Charles Zebula – Treasurer and VP, IR Mike Morris – Chairman, President and CEO Holly Koeppel – EVP and CFO

Greg Gordon – Citi Investment Research John Kiani – Deutsche Bank Dan Eggers – Credit Suisse Paul Ridzon – KeyBanc Danielle Seitz – Seitz Research Leslie Rich – Columbia Management Michael Lapides – Goldman Sachs Anthony Crowdell – Jefferies Pallavi Madakasira – Piper Jaffray Neil Stein – Levin Capital

Ladies and gentlemen, thank you for standing by and welcome to the Fourth Quarter 2008 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer period. Instructions will be given at that time. (Operator instructions) And as a reminder, today’s conference call is being recorded. I would now like to turn the conference over to your host, Charles Zebula, Treasurer and Vice President of Investor Relations. Please go ahead.

Thank you. Good morning and thank you for joining us today to discuss AEP's 2008 fourth 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 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 aep.com. I will now turn the call over to Mike Morris, Chairman, President and CEO of AEP for opening remarks followed by our CFO Holly Koeppel who will discuss the financial results for the quarter and year. Then we will have time for your questions. Mike?

Chuck, thanks a lot for the introduction. I’m sure you’ve all had a chance to see the press release and I hope that it leaves you with the same impression that it leaves us at American Electric Power as it has done over the last number of years, had a very solid earnings results in 2008. You may remember that we tightened our forecast of earnings to $3.15 to $3.25 a share and ended up at $3.24 on an ongoing basis. The fourth quarter $0.59 per share on an ongoing basis as well. You know I always want to touch on the regulatory update because, as you know, with the capital expenditures that we’ve made over the last few years, regulatory recovery and balance treatment is very important to folks who invest in American Electric Power as are the capital investments that are made on behalf of our customers. On our slide, we’ve highlighted just a couple of interesting regulatory accomplishments that as we came into 2008 you may remember we spoke to the notion that most states were very fair and we felt comfortable, but we were a little troubled by things in Virginia and little troubled by things in Oklahoma. To our certain satisfaction, we received extremely favorable rate treatment at Appalachian Power, Virginia, in the fourth quarter of 2008, and feel very comfortable about the impacts that that will have on us in 2009 and going forward. You might remember that in the tail end of 2007 and the very first few days of 2008 we had a very devastating ice storm in Oklahoma. The Commission allowed for recovery of some $70 million of that storm cost within weeks of the actual events. That kind of regulatory treatment is just part of what led to a very, very successful regulatory year with overall rate increases of just north of $0.5 billion. In that regulatory arena as well, the Turk plant received authority from three jurisdictions in the SWEPCO family of companies, and of course we received the air permit towards the latter part of the year and we are well on our way in construction the facility going forward. We have highlighted for you back I think in 2006 our partnerships in transmission, our desire to build a transmission grid that will serve the people of this country both near and longer term, and in ’08 we had a number of joint ventures announced with projects throughout the Southwest Power Pool partners in Kansas, partners in Oklahoma, projects with our good friends at Duke Energy in Indiana as well as others we’ve talked to you about before. Lastly, when we looked at the economic environment of 2008, but for the latter part of the fourth quarter it was an outstanding year in almost anyway that you can look at the U.S. economy. Our footprint being so large and being so diverse let us come to a conclusion that the overall economic impact of 2008 left us in pretty high territory. Our overall gigawatt output was 219 billion kilowatt-hours, which actually was a bit of an uptick from what we sent out on the wires in 2007. I am not going to run from the fact that the latter part of the fourth quarter was a bit disquieting as we saw certain downticks mostly in our industrial loads. So, let me just wrap up and tell you very simply that 2008, like so many years before, was a very successful year for American Electric Power in every way that we can measure it except for the overall downtick in share prices utility-wide as well as the entire Dow Jones Utility Index. When we look at 2009, we see things that are encouraging, we see things that are of some concern. Clearly, we continue to have progress on our transmission initiatives. The PATH project continues to move forward. The FERC continues to treat that project with appropriate regulatory treatment. We are encouraged by what our friends at PJM have done. Clearly, by having a start day to 2013 rather than 2012 works well for the capital crunch that we all find ourselves in today. At a hearing, just a few weeks ago, Chairman Smitherman of the Texas Commission mentioned that he thought $1.1 billion of the (inaudible) projects should go toward our ETT partnership with MidAmerican. We feel very good about that. And we continue to see growth opportunities in transmission. As we told you many years ago, transmission projects don’t happen overnight, none of these have, and I doubt that any of them will, but they will add to our portfolio of growth capital investment over the near term. As I mentioned before, the Turk plant continues to move forward. Just this month we received approval from the Arkansas Commission for the transmission lines that will allow that energy to move to market. And of course, as you know and I am sure you are all very interested in, we feel very, very comfortable about the current activities at the DC Cook plant. As you know, all three rollers [ph] have gone through a process of trying to straighten them out. So far two out of three are done and the results are quite comfortable for us. The third one is in the process and we don’t have any reason to believe that that too won't be satisfactory. I know if you ask our folks at Cook Station they would say we’ll do everything that we can to get that plant back on line sometime late in the third quarter or early in the fourth quarter of 2009. When we look at the Ohio ESP filing and the potential outcomes, as we’ve told you before, it is currently unknowable, but we do believe that it will come out with some balance and some fairness toward our customers at Columbus Southern as well as Ohio power company and most importantly will give us a very, very good footprint moving into 2010 and 2011. We have already had some pretty serious rate treatment in a very positive way in early 2009, adjustments of tariffs from the FERC for transmission services rendered to customers across our system, a very reasonable and balanced Oklahoma rate case decision for Public Service of Oklahoma, what we think will be a very balanced and fair treatment of a proposal that’s in front of the Indiana Commission awaiting Commission’s signature, and some minor, but nonetheless important upticks in rates charged of our customers in Tennessee. Ohio has worked out reasonably well I think for Duke. It seems to be working out reasonably well for FirstEnergy, and as you know because the PUCO has decided to take them on a one-off basis, we are next in line. As we’ve told you before, we continue to be in deep dialog with many of our customers with the Commission staff and we are very comfortable that we’ll find a reasoned and logical answer for the Ohio process as well. That leaves us with some comfort to tell you that we are maintaining our earnings guidance. We know that the wedge is wider than we typically like to have it. It remains at $3.00 to $3.40 a share. Post-Ohio, we’ll try to tighten that share for you. Post-Ohio, we’ll also update you on the many things that that particular order may mean for us in 2009. The last tag line on my slide is cash flow. I can assure you that we are watching it intently as you’d expect us to do. Capital expenditure, I think you know that beginning 2008 we were at $3.7 billion. Beginning at 2009 we are at $2.5 billion. We have plenty of room and plenty of flexibility in our own capital expenditures as we have shared with you frequently. If needed to pull on that lever, we are comfortable, willing, and able to do that. That would cause for some dialog and some coordination with our in-state regulators because it’s the same group that clearly are pressured by the economy for raising rates. That also know that capital expenditures need to be made for the reliability and the demand growth that we still see on our system. Financing of our overall activities in 2009, we feel comfortable about the plan that we have in hand. We are having serious opportunities in the capital markets without a great deal of concern. We could, if we wanted, to reenter the commercial paper market. It is beginning to thaw for the A2/P2 rated companies like ours. We’ve had some success at I&M and other issuances toward the latter half of ’08 and early here in ’09. So, all-in-all, we look at ’09 and you might expect me to say that with an optimistic eye, but I hope not an unrealistic eye. Early results of January show us that send out has been solid. It’s in line with what we had forecast it to be. Clearly the off-system sales market is impacted by the cost of natural gas. The margins are anywhere near where they were. And the demand system throughout our off-system marketplace hasn’t been what it had been historically, but we’ll continue to watch that. We feel all of those things were built in to the spread that we gave you on the forecast of earnings that we thought would be available to us in 2009. With that, I’ll turn the podium over Holly Koeppel and then she and I will look forward to your questions. Thanks.

