Improved liquidity noted in S&P review despite downgrade to BBB rating

COLUMBUS, Ohio, March 11, 2003 — American Electric Power (AEP) said that, although Standard & Poor’s announced a one-notch downgrade of the company’s overall debt rating, the decision to maintain AEP’s A-2 commercial paper rating reflects AEP’s improved liquidity position.

S&P lowered AEP’s rating to BBB from BBB+. The BBB rating is investment grade and applies to all AEP operating companies as S&P uses a uniform rating for all of a company’s subsidiaries.

“Because we had been on negative watch, the action was not entirely surprising,” said Susan Tomasky, AEP executive vice president and chief financial officer. “We are pleased the agency’s review has concluded, and that AEP now has a stable rating. We’re also pleased S&P acknowledged that we can regain its higher ratings by continuing to demonstrate our commitment to improving our financial profile.”

AEP’s available liquidity is approximately $4 billion, including nearly $1.9 billion in cash. A portion of this total includes proceeds from the company’s recent equity offering, which will be used to reduce debt. Last month, the company issued notes totaling more than $2 billion in proceeds and received commitments to extend a $1.5 billion credit facility two months before its maturity date. The equity offering completed last week raised more than $1 billion.

“S&P’s downgrade is based on their risk profile of the company,” Tomasky said. “We intend to reduce our risk profile this year with a continued focus on our utility businesses.

“We believe the agency’s decision to close its review shows that S&P is confident that we will continue to strengthen our balance sheet and reduce debt,” Tomasky said. “Our efforts already are reaping results. The unchanged commercial paper rating confirms that our ability to access capital markets remains strong. We are committed to taking the necessary steps to strengthen our ratings.”

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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