Chuck Zebula – Treasurer and SVP, IR Mike Morris – Chairman, President and CEO Holly Koeppel – EVP and CFO

Michael Lapides – Goldman Sachs Brian Chin – Citi Investment Anthony Crowdell – Jefferies Leslie Rich – Columbia Management Paul Patterson – Glenrock Associates Greg Gordon – Morgan Stanley Jeff Kvaal [ph] – Tricadia Capital [ph] Steve Fleishman – Catapult Capital Daniel Eggers – Credit Suisse Paul Ridzon – KeyBanc Michael Lapides – Goldman Sachs Shar Kahan [ph] – Incremental Capital [ph]

Ladies and gentlemen, thank you for standing by, and welcome to the second quarter 2009 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. (Operator instructions) As a reminder, this conference is being recorded, and I would now like to turn the conference over to our host, Mr. Chuck Zebula. Please go ahead.

Thank you, Brad. Good morning and thank you for joining us today to discuss AEP's 2009 second quarter earnings. If you've not seen the press release issued earlier today, it's available on our web page at aep.com. In addition to the financial schedules included in the press release, the webcast of this call will include charts and graphics referred to by AEP management during the call. An investor information packet is also available at aep.com that includes the consolidated balance sheet and statement of cash flows as well as full income statements for each of our business segments. The earnings release and other matters that may be discussed on the call today contain forward-looking statements and estimates that are subject to various risks and uncertainties. Please refer to the SEC filings including the most recent annual reports on Form 10-K and quarterly reports on Form 10-Q for a discussion of the factors that may cause results to differ from management forecasts and expectations. Also on the call, we will discuss the measures about company's performance, that is, ongoing earnings versus reported earnings that differ from those recognized by Generally Accepted Accounting Principles or GAAP. You can find a reconciliation of these non-GAAP measures on the Investors page of our website at aep.com. I'll now turn the call over to Mike Morris, Chairman, President and CEO of the company for opening remarks followed by our CFO, Holly Koeppel, who will discuss the financial results for the quarter, then, we will have times for your questions. Mike?

Thanks, Chuck. You are getting a whole lot better to introducing Holly and I guess you get our tails right this time. I appreciate it. Thanks to everyone those on the phone, I know you are busy today, so we will get right to it. If you go to Slide 3 in our deck, let me start talking about the second quarter highlights for American Electric Power. As you saw in the earnings release for the second quarter, we are at $0.68, which we feel is an extremely outstanding quarter, notwithstanding the impact of the drop off in industrial sales and the very difficult off system sales market that we continue to work with here throughout the second quarter. For the year, $1.55 a share on ongoing earnings is nothing short of phenomenal again with those challenges. What that shows I hope at long last is something that we have talked tirelessly to you all about for a number of years, capital expenditures made over the last handful of years with appropriate rate treatment has allowed for a very solid revenue stream during a very, very difficult time. The American Electric Power system, as you know, has experienced $2.7 billion of increase in rate adjustments over the last handful of years for the capital that was put to work. That, coupled with our O&M controls including being about $100 million under budget so far this year, without any fancy names, tells you that we have been on the job. For guidance for the rest of the year, we are extremely comfortable with our $2.75 - $3.05, no cause, no world [ph] to move up or down, but very, very comfortable with where we are. The Ohio ESP rehearing order was a disappointment. There is no question about that. We felt that the Ormat [ph] change from cash collection to deferred collection was to be expected and that’s exactly what they did. However, the moves that they made on the Waterfront Derby [ph] plant were unexpected, unnecessary and we think it will pass through. We bought those plants in 2005 and 2007 for the incredible prices of Waterfront to combine cycle plant $256 (inaudible) installed. The Peaker Darby plant in 2007 for $200 a kilowatt installed. It was our intent to decide those plants to the benefit of our Ohio customers. However, they felt that they didn’t need to pay for the cause. Our intent is to seek some kind of reconsideration of that (inaudible) decision or move those stations to some other operating company within the AEP family, but we think we can realize the return on investment that you show [ph] as investors. As I mentioned, Ormat was much about nothing, it takes it from cash which isn’t good, that puts in a deferred account as it was promised when we took on the Ormat load some years ago. The new