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Coal and Power PlantsCoal and Power PlantsRich History…..What’s Next?Rich History…..What’s Next?

Mark McCullough

Sr. Vice President – Fossil & Hydro Generation

American Electric Power

Eastern Coal Council

May 24, 2010

Kingsport, TN

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Company Overview

5.2 million customers in 11 states Industry leading size and scale of

assets:#2 Domestic generation with 38,000 MW#1 Transmission with 39,000 miles#1 Distribution with 213,000 miles

Coal & transportation assetsOver 8,400 railcars involved in operationsOwn/lease and operate over 2,650 barges & 52 towboatsCoal handling terminal with 20 million tons of capacityConsume 76 million tons of coal per year

21,000 employees

AEP Generation Capacity Portfolio

Coal/ Lignite

Gas/Oil

Nuclear

Other – (hydro, wind,

etc.)

69% 20% 6% 5%

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CONCERNS for COAL FIRED POWER PLANTS

Uncertainties for Coal Fired Generating Plants CAIR CAMR CO2 ASH WATER (Hg, Se)

Other Complicating Factors Age of Existing Plants Fuel/Security Regulatory/Permitting Risk Asset Investment Size and Timeframe Risk

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AEP System Emissions

-

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

MWh/US Tons Emitted

CO2

Generation

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AEP System Emissions

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

US Tons Emitted

SO2

NOx

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The CO2 Challenge

Bill

ion

to

ns

CO

2

Historical Emissions

0

1

2

3

4

5

6

7

8

1990 2000 2010 2020 2030 2040 2050

U.S. Electric Sector

Remainder of U.S.

Economy

83% Reduction in CO2

emissions from 2005

Assumed Economy-wide CO2 Reduction Target

2005 = 5982 mmT CO2

2012 = 3% below 2005 (5803 mmT CO2)

2020 = 17% below 2005 (4965 mmT CO2)

2030 = 42% below 2005 (3470 mmT CO2)

2050 = 83% below 2005 (1017 mmT CO2)

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Mountaineer CCS demonstration project

Project Validation 20 MWe scale

(Scale-up of Alstom/EPRI 1.7 MW field pilot at WE Energies)

~100,000 tons CO2 per year In operation 3Q 2009 Approximate total cost $80 – $100M Using Alstom “Chilled Ammonia” Technology Located at the AEP Mountaineer Plant in WV CO2 for geologic storage

Mountaineer Plant (WV)

2009 Commercial Operation

Chilled Ammonia

CO2 (Battelle)

Alstom

Will capture and sequester 100,000 metric tons of

CO2/year Photo courtesy of Alstom and AEP

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Mountaineer Storage andMonitoring System Design

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0

1

2

3

4

5

6

7

2000 2010 2020 2030 2040 2050

Tri

llio

n k

Wh

pe

r y

ea

r

0

1

2

3

4

5

6

7

2000 2010 2020 2030 2040 2050

Tri

llio

n k

Wh

pe

r y

ea

r

Limited Portfolio Full

Portfolio

Coal

Gas

Wind

Demand Reduction

New Coal + CCSCoal

Gas

WindNuclear

Demand Reduction

Nuclear

Solar

Biomass

Hydro

CCS Retrofit

Biomass

Hydro

Increase in Real Electricity Prices…2000 to 2050, And………

*Source: EPRI, 2009

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MERGE Wholesale Electricity Cost Results

2007 U.S. Average Wholesale Electricity Cost

Limited Portfolio

Full Portfolio

$/M

wh

(20

07$

)

2020 2030 2040 2050

Limited Portfolio

Full Portfolio

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

$220

160%

50%

2007 U.S. Average Wholesale Electricity Cost

Substantial increases in the cost of electricity

2050

BAU U.S. Average Wholesale Electricity Cost *

* Based on estimate of expected business as usual annual investment in generation expansion. Source: “Transforming America’s Power Industry: The Investment Challenge 2010-2030”, The Edison Foundation, 2008 (www.edisonfoundation.net) and U.S. DOE Energy Information Administration 2008 Annual Energy Outlook.

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THANK YOU