Saying that “corporate separation is our highest priority,”American Electric Power’s CEO E. Linn Draper announced last weekthat the company is undergoing a restructuring, and will place morefocus on its U.S. wholesale power generation, marketing and tradingbusinesses. It also will scrap previously announced plans to expandits overseas markets.

“Our focus for growth moving forward, plain and simple, will bethe wholesale business – generation and related energy assets,wholesale marketing and trading,” said Draper. AEP is one of thelargest U.S. power generators, supplying electricity to nearly 4.8million customers in 11 states.

AEP filed last week with the Securities and Exchange Commissionto form two wholly owned companies. The restructuring is scheduledto be completed by the end of 2001. One company will contain AEP’sutility power generation and non-utility units whose revenues stemfrom market-based operations. The second company will include AEP’sregulated domestic and overseas utility subsidiaries, including twoutilities in the United Kingdom and one in Australia.

The company owns more than 38,000 MW of generation, and nearly25,000 MW of it will be in deregulated U.S. markets by 2001, hesaid. AEP’s wholesale and trading group will market the output ofthe plants.

“We are restructuring the company to provide us maximumflexibility to achieve value from our wires business whenrestructuring is completed,” said the CEO. “In the short term, wewill aggressively manage our costs.” No expansion of the U.S. orinternational distribution business is planned.

Earlier this year, AEP filed business separation plans in Ohioand Texas, as required under restructuring legislation thosestates. Among other things, the plans separate all or most of theTexas and Ohio generation assets from the transmission anddistribution assets. The company-wide plan extends those conceptsfor the entire operation, giving it more flexibility.

Carolyn Davis, Houston

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