Well, thank you, Mike. I’ll briefly recap the fourth quarter performance and then the drivers on year-to-date performance. In the fourth quarter, when compared with the same quarter last year, we saw positive results as the consequences of rate relief that Mike covered just a moment ago. We also saw positive load growth and new customers contributing to increased margins. As Mike mentioned, we saw reduced off-system sales as a consequence of lower market prices, and that led to a reduction in the amount of off-system sales revenue that we share with our customers. Our margins were impacted negatively by higher fuel costs in Ohio. And on the quarter weather had no impact when compared with last year and we were slightly favorable relative to normal. Operation – off-system sales were substantially lower due to the lower market prices that Mike mentioned, as well as higher fuel costs rolling in, in the quarter. Operation and maintenance expenses were lower. As Mike mentioned, we had the PSO storm in the fourth quarter of last year, the cost of which were recovered this year. Fortunately, we did not have a major weather event of that magnitude in the fourth quarter this year. Interest expenses and dividend is higher due to longer term debt outstanding and higher interest rates on our variable rate debt. Finally, our income tax effective tax rate was slightly higher in 2008 increasing taxes. Turning to our non-utility operations, River operations had a very, very strong fourth quarter due to increased exports and improved freight rates and the Parent and Other expense was down primarily due to favorable tax adjustments in this year. Turning to the year-to-date performance, the major driver of the improvement year-on-year was rate relief, as Mike covered, over $350 million. Positive load growth contributed $74 million, and it was offset by $175 million due to higher fuel in Ohio. Weather was unfavorable year-on-year by $0.11, but relative to normal had a very minor impact of only $0.02. As you will note on line five, our off-system sales margins were lower year-on-year due to market conditions and trading activity. Operation and maintenance expenses were higher due to various costs and in particular the PSO ice storm in the fourth quarter as previously mentioned. Interest expense was also higher due to increased debt outstanding and higher interest rates on variable rate debt. Our income tax rate on the year was flat and therefore it had very modest impact on overall earnings. In total, our improvement in utility ongoing earnings was $0.30 per share. Turning to our non-utility operations, again a very, very strong performance year-on-year. River operations was down relatively modestly after having a very challenging first half of the year while Generation and Marketing more than offset the decline in our River Operations group because of a strong performance in the second half of the year. Parent and Other was down modestly due to higher interest expense offset – and lower interest income. Finally, turning to capitalization, Slide Seven, we ended the year at 62.5% debt to total cap on a GAAP basis. On a credit adjusted basis that metric is 60.7%. Our goal, as you know, is to maintain debt to cap on an adjusted basis at 60% or below. The primary driver of the uptick in the fourth quarter was an adjustment made to accumulated other comprehensive income associated with the change in pension obligations. With that, Mike, I will turn it back to you.

