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AEP merger won’t affect customers

A pending merger will have no visible effect on American Electric Power customers in Ohio, but will move the company into a better position for the future, company officials said.

Thursday, August 26, 1999

A pending merger will have no visible effect on American Electric Power customers in Ohio, but will move the company into a better position for the future, company officials said.

Ohio customers, who are served through Ohio Power in Ironton, are a part of the Kentucky District, which will not see changes in the immediate sense if a proposed merger between AEP and Central South West Corp. in Texas goes through, said Tim Mosher, AEP Kentucky president.

"The merger is going to affect the fact that the customers of AEP in Ironton are served by Ohio Power Co., which is a wholly owned subsidiary of AEP," Mosher said. "But in terms of what they have seen in price and service, it should not affect a thing."

Hearings to consider the merger application between AEP and CSW began Aug. 16 at the Public Utility Commission in Austin, Texas. The hearings also will address a proposed settlement that will result in combined rate reductions, which will total $221 million over a six-year period for Texas customers of the three CSW Texas electric operating companies.

These reductions will move into place after the settlement is approved and the merger is completed.

"We look forward to the start of these hearings because the hearings will give us the opportunity to provide additional details on the value that this merger will provide to CSW’s customers in Texas and AEP and CSW shareholders," said E. Linn Draper Jr., AEP chairman, president and CEO. "We also continue to work with other parties in Texas to attempt to reach additional settlements as this hearings process continues."

Locally, with deregulation ready to spring into effect in January 2001, AEP customers will benefit from the merger because the strength of the company as a whole will increase, Mosher said.

"What this merger does is position the new AEP to be a winner in the new restructured electric industry," Mosher said. "Deregulation is really a misnomer as we’re still going to be wholly regulated by the Public Utility Commission of Ohio and the Public Service Commission of Kentucky with respect to serving customers in those states."

The changes, however, will include a larger, stronger company, he said.

"What changes in the restructuring is the generation of electricity is basically going to become a commodity and customers are going to have a choice from whom they buy their kilowatt hours in Ohio," he said. "The positive side of this merger for our customers is again the fact that the new AEP will be an even stronger company positioned to be a winner in the future."

Deregulation is still under consideration in the Kentucky Legislature.

Once the proposed merger is approved and accepted by both parties and assessed by the Federal Energy Regulatory Commission and reviewed by the Department of Justice, the new company will retain the name American Electric Power.

CSW is the parent company to Central Power and Light Company, West Texas Utilities Company and Southwestern Electric Power Company.

AEP is a global energy company and one of the United States’ largest investor-owned utilities, which provides energy to more than 3 million customers in seven states. The company is based in Columbus.