers of CPL´s affiliate retail electric provider will see an overall price reduction of 6 percent from the price levels charged on Jan. 1, 1999, plus adjustments for the significant increases in the price of natural gas since that time. The investor-owned utility´s retail electric provider must continue to offer this "price to beat" for five years or until 40 percent of the customers in that rate class switch electric providers.

American Electric Power is a multinational energy company based in Columbus, Ohio. AEP owns and operates more than 38,000 megawatts of generating capacity, making it America’s largest generator of electricity. The company is also a leading wholesale energy marketer and trader, ranking second in the U.S. in electricity volume with a growing presence in natural gas. AEP provides retail electricity to more than 7 million customers worldwide and has holdings in the U.S. and select international markets. Wholly owned subsidiaries are involved in power engineering and construction services, energy management and telecommunications.

Larry Jones
Public Affairs Manager
Austin, Texas
(512) 391-2970 (Office)
(512) 922-9069 (Cell)

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