Thanks a lot and now, operator, to the Q&A part of the call.

(Operator instructions) And our first question comes from Greg Gordon with Citi Investment Research. Please go ahead. Greg Gordon – Citi Investment Research: Yes, can you talk about sort of the range of potential financing needs as it pertains to the equity for 2009? I know there is some concern especially given the statements by the rating agencies lately regarding what their response would be to one negative out in Ohio vis-à-vis you might need to modify your position on equity.

Well, Greg, I think it’s pretty safe to say that much of what the financial plan for the year is dependant on what happens in Ohio. We don’t share the rating agencies’ view of the potential for a negative outcome in Ohio. We think that, again, as I mentioned in my comments, that it will be reasonable. When we look at our overall financing plan, as you have heard us say many times before, we’ll look at every one of the tools and every one of the levers that may be available to us. If equity issuance is something that we feel comfortable in doing, we would do that with an eye toward the impact on the existing shareholder. But nothing that would be too dramatic or too reactive. The comments that Moody’s made in their evaluations reaffirming where they stand on Columbus Southern is logical. The calculations at Ohio Power speak for themselves and their determination there too was logical. But a two-notch downtick because of a really draconian ruling out of Ohio I think is an interesting view of the world, but not an accurate view of the world. Greg Gordon – Citi Investment Research: So, if the Ohio PUC were to give you a reasonable opportunity to recover fuel costs through approval of an ESP, do you think that would put you in a position to be within your current plan and not have to change your financing outlook?

First off, I would argue that a dollar-for-dollar recovery of fuel cost is probably a given. That’s exactly what they gave FE, that’s exactly what they gave Duke. I can't imagine that they won't give that to the Ohio operating companies. So, the overall piece beyond that, however, is what they allow in the ESP for other upticks in revenue requirements because of the cost associated with capital invested on the system done [ph] over the years. Again, I have no reason to believe that there is any vibration at the PUCO and the executive office for a punishment directed toward Ohio. So, I just don’t see a really draconian order coming out of there. And as we have said before, what we intend to do, and it would be premature to do is to update not only the $3.00 to $3.40 range on forecasted earnings, but to update you as best we can with the proposals that we would go forward with then for making certain we had adequate capital to finance those market or the capital expenditures that we’ve got. I think it’s equally clear and I think the facts speak probably to this, a year ago, as I mentioned, we had a CapEx requirement of $3.7 billion, we throttled that back to $2.5 billion. I assure you, we could throttle that back more if we needed to, but I would want to explain that to the regulators as to what it would do and what it would mean. So, our plans are somewhat in a state of flux, but by mid-late February we ought to have a very solid feeling for where we go. As you can imagine and I think you know, we have been in conversations, as I mentioned with customers – with the staff and with others, here in Ohio. They have chosen to get them done one-off. They are close to being done, I think with FE, but FE is a better person to ask of that. Once they are done there, I can assure you it will be rapid. Remember, we file because we had to file for our tariffs to continue beyond December 28th of 2008 and asked for an extension through January, they provided an extension through February. I think you can read to that that they presume they will have (inaudible) done by February and that would be fine with us. Greg Gordon – Citi Investment Research: Thank you very much.

Yes, thanks, Greg.

Our next question comes from John Kiani from Deutsche Bank. Please go ahead. John Kiani – Deutsche Bank: Good morning.

Good morning, John. John Kiani – Deutsche Bank: Good morning. On Slide 16 of you presentation from today, the green bar that shows cash flow from operations for 2009 looks like it’s about 2.5 – 2 billion or so and then in the last presentation I found from you all in mid-December that figure was about $200 million higher, it was about $2.7 billion. Can you talk about what the drivers of that change were, please?

