AEP Losing Ground on Global Warming to Cinergy and Duke

COLUMBUS, OH and TULSA, OK///April 26, 2005///American Electric Power (NYSE: AEP), the nation's leading utility emitter of the global warming pollutant carbon dioxide, was applauded during 2004 by investors and environmentalists when it broke ranks to become the first major power company to agree to study and report on the risks to shareholders posed by global warming. As AEP shareholders met today in Tulsa for the company's 2005 annual meeting, the same groups now are lamenting the fact that AEP has surrendered its leadership global warming to rivals Cinergy and Duke Energy.

Clear the Air and other groups urged AEP "to resolve to be an industry leader on global warming solutions by taking the next logical step of embracing a uniform federal approach with a firm timeline and real targets for cutting global warming pollution."

Peter Altman, deputy director, Clear the Air, said: "Mike Morris, the president and CEO of AEP, was way out in front of the rest of the pack in 2004 on the need to do something about global warming, but he has been lapped in 2005 by Duke Energy CEO Paul Anderson and Cinergy CEO Jim Rogers. Duke and Cinergy both have acknowledged that the longer we wait to act on global warming, the bigger the problem will be. And no one will face a bigger problem than AEP which is easily this nation's biggest polluter when it comes to carbon dioxide emissions."

Leslie Lowe, director of the Energy and Environment Program of the Interfaith Center on Corporate Responsibility, said: "More and more investors are urging AEP and other utilities to address the very real hidden risks posed by global warming to corporate assets and shareholder wealth. The U.S. Energy Information Agency recently reported that regulatory constraints on greenhouse gases would "not materially affect average economic growth rates" through 2025. This demolishes the claim that reigning in carbon pollution will wreck the economy. Given the risks of continued uncertainty that AEP so clearly recognizes, we'd like to see them exert leadership in working for policies that will end the uncertainty and spur innovation."

Marianist Sister Leanne Jablonski, Coordinator of the Ohio Interfaith Climate and Energy Campaign, said: "As people of faith, we must care for the earth's resources that God has entrusted to us. We must ensure we have healthy air and take action to prevent the damaging impacts of global warming on our children, the poor and vulnerable. We look to the managers of the companies located in our own communities here in Ohio to be responsive to these expectations from those of us who are their friends, neighbors and family members. AEP emits more carbon dioxide than any other utility in the nation, putting out as much as of that pollution as forty three and a half million cars."

Leading U.S. utilities now are reaching a consensus that they need certainty from the federal government regarding future limits on carbon dioxide (CO2) emissions. The only way to ensure such certainty, according to CTA, is to adopt a federal solution with clear timelines and clear targets for CO2 reductions.

In 2004 and 2005, three major power companies - American Electric Power (AEP), Cinergy and TXU -- issued reports to shareholders discussing their positions on and responses to global warming. All three reports make the case that voluntary action cannot be relied upon to address global warming, and that a federal policy is required in order to address global warming and to create the certainty needed for wise investments by the power sector. In addition, the CEO of Duke Energy made an argument on April 7, 2005 for an economy-wide, mandatory tax on carbon as the appropriate response to global warming.

AEP was the first company to agree to issue a global warming report, but it has since been eclipsed by the more forward looking responses of competitors, such as Duke Energy and Cinergy. The company's recent silence on global warming is puzzling in view of the strength of its original statements on the topic. AEP's public statements about global warming include the following:

"Enough is known about the science and environmental impacts of climate change for us to take actions to address its consequences."

"The central challenge the company faces is that of making decisions about large investments in long-lived assets in a setting of uncertain public policy and rapidly evolving technology."

"[A]nalyses prepared for this report suggest that AEP could meet a reasonable constraint at significant but manageable costs - provided that the program was efficiently designed."

Altman said: "It is now time for AEP to follow through on what they have been telling their shareholders. That is going to mean engaging in a positive way to get to a federal global warming pollution rule that has specific targets and timeline for reductions. This is a case where environmentalists and the utilities industry agree: A successful federal carbon policy must create certainty of reducing global warming pollution and certainty that enables utilities to harness innovation and technology to solve the problem."

For a copy of AEP's climate change report, go to http://www.aep.com/environmental/performance/emissionsassessment/default.htm on the Web.

ABOUT CTA
Clear the Air (http://www.cleartheair.org) is a national public education campaign to improve air quality by reducing emissions from coal-burning power plants. Clear the Air brings together grassroots organizations, national environmental groups, and policy experts to make the case for stricter pollution controls to communities, government agencies, elected representatives, and the media. Clear the Air is a joint project of three leading clean air groups, the Clean Air Task Force, The National Environmental Trust and the U.S. PIRG Education Fund.

CONTACT: Patrick Mitchell, (703) 276-3266 or pmitchell @hastingsgroup.com.

EDITOR'S NOTE: A streaming audio recording of a related news event will be available on the Web as of 6 p.m. ET/5 p.m. CT on April 26, 2005 at
http://www.cleartheair.org.