1 Coal and Power Plants Rich History…..What’s Next? Mark McCullough Sr. Vice President – Fossil & Hydro Generation American Electric Power Eastern Coal Council May 24, 2010 Kingsport, TN

2 Company Overview 5.2 million customers in 11 states Industry leading size and scale of assets: #2 Domestic generation with 38,000 MW #1 Transmission with 39,000 miles #1 Distribution with 213,000 miles Coal & transportation assets Over 8,400 railcars involved in operations Own/lease and operate over 2,650 barges & 52 towboats Coal handling terminal with 20 million tons of capacity Consume 76 million tons of coal per year 21,000 employees AEP Generation Capacity Portfolio Coal/ Lignite Gas/ Oil Nuclear Other – (hydro, wind, etc.) 69%20%6%5%

3 CONCERNS for COAL FIRED POWER PLANTS Uncertainties for Coal Fired Generating Plants CAIR CAMR CO2 ASH WATER (Hg, Se) Other Complicating Factors Age of Existing Plants Fuel/Security Regulatory/Permitting Risk Asset Investment Size and Timeframe Risk

4 AEP System Emissions

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6 The CO 2 Challenge Billion tons CO 2 Historical Emissions U.S. Electric Sector Remainder of U.S. Economy 83% Reduction in CO 2 emissions from 2005 Assumed Economy-wide CO 2 Reduction Target 2005 = 5982 mmT CO = 3% below 2005 (5803 mmT CO 2 ) 2020 = 17% below 2005 (4965 mmT CO 2 ) 2030 = 42% below 2005 (3470 mmT CO 2 ) 2050 = 83% below 2005 (1017 mmT CO 2 )

7 Mountaineer CCS demonstration project Project Validation 20 MW e scale (Scale-up of Alstom/EPRI 1.7 MW field pilot at WE Energies) ~100,000 tons CO 2 per year In operation 3Q 2009 Approximate total cost $80 – $100M Using Alstom “Chilled Ammonia” Technology Located at the AEP Mountaineer Plant in WV CO 2 for geologic storage Mountaineer Plant (WV) 2009 Commercial Operation Chilled Ammonia CO 2 ( Battelle ) Alstom Will capture and sequester 100,000 metric tons of CO2/year Photo courtesy of Alstom and AEP

8 Mountaineer Storage and Monitoring System Design

9 Limited Portfolio Full Portfolio Coal Gas Wind Demand Reduction New Coal + CCS Coal Gas Wind Nuclear Demand Reduction Nuclear Solar Biomass Hydro CCS Retrofit Biomass Hydro Increase in Real Electricity Prices… 2000 to 2050, And……… *Source: EPRI, 2009

10 MERGE Wholesale Electricity Cost Results 2007 U.S. Average Wholesale Electricity Cost Limited Portfolio Full Portfolio $/Mwh (2007$) Limited Portfolio Full Portfolio $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 $ % 50% 2007 U.S. Average Wholesale Electricity Cost Substantial increases in the cost of electricity 2050 BAU U.S. Average Wholesale Electricity Cost * * Based on estimate of expected business as usual annual investment in generation expansion. Source: “Transforming America’s Power Industry: The Investment Challenge ”, The Edison Foundation, 2008 ( and U.S. DOE Energy Information Administration 2008 Annual Energy Outlook.

11 THANK YOU