COLUMBUS, Ohio, May 27, 2005 – American Electric Power (NYSE: AEP), through its Columbus Southern Power utility subsidiary, has agreed to purchase the Waterford Energy Center from an affiliate of Public Service Enterprise Group (NYSE: PEG) for $220 million.

The transaction, which is contingent on the receipt of required regulatory approvals, is expected to close in the third quarter of 2005.

The Waterford Energy Center is a natural-gas-fired combined-cycle power plant, located in southeastern Ohio, with nominal generating capacity of 821 megawatts. The plant began commercial operation in August 2003.

"The purchase of the Waterford plant is part of a broad strategy to meet the growing electricity needs of customers in our eastern seven states," said Michael G. Morris, AEP´s chairman, president and chief executive officer. "We had anticipated purchasing capacity in the PJM marketplace in the 2006-2007 time frame to meet our needs. This acquisition will reduce our reliance on the marketplace.

"With a customer base as large as ours, we will need to add capacity each year to keep pace with annual growth in peak demand of approximately 2 percent in our eastern system and to maintain the 15 percent reserve margin required by the PJM Interconnect to ensure reliability," Morris said. "Our plan includes a combination of the construction of new plants, like the clean-coal generation projects we are pursuing, and -- if the price is right -- the acquisition of recently completed gas-fired merchant plants in this region, plants that seldom operate today because of significantly higher natural gas prices and more generation in the market than the owners had forecast."

AEP has filed with the Public Utilities Commission of Ohio seeking cost recovery for a 600-megawatt power plant using Integrated Gasification Combined Cycle (IGCC) clean-coal technology. The plant, which will be the largest commercial-scale IGCC plant in the United States, will be built in southern Ohio, once cost-recovery approval is received from the Ohio commission, and be in operation by 2010.

A second 600-megawatt IGCC plant is under consideration by AEP for Ohio, West Virginia or Kentucky, but no decision has been announced.

"Any gas-fired generation we add through either acquisition or construction will complement, not replace, our plans for IGCC," Morris said. "The IGCC capacity we add to our system will be baseload generation used to meet the expected day-to-day needs of our customers. The gas capacity we add will be mid-merit generation designed for use when electricity demand is higher than average."

When the transaction closes, AEP will operate Waterford as part of the company´s generation pool that provides power to AEP´s utility units serving customers in Indiana, Kentucky, Michigan, Ohio, Tennessee, Virginia and West Virginia.

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.

These reports made by AEP and its registrant subsidiaries contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and 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; available sources and costs of fuels; 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; new legislation and government regulation including requirements for reduced emissions of sulfur, nitrogen, carbon and other substances; resolution of pending and future rate cases, negotiations and other regulatory decisions (including rate or other recovery for 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 reduce its operation and maintenance costs; the success of disposing of investments that no longer match AEP’s corporate profile; AEP’s ability to sell assets at attractive prices and on other attractive terms; international and country-specific developments affecting foreign investments including the disposition of any current 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 on a point of 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 the establishment of a regional transmission structure; accounting pronouncements periodically issued by accounting standard-setting bodies; the performance of AEP’s pension plan; prices for power that AEP generates and sells at wholesale; and changes in technology and other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.