Julie Sloat - Vice President of Investor Relations Susan Tomasky - Executive Vice President, Chief Financial Officer Michael Morris - President, Chief Executive Officer

Greg Gordon - Citigroup Daniel Eggers - Credit Suisse Paul Patterson - Glenrock Associates David Frank - Pequot Capital Craig Shere - Calyon Securities Ashar Khan - SAC Capital

Ladies and gentlemen, thank you for standing by and welcome to American Electric Power’s Q2 2006 Earnings Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the conference over to Vice Present of Investor Relations, Ms. Julie Sloat. Please go ahead. Julie Sloat - Vice Present of Investor Relations: Thanks John. Good morning and thank you for joining us today to discuss AEP's 2006 Q2 and six months year-to-date earnings. I expect that you have seen the press release issued earlier today. It's also available on our web page at www.aep.com. In addition to the financial schedules included in the press release package, the web cast of this call will include visuals of charts and graphics referred to by AEP management during the call. An investor information packet will also be available at www.aep.com today at approximately 12 p.m. that will include the consolidated balance sheet and statement of cash flows, as well as full income statements for our utility operations, GAAP operations, investments, and parent company. 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 quarter reports on Form 10-Q for discussion of factors that may cause results to differ from management’s projections, forecasts, estimates, and expectations. Also on the call, we will discuss the measures about company 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 our Investor Relations website at www.aep.com. At this point, I will turn the proceedings over to Mike Morris, Chairman, President, and CEO of the company to lead an opening presentation and then there will be time for your questions. Mike…? Michael Morris - President, Chief Executive Officer: Julie, thanks a lot and to all of you who are the phone thanks for being here with us. We are quite excited about where we stand so far in the accounting year 2006. As you know from our press release, we feel comfortable earlier than usual to forecast an increase in our earnings guidance range to 265 to 280 a share versus our earlier guidance of 250 to 270. Much of that is driven by the continued regulatory success that we’ve had as we have told you before. The capital investment program continues to be robust although we have taken out about $68 million as we share with you over at the Mountaineer Plant for those of you who made that trip with us just a few weeks ago. For the quarter itself and Susan will give you a great deal of detail on the quarter earnings, we actually are in the midst of a very strong quarter which was masked by events of our own doing and couple of power plants that weren’t available to us as we had wished that they had been. Specifically, I think I’ve shared with most of you the events at the Kammer Plant where we had a corrosion steam break that was really unexpected and from our sophisticated look at the power plants, un-forecasted. That gave Bob Powers and Bill Sigmund and the power plant team and us as well because this is an employee potential exposure to a safety issue. We took all of the plants that were similarly situated offline and that impacted Q2 considerably in the off-system sales, but for that as you know from our earlier conversations, we were moving along quite handsomely at the time. Other things that affected of course Oklaunion out West came offline that was an unplanned outage. It took us a while to sort out exactly what the cause was, but again that plant is back online and running very well and we forecast that it will be with us as the rest of the year unfolds. A little bit of an extension in the Cook refueling outage have impacted Brian Tierney’s team and their ability to put additional Gigawatt-hours into the marketplace, but for that we feel very comfortable, although we were commercial offsets for the year. As I think most of you know we put the Jackson’s Ferry-Wyoming line in service on June 20th as we had hoped that we would, and that really has allowed us to move additional Megawatts into the Eastern market and more place with that as well. On the regulatory front, yesterday was a very, very important day for us. The commission in West Virginia gave final approval to the stipulation and settlement that we and the parties had filed, and that to us makes West Virginia look a great deal like that State of Ohio; forecasted rate step-ups in the upcoming years as we continue to put capital on the existing fleet in West Virginia and continue to improve our reliability on the T&D side. As you know we did get what we think is a very good order from the Federal Energy Regulatory Commission as pertains, the way that and at the end of the day the transportation revenues with the regional rate design. As Craig Baker already said that everyone is catching up to his view of regional rate designs of about four or five years ago, we hope that’s the case. The administrative law judge’s order was very well thought through and we will hope that the commission approves that as well. We continue to move forward with the stranded cost securitization activities in Texas, the Texas commission and their support and there consultants have been extremely supportive. Our finance group has met with and continues to dialogue with the rating agencies as well as the SEC that we feel comfortable that we’ll issues those bonds hopefully yet in the month of August if not then in early September and all things seems to be moving along quite well on Texas. The Ohio Commission just yesterday or the day before yesterday issued a reliability order for us. You might remember that in that case we had volunteered to spend an additional $5 million on the system. The commission directed us to spend $10, we think that’s a good thing for our customers at the end of the day and that they will only lead to increased reliability, something that’s very important to them. I think some of you might remember that we do have a storm damage recovery case in front of the commission that’s been there for a while. We are quite encouraged by what they did to Dayton Power & Light just a couple of weeks ago as they approved the expenses that DPL experienced in their storm almost in the exact same time line in calendar year late ‘04 early ‘05. So all in all, we feel very comfortable about the regulatory position that we are in. We await a decision in Indiana on the depreciation case. We await a decision in Virginia on what we call our environmental and reliability case. Short of that, we feel very comfortable about the way things have unfolded so far, and as those and other reasons that have caused us to move our range of forecast earnings up. With that I will turn the podium over to Susan for considerably more detail on the performance not only for the quarter, but for the company year to-date. Susan…? Susan Tomasky - Executive Vice President, Chief Financial Officer: Thanks Mike. I want to spend most of time this morning talking about the quarter and then I want to update some additional financial data. As Mike noted we have what we consider to be a really very solid quarter, but we are down on a quarter to quarter basis $0.44 versus $0.62 for the same period in ‘05 so I wanted to talk about those difference a bit. There were two important differences between last year and this year that we are anticipated, and Mike alluded to both. The first was the sale of the STP, which occurred in mid-May of last year and lots of those revenues associated with that which were around $25 million of the $49 million quarter to quarter reduction in off-system sales, we are obviously going to reflected in this years numbers. We also had expected the elimination of the SECA rate and let me talk a little bit about what you see on that third party transmission line that you’ll see on the next page as we get to that. Basically, SECA has two features. As we had told you we were going to expect to see that the SECA number would go down as temporary provision ran off in April of this year. That did indeed happen in $37 million of the year over year negatives that’s imbedded in that utility line is associated with that. In addition, as you will see we have a provision for about $18 million that we are expecting for as settlement that is against the $200 million and a bit over that that in total revenue for SECA that we have collected over the last 16 months. We think that