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AEP receives final approval for generation, transmission separation

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American Electric Power has received all necessary approvals to separate its AEP Ohio-owned generation assets from its Ohio distribution and transmission operations and complete transfer of that generation to AEP's competitive generation company – AEP Generation Resources Inc. – and regulated affiliates Appalachian Power and Kentucky Power.

The company said Dec. 26 it had received the final approvals from the Federal Energy Regulatory Commission this week and expects to complete transfer of those assets effective Dec. 31.

Approximately 11,200 megawatts of AEP Ohio-owned generation will be transferred to AEP Generation Resources. AEP Ohio's two-thirds ownership of John E. Amos Plant Unit 3 (867 MW) will transfer to Appalachian Power, and 50 percent of Mitchell Plant (800 MW) will transfer to Kentucky Power. Following the transfers and expected retirements through 2015, including the Philip Sporn and Kanawha River plants in West Virginia, AEP Generation Resources expects to own approximately 8,700 MW.

The FERC accepted AEP's application to terminate the interconnection agreement, or pool, that exists among AEP's utilities in the Midwest; approved a new power coordination agreement among Appalachian Power, Kentucky Power and Indiana Michigan Power; and approved other tariff and financing-related filings. AEP's applications for the generation transfers were approved by the FERC April 29.

"The diligence of our employees and the cooperation of the affected state and federal commissions allowed us to execute our Ohio restructuring plan right on schedule, and we are well-positioned to operate two separate, sustainable businesses with our Ohio assets," Nicholas K. Akins, AEP president and chief executive officer, said in a news release.

"The majority of AEP's operations remain regulated, including our Ohio wires businesses, and we've consistently demonstrated our ability to successfully operate regulated utilities. The assets in the AEP Generation Resources portfolio are competitively positioned to perform well in the market. We expect our competitive business to be cash-flow positive."

AEP received approval Dec. 13 from the West Virginia Public Service Commission for Appalachian Power to acquire AEP Ohio's ownership of Amos Plant Unit 3. The Virginia State Corporation Commission (Virginia SCC) approved the Amos Unit 3 acquisition July 31. The Kentucky Public Service Commission approved Kentucky Power's acquisition of 50 percent of the Mitchell Plant generation Oct. 7.

AEP said it plans to make additional filings in the first quarter of 2014 to address a deferred decision from the West Virginia PSC on the merger of Wheeling Power into Appalachian Power and the acquisition of the remaining 50 percent of Mitchell Plant by Appalachian Power. The Virginia SCC approved the Wheeling Power merger but not the transfer of the Mitchell generation to Appalachian Power. Wheeling Power customers will continue to receive generation service through a FERC-approved agreement, which will transfer to AEP Generation Resources effective with the closing of corporate separation Dec. 31.