generation activities at Turk Plant is an equally unsettling opportunity that we think one that at the end of the day should work out appropriately. In the court of appeals in Arkansas decided that the Arkansas Public Service Commission has misapplied a longstanding statue in dividing the review of the certificates for the power plant and the transmission system, something that the commission has done for a number of years on a number of applications. The Public Service Commission of Arkansas has petitioned the Arkansas Supreme Court to review that decision and in fact to correct that misappropriation. We joined them in that petition for review and feel comfortable that we might have a reasonable outcome there. Again, as I know we shared with a number of you before, there are options than we will continue to explore those options as we go forward. During the interim, with court approval, we continue to build the Turk Station, the first ultra supercritical coal plant in the United States. Something again that we think is a great benefit to our SWEPCo customers and equally important something benefit to the American population to demonstrate the continuing lead in power production with ultra supercritical technology. So although a bit disquieting, we will continue on that plan and we would hope that that gets resolved sometime through the later part of this year or into 2010. The last subject on my list is kind of unique and that is to try to bring you all up-to-date as best we can on federal legislation. Federal legislation is as you have frequently heard people say like shortage making, there is nothing worse than being at a shortage factory. As you know, we are supporters of Waxman-Markey and let me explain to you why? The plus is on allocation and bonus allocations, and offset to 2 billion tons per year, really seemed greatly beneficial to our customers as we looked at it. An allocation of about 110 million tons per year at $20 a ton saves our customers $2.2 billion a year. The bonus allocations which you can earn $90 a ton of credit is worth as much as $3.6 billion for weather shortfall that we might have. Assets today at less than $10 are being gathered for early action activity and equally important, Waxman-Markey has that we think is a very appropriate international requirement and other countries join us in this global challenge. So when we looked at the activities in Waxman-Markey, we felt that it would surely to the plus side for the benefit of our customers and to address the global environmental challenge. Not to say that they weren’t things that we need to be fixed as we get to the Senate. The allocation of roughly 90% of the utility space isn’t up to the par, it on to be 100%. The timelines for the implementation of the reductions of the cap will and actually match the timelines of technology being available in the marketplace. I know, you know that we are pushing that timeline on the technology with the activities that we are undertaking at our mountaineers’ station in West Virginia. The allocation ramp down from 20, 25 to 20, 30 in a five year cycle is far too short. It will surely be as a benefit of our economies, our customers, our shareholders and the country in general if they stretched out the free allocations to utilities over 10 or 15 year cycle which would very much marry up to the technology deployment that again we are pushing in (inaudible). No credits for early actions is absolutely deplorable when you think of all the years when we have been asked to do things to say that you can’t take those into the calculation of credits already earned is simply unfair. In fact, I remember some years ago having done as well as stand on the particle of the White House was then Vice President Gore pledging to do early action things and then Vice President Gore saying, those would always be valuable. I hope that now the advocate Gore changes his mind. And of course, we think that the transmission concept that was build in the Waxman-Markey is equally offered [ph] too. Effective back up authority in the Western States and a logical back up authority in the Eastern States is just about (inaudible) that will get fixed in the Senate. On the Senate side, we are encouraged by the energy bill that Senate Bingaman has been working on. We think that the way that he treats transmission particularly inside of a renewable energy standard is an appropriate way to about doing it. We believe that the energy bill may stand on its own, it will be interesting to see if the Senate can pull together enough votes to do in total global warming as well as the Senate Energy Bill. I worry a great deal about the Senate and the White Houses’ comments about the problems of border terrors starting some kind of a challenge. If we don’t address this in a global sense, companies like ours and others are to stand strong, so let’s wait until the world is ready because we can’t do it alone. Now, let me turn this over to Holly for more details on our company and our first quarter and first half earnings. Holly?