that’s potentially a very good outcome and a reasonable one for purposes of preserving those revenues. Those were the two major factors that have contributed to the outcome that you see on the utility line which is $0.41 a share, but as Mike mentioned we also have some additional pressures that were not part of the picture going in that we’ve also managed to absorb, the most significant one of course, was the additional ONM that include several different items most notably the additional generation dollars that we have talked, about $13 million for the quarter as well as additional dollars of tree trimming and additional operating in maintenance dollars with respect to the river transportation business. We had a very bright note for the quarter in our investment line of course and that’s the continued excellent performance of MEMCO. It contributed $14 million to the quarter as opposed to $5 million in a comparable quarter of last year and this is the continuation. The excellent barge conditions, river conditions and of course demand conditions that have driven up freight rates that MEMCO has been in an excellent position to take advantage of. If I could turn you to the detailed page that’s entitled Second Quarter ‘06 Utility Operations, I want to provide a couple of additional detail with respect to the utility operations themselves. Utility operations were down $102 million, $0.27 cents a share year-over-year. We did have very significant rate increases issue now in Ohio worth about $58 million and in Kentucky, pretty important successes for us and I may also want to point out that we had another $15 million in revenue from our acquisition of 29,000 Mon power customers, a significant accretive transaction for AEP. I also wanted to note that we had higher margins in the West that contributed to that total for this year, but that combination of events were not significant to offset some of the pressures, again the ones we foresaw, the STP sale, the end of the SECA, as well as the additional higher ONM that we incurred that I think Mike and I have probably fully covered. We did see increase in fuel, we had expected that as you know, we forecast fuel increases every year. The actual costs were -- the delivered cost of coal that we experienced are well in line with what we have expected, we have told you to expect 11% to 13% increases overall and we actually expect, sold lower than that for the quarter and expect to be closer to the lower end of that range for the year. But with that said, we still did see fuel play a role in offsetting the overall combined positive affect that we had as a result of those rate increases. Whether it was also a factor for the quarter particularly providing some downward pressure particularly for the East across the company. It was $0.01 drag on earnings versus normal, $0.02 drag versus prior years. In the East utilities as well, you saw about 5% low growth, even though the cooling degree days were down, but I think it’s worth mentioning that we saw industrial customers primarily driving that and that really had to do with the move of the sentry aluminum customers over from OPCo to APCo. We did have some increased volume from union co-op sales and we think that is going to be a continued positive trend as we are aggressively marketing two traditional Muni/Coop customers with our marketing group. Residential lobe was down in the East by about 5%, commercial lobe by 2%, what you would expect in two sectors, but it is clearly weather related. In Ohio you see the flip side of the industrial move the movement away of Sentry Aluminum from an Ohio customer to the APCo customer. Obviously, from a total company effect that’s really geography, but also as part of your comparison as you’re looking at Ohio, you need to keep in mind that we had $16 bump last year, due to the (inaudible) emission sales, you may recall that we booked $9 million of that for this year and that will be the total amount for year to-date in the first quarter. So you also do not see that positive effect that we had last year in the Ohio numbers and for that reason those combined effects, we leave the Ohio company slightly better of year to date. West margins were up significantly and that’s good news. That’s the utility business operating well in a circumstance of good solid demands, the weather was actually positive for us in the West. I mentioned that the off-system sale line was down $49 million primarily associated with the difference between the ownership of STP in the comparable period for last year and then the ONM total on a year-to-year basis, we have an increase of ONM of $56 million, $13 having to do with the plant maintenance activity that Mike mentioned and the other couple of major items were tree trimming which we increased by about $12 million year-over-year for that period and then we had an additional property insurance payment to our captive coming out of the Kammen(ph) incident and that really are the major big-ticket items with respect to the O&M increases for the quarter. If you turn down the six month year-to-date earnings performance, I am not going to spend a great deal of time combining this other dent to emphasis that we did have some months with respect to the Q2 that we knew we had to absorb and we are extremely pleased with the way in which that happened. When you couple that with the very strong Q1 performance that we had we really have laid the groundwork for the significant increase in our guidance range for this year. That increase as Mike has noted is really based upon the very high level, the certainty with respect to regulatory outcomes that we were able to achieve in the first half of the year are increased expectations for the MEMCO Barge Line and our increased expectations with respect to wholesale sales and the details of all that are set out in one of the pages in the appendix. That outcome is what gave us the basis not only to be able to raise our guidance upwards but to eliminate some of the downside risk that we had previously seen, so that our revised guidance for the year $2.65 and $2.80 a share. What I would like to do just briefly skip over to the cash flow page and point out a couple of items for you that may get your attention. What we see with respect to the Q2 ‘06 cash flow page that’s two pages forward from where we just were, it was that we ended Q2 of 2006 with a cash balance of $249 million. That compared us to an earnings cash balance of $607 million from last year and I simply want to remind you that last year we concluded the HPL sale and in the early part of that year and we had a cash balance that was unusually high which as you know, we put to good use over the subsequent periods. For the year-to-date the cash flow from operations was $1.137 billion and that’s about $550 million in continuing earnings and you see down there the typical adjustments one that may provoke your question that I will go ahead and answer is $183 million change in working capital, that is really the result of fuel inventories and some decreased customer deposits. The change in other assets and liabilities is due to defer to recovery at PSO and SWEPCO. In the investment line you see cash outlays of about $1.6 billion year-to-date of six that’s driven primarily to the $1.6 billion capital spend we have received cash of $123 million in asset sales, about $70 million of that has to do with the Centrica payment and about $30 million of it is the BCO plan which you know also happened earlier this year. The financing activities for the first half of those six provided us a net cash increase of $297 million and we ended 2005 with a very minimal short term debt balance and you see that is up on a year to year basis. I think that we told you that particularly in live of our credit rating increase last year that we felt we were in a position to take some better advantage of access to short term debt markets and indeed we have done that in a day of some long term financing that has put us in a position to have a higher level of flexibility and timing as we go to the long time debt markets. Now as a consequence our net change in cash was a negative $152 million. The ending cash balance that I mentioned of $249 million and we expect to end up the year with a cash balance of $260. One last quick note on capitalization, we ended the quarter at 57.4% debt-to-cap on a GAAP basis and 58.2% on a credit-adjusted basis. We continue to have the goals of maintaining debt-to-cap on an adjusted basis in the 60% range and forecast to do that by year-end. With that I think Mike, why don’t we go to questions.

