AEP SWEPCO is advancing coal technology now

Bond

The issue of climate change—including the impact of carbon dioxide (CO2) and other greenhouse gases—is very much on the minds of the public, policymakers and the media. Balancing concerns about climate change with ways to meet the growing energy needs of the nation is both a technological and a policy challenge.

Fifty percent of the electricity consumed in the United States is generated using coal. As a strategic part of the nation’s energy mix, coal is a fuel that keeps electricity affordable, businesses competitive and the economy growing.

Advances in technology play a major role in plans by Southwestern Electric Power Co. and our parent company, American Electric Power, to build a coal-fired electric plant in Arkansas. The proposed plant will use an advanced clean coal combustion technology called “ultra-supercritical”—requiring less fuel and producing fewer emissions, including CO2, to generate the same amount of electricity as other plants using low-sulfur coal from Wyoming.

When complete in 2011, the SWEPCO plant in Hempstead County near Texarkana will be one of the first plants of its type in operation in the United States.

The plant design also includes the option to retrofit for control of greenhouse gas emissions—when such technology is proven on a commercial scale. But AEP is not waiting for someone else to make that happen. Earlier this year, AEP announced plans to install carbon capture technology on two coal-fired power plants—the first commercial use of technologies to significantly reduce CO2 emissions from existing units.

The effort begins with a validation project at AEP’s Mountaineer Plant in West Virginia in 2008 and, if all goes well, a commercial-scale installation at AEP’s Northeastern Plant in Oklahoma by late 2011. Up to 100,000 metric tons of CO2 per year from the Mountaineer project will be injected into a deep saline aquifer (more than 9,000 feet below the earth’s surface)—the first large-scale injection of CO2. At Northeastern, AEP expects to capture 1.5 million metric tons of CO2 a year, with the captured gas to be used for enhanced oil recovery.

At AEP, we fully expect that Congress will take action on greenhouse gas issues. We support the adoption of an economywide cap-and-trade greenhouse gas reduction program that is well-thought out, achievable and reasonable. Under such a program, AEP SWEPCO would be able to offset greenhouse gas emissions from the proposed Arkansas plant through a range of actions, such as power plant efficiency improvements and forestry projects (trees take CO2 out of the air and sequester it in living plant tissue), as well as retrofit for greenhouse gas emissions control.

Over the past decade, AEP has led the U.S. electric utility industry in taking voluntary action to reduce, avoid or offset greenhouse gases. During 2003-2005, we reduced our greenhouse gas emissions by 31 million metric tons of CO2 by planting millions of trees, adding wind power, increasing power plant efficiency, retiring less-efficient units and other measures. AEP was the only U.S. utility among the founding members of the Chicago Climate Exchange and is still the largest U.S. utility to join. Participation requires a legally binding commitment to reduce or offset greenhouse gas emissions.

We continue to invest in clean coal technology, including plans to build two integrated gasification combined cycle plants and two state-of-the-art ultra-supercritical plants. By taking a lead role in the advancement of carbon capture technology, AEP will be well positioned to retrofit plants as needed while avoiding a potentially significant learning curve. AEP also is a founding member of FutureGen, a groundbreaking public-private collaboration aimed at making near-zero-emissions coal-based energy a reality.

You can read more about climate change in AEP’s recently published Corporate Responsibility Report, available online at www.aep.com/cr.

AEP SWEPCO will continue to explore clean energy and renewable resources for power generation, coupled with promotion of energy efficiency and conservation to reduce the demand for electricity. At AEP SWEPCO, we are committed to responsibly addressing climate change issues and providing reliable, reasonably priced electricity to meet the needs of our customers in Arkansas, Louisiana and Texas.

Brian Bond

Vice President, External Affairs

Southwestern Electric Power Co.