Thank you, Mike. Recap of our quarterly performance comparison on page 4, our on going earnings for the quarter improved by $41 million when compared with the second quarter last year. Earnings from utility operations were up $62 million on the quarter. Weather had a favorable impact of $0.02 on the quarter, while retail sales increased $226 million of gross margin, primarily due to increased rate relief of $215 million and reduced off system sales sharing margins of $62 million. These increases were somewhat offset by lower industrial sales of $56 million, since industrial load was down 20% quarter-over-quarter. Our East Regulated utilities gross margin improved by $43 million, primarily due to rate relief in Virginia and Indiana as well as lower off system sales sharing. Although that our East utilities was down 11% quarter-on-quarter, our Ohio companies realized gross margin improvement of $130 million on the quarter. This is principally the result of the Electric Security Plan that Mike discussed with you. Ohio retail though declined 14% on the quarter. Turning to our West Regulated utilities, gross margins were up by $48 million driven by rate relief in Oklahoma and our formula rate adjustment in Louisiana as well as residential and commercial load growth in Oklahoma. Total retail sales in the West declined by only 2% on the quarter. Margins at our Texas Wires business improved by $5 million and load declined by 5%. Our off system sales were down $155 million on the quarter due to lower physical sales volumes and market prices. This is a consequence of both weak market demand and low natural gas prices. Our marketing and trading activities contributed $52 million on the quarter; this is an increase of $25 million year-on-year. Third party transmission revenue improved in both SPP and ERCOT for a total of $8 million on the quarter. Other operating revenues are up $42 million, primarily due to the accidental outage insurance payments associated with the outage of DC Cook. As a reminder, approximately 40% of these insurance payments are credited back to customers in our East utilities to help offset fuel costs. Turning to O&M, as you will know, it’s down $35 million due mainly to lower plant maintenance outage expenses. We have reduced the amount of contract labor being used for these expenses as well as throughout the company. Depreciation and amortization is up $23 million due to increased planned investment as we continue capital spending and we are increasing depreciation rates at Ohio Power. Other income and deductions are down $25 million, primarily due to lower carrying costs in Virginia and lower interest income. The effective tax rate for utility operations was 31.6% in the second quarter of ’09 when compares to 30.2% in the second quarter of ’08. Turning to non-utility operations, the single largest change is the decrease in earnings from our Generation and Marketing segment of $22 million. This decrease is due to lower long term contract gains in the second quarter of ’09 as well as lower ERCOT West power prices. Finally, as you will recall, we completed our equity offering on April 7 of this year. Therefore, our weighted average shares outstanding increased to 472 million shares on the quarter from a level of 402 million shares in the same quarter in 2008. Turning now to the year-to-date performance comparison at Page 5, ongoing earnings year-to-date were $681 million, which is $9 million less than the prior year. Retail sales increased $286 million primarily due to increased rate relief of $325 million and reduced off system sales margin sharing of $160 million. Additionally, weather added another penny to the year $0.02 when compared with normal. These increases were offset somewhat by lower industrial sales of $89 million as industrial load was down 17% year-on-year. We also had a favorable variance in the prior year due to coal contract amendments of $29 million. Turning to the detailed gross margin at our East Regulated, utilities improved $139 million, primarily due to rate release in Virginia and Indiana as well as lower off system sales sharing. Load at our East utilities is down 8% year-on-year. Gross margin in Ohio improved $73 million year-on-year due to our Electric Security Plan offset by retail load loss of 10%. West Regulated utilities gross margins improved by $64 million, driven by rate release in Oklahoma and a formula rate adjustment in Louisiana as well as residential and commercial load growth in Oklahoma. Retail sales in the West are down 5% year-on-year. Texas Wires business improved their margins by $10 million year-on-year, load has declined by 3%. Off system sales were down $291 million due to lower volumes and market prices, reflecting weak market demand and a significant drop in power prices. Marketing and trading margins improved by $35 million year-on-year and the detail of off system sales gross margins can be found at Page 15 of the materials provided. Our other operating revenues are up $104 million year-on-year, primarily due to the DC Cook accidental outage insurance payments. Of this amount, approximately $40 million has been credited back to Indiana, Michigan customers to offset increased fuel costs resulting from the loss of the Cook plant. O&M is up $21 million year-on-year, primarily due to storm restoration costs incurred in the first quarter of 2009. Depreciation and amortization is up $41 million year-on-year due to increased plant investment as we continue our capital spending and we have also increased depreciation rates at Ohio Power. Interest expense is up $21 million due to increased long term debt outstanding and increased interest rates. Other income and deductions are down $35 million primarily related to lower carrying cost and lower interest income. And our effective tax rate for the utility operations remained at 32.3% in both periods. Outside of utility operations, again, the largest change is the loss of parent and other, this is primarily due to increased interest expense at the parent. Similar to the quarter, year-to-date, our weighted average shares outstanding have changed. Year-to-date, it is 440 million shares for 2009 which compares to a level of 401 million shares for the same period of 2008. Turning now to cash flow, cash flow from operating activities for 2009 has totaled $867 million, a decrease of $344 million when compared with last year. This variance is largely driven by changes in working capital attributable to increased coal inventories. Without the build in inventory, cash flow from operations would have been approximately equal to results in 2008, despite an approximate 5% decrease in total revenue. Investing activities are highlighted by cash outlays driven by our capital expenditure program in the amount of $1.55 billion year-to-date. Asset sales in 2009 are primarily related to payments from co-owners of the Turk Plant which is under construction as Mike mentioned. We also transferred assets from our Texas Wires business to our Texas transmission partnership ETT in the amount of $91 million and affected a sale lease base transaction for certain parts in both assets at our AEP River Operations. Other investing includes amounts related to our nucleus [ph] field purchase by the DC Cook plant of $152 million. Our financing activities provided net cash of $568 million and the proceeds from the equity issuance of $1.688 billion were used primarily to pay down short term debt of $1.4 billion. In 2009, we have issued approximately $1 billion in long term debt offerings at I&M, Appalachian Power earlier this year. Approximately $372 million of long term debt has been retired resulting in a net increase of approximately $700 in long term debt. As you will know, we ended the second quarter with the cash balance of $358 million. Finally, turning to the balance sheet at Page 7, we continued to maintain strong capitalization and liquidity. I will draw your attention to the total debt to capitalization ratio at the end of the second quarter of 2009, which stands now at 57.3%. We also note we have a tremendously strong liquidity position at $2.9 billion. With that Mike, I would like to turn it back to you.