Julie. Julie Sloat: John, we are ready for questions.

[Operator Instructions] and first to the line Greg Gordon with Citigroup, please go ahead. Greg Gordon - Citigroup: Good morning.

Good morning Greg. Greg Gordon - Citigroup: Can you just tell us exactly how much or approximately how much the MEMCO has actually contributed on absolute dollar basis in the quarter and for the first half of the year?

Yes, we can -- we are happy to do that. MEMCO’s contribution in Q2 of ‘06 is $14 million that compares with the $5 million from last year, $35 million on a year-to-date basis in absolute dollars and the revised guidance for the year is $70 million, Greg. Greg Gordon - Citigroup: $70 million for the full year?

The full year.

And I think what we’re seeing, Greg, at MEMCO is that the ongoing impact that Katrina had on the barge fleet only inter state waterways unfortunately more players have gone out of business and a number of big players weren’t in the position that we were with new barges on order and new tows on order. So unit prices are up and unit utilization factors are up. And we see that as you can tell from Susan’s forecast number, staying that way for the rest of the year. In fact most of what we see at MEMCO is already on the contract for calendar year ‘06. Greg Gordon - Citigroup: Can you refresh my memory as to what the fiscal year total contribution was last year?

It was around $20 million. Greg Gordon - Citigroup: Okay, and are you guys -- I know you guys obviously haven’t given any earnings guidance for next year, it’s way too early for that, but can you give us some qualitative understanding of whether this sort of structural pricing changes in the barge business are sort of economically or whether -- what sort of issues are we thinking about in trying to figure out sustainable learning’s power at that business going forward?

I would argue from a day-to-day we see in some of the forward contracting that we see 2008 will be strong for MEMCO and then I would expect because there is a space to be filled by others is that they will see a tail off towards the latter part of ‘08, ’09, more typical to what we see. But again, Greg, again remember a lot of folks went out of business and as you know fewer units yield higher unit prices and higher unit capacity factors.

The barge manufacturing capacity is also completely committed as we understand it and it may be awhile, I would certainly don’t expect to see additional manufacturing capacity any time soon. As those barge come in pretty much in the time frame that Mike talked you might see some flexibility but this is a pretty tapped up market at this point. Greg Gordon - Citigroup: And can you also just update us on the progress you are making in some of these lumpy and potentially accretive capital expenditures on proposed IGCCs, and I think you also announced the small construction program in Oklahoma as well. Just update us on some of these longer data projects that have you know, earnings upsides of post-‘08.