Yes, John, at a very high level, we are seeing capital – additional requirements for working capital that are really tying up some of the cash from operations that we would otherwise seek, predominantly related to deferred fuel cost and more capital tied up in the coal piles. John Kiani – Deutsche Bank: Okay, so that’s something you would expect to see normalize over time or is that more of a run rate expectation for you are going to have tied up?

I think for the year of ’09 it’s probably a run rate. We will have additional working capital tied up. Because of the cyclical nature of not only the fuel cost, but how we turn the coal pile and in light of increasing coal costs. John Kiani – Deutsche Bank: Got you. Okay. And then on Slide 10, can you talk a little bit about where the business interruption insurance proceeds show up?

Sure, sure, they are going to show up in your line one East regulated integrated utilities and I believe partially will show up as a reduction in your operation and maintenance expenses. John Kiani – Deutsche Bank: Okay.

Most importantly, John, they are showing up at the bank as they should.

And if not, in your – in a reduction to expense it would be another operating revenue, John, I am not sure if it’s in seven or nine, so part of it’s in margin, up in line one and the balance will be in either lines seven or nine.

And remember, it’s our intent to make sure that we hold the I&M customers flat on fuel cost for the change in the generation mix that they are seeing. John Kiani – Deutsche Bank: Understand. And then one other question is as far as off-system sales are concerned for 2009, can you talk a little bit about how hedged you are and what your assumption is for either power prices or natural gas prices for the unhedged portion?

We are about 40% hedged and we feel comfortable with that because many of those commitments were made when gas prices were higher and therefore electric prices were higher and we feel good about that. I must tell you, going forward, that the fundamentals would tell you that gas prices should be higher than they are. It isn’t happening. I expect gas prices will be under pressure all year. And therefore margins and off-system sales will be under pressure all year. But again, I want you and the others on the phone to understand that we’ve surely built a lot of that into our range of forecasted earnings for 2009. We didn’t come into this as we have ever done before believing that some great upside would yield great results for us. We’ve always tried to be conservative about this. I think Barbara Radous and the commercial operations people would say that we were conservative, maybe not as conservative as she would like to be, but nonetheless conservative. John Kiani – Deutsche Bank: Would you say that the level of conservatism on the open position is in line with where the forwards have gone or is a little bit better than or a little bit worse than the forwards.

Given the multiple choice I’d take in line. John Kiani – Deutsche Bank: Okay.

Alright? John Kiani – Deutsche Bank: Thanks, Mike.

Yes, you bet, John.

Our next question comes from Dan Eggers with Credit Suisse. Please go ahead. Dan Eggers – Credit Suisse: Hey, good morning.

Good morning, Dan. Dan Eggers – Credit Suisse: Mike, you made a reference to the fact that you are seeing more customer slowdown in the second half of the fourth quarter. I was wondering if you could just share some more comments on kind of between customer classes or between geographies where you guys were seeing decay and is that continuing in January or was that just kind of a December holiday season split [ph] type of event?

Well, that’s a great question, Dan. It’s clear that we are beginning to see and continue to see announcements by our industrial customers that they will be lowering the output of their products as the recession or the current economic conditions send them very negative symbols or signals, I should say. However, I would tell you that when we look at January output, we are very much in line, actually about what we did in ’07, and very much in line with what we have planned through our mid-month numbers. But, clearly industrial will be off, commercial looks flat to slightly up, but we are also seeing a lot of commercial folks. So, if you look at today’s journal, there is all kinds of Starbucks and others being closed. And you think of our footprint we must serve 40 or 50 Circuit City stores in the 11 states that we do business. Just think of our footprints, we are touched by that. But having said that, pockets of the footprint continue to do well and in that regard. And remember, most of our industrial customers have very small margins and pay a great deal of their energy bill on their utilizations based on the peak send-outs that trail 12 months behind. So, we’ll see some downtick there, but revenues should be decent, but impacted. We set an all-time peak in Appalachian two weeks ago for winter send-outs. So, it’s still too early for me to give you much comfort of where we think ’09 total year output will be. It clearly will not be as robust as the 219 billion kilowatt hours in ’08, we don’t think. Dan Eggers – Credit Suisse: What – I guess my – sorry.

Well, I was just going to say as you know the highest margins of course come on residential, commercial, and those seem to be doing very well. Go ahead, Dan. Dan Eggers – Credit Suisse: What – along those lines, kind of what is the thought process, what’s the band of tolerance around an economic recovery in ’09 the guidance and others, the Ohio caveat of how things will go, but isolating that piece is it – do you comfort that the volumes were down system-wide 2%-2.5% that reasonably you would still be within the guidance range?

