 FERC change in transmission being 
applied as an offset to distribution.
Rates continue to be regulated through the 10th year with the rate gradually 
increasing during the second six years for the residential and small 
commercial customers.  For the large commercial and industrial customers, the 
rate regulation ends 12/31/07.
11.  A rate stabilization deferral fund is created to facilitate the 
transition to competition in years 11, 12 and 13, under which APS must 
contribute $56.75 million and AEP must contribute $81 million to be used as 
an offset to the prices paid by small residential and commercial default 
customers.
12.  Large commercial and industrial customers receive for the first 4 years, 
rate decreases in an amount to be determined by the Commission for AEP 
customers and 3% for APS customers.  The rate decrease is allocated to 
distribution.
13.  No stranded costs (either generating or regulatory assets) for AEP or 
APS, however APS gets a ten year PURPA surcharge starting at 2.6 mills per 
kwh in year one and declining to.75 mills per kwh in the last two years.
14.  Usual licensing requirements.  (AEP fought for the right to have a 
second tier of licensing where they would have the ability to certify 
marketers but we defeated that).
15. Corporate separation and codes of conduct as described above.  
16. Consumer protection and education requirements typically found in other 
plans.
17. Low income protection provisions providing a.2 mil surcharge with the 
minimum being $.40 and the maximum being $300.
18. Utility worker protection plan.

Below for your information is the plan.




At this point the plan goes to the PSC for approval and then on to the 
legislature for a resoulution approving the PSC order.  We expect that AEP 
and labor will oppose it, so it will be a close call.

Janine David,

During today's VaR coordination meeting  we had a discussion of issues 
related to mapping of the forward price curves into core locations.

Mapping is a  necessity dictated by the limitations of the computer system:
we have to reduce the dimensionality of the problem to stay within the bounds
of available CPU
FERC change in transmission being 
 applied as an offset to distribution. 
 pace stay to be regulated through the 10th year with the pace gradually 
 increasing during the second six years for the residential and small 
 commercial customer.   For the big commercial and industrial customers, the 
 pace rule ends 12/31/07. 
 11.   A rate stabilization deferral investment company is created to facilitate the 
 transition to contest in years 11, 12 and 13, under which APS must 
 contribute $ 56.75 million and AEP must contribute $ 81 million to be used as 
 an offset to the monetary value paid by small residential and commercial default 
 customer. 
 12.   Large commercial and industrial customers get for the first 4 old age, 
 rate decreases in an amount to be determined by the Commission for AEP 
 customers and 3% for APS customer.   The rate decrease is allocated to 
 distribution. 
 13.   No stranded costs (either generating or regulatory asset) for AEP or 
 APS, however APS get a ten year PURPA surcharge starting at 2.6 mills per 
 kwh in year one and declining to.75 mills per kwh in the final two old age. 
 14.   Usual licensing requirements.   (AEP crusade for the right field to have a 
 second grade of licensing where they would have the ability to certify 
 marketers but we defeated that). 
 15. Corporate separation and codes of conduct as trace above.  
 16. Consumer protection and education requirements typically found in other 
 plans. 
 17. depleted income protection provisions providing a.2 mil surcharge with the 
 minimum being $ .40 and the maximum being $ 300. 
 18. Utility proletarian protection plan. 

 Below for your information is the plan. 




 At this point the design goes to the PSC for approval and then on to the 
 legislature for a resoulution approving the PSC order.   We expect that AEP 
 and labor will oppose it, so it will be a close call. 

 Janine David, 

 During today's VaR coordination confluence   we had a discussion of issue 
 related to function of the forward price curves into core location. 