Sure. The integrated gas combined cycle activity in Ohio continues to move along as we had hope that it would and maybe a bit slower than we would have liked, but as you know the PSCO just approved then we put in place on July 1 of this year, the recovery of the phase-I dollars. As we had expected and as anyone should expect, the Ohio commission is waiting for the completion of what we call the front-end engineering design study or the FEED study, which will lay considerable more facts in front of them as to the cause of those facilities. And we would expect the Ohio commission to treat that with a certain amount of dispatch. And I would hope, Greg, that we would get some kind of clear indication late ‘06 very early ’07, on how they will allow us to recover the capital spent on the integrated gas plant in Ohio. That’s a little off of our original plan line but nonetheless well and keeping with what we think we are going to need to do to continue to service growing demand. And recently back to the integrated project in West Virginia there is provision for recovery of those expenditures that in the settled rate case that I spoke of in my opening comments, we still need to go back to the commission in West Virginia also with the completion of the FEED study for that particular plant. Our expectation is that those will both happen in Q4 of this year. And therefore, again we look for early ‘07 treatment by the West Virginia commission as it pertains to that issue. We always need to remember that because of the way Appalachian Power functions we also need some additional information for the commission in Virginia about that plant as we go forward. And we feel comfortable about that and those of you who are with us at the Mountaineer Plant, the Governor mentioned at West Virginia would rather to plan –- were already in service. But we are not even that eager to go that fast. As to the Oklahoma announcement it’s a very important partnership between us OG & E and UMPA, one of the municipal cooperative utilities in Oklahoma to build a much-needed hard fuel also super critical plant. We have made a filing to the Oklahoma Commission asking for appropriate rate recognition and approval of that facility. So it is a typical of what American Electric Power is trying to do in the generation side in the entirety of our footprint, but again that’s to get as much upfront assurance in cash recovery as we build this much needed facilities, going forward. I would argue that at least the early returns from the Oklahoma politicos and the executive office was very strong and support of the filing that we made there. Greg Gordon - Citigroup: Thank you.

You bet, thanks for the question.

And next on the line is Daniel Eggers with Credit Suisse, please go ahead. Daniel Eggers - Credit Suisse: Hi good morning guys.

Good morning Dan. Daniel Eggers - Credit Suisse: First question I guess -- with some higher cost pressures in Ohio on the scene fuel roll through. Can you give us some flavor on if we should expect that 4% rate added, to get pushed through and how that’s going to work?

Well, we remember as it pertains to Ohio in calendar year ‘06 much of the 4% is already been taken up with some of the way that the commission is wanting us to treat the phase one activities of integrated gas, we will continue to look at the 4% rider in ‘07 we constantly review that to see where we are. The Ohio fuel situation is really better than it might seem on its phase and as Susan said in her comments, we originally thought we would see escalations on the 11% to 13% range for fuel calendar year ‘06 were actually at the lower end of that and Chuck(ph) who many of you have had an opportunity to be with continues to tell me he hopes he beats the 11%, the worst thing with that is our forecast for now. The automatic step-ups will be there calendar year ‘07 the intent of that of course is to cover escalating cost on the G side. We feel relatively comfortable about Ohio and we’re seeing some softening in the coal market, which may lead to a better ‘07 experience than we saw in ’06, but again Q2 coal escalation considerably softer than Q1 coal escalation in Ohio. So we are feeling pretty good about what we are seeing and of course, the West Virginia case now puts fuel recovery in day-to-day recovery so, but for Ohio and the cap step ups that we have in Indiana we are recovering through fuel cost on an ongoing basis. Daniel Eggers - Credit Suisse: I guess -– you mention, you open the door on that just from a coal delivery perspective and inventory perspective. How are you guys looking, it seems like the rail companies are getting things done, are you guys sitting on your stocks?

We are, we feel very comfortable with the inventory on most of the sites. I keep telling about powers in this team you get use to running them more lean stat wise so let’s watch our inventory levels and they are constantly doing that, the rail is also getting better. I think the attention that EEI and some of the principle coal companies are blocked by bringing some other rails in front of the FERC, I think Chairman Kelliher did an excellent job with that one he had them in there and they are doing what they need to do. We’re still a little contract short and we are trying to make reasonable arrangements to sale those contract differences. But we will not let the rails off the hook for the failure to deliver at quantities and that decides what they were supposed to do. Daniel Eggers - Credit Suisse: One last question with the increase in gains maybe you are not going to talk ‘07 and ’08 and beyond but you know with this positive regulatory developments. Are you guys having any feel that long-term growth rates could be stepping up from where, where you’ve talked before?

Well, you know us to be a relatively conservative bunch and its early to give you that kind of a flavor we do you know this goes back to our short tenure here at the American Electric Power, but what we told you all two and half almost two and three quarter years ago was that you will began to see a constant improvement in the regulatory treatment of this company by the 11 jurisdictions where we do business and Craig Baker and all of the individual operating company presidents and their individual representatives deserve all the credit here, but we are saying that, we are saying it almost every jurisdiction that we look at. Your know, when you -- when you look at the Texas securitizations not by March but we did better that anyone else who went into that arena, and we feel comfortable about that, there is a real strong working relationship between our treasury group and the commission and their consultant on getting the securitization done as quickly as we can. I’m always a little puzzled by our success or hiatus success in Virginia, we don’t do it as well as Dominion does. I keep telling Tom Ferrell(ph), please tell me the secret in Virginia, he won’t share it with me, but we see improved performance in almost all of the jurisdictions and we are encouraged by that. That’s a little short of telling you we are bullish going forward but it does tell you that we feel comfortable with the capital spin that we were doing because it’s all driven toward having adequate low price generation, it’s all driven towards improving the environmental performance of a as you know, very cost effective power plants and reliability improvements on all of the systems that we function at. : Great, thank you Mike.

