COLUMBUS, Ohio, Dec. 15, 2004 - American Electric Power (NYSE: AEP) and Peabody Energy Corp. (NYSE: BTU) have agreed to settle outstanding litigation related to disputes about terms of existing coal supply agreements.

Lawsuits settled were: Caballo Coal Company, et al. v. Indiana Michigan Power Company, et al., originally filed in the Eastern Division of the U.S. District Court for the Eastern District of Missouri but pending on appeal in the U.S. Court of Appeals for the Eighth Circuit; and Powder River Coal Company, et al. v. Indiana Michigan Power Company, et al, pending in the Eastern Division of the U.S. District Court for the Eastern District of Missouri.

The companies also signed six new coal purchase and sale agreements for fuel to be provided by Peabody Energy affiliates for use by plants owned by AEP subsidiaries Appalachian Power Co., Kentucky Power Co., Ohio Power Co., Indiana Michigan Power Co. and Southwestern Electric Power Co.; agreed to amend and restate a coal supply agreement between Indiana Michigan Power Co. and Peabody Energy affiliate Powder River Coal Co.; and reached a new transportation agreement.

The time periods covered by the agreements vary, with some extending as late as 2014. AEP plants could receive up to 98 million tons of coal from Peabody Energy affiliates under these agreements.

"We´re pleased to resolve the issues that were in dispute and to dispose of this litigation in a rational manner," said Michael G. Morris, AEP´s chairman, president and chief executive officer. "Peabody is a long-time supplier of coal to AEP and we value our business relationship with such a stable, reliable company.

"Reaching new purchase and sale agreements is an added bonus," Morris said. "Our fuel needs are almost fully hedged for 2005 and significantly hedged for 2006. These agreements improve our already strong near-term positions and solidify our position longer term."

American Electric Power owns more than 36,000 megawatts of generating capacity in the United States and is the nation´s largest electricity generator. AEP is also one of the largest electric utilities in the United States, with more than 5 million customers linked to AEP’s 11-state electricity transmission and distribution grid. The company is based in Columbus, Ohio.

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This report made by AEP and certain of its subsidiaries contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and each of its registrant subsidiaries believe that their expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are: electric load and customer growth; weather conditions, including storms; available sources and costs of, and transportation for, fuels and the creditworthiness of fuel suppliers and transporters; availability of generating capacity and the performance of AEP’s generating plants; the ability to recover regulatory assets and stranded costs in connection with deregulation; the ability to recover increases in fuel and other energy costs through regulated or competitive electric rates; new legislation, litigation and government regulation including requirements for reduced emissions of sulfur, nitrogen, mercury, carbon and other substances; resolution of pending and future rate cases, negotiations and other regulatory decisions (including rate or other recovery for new investments and environmental compliance); oversight and/or investigation of the energy sector or its participants; resolution of litigation (including pending Clean Air Act enforcement actions and disputes arising from the bankruptcy of Enron Corp.); AEP´s ability to constrain its operation and maintenance costs; the success of disposing of investments that no longer match AEP´s business model; AEP´s ability to sell assets at acceptable prices and on other acceptable terms; international and country-specific developments affecting foreign investments including the disposition of any foreign investments; the economic climate and growth in AEP´s service territory and changes in market demand and demographic patterns; inflationary trends; AEP´s ability to develop and execute a strategy based on a view regarding prices of electricity, natural gas, and other energy-related commodities; changes in the creditworthiness and number of participants in the energy trading market; changes in the financial markets, particularly those affecting the availability of capital and AEP´s ability to refinance existing debt at attractive rates; actions of rating agencies, including changes in the ratings of debt and preferred stock; volatility and changes in markets for electricity, natural gas, and other energy-related commodities; changes in utility regulation, including membership and integration in a regional transmission structure; accounting pronouncements periodically issued by accounting standard-setting bodies; the performance of AEP´s pension and other postretirement benefit plans; prices for power that AEP generates and sells at wholesale; changes in technology and other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.