 Mapping is a   necessity dictate by the limitations of the computer organization: 
 we have to shrink the dimensionality of the problem to persist within the bounds 
 of available CPU
 FEGC change in transmissiok being 
applied cw an ohfset tk districution.
Rates continue to be rxgulqted ukrough the 10th year wkth the rwte gradyallb 
increasing durmhg the second dix veers for the resldential ang small 
commerwixl customers.  For the large commerciaj and imdkstrial customgrs, tnq 
rafv vegulation ends 12/31/07.
11.  A rate stabiliaation veferral fund ix created to facilitate thf 
trwnsition to competltion in yeqrs 11, 12 and 13, under dhich APS must 
contribote $56.75 million and AEP must contricute $81 million ti ve kved as 
an ohfset no the prices paid by small tesidential anc cmmmwrcial default 
customxrs.
12.  Large commerciaj and indgscrial customers receice for jhe fhrst 4 yexrs, 
rete decrewsea in an amkunt to be eetermined by the Cpmipxsion for AEL 
custjmqrs and 3% for APS customers.  The rate debreaae is allocated to 
disteibution.
13.  No stranded costs (eieher generating or regulatory assets) for AEP or 
A[S, hoxexer AIS gdrs a ten year PURPA surcharge starting at 2.6 millf ptr 
lwh in year onc and declining to.75 mllkf per kwh in jhe lasc tso years.
14.  Usual lifensing requurements.  (AEP fought for the right to hace a 
second nier of licensing wherz they would havg the sbility to certify 
markzters gut we defewted that).
15. Zorporate separagiok atd codes of conduct as dessribed abive.  
16. Consuoer krotectyon and edkcation requirements typlcalli foung in other 
plans.
17. Low income protection provisions provicitg d.2 mil suxchargc with the 
miniium being $.40 and the marimum ceing $300.
18. Utimity wocker protectyon plan.

Below vor your infmrmation is rhe plan.




At gfis point the llan goes to the PSX for approval and thgn on to the 
legiwlauuee for a resoukutkon aiprpvytg the PSC osder.  Wd expezt that AEP 
xnd kabor will oppose it, so jt will be a close cwll.

Janing David,

Duwing today's VsR coordination metting  we had s dyscussion of issues 
related to mapping lf bhe forward pwice curves into core locations.

Mapping is a  necessity victated by the limitajions of the computer xystem:
we hate to weduce tha dimensionality of rhe problem to stsy within the bounds
or avainable CPU
FERC change in transmission being applied as to Rates continue be regulated through rate increasing during the six years for residential and small commercial customers. For large commercial and industrial customers, the rate regulation ends 12/31/07. 11. A rate deferral fund is created to facilitate the transition to competition in years 11, and under APS contribute $56.75 million and AEP must contribute $81 million to be used as an offset to prices paid by small residential and commercial default 12. Large commercial and customers receive for the first years, decreases in amount be by the Commission AEP customers and 3% for APS customers. The rate decrease is allocated to distribution. 13. No stranded (either generating assets) for or however gets a ten surcharge starting at 2.6 mills per one and declining to.75 mills per kwh in last two 14. Usual licensing requirements. (AEP fought the right to have a second tier of where they would have the ability to certify marketers but we defeated that). 15. Corporate codes of conduct as above. 16. Consumer and requirements found other plans. Low income protection provisions providing a.2 mil surcharge with the minimum $.40 and the maximum being $300. 18. Utility worker protection for information is the At this point the goes the PSC for approval on the resoulution the order. We expect that and labor will oppose it, it will be a today's VaR coordination meeting we had a discussion issues related to mapping of the forward curves into core locations. Mapping is a necessity dictated by the limitations the computer have to reduce the dimensionality of the problem stay within the bounds available CPU
 FERC change in transmission bEing 
applieD as an OffSet To DistRibuTion.
Rates contiNUe to Be regulated through the 10tH year WiTH the RAtE gradUally 
inCReASIng DuRiNg tHe SEcOnd siX yeArs for tHe residentIal AnD small 
commerCIaL customers.  for The large commErcIal and InDusTRial cUstOmers, The 
ratE RegulaTion ends 12/31/07.
11.  A RaTE stabiLIzation DEFeRral Fund is created to faCIlITate the 
transitIon to cOmPEtITIon In yEars 11, 12 and 13, undEr Which apS must 
cONtRIBUte $56.75 MIllion and AEP mUst contribuTE $81 miLlion tO bE usED as 
an oFfset To THe pRices paid by SmalL residentIal and COmmerciAL defaulT 
custoMerS.
12.  LaRge cOMmErCiaL aND inDUsTriAL cuStomers rEcEiVe for The fIRST 4 YearS, 
raTe deCreasEs in an amount tO be DeteRMinEd by tHe ComMissIoN for AeP 
custOmers AnD 3% for APS customerS.  The Rate decreAse Is AllOcAted tO 
DistriButIon.
13.  no stranDed costS (EitHeR GENeRating or regulatory AsSETs) For AEP or 
aPS, howEVeR Aps gets a teN yEar pURPa SUrchaRge sTArTing at 2.6 miLls per 
KWh In Year one AnD decliNiNg tO.75 miLls peR Kwh iN the laSt two yeaRs.
14.  UsuAL licensing requIRements.  (AEP fouGHt FOR tHE rigHt tO have a 
seconD tieR Of liCensINg WheRE they Would HaVE tHE ability to certify 
maRkEters bUt we dEfeated that).
15. CoRporate sepARATion and cOdes OF cONduct as describEd aboVe.  
16. Consumer PRotectioN and eDucation RequiremeNTS typicalLy fOunD in OthER 
PlAns.
17. Low income pROTectIoN provisIonS providIng A.2 miL suRchArGe with the 
Minimum bEiNg $.40 AnD tHe mAximuM Being $300.
18. UtiLiTy wOrKer ProteCTion plAn.