Holly, thanks. I always worry when I say I am going to pass it on to Holly for more details, but load, load, load she loaded you, excellent job. I will tell you one thing that demonstrates at least from our advantage point and I hope from yours, the value of having the footprint of the American Electric Power has with rate cases and sales decreases different from the East and the West, off system sales activities and our energy marketing that more successful out West and in the East right now, as it shows the benefit of having that portfolio stays differ as difficult as how to manage. We continue I think to do a pretty good job. With that, we will move to the Q&A.

Thank you. (Operator instructions) And our first question will come from the line of Michael Lapides with Goldman Sachs. Please go ahead. Michael Lapides – Goldman Sachs: Hi, guys. A question for you, can you give a quick review of the various large scale transmission ventures or projects and briefly where they are in terms of the process for approval and when you think kind of the most likely timeline would be?

Sure, Michael. Let me try to do that for you. As you know, the one that we have probably been -- the two that we have been most long after are the build out of the activities in Texas with our partnership in Electric Transmission Texas. Moving along relatively well, final applications in some of the PUCT, bill dates as I remember them of 2010, 2011, 2013, that will begin to bring additional revenue opportunities into that partnership. It also -- as Holly pointed out, we have also transferred a number of assets into that partnership and although they are at a 996 return on equity, they are in fact yielding revenues on the transmission side of the equation. The PATH project which is greatly needed to decongest, if you will, some of the activities in the PJM, when you look at the capacity market price is on the congestive side versus its non-congestive side, you could see why East Coast customers would be eager to have that happen. It is moving along relatively rapidly in front of State Regulators. As you know, they have received their fort [ph] approvals. We think that that line will be up and running by 2013, 2014 as I remember the dates. In the Middle West, the project in Indiana with Duke as a partner continues to move forward, that’s probably a 2013 play. Further West, the activities in Kansas where we and the ITC came together, let’s say, a settlement which was approved just this week by the Kansas Corporation Commission should allow for those projects to move forward. Rapidly there, we are simply weighing for an SPP for final cost allocation. So that will include projects that will be build in Kansas and stretch into Oklahoma. As you know, we also have projects in the partnership with Oklahoma Gas and Electric, which is moving along relatively rapidly in the review process again, SPP projects. So as we have said before, these are near-term, midterm and ultimately long term plays. I would argue the win projects of Dakota into the Central Midwest probably in the Greater Chicago landing from there into the AEP grip probably are middled next decade because of the magnitude of the undertakings. So we will begin to see -- we are beginning to see some constructive activity in the transmission subsidiary now. We will continue to see it grow over the near term years and truly have a total impact on the company. I think in our review with the board for a three or four year cycle which we did earlier this week, we are looking at the potential as much as $1 share of earnings from the transmission subsidiary alone. So we feel very comfortable about it, takes longer than you wish, clearly needed, ultimately the FERC cost allocation and the kinds of things that I addressed in the bill that I spoke about earlier are the things that will be needed to have a robust build out of the transmission to attract United States with the benefit of everyone. Michael Lapides – Goldman Sachs: Got it. One follow-up on PATH and thank you for that overview. Can you give an update on whether there are any significant legal or litigation challenges to PATH?

At the end of the day, there will only be, please don’t put this in my backyard which I am not uncommon, but I don’t think you are going to find any significant legal challenges that will delay any of that activity. Once you receive final authority from the FERC which we have and ultimate authority from the states and the alignments, then you will move into an eminent domain world where the augment really gets down to what’s my property worth and there are longstanding methods to take care of that. But we are routing around the kinds of things that would cause some long term delay. I mean, you know, the day I was getting your straight and laying a transmission line out are long gone. We know how to avoid historic sites and environmentally sensitive areas, public areas where people don’t want us to be. We learned a lot of lessons over a lot of years that we are much better at routing transmission lines. If you could see the Wyoming Ferry Jackson line, we flew in the towers, they are point set towers rather than four square foot towers. We cleared very, very little (inaudible) go through the forests of Virginia and West Virginia and environmentally accepted, right away end up being great places for birds and others to live and eat. So we are sensitive though. I don’t think we are going to see any major litigation step in those undertaking. Michael Lapides – Goldman Sachs: Got it. Thank you.

You bet, Michael. Thank you.

And our next question will come from Brian Chin with Citi Investment. Please go ahead. Brian Chin – Citi Investment: Hi, I noticed that in the last slide presentation, you had a little bit more of an overview on the Ohio ESP and given that we are hearing, can you give us a little bit more up-to-date stance on what some of the numbers look like on the re-hearing or is it little too early to say?

Not at all. I think and I will ask Holly to augment this, but pretty straightforward. It is what we thought it was going to be, the shift of the Ormat recoveries from current cash to deferral is an issue, but it is an issue that will simply be done by the accounting process. The $51 million reduction of the cost facilitated with Waterfront Derby is we think, as I mentioned, it will talk through those very, very cost effective power plants that we wanted to put to the advantage of the Ohio customers. But you can’t have the plants without the cost. That just isn’t fair, it isn’t right and we will address that issue short of that, everything else they had and I thought they did an excellent job. The way that they treated riders outside of the GAAP calculation, the way that they treated environmental investments outside of the GAAP calculations, the opportunity to file a distribution rate case gives us the opportunity to address those costs. The transmission rider costs outside of the rate GAAP absolutely as we expected it to be. All in all, it was a tremendous re-hearing order, but for the one mistake that we think that they made, and I understand their view point, just don’t agree with it. Holly? Brian Chin – Citi Investment: On the off system sales, is that an issue that we are still working through on the re-hearing or is that do you think was all to your satisfaction?

Well, they didn’t change anything. What they said was, two things, one that we think is appropriate is as we go through the significant excess earnings or seed test, they will review the notion of treating AEP, the two operating subsidiaries as a single entity, we think that’s good. And we will address the issue of whether off system sales are not included in GAAP calculations which of course we don’t agree with. But to add that to the workshop dialogue is not an issue whatsoever just again, an open conversation that helps the commission and their staff, again establish why they eliminated the concept of including that before and one great thing about American society and here in the Heartland we believe that wholeheartedly is open dialogue on those kinds of issues is healthy. Brian Chin – Citi Investment: Understood.

And your next question will come from Anthony Crowdell with Jefferies. Please go ahead. Anthony Crowdell – Jefferies: Mike, I just want if you could provide an update of the Cook County, Cook nuclear plant outage?

Yes, Cook County is in Chicago. Anthony Crowdell – Jefferies: Yes, geography (inaudible) strong point.