You bet Dan, thanks.

Our next question is from Paul Patterson with Glenrock Associates, please go ahead. Paul Patterson - Glenrock Associates: Paul here, how are you?

Good Paul, how are you doing? Paul Patterson - Glenrock Associates: All right, I want to thank you for the update guidance. It’s really helpful and I wanted to just to, you know, if we look at the slides in the back, notice that there has been a change in the few of these, the forecasted items, one is deprecation which before you guys had increase and then you actually have decreasing slightly. I was wondering if you could give us a feel for that. I was also wondering with the expected ONM that you are looking at some which is you know, it sounds like we are going to expect it, you know, should we think in general how much of this might actually might now show up in 2007 or you know, some of these things sound like they were sort of unusual or perhaps normal even and how might that -- how might that behave going forward I was wondering about that, if you can just sort of touch base on those two things?

Sure happy to Paul, Susan will touch the deprecation one. Susan Tomasky: Now, the depreciation part really has a large typically to do with our expectations with respect to the Indiana preceding where you are going to as a result of the extension of the nuclear plant. It’s appropriate to extend that life from reduced deprecation, so that’s what you might see some of that.

I mean do you, I know you know, this Paul but may be for others on the phone we went to the NRCS, have so many others and asked for a license life extension and received that just this year earlier, so that’s part of what’s driving that.

Yeah and that’s pretty much the deprecation decline story.

On the OMN phone I think it’s important that as Susan did it with a couple of the larger buckets for the impact so far this year. The events that we went through by taking off the sister plants to the design of the camera station, were dollars Paul, that I would spend everyday losing those megawatt hours from the commercial offices is unfortunate but I would do that everyday too rather than put my employees at risk as being in a station were a life threatening event might happen. Those won’t reoccur obviously, we have some of that through the tale of the year, as Bob goes through, Bob Powers goes through some additional outages that were scheduled but it wasn’t scheduled, that we would do the x-ray work on the tubing for those plants as well. That will add some cost as we go through the year, but those are dollars that I will always be willing to spend. Now on that distribution side were, as we always do when earnings are strong we were spending forward on tree trimming and reliability. We’ll continue to do that as well. Now when you ask about ‘07, ‘08 as you have heard of say many times before, our expectation is that this company will be able to manage its own ONM at or close to flat going forward. That means we will have to address the issues of inflation that means we will have to address the ANG issues of the salary increases. So I wouldn’t expect any spiky ONM going forward but at the same time, I don’t expect a big machete on the ONM side, we -- we have a huge system that demands that it be refurbished and cared for, we are doing that on the distribution, we were doing that on the transmission and we are doing that on the generation side as well. And Paul as you know, and you have heard to say before we are still burrowing into rate cases as we recover the capital invested on the power plants in some of these jurisdictions so, spending into a rate case makes a heck of a lot of sense, particularly if it isn’t impacting your earnings in a real negative way. Paul Patterson - Glenrock Associates: Okay, so as I understand the previous guidance did have the Indiana rate case depreciation proceeding in it or, or the outcome associated with the -- with the licensing of the nuclear plant is that correct?

It was -- it was built into some of what we looked at, but we remember what we said about our earlier guidance to get to between the 250 and the 270 we need a great certainty and some jurisdictions, not all jurisdictions. We never expected to get a 100% clear the board re-treatment. We have now moved the guidance up because most of that is in hand, the Indiana case will be, we think issued soon and we are okay with that no matter where it lands inside of the increased guidance that we have given you. Paul Patterson - Glenrock Associates: Okay, so okay, I guess I understand that. I guess the NM will be such a, the ONM. Some of that, I guess this means that your ability to cut costs in the future considering some of these were anomalies would have a little unusual, you guys should be -- you guys should be on track. It should be easier to attain that, is that my understanding sort of, with what you are saying.

Yeah, I think when you look at the total ONM for the company, it’s right around 3 billion to 3.1 billion and that’s about where it should be on a going forward basis. Paul Patterson - Glenrock Associates: Okay, and then just finally other operating revenue, you guys do seem that’s seems to be one of the drivers in the numbers and I am trying to just get idea which the futures remind us, what that other operating revenue rules and why that’s, why you guys see a better forecast now in 2006. Did I expect it?

Yeah, just give me one second.

Susan is trying to catch up with that particular line, obviously it’s actually an investment line, it has a lot to do with FEMCO and those activities. Help us out a little more Paul with the. Paul Patterson - Glenrock Associates: I am sorry, it’s line item Six on slide, I mean it’s -- it’s easier, when you do the breakdown which is very helpful, it’s -- it’s item six, you got third, or you got transmission revenue third party which you guys seem to expect to go down a little bit more than you have before and then you have other operating revenue in pricing substantially and I am just wondering what --

Yeah, we got it now, Susan.

I am sorry Paul, I couldn’t follow where you were but basically that’s where we show allowances expenses, I am sorry gains on allowance sales and we do expect to see some additional gain on allowance sales for this year.