Oh, absolutely. You know, remember because of the footprint we are slow to see recessions. Unfortunately, we are slow to come out of any other side. In fat, it’s around walk around knowledge that we – our industrial load never came out of the last recession. Whether that’s true or not is open to debate among my colleagues, but we’ll still be we think well within our guidance range. Dan Eggers – Credit Suisse: Okay. And then I guess, Mike, if you could just talk a little bit about some of the transmission opportunities out there? You guys made the announcements for the Great Plains states. Any kind of what you are seeing out there and with the stimulus package and what’s going on in D.C., what’s kind of opportunities and involvement you guys have right now?

Well, as you can imagine, we are deeply involved with the current discussions in Washington over the notion that – that we believe at American Electric Power and my colleagues who are in that – into the business that we do need stimulus bailout pack [ph] money to go forward and finance these projects. The whole notion of allocating costs and getting a federal authority to build the systems are the critical points that have to come to pass. And if you think in terms of the more traditional rate making concept of beneficiary pays, you almost immediately stop any of the alternate energy programs to be built that are so desirous and embraced by this administration and many in the renewable portfolio standard community. So, our current conversations with Senator Benjamin [ph] and others lead us to believe that the county might well have an RPS standard sometime 2009, but if it really is going to be meaningful and accomplishable, it will have to have some kind of a federal transmission play associated with it. The monies that were given to the federal power transmission companies really are for one-off projects and don’t accomplish much other than helping them build out things that they either should have built out or just simply didn’t have the capital built out before. I do worry about the notion of the government wanting to take this whole thing over. I would think that’s a terrible place for them to put their money. But government is government. I have been around long enough to know they frequently do things that are illogical. But it will be on the real issue with the transmission projects and we said this in ’06 when we first announced the whole concept, they take forever, and FERC authority would truncate a great deal of that going forward and FERC has been very good about returns on equity, very good about approving projects. We are very much in support of the concept of enhanced returns on equity being predicated on technological advances. We think that plays immediately to American Electric Power’s strong suite [ph]. We just need to have them to that cost allocation piece in the federal oversight and I really think that that’s – the time is right. My good friend Boone Pickens has spent a lot of his money and I thank him for that raising people’s awareness of the significance of what an inter-state grid could do. Dan Eggers – Credit Suisse: Do you see a pickup on a federal siding [ph] your going to FERC, do you see that coming out of Congress this year?

I do and I think it will be tied to the renewable portfolio issue, but it will not be just for renewal – but again, it will be very short-sighted to make it just for renewables. Dan Eggers – Credit Suisse: Great, thank you very much.

You bet, and thanks for the question, Dan.

Our next question comes from Paul Ridzon with KeyBanc. Please go ahead.

Good morning, Paul. Paul Ridzon – KeyBanc: I had a question about MEMCO put up a pretty solid quarter and just wondering how sticky these trends could be?

You ask the same questions that I ask of the MEMCO team. We were – we are really quite impressed with the recovery and it had a lot to do with a number of other people drawing out of river transportation when a number of smaller operations simply are folding up shop. So, if you look at our ’09 forecast, we show MEMCO being flat year-to-year, but if those kinds of rates and particularly those kinds of volumes hold up there may be another potential uptick, and again it would keep us well within the range that we’ve shared with you. We are encouraged by being in that space. I think again, our team has done an excellent job of blending not only the transport of our own fuel in a very rational and cost effective way but then utilizing capacities for moving what would have been empty barges up river, just simply has turned out to be a very good business model for us, and we feel comfortable about that. But it would be wrong for me to say take fourth quarter ’08 multiply by four, and that looks like a great MEMCO year, that would just be an over statement of the potential. We continue to move forward, as you might expect, with considerably more Powder River Basin blending of fuels into our Eastern fleet. Again, having MEMCO in the river operations inside of our portfolio of control allows us to do that in a much more cost effective way than I am sure some of my colleagues see. Paul Ridzon – KeyBanc: We had a lot of capacity come out of the barge market given really robust scrap prices. Now that deal has – in a downturn, are people adding capacity back into the barge market at this point?

I think that the current capital crunch is causing people who would love to do that to not being able to do that. So we aren’t seeing a great deal of that. We, of course, had added to our fleet last year, and will add to it a little less this year, but nonetheless add to it, because we think that continues to give us a strong revenue advantage. Paul Ridzon – KeyBanc: And then what’s the status of the draw [ph], have you paid that back or is that still outstanding?

Still outstanding. Paul Ridzon – KeyBanc: And then obviously equity garnered a lot of attention this year. Can you just go beyond ’09 and talk about kind of what the financing plans look like?

Well, as Mike mentioned earlier, we have a number of levers to pull. Once we see the outcome in Ohio, we plan to balance expected cash flow from operations with the capital required to run the business and all other known changes in both cost and cash flow and come up with a balanced plan that takes into consideration the needs of the customers, the will of the regulators, then the objective of enhancing shareholder value. So, we will look at the whole portfolio and come back with the most balanced recommendation. Paul Ridzon – KeyBanc: Okay, thank you.