(inaudible) couple of days. Well, as you know, Unit I is in now the turban [ph] reconstruction process. We were all out there earlier this week and it’s moving along our pace. We expect that will be buttoned up towards the later half of October, which is in keeping with our original plans. So that will come back online and should, it will be as you know, I think we’ve talked about -- I know we’ve talked about this before, we will be de-rated about 110 to 120 megawatts. As we have concluded that putting in that last couple of rows of blades would not be in our best interest. The actual replacement routers are being manufactured, the plan is to put them in 2011 refueling outage that should work in accordance with our plans as we go. We continue to work again hand-in-hand with our insurance carriers and our contractors and having the seen the work in the details of safety and nuclear controls as well, we remember the fuel is still in Unit I and its still cooking away. So I think our team is doing an excellent job of managing those issues. The Unit II outage of course is I have concern, we have a re-circulating pump seal [ph], we have taken the plant offline as you know. That project moves ahead of the schedule that we are heading on. However, the conclusion of our team and a very conservative and appropriate safety nuclear view of the world has decided now to look at the couple of the other deals on the other re-circulating pumps associated with Unit II. That unit will be back on line in the very near future clearly some time next week. And we feel comfortable about that. The most important thing and I think you all know, with the operation of a nuclear fleet its always about nuclear safety, never about the megawatts, never about megawatts on the system, so our team is doing an excellent job out there and we are very comfortable with the way that’s working out. Anthony Crowdell – Jefferies: Thank you.

Yes, you bet.

And our next question will come from Leslie Rich with Columbia Management. Please go ahead. Leslie Rich – Columbia Management: Hi, I wondered Holly if you have indulged me and go through a little more slowly this time, the financial implication at the DC Cook outage in insurance reimbursement and what impact that has on earnings versus being falling through directly to customers.

Sure, Leslie. I would be happy to. Our hit at the high level year-to-date, its approximately $100 million of insurance proceeds. As you know, we received $3.5 million each week as the plant is out of service. Of that amount, approximately 40% is credited back through the fuel cost adjustment mechanisms to the customers of Indiana Michigan Power leaving a net in the range of $60 million that flow through the earnings. Leslie Rich – Columbia Management: And definitely, Mike, on the Turk Plant, what happens if I mean is a possible outcome that Arkansas says forget it, or is it just a matter of sort of working through a different way to review the recovery mechanism?

Well, Leslie, that’s an excellent question. At the end of the day, let’s presume that the Supreme Court says, now we think the court appeal has got it right. We will simply refile the project as a transmission in power plant to be benefit of the demand (inaudible) cost advantage that the plant has. The commission would review it, I presume the commission has already concluded that we need the plant and this is the appropriate plant that we need to transmission and that’s the appropriate alignment might well come to the same conclusion. By the time they have been doing all this, of course the plant would be build and ready to go in service. The alternative for that is that, they say you have simply got it wrong and we think you have approved it wrong and you shouldn’t have done it, it’s an 88 megawatt slice out of 600 plus megawatt plant which we could take to market if may be or we could assign to other companies if may be. So I think there are, as we have shared with all of you, a number of options and alternatives that we might be able to pursue. Leslie Rich – Columbia Management: Okay. And finally on coal, you talked about, Holly, you mentioned contract amendment, could you talk a little bit more about sort of what you are seeing and I am sure your stockpile there is evidenced by your working capital impact, but sort of as you look forward for your coal contracting for 2010, 2011, do you see continued fuel escalation as an issue or you think prices have started moderating?

Well, clearly the coal piles are -- because and I like them, we are at 50 plus days on average. We would rather be 30 plus days on average. I feel a lot better than some of my colleagues who according to EIA at 70 plus days, but we are working them down. One of the things that we jokingly said the other day is we looked at Cook II being offline at least for bearing some coal. But the fact of the matter is, they are too big. And when we look 2010, we have contracted for in a great shape, prices are coming down, we think that the coal suppliers, no offense to my good friends, are a little bit bullish on their view of 2011, so we will wait and watch. As you know, we buy our coals through a series of long term, short term, mid term contracts. We are in great shape for 2011, just not in need for paying any of the prices that we think are a handful of dollars per ton too high. Leslie Rich – Columbia Management: Thank you.

You bet.

And our next question will come from Paul Patterson with Glenrock. Please proceed. Please go ahead. Paul Patterson – Glenrock Associates: Good morning, guys. How are you?

Great, Paul. How are you? Paul Patterson – Glenrock Associates: All right. Most of my questions have been answered, but just on weather, I wasn’t sure what it was versus normal?

Its very, very slightly favorable, a penny for the quarter, $9 million total versus normal.

Booming out in West and pretty bad here in the East. Paul Patterson – Glenrock Associates: Okay, great. Thanks a lot.

And your next question comes from Greg Gordon with Morgan Stanley. Please go ahead. Greg Gordon – Morgan Stanley: Good morning.

Good morning, Greg. Greg Gordon – Morgan Stanley: Can you tell us what you are seeing vis-à-vis demand here in the third quarter and whether we are seeing further declines in economic demand in your service territories and whether or not we can expect some hopefully some positive year-over-year comps in the fourth quarter, since the fourth quarter was (inaudible) bad last year. And basically when do you guys project perhaps hope [ph] you will start to see a little bit of a stabilization or recovery in that?

We love cash for plungers, Greg. There are couple of things that matter here. We -- third quarter is just coming in, it’s not worth sharing a great deal of data, but we are in fact seeing some of our smaller metal smelters go back into business. We are encouraged by that. If the export market picks up, remember, (inaudible) tail off until as you have pointed out fourth quarter of ’08 and if you look at the GDP numbers now for ’08, they are falling like a rock in the third and fourth quarter. So if China’s economy and their stimulation or their stimulus package continues to benefit, we think some of the exporters will pickup some and we are seeing some of that. So we look at third quarter, we will watch it closely, and there are no secret that its been pleasantly cool in the East anyways in July, we hope that August brings some blistering weather for all of our customers who love the comfort that we provide them. And if you look at the papers today, as I am sure you already have, lots of companies are talking about up ticks in their business profiles for late third to fourth quarter. They can’t do that without us, so we hope that they are accurate in what they are forecasting. To the really granularity that Holly shared with you on the operating companies that are in the outputs, our residential and commercial sales have been just fine, they are absolutely fine. If that’s industrial and obviously the off system impact that’s also associated with industrial and some pretty cool weather throughout the Eastern half of the United States. Greg Gordon – Morgan Stanley: Thank you.

