AEP SWEPCO Signs Wind Power Purchase Agreements for 359 Megawatts

SWEPCO, OMPA agreements exceed 400-MW Turk Plant settlement commitment

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Jan 25, 2012, 11:23 ET

SHREVEPORT, La., Jan. 25, 2012 /PRNewswire/ -- American Electric Power (NYSE: AEP) subsidiary Southwestern Electric Power Co. (SWEPCO) has signed long-term power purchase agreements for a total of 358.65 megawatts (MW) of renewable energy from wind projects in Texas, Oklahoma and Kansas. Together with a 49.2-MW agreement signed by the Oklahoma Municipal Power Authority, SWEPCO and its affiliates have exceeded the 400-MW renewable energy commitment in a recent settlement of legal issues involving the John W. Turk Jr. Power Plant.

The agreements will more than quadruple SWEPCO's wind energy portfolio. The new series of 20-year agreements includes:

Three contracts totaling 201.25 MW from Canadian Hills Wind, LLC, owned by Apex Wind Energy Holdings, LLC and located in Canadian County, west of Oklahoma City, Okla.
79.6 MW from High Majestic Wind II, LLC, owned by NextEra Energy Resources, LLC and located in Carson and Potter Counties in the Texas Panhandle.
77.8 MW from Flat Ridge 2 Wind Energy, LLC, owned by BP Wind Energy and Sempra U.S. Gas and Power and located in Barber, Harper, Kingman and Sumner Counties, southwest of Wichita, Kan.

Separately, OMPA, a co-owner of the Turk Plant, has signed a 25-year agreement for 49.2 MW from the Canadian Hills Wind project.

"With these long-term power purchase agreements, we have added a substantial amount of wind energy to serve SWEPCO customers in Arkansas, Louisiana and Texas, and we have combined efforts with a Turk Plant partner to exceed the 400-megawatt commitment in our Turk Plant settlement," said Nicholas K. Akins, AEP president and chief executive officer.

SWEPCO announced on Dec. 22, 2011, that the company had settled all legal actions brought against it by the Sierra Club, the National Audubon Society and Audubon Arkansas related to the Turk Plant under construction in southwest Arkansas. The settlement includes a provision that SWEPCO and its affiliates will construct or secure 400 MW of new renewable energy resources by the end of 2014. The SWEPCO and OMPA agreements total 407.85 MW.

"Through the Louisiana Public Service Commission's recent Renewable Energy Pilot Program and our ongoing efforts to expand our renewable energy portfolio, we were in a good position to pursue additional renewable resources at a good price for customers. I'm pleased that we could secure these agreements in a fairly short time frame to put more wind power to work for our customers," said Venita McCellon-Allen, SWEPCO president and chief operating officer.

The wind resources will be interconnected to SWEPCO through the transmission facilities of the Southwest Power Pool, the regional transmission organization that includes SWEPCO and other utilities across parts of nine states. "Some of the best renewable energy available to serve our customers comes from wind farms in Texas, Oklahoma and Kansas," McCellon-Allen said.

Flat Ridge 2, High Majestic Wind II and Canadian Hills Wind are expected to come on line by the end of 2012.

The combined impact of the new power purchase agreements is expected to slightly lower SWEPCO's projected overall cost to customers. SWEPCO estimates the decrease will average about 0.1 cents per kilowatt-hour over the next 10 years starting in 2013.

Prior to the latest agreements, SWEPCO's wind capacity totaled 110.5 MW. In December 2011, SWEPCO announced a 20-year contract with Flat Ridge 2 for 31 MW as part of the Louisiana Public Service Commission's Renewable Energy Pilot. The latest agreement is for an additional 77.8 MW from the Flat Ridge 2 project. In January 2009, SWEPCO announced a 20-year agreement with Majestic Wind Power LLC, a subsidiary of Babcock & Brown Renewable Holdings Inc, for 79.5 MW from the Majestic Wind Farm near Amarillo in Carson County, Texas. Majestic Wind is now known as High Majestic Wind, owned by NextEra Energy Resources LLC, and SWEPCO's latest purchase of 79.6 MW is from a build-out of the original project.

When the new projects are on line, SWEPCO's total wind capacity will be 469.15 MW.

SWEPCO serves 520,400 retail customers in three states, including 113,700 in western Arkansas, 225,700 in northwest and central Louisiana and 181,000 in north and eastern Texas.

SWEPCO owns 73 percent of the $1.7 billion Turk Plant. Co-owners of the Turk Plant are Arkansas Electric Cooperative Corp. (AECC), 12 percent; East Texas Electric Cooperative (ETEC), 8 percent; and Oklahoma Municipal Power Authority (OMPA), 7 percent. The Arkansas Electric Cooperatives serve more than 490,000 members across the state.

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 Texas). AEP's headquarters are in Columbus, Ohio.

This report made by American Electric Power and its Registrant Subsidiaries contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and 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 of fuel suppliers and transporters; availability of generating capacity and the performance of AEP's generating plants; the ability to recover regulatory assets and stranded costs in connection with deregulation; the ability to recover increases in fuel and other energy costs through regulated or competitive electric rates; the ability to build or acquire generating capacity when needed at acceptable prices and terms and to recover those costs through applicable rate cases; new legislation, litigation and government regulation, including requirements for reduced emissions of sulfur, nitrogen, mercury, carbon 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.); AEP's ability to constrain its operation and maintenance costs; AEP's ability to sell assets at acceptable prices and on other acceptable terms, including rights to share in earnings derived from the assets subsequent to their sale; the economic climate and growth in its service territory and changes in market demand and demographic patterns; inflationary trends; its 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 and number of participants in the energy trading market; changes in the financial markets, particularly those affecting the availability of capital and AEP's ability to refinance existing debt at attractive rates; 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 membership and integration into regional transmission structures; 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; and other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.

SOURCE American Electric Power