Our next question is from Danielle Seitz from Seitz Research. Please go ahead. Danielle Seitz – Seitz Research: Thank you. I just was wondering – do you – what type of rate relief you are assuming for 2009 in your forecast and also is the $2.5 billion of CapEx the kind of number that we should for 2010 or at this point there is no way of knowing it?

Thanks for the question, (inaudible) Danielle, but we won't take it. $2.5 billion is probably a reasonable way for us to go forward, but as I said in my comments, the capital expenditures on the system are really predicated on an understanding and the support by the rate regulator that were doing the right thing at the right time for the right reasons. We continue to push for and have some success with trackers and riders and other activities that gives you a more realistic cash flow to match the capital expenditures. We are in the process, as are many of my colleagues in the business, of trying to carry forward to the regulator the notion that in a more capital available environment the utility being the local bank for the customers was a viable undertaking, but in today’s capital constrained marketplace that simply is not sustainable. So what you see in Texas, for instance was tremendously aggressive and a project that we support that we support very, very strongly going to the upgraded meter reading systems as they are doing throughout the state. All of us, all Texas utilities went to the Commission and said we need a better cash tracking machine to buy the meters and put them in place a la California, which did some pre-funding. If you see the capital expenditure for power production facilities in the Southeast, they are going forward very aggressively in states that have addressed that upfront issue and I think you’ll see more of that. So, when we look at $2.5 billion, we could easily spend $3 billion. We wouldn’t be wasting a dollar of capital. We’d be putting every dollar at good advantage for our customers, but it will have a lot to do with how the regulators sees those investments and how current the recovery of cash expended would be. I’ll let Holly speak to the ’09 rate activity.

Well, Danielle, we really haven’t given an indication of the total amount in the year, but it’s coming from what Mike reviewed earlier. As you know, we had a number of regulatory successes in the latter half of last year. And if we look at the impact on this year’s margin when compared to last year, because we haven’t had a full 12 months of those rate increases, we are up already if we assume approval of the cases we have pending before the Commission at I&M. We are looking at over $300 million of increased rate relief on an annualized margin basis already this year.

And that’s of course without Ohio.

Yes, without Ohio, Mike. Danielle Seitz – Seitz Research: Great. Just one last quick one. The sharp decline in off-system sales, do you actually view that mostly to the economy or just opportunities in terms of weather, et cetera.

Well I think it had lot to do with the downtick in the economy. It also had a lot to do with gas prices falling as they did because some of our production, which would have normally gone to those markets simply didn’t. Danielle Seitz – Seitz Research: So, it’s not just the economy. There are other issues there.

Yes, clearly the multiplier of gas produced electricity as compared to some of our higher cost coal stations put some of our stations on the ‘love to have you, but don’t need you today.’ Danielle Seitz – Seitz Research: Great, thank you.

Yes, you bet, Danielle, thank you.

Our next question is from Leslie Rich from Columbia Management. Please go ahead. Leslie Rich – Columbia Management: Hi, I wondered if you could walk through your big transmission projects and just give a sense of timeline, what kinds of approvals are we anticipating? What monies will be actually spent in 2009, ’10, ’11? I know you said it takes a long time, but you’ve gotten several projects that have been under development for quite a while, so just trying to figure out what the next signposts will be?

Yes, well, okay, that’s fine, Leslie. Clearly there is very little capital invested in 2009 on any of the projects. The projects in Texas are probably further along than most. As you know, a number of us are waiting for cris [ph] results and the actual order that will allow us to get going on that, and as you know as well, in Texas once given the authority to go you have all of the imminent domain rights that you would need, buying rights of way in Texas, because it is an energy rich state or usually a less complemented than other parts of the country. PATH is moving along. We think the SPP projects may go more rapidly because there is a great interest, as you know in Kansas, the Kansas legislature as well as the regulator has spoken about how quickly they would like to see some of those projects built [ph]. When I look at ’09 though I don’t see a great deal of capital being required. In 2010, you will begin to see capital clearly for the ETT projects, probably for one of the project with OG&E and Westar and in the SPP. I think that Duke Indiana thing will lay over a while. Clearly, one that we’ve talked about far too long, the projects in Michigan with ITC are way in the future as well. You begin to see serious money spent on PATH as we get into the latter half of the three-year cycle you mentioned, probably the latter of ’10 and clearly in ’11. So, I know that’s not may be as specific as you would like to see it, but I think that’s a pretty good view of it. Leslie Rich – Columbia Management: That’s good. That gives me a timeline and an order of which projects to be focusing on. Thank you.

Good. Well, thanks.