One of the things Paul that you would expect is that, the fleet continues to run more efficiently. We continue to be a participant in the optimization of environmental credits and that’s gone really quite well for us so far calendar year 2006 and we don’t see any reason for that to change. Yes, we look at our dispatch needs for the tail of the year and our current credit balance is on the environmental side for the remainder of the year, we see the opportunity to continue to put some of those credits into the market place and we will watch that for the opportune time to do it. Paul Patterson - Glenrock Associates: Okay, thank you very much.

You bet, thanks for your questions.

And next goes to David Frank, that’s Pequot Capital, please go ahead. David Frank - Pequot Capital: Yeah, hi good morning.

Morning David. David Frank - Pequot Capital: I was hoping you could tell us a little bit about the hedgings you did coming into the quarter kind of, when you put -- how much on the power you sold ahead of time and what you’re seeing in specifically, I am most interested in the Ohio region and what your guys are seeing for calendar year ‘07 as far as around the clock power prices in the region.

Well David as you typically do, you ask very important questions for data that I just don’t want to share with you because there may be some of our competitors listening in as well. We, as you know, we constantly look at the curves and -- we are in the near part, we are quick to move whenever there is an opportunity. Brian and his team always have a certain volume of the Gigawatt-hours available to put and take when things look good for us. As we look at 07, we don’t see a lot of reason for prices to deteriorate when I look at natural gas which is really the price leader in many of the regions that we serve, I don’t see the price of natural gas falling substantially as you know we are in a bid of a gas hiatus right now because there was a such a story to overfill based on last year’s very mild winter. But the burn has been substantial, it has been incredibly hot in the southern part of the country where natural gas is a fuel of choice in many of the generation machines. So we like you watch that storage inventory level day to day, it can cause the price of gas to move as much as a dollar, when we look at winter prices we see the $6 and $7 and $8, when we look at early ‘07, if you’ve got a reasonable heating demand season in the greater east cost and upper mid west. Gas prices could get very hefty. If they so, I would expect electric prices not to go lock step, but to follow. So when we look at ‘07, Brian and his team will tie down any price that we think is reasonable and leave anything else float and will take it as it comes. But as you know, our primary business is to make sure that we put those Gigawatt-hours to our retail customers and the ever-growing Municipal co up market that we see. When you see as continue to move in that space, you can -- you can read into that, that we believe the returns on the megawatts sold into that market are very strong and better than we would get in the day to day short-term market. We always love months like July, but they don’t come every year. David Frank - Pequot Capital: Okay, and I had another question on Ohio just may be, you could give us an update if there is one on for your thoughts on another RSP, I mean, is that -- will there be a move this year do you think towards crafting next set of rate stabilization plans for Ohio companies this year’s still too early as in next year event do you think or do you have any update for us there?

Yeah, David, I guess I would tell you that if you are going to do something, that would extend the RSP, the sooner you get about the discussions, the better as you know there are diversion views among the two largest utilities here in Ohio. Duke, Ohio is involved in those conversations as we all try to needle through what might make sense DPL to a lesser degree. The legislative branch of the Government is crystal clear when they us please don’t bring us a Marylyn and we will try to see if there is a way not to do that, but we should never loose sight of what the law in Ohio is. The law in Ohio says that on January 1 2009, our generation fleet, or this generation fleet synergies or excuse me, Duke, Ohio’s generation fleet and DPL’s fleet can go to market, and that’s the law. As you have heard us saying many times before, we would like to find a reasonable answer if we can, if not that’s the law. David Frank - Pequot Capital: Okay. Have a good luck for the rest of the year.

Thanks so much.

The next one is a line with Craig Shere with Calyon Securities, please go ahead. Craig Shere - Calyon Securities: Hi. How are you all doing today?

Good.

Well, thanks. Craig Shere - Calyon Securities: Susan, can you quantify what exactly the impact of whether say versus normal would have been in 2Q and is incorporated in your changing guidance?

The, more we saw with respect to 2Q was a negative $0.01 cent versus Normal. That’s overall all across the company and the negative $0.02 versus prior a year with respect to the east, where it was heavily concentrated and it was about $0.035 cents, so that you can get it on average. If with respect to the rest of the year we continue to -- what we do is we will embed the actual affects that we have for the first six months and then we assume normal weather for rest of the year. Craig Shere - Calyon Securities: So we are just still praying for hard weathers so we can sell comfort to our customers, great.

Okay, but -- but the actual effect and, so it’s a net positive including the July weather for the entire year so far, that you saying. Craig Shere - Calyon Securities: Well, I don’t know that the July has been that strong. We -- we don’t really have, you know, we obviously we know what send out has been, but we do not know on an overall system wide basis whether weather has caught up or not, but it’s Suzan’s point. When we look at the guidance change that we are hearing with today that’s based on normal weather for the last half of the year, because we already know what the weather was for the first half anytime it’s better than that, that just help us get to the upper end of the range if possible. If it’s worst than that they will be at the lower end of the range.

Okay, this is not much big than for -- for in other facts of weather versus normal for the entire year in your guidance. Craig Shere - Calyon Securities: Absolutely not. We always forecast on normal weather and again you’ve heard me say this before when things are strong you will see ONM spending go up. When things are weak in the, in the weather world you’ll see ONM spending get very frugal.

The only thing I would add Craig is that the positive trends that we saw in July were certainly part of the judgment we exercised in looking at wholesale sales margins and having confidence around the rest of the year, we just don’t attempt to quantify any weather variations.

