Coal/Lignite 69%

1. November 5, 2009Louisiana Tech University Energy Systems ConferenceTransformation to the Energy Resource Mix of the Future Nicholas AkinsExecutive Vice President – Generation

2. Company Overview Nat. Gas/Oil 20% Nuclear 6% Pumped Storage/ Hydro/Wind 5% Coal/Lignite 69% AEP’s Generation Fleet >38,000 MW Capacity 5.2 million customers in 11 states Industry-leading size and scale of assets: Industry Asset Size Rank Domestic Generation ~38,300 MW # 2 Transmission ~39,000 miles # 1 Distribution ~213,000 miles # 1

3. U.S. Policymaker Goals • Addressing rising electricity demand while reducing power plant emissions • Ensuring electricity remains affordable, reliable and secure from domestic sources • Moderating electricity price increases • Sustaining the engine of economic growth • Increasing environmental protection

4. Key Points • No silver bullet – Portfolio mix of resources will be required to satisfy future energy needs • Expected federal environmental policy will require further emissions reductions from existing and future coal and natural gas fired power plants • Carbon capture and storage and EOR are critically needed technologies for baseload generation to comply with anticipated federal CO2 emissions reduction requirements • Financial market recovery is necessary to enable the transformation of a decarbonized portfolio

5. Electricity Generation: U.S. Government Forecast 2006 2030 23% Growth 3875 TWh 4777 TWh Reference case from EIA “Annual Energy Outlook 2009”

6. Waxman-Markey emission reductions

7. 2009 EPRI Prism 2007 EIA Base Case 7

8. 2009 Prism Technology Targets 8

9. Generation Mix & Electricity Costs--2030 9

10. Generation Mix & Electricity Costs--2050 10

11. How can these reductions be achieved? • Technology developed and quickly deployed • Establishing enabling public policies • Financing through public/private partnerships • Investment recovery from ratepayers

12. CO2 Capture Techniques • Post-Combustion Capture • Conventional or Advanced Amines, Chilled Ammonia • Key Points • Amine technologies commercially available in other industrial applications • Relatively low CO2 concentration in flue gas – More difficult to capture than other approaches • High parasitic demand • Conventional Amine ~25-30%, Chilled Ammonia target ~10-15% • Amines require very clean flue gas • Modified-Combustion Capture • Oxy-coal • Key Points • Technology not yet proven at commercial scale • Creates stream of very high CO2 concentration • High parasitic demand, >25% • Pre-Combustion Capture • IGCC with Water-Gas Shift – FutureGen • Key Points • Most of the processes commercially available in other industrial applications • Turbine modified for H2-based fuel, which has not yet been proven at commercial scale • Creates stream of very high CO2 concentration • Parasitic demand (~20%) for CO2 capture - lower than amine or oxy-coal options

13. Mountaineer CCS demonstration project 2009 Commercial Operation Alstom Mountaineer Plant (WV) Chilled Ammonia CO2 (Battelle) Project Validation • 20 MWe scale • (Scale-up of Alstom/EPRI 1.7 MW field pilot at WE Energies) • ~100,000 tons CO2 per year • In operation 3Q 2009 • Approximate total cost $80 – $100M • Using Alstom “Chilled Ammonia” Technology • Located at the AEP Mountaineer Plant in WV • CO2 for geologic storage Will capture and sequester 100,000 metric tons of CO2/year Photo courtesy of Astom and AEP

14. Gas to Stack Chilled Water Reagent Gas Cooling and Cleaning Flue Gas from FGD Cooled Flue Gas CO2Absorber CO2 Regenerator Clean CO2 to Storage Reagent CO2 CO2 CO2 CO2 Heat and Pressure Alstom’s Chilled Ammonia ProcessPost-Combustion Capture Reactions: CO2 (g) == CO2 (aq) (NH4)2CO3 (aq) + CO2 (aq) + H2O == 2(NH4)HCO3 (aq) (NH4)HCO3 (aq) === (NH4)HCO3 (s) (NH4)2CO3 === (NH4)NH2CO2 + H2O Graphics curtsey of Alstom Power

15. Mountaineer Storage andMonitoring System Design

16. Storage issues: Property rights Liability Permit requirements USEPA designation of CO2 State cooperative agreements/consistency Capture issues: CO2 absorption Steam requirement for liberation of CO2 Power plant integration and optimization Parasitic load Major issues

17. Complimentary Technologies Toward a Cleanly Powered Grid • AEP is investing in these new technologies: • New advanced coal technologies to gasify coal and carbon capture to retrofit to existing and new coal and natural gas units with storage or for enhanced oil and natural gas recovery; • Renewable energy (especially Wind, Biomass); • Supply and demand side energy efficiency; • New nuclear units; • New transmission infrastructure to make our system more efficient; • Offsets (Forestry, Methane) Power to Change Deployment Plan at www.wbcsd.org Midwest Governors Association Energy Stewardship Platform At www.midwesterngovernors.org

18. Today’s Challenges…. Why change now? • Generation profile is shifting and will continue to shift dramatically: • New large scale renewables need to be interconnected that are today largely electrically isolated • Environmental requirements may require retirement of large fossil units, potentially at a magnitude never before faced in this country • Generation needs to be deliverable to load not simply interconnected. Attention must be focused on the robustness of the grid. • The search for a “bright line” between reliability and economic projects is increasingly artificial. What needs to change? • A new energy supply paradigm requires a different type of transmission planning to enable greater capacity and flexibility. • Cost allocation principles must be broadened to encompass this strategic new build. • Siting processes which are aligned with state, regional and national energy policy objectives.

19. Efficiency of 765-kV Transmission Advanced transmission enables energy savings through efficiency. A US 765-kV transmission overlay would reduce peak load losses by more than 10 GW and CO2 emissions by some 15 million metric tons annually.