AEP endorses policies to accelerate development of wind and other renewable resources

AUSTIN, Texas, May 20, 2003 — American Electric Power (AEP) announced it supports policies to accelerate the development of renewable generating resources.

During a presentation Monday at WindPower 2003, a conference of the American Wind Energy Association (AWEA), E. Linn Draper, AEP’s chairman, president and chief executive officer, recognized the progress that has been made in wind generation, but focused on the obstacles that must be addressed if the U.S. is going to significantly increase the amount of electricity generated from wind and other renewable sources.

“Despite a sluggish economy and uncertainty regarding tax provisions, more than 2,100 megawatts of new wind-powered generation has been completed in the U.S. in the last two years which is a fine achievement,” Draper said. “Unfortunately, the outlook for wind isn’t completely rosy. There are some obstacles that must be overcome if the U.S. is ever going to receive more than just a percent or two of its electricity from wind.”

According to Draper, one of the biggest obstacles to the development of large-scale wind generation is the lack of transmission resources in our nation’s windiest locations, which are sparsely populated and far from major load centers. Additionally, cost continues to be a factor. Although wind energy production costs have declined, the industry needs turbines that can operate cost-effectively in areas with lower wind speeds to allow large-scale wind farms to develop closer to major load centers.

Finally, Congress needs to pass a multi-year extension of the existing federal wind energy production tax credit (which is scheduled to expire Dec. 31, 2003) or make the credit permanent. Congress has twice allowed the credit to expire before renewing it — in 1999 and again in 2001. That uncertainty seems to be contributing to a pause in wind industry progress, according to Draper. Nearly 1,700 megawatts of new wind-powered capacity were added in the U.S. in 2001, while only 410 megawatts of new capacity came on line in 2002.

As the largest generator of electricity in the United States, AEP is a strong supporter of wind and other forms of renewable generation. The company has been monitoring wind sources for more than nine years and has been operating wind turbines since 1995. Its Fort Davis project was the first utility-scale wind farm in the southwestern United States and the first project built under the Department of Energy’s Wind Turbine Verification Program.

With 311 megawatts of operating wind generation, AEP also is one of the top generators of wind energy in the United States. The company operates the 150-megawatt Trent Mesa Wind Project, near Iraan, Texas, and the 161-megawatt Desert Sky Wind Project, near Trent, Texas.

Internationally, AEP is heading a project as part of e7, an organization of leading energy companies that promotes sustainable energy development, to construct a wind park and generate 1.8 megawatts of electricity that will displace a significant amount of diesel-powered generation on the environmentally sensitive San Cristobal Island in the Galapagos Archipelago.

Beyond wind generation, AEP operates nearly 900 megawatts of hydroelectric and pumped storage generation and has biomass co-firing projects in operation in the United Kingdom and in testing and development in the United States.

Draper said the following policy actions would promote additional investment in renewable generation:

“- Making the renewable energy production tax credit permanent;

“- Allowing and encouraging the trading of renewable energy credits nationally;

“- Allowing construction of new, economically feasible hydroelectric projects and providing renewable energy credits for generating capacity increases at existing hydros;

“- Including co-firing of biomass in existing resources as renewable energy;

“- Ensuring the orderly development of transmission infrastructure necessary to support new renewable generation; and

“- Providing assurance of cost recovery for transmission investments that support renewable generation.

American Electric Power owns and operates more than 42,000 megawatts of generating capacity in the United States and select international markets and is the largest electricity generator in the U.S. AEP is also one of the largest electric utilities in the United States, with almost 5 million customers linked to AEP’s 11-state electricity transmission and distribution grid. The company is based in Columbus, Ohio.

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