That’s which we are going to apply because the July experiences on our system sale are over with for the most part, but we haven’t looked at weather on the retail site. Craig Shere - Calyon Securities: Okay, great and remind me what is the negative driver for investments in the second half?

Well, we continue to have, we continue on the Dow plant and we continue not only to service the interest cost on that investment issues and around $0.03 of the share, but we also have additional operating losses around $0.02 of the shares, so those is really the major drivers on the investment side. Craig Shere - Calyon Securities: Okay, great. I appreciate the reminder. On Paul’s question, when we started talking about a mission credit sales, I understand that what the plans down our maintenance in the Q2 that you know, you may generated less than have more mission credit for sale so may be that’s all if that then you will take advantage of it during the course of the year, but is that just a temporary issue or how should we thinking about this ‘07 and beyond? Michael Morris: Well a couple of things. The burn rate being down some of course as you have suggested some additional credits that may be available but remember that one of the goals that Bob Powers, Bill Sigmund have to continue to improve the efficiency of our plants lowering the heat rate input which means fewer tons of coal for the same or greater Megawatt hours of production which yield the additional credits. On top of that as you know, we are now plugging in scrubbers on the system, they are performing at or better than we had forecasted that they would, which yields additional credits. So when we look at the rest of the year, we will be an opportunistic seller or monetizer of those credit tiffin when we can. Remember as well, historically that American Electric Power has always been not only a major participant in the actual auction year but in the out-year auctions as well so that as we look at our book going forward we feel very comfortable with the amount of credits that we have in hand the performance of the FGDs and scrubbers that we put on the system, or SVR’s that we put on the system, so that we see no reason not to be able to have that as an additional earnings optimization opportunity as we look at ‘07 and beyond, but we don’t ever want to oversell that because we are in, what we think as a very important position, but if we need to run our plans more overly more credits for our own needs and there won’t be that much to out into the market place, so we constantly look at that and constantly try to move in the most opportune times and I think you know from our first quarter data with you, we led the league in opportunistic monatization of credits in Q1. Craig Shere - Calyon Securities: Mike, I understand yeah, because of these initiatives your lowing an increasingly lowing credits so these sales should continue with credits have been fallen so much in price but many companies kind of in your position with having put on control equipment they are increasingly lowing credits as well. Do you have any thoughts you want to share about the pricing in that market?

I don’t think that there is any question that they are soft and they will continue to be soft as we see their performance going forward. And again that’s why as we look at our years and we look at the opportunities have put those credits into the market or burn them our selves, It’s all built into the price of power and the results that we might get by turning the credit into an electron versus, turning the credit into a dollar. Craig Shere - Calyon Securities: Great, and last question, Mike I know that you are not going to give us seven guidance, but you all have issue previously long term you know, earnings through out guidance and what you think you could achieve. And it seems like we are getting a little more attraction and a little more certainty on the regulatory front, if we assume the continuation of that and the successful pursuit of ITCC’s in both Ohio and West Virginia and I know that’s in the function, what you been in the position of increasing that guidance and when would you feel comfortable giving any adjustment for long term guidance?

I think it’s safe to say Craig that we will continue to look at that as you know form the many meetings we have all had together capital invested in a regulated utility, which is what we are for the most part, yields earnings growth potential if it’s treated appropriately in the regulatory arena. To your point, we have seen near term success. It’s critically important that our team continue to build those relationships stay in and day out with the in state financial regulator. As I mentioned at the top of this discussion the decision that the FERC can and should make as it pertains to the regional rate design as it pertains to our incredibly important transmission grid. Now there, it’s impossible not to say that there is an upside in American Electric Power. However, it will be wrong for us to forecast more robust than the numbers we put in front of you. But we hope to continue to look at that and as we get closer and closer to process on that we’ll try to share that data with you. I see some of these as a replay of my days in New England where Northeast utilities today rightfully so, because of the hard work that Chuck Shivery and the team have done are beginning to reap the rewards of the huge transmission capital investment that they have in front of them are well underway. So as we get nearer to that it’s going to be safe to build that in but it would be wrong to tell you that today. Craig Shere - Calyon Securities: On transmission, your proposed transmission project in the Northeast, do you think that and Allegheny can both be done?

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Craig, are you still with us? Craig Shere - Calyon Securities: Oh yeah, I’m back.

Okay great. I think -- well go ahead, ask the question again because I want to assure you there was not a problem all this year in Columbus. This is the phone company not the electric company. Well go ahead with your question please. Craig Shere - Calyon Securities: Since you brought up the transmission investments you’ve got a large project you know, propose longer term for the Northeast you are on. You know, do you think that project is out of yours or Allegheny’s or how should we think about these different proposals for transmission congestion relief going into turn?

