AEP encouraged by Moody’s comments

COLUMBUS, Ohio, Dec. 12, 2002 — American Electric Power (AEP) said that it is encouraged that Moody’s Investors Service recognized the company’s strong liquidity and investment-grade quality, despite the downgrade of the company’s senior unsecured rating.

Moody’s announced that it is lowering AEP’s senior unsecured rating to Baa2 from Baa1 and placed its Prime-2 rating for commercial paper under review. AEP’s Baa2 long-term rating remains under review.

Moody’s also placed the long-term ratings of AEP subsidiaries Public Service Co. of Oklahoma (Senior Secured A1) and Appalachian Power Co. (Senior Secured A3) under review. The ratings of subsidiaries Ohio Power Co., Columbus Southern Power Co., Central Power and Light Co. (all Senior Secured A3), West Texas Utilities Co. (Senior Secured A2) and Southwestern Electric Power Co. (Senior Secured A1) all remain under review. The ratings of Indiana Michigan Power Co. and Kentucky Power Co. (both Senior Secured Baa1) were affirmed with a stable outlook.

“Although we are disappointed with the negative actions taken by Moody’s, there were several important positive observations in their report,” said Susan Tomasky, AEP executive vice president and chief financial officer.

“In addition to affirming the ratings of Indiana Michigan Power and Kentucky Power, Moody’s noted that AEP appears to have reasonably strong liquidity,” Tomasky said. “Their statement also clarifies for the marketplace that the ratings for AEP’s senior unsecured debt are not currently anticipated to fall below investment grade.

“We will continue to work with Moody’s as they complete their review in the next few weeks to facilitate an accurate understanding of the company’s credit,” Tomasky said. “In the meantime, the company expects to continue to market its commercial paper. Because we anticipate that the company will remain at investment grade, we expect to continue to refinance upcoming maturities as they fall due.”

AEP has approximately $1 billion in commercial paper maturing by Dec. 31, 2002. Approximately $500 million has already been placed over year-end. The company also has $5 billion available in its liquidity portfolio (see table). The company plans to draw on this portfolio to have sufficient cash on hand to retire its commercial paper maturities if necessary.

American Electric Power, an energy company with a balanced portfolio of energy assets, 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 a leading wholesale marketer of energy commodities, utilizing its energy expertise and risk management skills to make optimal use of its generation, natural gas pipeline systems, natural gas storage, coal mines and inland barge fleet. 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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