You bet.

And our next question will come from Jeff Kvaal [ph] with Tricadia Capital [ph]. Jeff Kvaal – Tricadia Capital: Hi, good morning.

Good morning, Jeff. Jeff Kvaal – Tricadia Capital: I have a follow-up on your point on -- I was just wondering on 2011 kind of coal expectation that producers have, ballpark rate where they are and obviously you think it’s a little too (inaudible). I am not exactly sure what they are asking for at the moment.

Well, I think they are thinking mid-60s give or take and we think in mid-50s give or take. Jeff Kvaal – Tricadia Capital: Got it. That’s very helpful. Thank you very much.

You bet.

Your next question will come from David Frank [ph] with Catapult. Please go ahead. Steve Fleishman – Catapult Capital: Hi, it’s actually Steve Fleishman.

Hey, Steve. Steve Fleishman – Catapult Capital: Hi, Mike. How are you?

Yes, you want to be called David thee. Steve Fleishman – Catapult Capital: That’s fine. And it’s fine. I could call a lot of things these days.

That’s further right. Steve Fleishman – Catapult Capital: Just a question, I think Brian brought up the question on the processing sales on -- the earnings significant excess earnings test?

Yes. Steve Fleishman – Catapult Capital: Could you give some color on how you expect this workshop to work later this year like when is it going to start, how are they going to do this and just how can you get comfortable about it will come out without comps that okay for you?

Well, again, I do not know, I know there's a forecasted start date and we can get that to you afterwards. It's sometimes as I remember in the August timeframe kind of late August after all the vacation cycles I think it will be a dialog, there will be people arguing for this, that, any other we'll be doing the same. One of the things about the PUCO that they do and do very well if they allow for a fulsome discussion and a rational conclusion, and so I don’t expect that there will be any curve balls coming out. They've addressed the issue of our system sales on many, many occasions here in the state with the ESPs and the rate stabilization plans before that it's a pretty clear conclusion from their point. I can’t imagine that they change and much well talk about it and see. The notion of breeding the two utilities as one is very logical when you think about it because that’s the way we dispatch them, that’s the way we really treat the customers at the end of the day even though they have different rate schedules and different rate treatments. Steve Fleishman – Catapult Capital: Do you anticipate that they will do this with all the utilities together?

Yes. Steve Fleishman – Catapult Capital: Or do you think they will do this kind of one by one because some of the tests have been set up differently. For example, Duke agreed to include all system sales and their settlement.

Because I have none. The workshop to be a general conversation and that you'll (inaudible) a laugh and come to some conclusion, company by company, but the intent is that the workshop would be all inclusive to begin with. Steve Fleishman – Catapult Capital: Okay. And when would the first one be done, it would be for the 2009 year?

I think Allen [ph] has said all along that he thought that, that review would be you got away till the '09 statistics or all in, then the review would be sometime during the 2010 first half of the year, then the conclusion of it would come to play sometime in the latter half of 2010. Steve Fleishman – Catapult Capital: Okay. Thank you.

Yes, you bet, Steve.

And our next question will come from (inaudible). Please go ahead.

Hi, guys.

Hey, Kit [ph].

Question on the O&M, I haven’t noted that I think it was Holly and again congratulations on amount of data per minute, which is good, you get things done.

Absolutely.

I think you talked about O&M being I believe it's down for the second quarter on reduced plant maintenance. And I wondered if you could give us some idea of whether that's a quarter to quarter thing something you can do indefinitely and if you can spend less maintaining the plant I think you’ve [ph] been spend in more?

Let me try to address those issues. With the fall off in demand throughout the PJM, what we've done of course is remove some of our sub critical plants and because of that we are not pursuing maintenance and would normally go on at those stations. So to your question about sustainability of that in the longer term I would hope not. Because even when we spend the O&M on those plants are called for our system demand, the shareholder benefit is quite obvious. To the latter part of your question why do we spend money maintaining plants, that’s like I hope on occasion you take your car and has somebody look at it, so keeps working with a number…?

No, I agree with. I was trying to get at what's the level of sustainability, is this just a blip and it will go back to its end line and that all?

Really the larger O&M question, Kit, is how are you managing the fullness of the American Electric Power operating and maintenance expense buckets, which tally up about $3.5 billion. Our plan for 2009 was to stay at our incurred expenses in 2008, and as I mentioned we're a bit ahead of that plan and I am proud about that it doesn’t have a fancy name like AEP 20/20 or some such name but it is an effective cost management by a very detailed and very conservative organization. Our plan for 2010 will unfold as it unfolds. I don’t see any massive step up soon O&M as we look at 2010 we will continue to manage the cost structure. Again the magnitude of the O&M spend at American Electric Power is dynamic and dramatic. But it is required to make certain totality of the system is up and running for the reliability numbers that our customers expect.

Of course, I accept. Okay. Thank you.

Yes, you bet.

