SWEPCO Purchases Land for Planned Peaking Plant

American Electric Power's (NYSE: AEP) Southwestern Electric Power Company (SWEPCO) today announced the purchase of a power development project and 44-acre tract from Genova Power Company, L.P. of Plano, Texas, for $ 4.2 million. The project, located one-half mile north of U.S. Hwy. 412, near Tontitown, Ark., is the proposed site of a generating facility announced May 31 by SWEPCO. Genova Power originally announced and permitted a power project at the same location in 2001. Included in the price are the property, associated environmental permitting and site preparation work.

Pending regulatory approvals, SWEPCO plans to build up to 480 megawatts of simple-cycle natural gas combustion turbine (CT) peaking generation at the Tontitown site by 2008. That plant, with an estimated cost of $130 million, is part of $1.4 billion in new generation capital projects already announced by the company. Regulatory approvals in SWEPCO's three-state service territory of Arkansas, Louisiana, and Texas are required. SWEPCO filed for Certificates of Convenience and Necessity (CCN) in Texas and Arkansas in July, with a similar filing scheduled for Louisiana.

"Rapid growth throughout SWEPCO's service territory, especially in northwest Arkansas, and the need to increase generating capacity in a relatively short amount of time to meet that demand, means we need to build additional peaking and combined-cycle natural gas plants," said Nick Akins, executive vice-president, generation for AEP. "While these facilities will use natural gas, it's important to note that natural gas will continue to be only about 15 percent of SWEPCO's fuel mix."

SWEPCO's generation plans are the result of a Request for Proposals (RFP) competitive bidding process initiated in December 2005. The process, outlined by the Louisiana Public Service Commission's (LPSC) Market-Based Mechanism Order (MBM), requires Louisiana utilities to implement competitive procurement processes to acquire or construct incremental generation capacity. The process, overseen by an Independent Monitor (IM), actively solicited bids from all potential suppliers, including SWEPCO.

SWEPCO serves 454,000 customers in three states: 112,000 in western Arkansas, 174,000 in Northwest Louisiana, and 168,000 in East Texas.