(Operator instructions) And our next question is from Michael Lapides from Goldman Sachs. Please go ahead. Michael Lapides – Goldman Sachs: Hey, guys. Congratulations on a good quarter. Quick question, can you given an update regarding the litigation or the dispute down in Arkansas regarding the environmental permits to the Turk plant? And kind of what the path is for getting this resolved?

Certainly, Michael. Thanks again for the comment. We really do feel not only we have a solid quarter, we had pretty solid year and obviously we are hoping the same for ’09 with whatever the economy yields for us. The issue at the Turk station is an appeal of the air permit. It’s in the process. Briefs have been filed. It is on a very expedited path and we have no reason to believe that we won't be successful in that regard. As you know, there was an early go and the request for a stay, which was not granted. We took that as a positive that the court was going to view this in a quick fashion and the day that they said we could move forward because the stay gets lifted according to the legal requirements of the filing that they made, we were back in the field. So, we are in construction without question. And we continue to believe that that will continue unabated. So, timeline, I can't give you a real good handle on the timeline, but surely will have an answer to that issue we would hope early this year. Michael Lapides – Goldman Sachs: Got it. Okay, just last question. You may have touched on this and I apologize if I missed it. When you think about off-systems sales volumes for next year, how is it different from ’08 levels?

For next year, you mean for this year? Michael Lapides – Goldman Sachs: Yes, for ’09, I’m sorry.

I have just (inaudible) looking at my crystal ball and 2010 and I tell you it’s pretty foggy right now. Volumetrically I think we ticked it down as well. And we can follow up with more granularity on that. But the more important point is our view of off-systems sales revenue and off-systems sales volumes and the sharing of that revenue, which is required in many jurisdictions, is all built in to the $3.00-$3.40 range that we’ve given you for forecasted earnings in 2009.

Michael, you should expect us to come out with those details, that level of granularity once we refine guidance post Ohio. Michael Lapides – Goldman Sachs: Got it, okay. Thank you.

Our next question comes from Anthony Crowdell with Jefferies. Please go ahead. Anthony Crowdell – Jefferies: Hi, good morning. I just want to follow up I guess on a comment that came from one of Danielle’s questions. Mike, did you say that with low gas prices, gas plants are displacing some of your coal plants, and although you’d want to operate them you are not being called to operate or did I just completely misunderstand it?

No, Anthony, you got it right. Current gas prices – and again, you are looking at our 200 megawatt coal plant, you are looking at the top of the stack. I know you all know how the pool works. The most cost effective plants go to the retail customers and then everything we sell off-system simply follows the stack up. When you look at demand cycles with gas prices of $7 and $8 NM [ph] in 2008, every plant we had ran. When you look at gas prices at $4 and $3 NM the gas plants are more effective – cost effective than are our co-plants.

And the important thing to take into consideration as you can't just look at an average, typically the units that are on the margin are not only the smaller units, they also, in some instances, have relatively more expensive more expensive coal contracts, squeezing the spark spread further, but most importantly there often are highest emitting units and we dispatch assuming a cost of SO2 and NOx. And so it’s the higher cost units for fuel, the least efficient units, because of size and typically the highest emitting of SO2 and NOx, not retrofitted.

Well, I might add, Holly used to run commercial operations. Anthony Crowdell – Jefferies: Is this mostly you are seeing these plants in – is there any particular region where you are seeing your coal plants be – gas being dispatched before coal or could you give us like roughly just a – what are the heat rates, are these just really like coal plants that are just pegged like 12,000 heat rates that are being dispatched or is it 10,000 heat rate coal.

Boy, if I said that we’ve got some gas plants that means some coal plants that are pegged at 12,000 Btu’s, my ancestors would come from the grave and grab me – they are 10,000 kind of Btu plants. They still are very efficient and very effective and frequently a few – again, you look back at two weeks ago on the AEP system, we ran everything we had because we needed it for our retail demand. We didn’t have megawatts to put in the off-system market even if they had called on it. So, it’s a combination of those and I can't give you geography other than to tell you that this is mostly in the Eastern pool, obviously. And you’ll remember, as Chuck used to always cry about how much coal costs, some of the plants have very unique boilers and therefore very unique recipes for fuel supply. And those are at the higher end of the stack. It’s just that simple. Anthony Crowdell – Jefferies: Great. Thank you very much.

You’re welcome.

Our next question is from Pallavi Madakasira with Piper Jaffray. Please go ahead. Pallavi Madakasira – Piper Jaffray: Hi, I just had one really quick question. Would you be able to comment on AEP’s smart grid initiatives and how much of your CapEx plan for 2009 will be used for deployment or initiation into the smart grid meter?