Next question comes from Daniel Eggers with Credit Suisse. Please go ahead. Daniel Eggers -- Credit Suisse: Hey, good morning. Am I just clarify, you said outwards [ph] with the dollar earnings from transmission did you give a time frame when you thought that could happen?

It's so hard to forecast when will get the final authority to build the facilities, but those are projects that we really has in hand and the partnerships are put together and applications are approved at the FERC and other activities are moving forward. So mid-late next decade I think you will see that, that at its final number, but surely along the way you will see some of those pieces drift in the earnings. Daniel Eggers -- Credit Suisse: Yes, trying to give that cut back on CapEx to the more $1.8 billion level, when do you start to see CapEx going in transmission from here and once we start to see earnings contribution come directly for some of these bigger projects?

Well, remember our intent on the 1.8 billion is the CapEx and the traditional utility footprint, not the transmission activities nor the transmission projects, which as you know we do many through partnerships and then intend to do a standalone finance projects so it is in the same category as the 1.8 billion. You begin to see, you are already seeing some in 2009, you will see more in 2010, particularly, the assets that Holly mentioned being transferred over ETT and Texas, those are transmission assets that are moving energy today, receiving adequate compensation for the energy that they're moving, and that will continue to grow. The schedule for the Texas billed out of the closed activities is aggressive and those will be some of the first adds to the transmission and those will probably you will begin to see those in the 2011-2012 timeline.

Remember, Dan, our capital equipment is simply our equity contribution. Will account for this on an equity accounting basis. Daniel Eggers -- Credit Suisse: So if you got a billion dollar projects going in and show CapEx, your budget is in fact only half or that less?

Actually just the equity portion of that, Dan, so probably more like a quarter of it, it is a 50-50 joint venture capitalized at 50%. Daniel Eggers -- Credit Suisse: Okay. And I guess just one more on the ESP decision on the $51 million on cost, when do you think you're going to have a resolution to drill higher some sort of a mediation or moving to the utility jurisdiction and as to really backing at $51 million out of plan for the full year on an annualized basis or just on a run rate basis going forward?

Well I'll let Holly answer latter part of that, first part of that, we will petition the commission for some reconsideration, probably next week. Daniel Eggers -- Credit Suisse: Mike, you got a process for trying to get that results?

No, I don’t. I mean first off they will look at it and say I don’t know it sounds reasonable they can do something in a hurry, they may decide to have a bit of a rehearing, people will file papers on it, that will be up to them.

Dan, as for the second half of your question, (inaudible) would filing will produce within lower revenues in the amount of the $51 million for the year of '09, so I would say that you should adjust it on an annual basis. Daniel Eggers -- Credit Suisse: Dost that mean the third quarter Holly we're going to se some sort of step up in cost to true-up with the first half of the year?

I believe it will feather in not just in the quarter, but through the balance of the years, Dan. Daniel Eggers -- Credit Suisse: So evenly level? Okay. So then we should assume that still gives you guys comfort within your guidance range even with that 6% or 7%--

Absolutely. Daniel Eggers -- Credit Suisse: Okay. Thank you.

You bet.

(Operator instructions). And our next question will come from Paul Ridzon with KeyBanc, please go ahead. Paul Ridzon – KeyBanc: Congratulations on a solid quarter in a difficult environment.

Thanks, Paul, I am glad that you understand that. Paul Ridzon – KeyBanc: With the Cook plant when you have the 11 replacement, could there be an operate there within German technology?

It’s interesting. We're looking at a longer-term pretty significant operate at Cook station, but it wouldn't be just by putting that. We may get some efficiencies out of the 11 replacement that’s for sure. And we are angling towards that, but we as I know, you know continue to look at the most cost-effective way to add additional megawatts, we are not a 15000 or 1500 megawatt player, but we surely have a chance that somewhere in the 400 megawatt to 500 megawatt additional range out of Cook station. Paul Ridzon – KeyBanc: Just back to PUCO what was the logic of the disallowing the plants and kind of what could the alternatives be, could you elaborate more?

Well, it’s a brief explanation by the commission, they thought that we hadn’t explained that the $51 million were needed in a revenue shortfall activity kind of a cost of service view, but I think it's pretty clear if you look at generation in the State of Ohio its not supposed to be a cost of service view so we think that there is a little cross over in the thought process there. And the whole notion of taking to really cost effective power plants for the benefit how customers we thought was to everyone’s advantage, but you got to pay the cost, you can't have the plants without paying the cost, that just silly. So that’s our point and if doesn’t clear it they then will ask them to say, fine, if you're not paying for them, then you got to let us use them, when you can't take them, well, if they take them without paying for them then we'll have to go to -- in Ohio which we will do promptly is just isn't right. Paul Ridzon – KeyBanc: They denied not O&M but actual capital cost to cover?

Yes, yes, the capital cost of operating as well some subset of it is a combination. Paul Ridzon – KeyBanc: And just from an economic standpoint do you think we've hit the bottom, do you think we've started up, or are we still moving down in your view from the numbers you see yourself?

