Waste-to-Profit

April 12, 2007

100 YEARS

2

Fortune magazine, April 2, 2007

Over 11 graphics in this issue alone dealing with the environment and positive economics……

3

Fortune

4

5

“The waste we collect helps power over one million homes.”

“Waste Management - - Think Green.”

6

“…our innovations are designed to minimize their impact on the environment.”

SIEMENS ELECTRIC

7

“Clean Power Today!

Instead of imagining a better environment, let us help you make it happen.”

8

“All in favor of protecting the environment, raise your hand.”

Home Depot

9

“With over 800 environmentally responsible, high quality papers, using DOMTAR EarthChoice helps protect his world and yours.”

“DOMTAR EarthChoice …. high quality paper with a conscience.”

10

“ …. putting environmental savings in a whole new light.”

Sea Gull Lighting

11

“… the sky is the limit……Because for all of us at ADM, there are no limits to a cleaner, greener world.”

12

United Technologies

13

AEP: An Introduction

Among the largest U.S. electricity generators with 39,000 MW

America’s largest coal user

The nation’s largest electrical transmission system

>240,000 miles of T&D

A large consumerof natural gas

Major wind developer

5 million customers in 11 states

AEP Fuel Portfolio: Increasingly Diverse

Coal Gas Nuclear Hydro Wind

1998 88% 0% 9% 3% 0%

Today 70% 20% 7% 2% 1%

14

AEP is America’s Largest Coal User

Coal consumed

(~million tons / yr.)

Coal combustion products (CCPs)

produced (~million tons / yr.)

AEP 75 8

In all of the U.S. 943 75

15

Sustainability …..

The ability to meet our present needs

without compromising the ability of future

generations to meet theirs

16

AEP’s 2006 Corporate Responsibility Report

Our Vision for Sustainability

• safely provide reliable, reasonably priced electric power

• actively work to protect people and the environment.

• engage stakeholders

• continue our role in making people’s lives better today and for generations to come

17

Waste-to-Profit at AEP is enterprise-wide

• Asset Recovery

• Environmental Services

• Information Technology

• Generation

• Transmission

• Distribution

• Telecommunications

• Materials Services

• Fleet

• Workplace Services

• Land Management

• Procurement

• Aviation

18

Disposition Hierarchy

redeploy re-stock sell scrap donate pay to dispose

Asset Recovery Group

• Take surplus assets

• generate revenue

• balance risk

• address environmental concerns

• support customers’ missions

19

Representative Projects

• CCP utilization

• Power Plant demolition and salvage– electric motors– spare parts– scrap metals

• Spent Selective Catalytic Reduction (SCR) catalyst modules

• Used electrical equipment / transformers

• Information Technology equipment

• Mobile phones

20

2006 - - Waste-to-Profit examples

Scrap Metal sales $8.8 million

Material sales $3.4 million from:

• Generation = $2.0 million• Utility = $1.3 million• Other = $62,000

Cost avoidance / savings $2.2 million_____________________ __________________________

Total $14.4 million(CCPs not included)

21

Coal Combustion Products (CCPs)

• CCP production and utilization at AEP– burned 74.8 million tons of coal in 2005 at 22 power plants– produced 8.2 million tons of CCPs– utilized 44% in concrete, structural fill, ice control (grit), etc.– represents ~$18 million / year in revenues and avoided costs

• CCP utilized in:– concrete, concrete block, road base asphalt and ice control– flowable fill and structural fill– paint manufacturing, Corvette body production, blasting grit, amber

glass manufacturing, roofing shingles and wallboard– mined land reclamation (both contours and AMD treatment)

22

CCPs

BOILER SLAG

BOTTOM ASHFLY ASH

SCRUBBER MATERIAL

23

CCP Utilization Avoids Disposal

24

Synthetic gypsum as a useable byproduct

25

CCP Utilization

26

CCP Utilization

27

CCP and Mine Reclamation

• CCP used to reclaim highwalls and to treat acid mine drainage

28

Reclaimed, Mined Land Use

Tree Plantation for paper mill feedstock

29

Working with EPRI on Beneficial Uses for Old Poles and Crossarms

30

Biomass co-firing at Picway Plant

Utilizing cabinet maker’s waste wood to augment coal-fired production of electricity

31

Power Plant Demolition & Salvage

32

Spent SCR Catalysts

33

Used Electrical Equipment

34

Used Electrical Equipment

• Some used electrical equipment is rebuilt

• Partially offsets cost of new units

35

IT End-of-Life Program• contract is in place to take used IT equipment and refurbish or recycle• AEP Asset Recovery is working to improve the return

36

AEP’s CO2 Capture and Enhanced Oil Recovery

Northeastern Station 3&4

• chilled ammonia process for capturing CO2 emissions from two AEP power plants :

• initial validation at Mountaineer Plant (4Q 2008)

• commercial-scale at Northeastern Plant in OK (late 2011)

• 1.5 million tons of CO2/year captured & sequestered

• approximate capital cost of ~$250-300 million

• annual O&M of ~$12 million

• Enhanced Oil Recovery - - Used to increase production from mature oil fields

• water or gas traditionally was injected to increase pressure but recently are seeing CO2 being used

• sell the captured CO2 for Enhanced Oil Recovery in Oklahoma ~ End ~