Well I’ll surely talk about it. The easiest answer to your ’09 question is it will be very little. The Indiana deployment of about 10,000 meters is part of it. We have part of it built into Ohio for a section Northeast of Columbus, but we are waiting for the approvals there. Again, this is a very important point on cash flows matching the deployment of the technology. But remember, our grid smart program is much broader than that. It has a lot to do with upticking the efficiency of the generation station, adding the intellectual capacity to the substation, transferring from lower voltage to higher voltage, better efficiencies along the transmission energy delivery grid, stepping down again with better efficiencies on the distribution grid and then into the house. As you know, we’ve partnered up with IBM, we’ve partnered up with General Electric, and we are very deeply involved in deploying grid smart as we see it, which is the totality of the generated kilowatt hour to the point where that kilowatt hour is put to great economic use in the household, the commercial operation or the industrial operation and we continue to work on that. Huge capital demand in ’09? No. But going forward, because we think that energy efficiency model will be exactly where this country should go, we think that it’s another space where American Electric Power has an opportunity to lead and make a huge difference. And if I’ve got my story lines right, if you happen to watch the Super Bowl and you see some great GE ads that they paid for, look for our name, which we didn’t pay for. Pallavi Madakasira – Piper Jaffray: Alright, thank you.

You bet.

And we have a followup question from Michael Lapides from Goldman Sachs. Please go ahead. Michael Lapides – Goldman Sachs: Hey guys. Holly, real quickly, what do you expect as cash contributions and in the pension for the next few years, not really the earnings impact, but just cash?

The cash side of it, nothing in ’09, Michael. Obviously, we are waiting the final verdict from the actuaries. But it looks like we are good for ’09. In ’10, the number is yet to be determined, but it will be substantial. It will be in hundreds of millions, I would say, in the range of 300 is a reasonable planning tool. Michael Lapides – Goldman Sachs: Okay. Thank you.

Then, Michael, I would just add to that. It’s truly great for me to be able to put a finer point on Holly’s answer, for once, but any rate, through our involvement with a number of Washington active organizations, there will be a very, very long and meaningful discussion on the entire Pension Protection Act and how people need to fund going forward. So Holly gave you a very accurate number as to what we think might be the issue for us in 2010, but I think there is a high likelihood that there will be some addendums that will allow for a longer period of time for funding. And much of it has to do with what the market might do in ’09 and might do in 2010, which could surprise either negative or positive, but believe me we are in great shape in the utility space in pension funding, and great shape in corporate America space in pension funding. So, we will join in the endeavors. In fact, we signed on a letter from National Association of Manufacturers, signed on a letter from the business round table, signed on a letter from the U.S. chamber. It’s a very critical issue that Congress is going to have to take up. So, again, Holly’s answer is granularly correct, but I would tell you that politicians are going to weigh in on this before many segments of not only corporate America, but public America cities and states and counties are faced with a law that they just simply can't comply with. Michael Lapides – Goldman Sachs: Okay. Thank you, Mike, thanks, Holly.

And our final question comes from Brendan Naeve with Levin Capital. Please go ahead. Neil Stein – Levin Capital: Yes, hi, it’s actually Neil Stein, could you hear me?

Yes, Neil, how are you? Neil Stein – Levin Capital: Okay. Just had a question on Slide 16. It looks like you have planned debt issuance one of the (inaudible) million for ’09 versus the (inaudible). I just want to understand, I think the operating cash went down a little bit, it was what you are forecasting and just want to understand what’s behind that?

Well, we were afraid someone was going to have those EEI slides, Neil, so – I am only kidding, Holly is more than prepared to answer.

It’s really back to that comment I made about capital tied up both in deferred fuel cost recovery and in increased cost on the coal piles. Working capital is going up because coal prices have gone up, and as you know we maintain bottom and supply of inventory. So more capital is tied up there. and we have larger fuel cost deferrals because we are going to get that back from customers. More capital is tied up there. That’s the vast majority, essentially all the difference, Neil. Neil Stein – Levin Capital: But the numbers changed since EEI and fuel costs generally have come down since then?

Not for us, Neil. As you know, we have been below market consistently. We are still below market. And over time, we’ll move towards market. The market has come in that were still below the point to which it has come in. We are expecting a fuel cost increase next year, well, actually this year, ’09 – Mike’s always catching me on that – ’09 of 15% and so as we see costs going up, we’ll have more capital tied up in the coal piles and fuel cost deferrals will go up proportionately.

And I think that’s a really interesting point, Neil, because, yes market prices are coming down, but because we’ve been so far below market prices as our contracts mature year-over-year you are seeing a slow tick up in our cost of coal. That’s why we are lending more and more PRB in some of the Eastern plants too. We are trying to make sure that we put a cap on that uptick as best as we can although recovered from the customers we just think that’s the right thing to do for them and for us. Neil Stein – Levin Capital: Okay, thank you very much.

You bet, and thank you.

And that was our final question.

Okay, thank you very much.

Yes, we’d like to thank you again for your participation today. As always, our IR team will be available to answer any additional questions you may have. Anna, would you please give the audience the replay instructions?

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