Yeah, I am the last guy really got asset, because I am an optimist. We see enough activity around, you saw the housing market kick up a little bit, you saw the unemployment numbers not go up as much as people thought, I am not kid, I sat with a couple of our big metal melders (inaudible) and Chrysler had an empty showroom across the entire United States, GM coming back on line, the metal melders and the car suppliers are kicking away, Delphi just got a rid of their entire pension obligation, I don't know who they picked it up, you know they say the Federal government, but they are broke. We are seeing some signs that tell us things might be getting little better even housing here and central Ohio which has been a good driver for us for a long time and then if you look at the footprint on the west Texas is still cranking out, you think a shale oil and drill rigs, shale gas I mean and drill rig tick up that’s all about our Texas low that all about our Oklahoma load, so again I'm an optimistic so don’t go make any bets on that but I should hope I am right. Paul Ridzon – KeyBanc: Okay. And Holly, could you review off system sales jarring in impact lecture?

Sure. I would describe it broadly this way. Our off system sales are down year on year by approximately 60% in terms of gigawatt our sales, the total year-to-date of a 183 million, 54 is due to physical sales volume, 36 is the Oklaunion payment from our generation marketing segment back to our Texas company and marketing trading has contributed 93 million. Of the 183, approximately half of it is shared back to our east integrated utility operating company, part of the other half approximately is retained by our Ohio operating company. The detail that I referred is on Page 15 of the handout. Paul Ridzon – KeyBanc: And then Mike said you are extremely comfortable I think was the phrase with guidance?

Yes I was afraid. Paul Ridzon – KeyBanc: Did you care to tip on which side of that (inaudible) you are extremely comfortable with?

People will shoot me if I do, but you just heard me talk about being optimistic. Paul Ridzon – KeyBanc: That’s it, thank you.

You bet.

And our next question come from Michael Lapides [ph] of Goldman Sachs. Michael Lapides – Goldman Sachs: Hey, guys, one quick follow up, Mike, you talked a little bit about carbon legislation can you talk about your outlook or how you think regulation or even legislation kind of comes down the pipe for (inaudible) knox and Mercury?

Well, I know you know that administrator Jackson is looking at the particularly the mercury and the knox piece I think we will continue to see regulatory changes that as you know we have proactively and cost effectively retrofitted all our large units completing that schedule even as we speak we are able under that not only to meet the (inaudible) requirements as well as meeting potential future mercury requirements so we are not overly concerned about any of that it may lead to activities that some of the very small sub critical units that we have continually looked at for potential retirement date that may force some of that earlier than you would expect, but that’s not a major impact to us as we go forward having a chance to meet with the administrator a week ago she is a very balanced person and she is trying to implement laws that are already in place in that balanced way. Clearly, a couple of issues that are there that we are deeply involved with we think the current activity for 316B is appropriate and doesn’t need to be changed, we also feel very strongly that although we're more than happy to have additional Federal inspection of our hedge [ph] fund that ought not be considered hazard as waste that simply has tremendous amount of cost for very little of any benefit so we'll continue to participate in those activities with the EPA, but I am pretty encouraged that she is doing her best to do things that make sense, we had a very constructive meeting with her on lots of issues so we will continue to comply with all of the laws of the land and should they change we will react to them in a constructive way to the benefit of our customers and shareholders as quickly as we can, Michael. Michael Lapides – Goldman Sachs: Got it thank you.

Yes, you bet.

Next question comes from the line of Shar Kahan [ph] with Incremental Capital [ph]. Please go ahead. Shar Kahan – Incremental Capital: Good morning.

Morning. Shar Kahan – Incremental Capital: Just a question if I look at the line of system sales for six months its running at 173 million year-to-date?

Yes. Shar Kahan – Incremental Capital: And then the forecast for the year if I am right is something like 280?

Yes. Shar Kahan – Incremental Capital: And so are we running ahead of plan I was just trying to get a sense?

Little bit, yes, little bit, couple of nice things and our first quarter as you know we were extremely successful in the fee option, I doubt that there is going to be another fee option in the latter half of the year so again we are inside of the guidance range that we have given our assurance, you're correct, we had a pretty productive first half of the year in a really rotten markets. So Barbarados [ph] commercial office people deserve a great deal of credit. The Energy Trading Group has been conservative but successful. Our Texas energy marketing partners have equally been successful as they continue to rack up what we consider to be very cost effective back to back contract sales. Shar Kahan – Incremental Capital: So Mike can't we analyze this number at least because by taking what’s happening in the half year and every contract really starts in June, right, so the majority of the contract is at the back end of the year, am I correct?

It's never good to take six months and multiply by two in the utility business, you can go ahead and do that (inaudible) I wouldn’t. Shar Kahan – Incremental Capital: Okay, but you would agree that benefits of the fee contract at the show up in the latter half of the year, is that correct?

Some of them, yes, some of them have already been built into the system because we are already on the process of satisfying those demands.

And some of that will show up through 2011 as this… Shar Kahan – Incremental Capital: As the contract goes.

Contract goes, yes. Shar Kahan – Incremental Capital: Okay. I appreciate it.

Its 10:00 clock and we greatly appreciate all of you being with us I know you got other calls to go to and for better worse we've all got other things we have to do. Other questions of course Betty Joe [ph] and Julian and the team are here we are always available to answer those questions. We thank you for much for your time and your attention and I guess Betty Joe, turn it back to you for if there is any other official things you will need to do.

No, we just thank you for joining us today. And Brad, can you give the playback information.

Absolutely ladies and gentlemen this conference will be available for replay after 11:00 clock AM today and running through Friday, August 7th at midnight. You may access the AT&T Executive Playback Service at anytime by dialing 1-800-475-6701 and entering the access code 106565. International participants may dial 1-320-365-3844. Thank you.