Okay, great. I will tell you that as much as I like Paul, that project is ours, he is a great follower, he is putting an application that would actually substantiate our 765 line and compliment the way the power will flow through that region. As you know earlier in the week or I guess last week the FERC gave us the incentive not that we were looking for again Allegheny first came in and said we should get those incentives then once they feel that we were bound to give them they went in and got them so I give Paul credit again for being a great follower. As it pertains to the project itself, we are very much intrigued and waiting for the department of energies, the National Corridor Designation, extremely comfortable that this will be among those that isn’t moving as quickly as we would like it, but I’d tell you that Kevin Kolevar and Clay Sell, and Secretary Bodman are surely taking care of their EP 2005 responsibilities and we will see those designations before the end of the year. I fully expect that we will be part of that corridor designation. We now then wait only for the determination by the PJM RTO that ours qualifies as an economic project because it will relieve as you know, at least as we forecast something on the order of a billion dollars with congestion in the PJM. And all you really have to do is see the constructive impact that Jacksons Ferry-Wyoming has said on power flowing west to east to realize how important this project is so we feel comfortable as you know that 20 -- 13 -- 14 service date, it goes back to the future of what AEP continues to be and hopefully will be as we build out this potential capital expenditure program that we are surely well in the midst of. Craig Shere - Calyon Securities: So two lines is too much and yours will be built?

Actually the 500 KV line that the Allegheny brought out is a big complimentary to the way that power flows in that part of the state, so I wouldn’t say that two lines is too many. But remember again, I know it’s always amazing when we talk about a $3 billion transmission project, but its going to move billions of kilowatt hours and the per kilowatt hour fee for that kind of a capital investment is usually in mills not in the pennies. So there is room in the overall transmission grid for that kind of expansion of the system and if you really are after this notion of open competition what an enhancement of the grid gives you is the ability for all power plants to compete against each other no matter what their fuel source is. It gives power plants a change to compete against demand side management, it gives renewable and opportunity to get on the system. If you think that the state of Pennsylvania and Governor Rendell’s desire to expand wind capacity in that state, that project what we call the I765 will give him an (inaudible) just like he would in the highway system and that energy will be able to get to market in a very cost-effective way so you can tell we are bullish on our project, we think its exactly the right thing to do and we think that the FERC will see its way to approve it and PJM hopefully will designated as economic project if we can deal with the environmental challenges along the right of way we’ll be in business. Craig Shere - Calyon Securities: Right, thank you.

You bet, thank you.

And we have question from the line of Ashar Khan with SAC Capital, please go ahead. Ashar Khan - SAC Capital: Good morning.

Good morning Ashar. Ashar Khan - SAC Capital: How are you doing? Well most of my questions had been answered, but I just wanted to –- just a small tidbits – shall we look at the transmission in ’07? Susan, the way I look at the numbers, the negative in ‘07 would be around $50 million pre-tax just looking as how the quarters that have come in from Q1 to Q2. Is that a fair number approximately?

Tell me how you are getting it? Ashar Khan - SAC Capital: Well I’m getting that in transmission revenues you were pretty much the same Q1, Q1 this year and then there was a $50 million discrepancy starting in Q2.

No there are several factors. Ashar Khan - SAC Capital: And taking the lag remaining going in to next year would be only around $50 million or so into next year. Is that a fair thing or no?

Yeah, we think its actually flat next year, is that what you are saying? Ashar Khan - SAC Capital: Okay its flat next year. So you wouldn’t have any more because I thought the super charge just went off –

Well let me talk a little bit about what’s going on here because there are some uncertainties. The number that you see year-to-date is not only the cessation of the seeker charge which for the a quarter is about $37 million because it didn’t happen till April and then there is another $18 million that is a provision for settlement refund so that’s clearly a one time event. Now what’s going to affect that number year to year which is why I’m not really going to give a 2007 number we have really worked it all out which is –- that it’s only flat if you assume no other regulatory change and there are many regulatory changes that could happen, one of the things that we had talked about doing of course was returning some of that money in other cases we’ve began to see some of that in both Kentucky and Ohio. We had a pending in other jurisdictions as well but we also have the possibility that all of these will be trumped by FERK action confirming the OJ decisions around regional rates which will have the effect of restoring some or all of those total revenues although under a different rate design. So I don’t think – I can’t today tell you how to model it for 2007, but I would not most importantly do not continue the provisionary year-to-year but you should also be making some assumptions about possible positive rate outcomes as a result of these activities that are going forward.

And I think we shared with you another, as I share what the impact of an appropriate rate design would be for the -- particularly the American electric power system in and as I said in my opening comments at the administrative law judges conclusions of the case just a week or two ago are extremely favorable to what we were hoping will be done not everything we want it but a very good order. And if the commission improves on that all the better, if they approve as it is we feel very comfortable about that but again Susan pointed it out to you, the negatives quarter to quarter in comparison has everything to do with seeker going away and settling the seeker case. Ashar Khan - SAC Capital: Okay and then -- Susan could you just remind me how long does the Centrica deal last, if you could just -- I guess you mentioned it in the beginning of the year or so.

Yes one more year. Ashar Khan - SAC Capital: One more year is that mean year 2007?

Yes 2007 and as we typically do will reflect that sharing positive at the beginning of the year. Ashar Khan - SAC Capital: Of 2008, right?

Of ‘07, no. Ashar Khan - SAC Capital: I mean don’t you book it in earnings the following year?

Yeah, it will be in ‘07. Ashar Khan - SAC Capital: Okay, thank you.

Sure.

Thank you, and with that I'll turn the conference back over to you for any closing comment. Julie Sloat, Vice President of Investor Relations: Thanks for joining us today. The investor relations staff is available for you for any follow-up questions. Thanks.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.