SHREVEPORT, La., Feb. 19, 2009 – Southwestern Electric Power Company (SWEPCO), a unit of American Electric Power (NYSE: AEP), today submitted to the Arkansas Public Service Commission (APSC) a request to increase the company’s Arkansas non-fuel base rates by $53.9 million. If approved, the increase in base rates would be SWEPCO’s first in Arkansas in more than 23 years.

SWEPCO’s request includes a $25.3 million increase in the direct cost of providing service to the company’s retail customers, including investments in infrastructure and ongoing operating costs. It also includes approximately $28.6 million to recover financing costs related to SWEPCO’s ongoing power plant construction program.

If approved, the request would result in an overall increase of $15.43 per month, or 17.7 percent, for a residential customer using 1,000 kilowatt-hours per month. New rates likely would go into effect in late 2009 or early 2010.

“We have made sizeable investments in our high-voltage transmission and local distribution systems, and we continue to face substantially higher costs of providing reliable electric service to our retail customers,” said Paul Chodak, SWEPCO president and chief operating officer. “For example, the average cost for wire, poles and labor has increased by 37 percent over the past 10 years. We also completed the Harry D. Mattison Power Plant in Northwest Arkansas and made other investments in our electric system as part of ongoing efforts to meet our customers’ growing electric needs,” Chodak said.

"For many years, we have been able to absorb or offset these kinds of non-fuel cost increases, but we have reached a point where a rate increase is necessary for us to be able to continue providing the kind of reliable, affordable power our customers expect, while also earning an adequate rate of return for our investors,” Chodak said. “An adequate rate of return is needed to maintain a strong credit rating, avoid increased costs of borrowing, and continue making the necessary investments in our electric system.”

SWEPCO also is seeking recovery of financing costs during construction of two major power plants – the 600-megawatt John W. Turk Jr. Power Plant in southwest Arkansas and the 500-megawatt J. Lamar Stall Unit in northwest Louisiana. “Recovery of financing costs while the plants are under construction, instead of at the end of construction, will help prevent compounding interest on these major investments, which will save customers money in the long run,” Chodak said.

As a base load unit, the Turk Plant will use advanced coal combustion technology and is designed to run 24 hours a day and serve demand that exists all the time in the electric system. As an intermediate facility, the natural gas-fueled Stall Unit is a high-efficiency combined-cycle plant designed to meet system requirements between base load and peak load.

“Since 1985, when our last major construction program was completed, SWEPCO has absorbed or offset the higher costs of serving customers through belt-tightening and significant changes in the way we do business,” Chodak said. “But as we have been saying, we are out of belt notches to tighten, and we need to raise our rates to cover our increased costs so that we can continue to provide our customers with affordable, reliable electricity in the years ahead.”

SWEPCO’s current rates are 13 percent below the Arkansas average and 31 percent below the national average. “We know there is no good time to raise rates, and we’re aware of the impact the economy is having on individuals, families and businesses. But our electric rates will continue to provide good value for the money. Even with this proposed increase, our rates will be close to the present state average and still well below the national average,” Chodak said.

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 covers the costs of fuel and purchased power and is a pass-through with no profit to the company. “Increases in electric bills over the past 23 years have been due to fuel costs for power generation and increases in electricity usage. 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.

In December, SWEPCO provided the required notice to the APSC that the company planned to file a rate case in 60 to 90 days. “Turk plant opponents immediately sought to make our case all about paying for the Turk plant, but customers and other stakeholders should not be misled,” Chodak said. “This request is about the big picture, including all the electric infrastructure investments and day-to-day operating costs needed to keep the lights on, now and in the future.”

In addition, the rate case process began well before the Jan. 27 ice storm. Service restoration costs from the ice storm are not included in the rate request. Methods of major storm cost recovery for utilities are under consideration in a separate docket opened by the APSC last year.

SWEPCO serves 113,500 customers in Arkansas, along with 180,000 in Northwest Louisiana and 180,000 in East and North Texas for a total of more than 473,500. 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.