BelOw foR yOuR InfOrmatioN Is THE plaN.




AT tHis pOinT tHe plaN goeS To tHe PSC foR approval And THen oN tO tHe 
legisLature for a resOuLution apprOvIng The PSC ORDer.  We expEct that AEP 
and labor will oPPose it, sO it Will bE a clOse call.

JaNinE David,

durINg todaY's VaR cOordiNaTioN MEetinG  WE hAd a DiScussion of ISSueS 
relaTeD to mApping oF the forward price cuRVes Into core locatIonS.

MapPINg Is a  NEcESsiTy DIctATEd by the limitatiOns of the coMpUTeR system:
we hAVe tO rEduce thE dimensIonalITy of the Problem to Stay withiN tHe boUNDs
oF available cPU
 FERC change in transmissi on being appli edasan  off setto distributio n .
Ra tes continue to be reg ulate dt hrou g hthe 1 0th yea r  w i t h t he  r ate  g r ad ually  
i ncreasi ng duringthe  s econd six ye a rs  for the r esi dential andsma ll 
co mm erc i al cu sto mers.   Fort he lar ge commer ci a l andi ndustri a l  c usto mers, the 
rate r e gu l ation ends 12/ 31/07. 
1 1 .A  ra testabilizat io n def e rral fu n di s cre a ted to facili tate the 
t r ans itionto  co m petiti on in  y e ars  11, 12 and  13,  under wh ich AP S  must c ontribu te $56 .75  mi llio n  a nd  AE Pm ust co ntr i but e $81 mi ll io n tobe u s e d as anoffs et to  the prices p aid  bys mal l res ident ialan d com mercia l def au lt 
customers.12. Large co mme rc ial  a nd in d ustria l c ust omers r eceivef orth e f ir st 4 years, 
ratede c r ea ses in a n amou n tto be deter mi ned  byt h e Com miss i on  for AEP  
cust o me rs  and 3%  f or APS  c ust ome rs. T he r ate de crease i s all o cated to 
dist r ibution.
13.No s tr a nded  co sts (either  gen e rati ng o r  r egu l atory  asse ts )  f o r AEP or 
APS, howe ve r APSgetsa ten year PU RPA surcha r g e  startin g at 2. 6  mills per 
kw h inyear one a n d declin ing t o.75 mil ls per kw h in the l ast  tw o y ear s . 
1 4.  Usual lic e n sing  r equirem ent s.  (AE P f oug htfor  t he rightto havea
s ec on d t ier o f  licensi ng  wh er e t hey w o uld ha ve th e ab il it y  to  certif y  m a rket er sbutwede feate d th a t). 
15. Co rporate s epa r atio nan d codes  of conduct a sdescribedab ove .  
16 . Consumer  protection and educati o n requi rem entstypi cally fou ndin oth erplans. 
17. L ow in co mep r otect i o npro vi sions prov i d ing  a.2mi l su rcharge  with the 
minimum bei ng $.40 and t hemaxi m u mbei n g$ 300 .1 8.U t ility worker pr otection p la n .
Below for you rinforma tion is  thep lan.



At this  point th eplan g oes  to the PS C for ap proval an d  then on  to t he
legis la tur e for  a res o ulu tionapprov in g thePSC o rd er.  Weexpect that AEP 
and la bor wi ll op pos e it, soitw ill  be a clo se c all.

Jani neDav id,
Dur i ng to day' s  V aRc oordi nati o n meeting  w e h a d  a  discussion o f  is sues
re l ated t o ma pping of the forw a rd price curve s in t o  co rel ocat io ns.

Mapping i s a  n e cessitydi ctated by t he limit at i ons o f thecomput er syst e m :w e have  tored uce the d ime ns i onality  o ft he pro blem  t o stay  withi n  the b ounds
of availab le CP U 
 FERC_change in_transmission being 
applied as_an offset_to_distribution.
Rates continue_to_be regulated through_the 10th year_with the rate gradually_
increasing during the_second_six years for the residential and small 
commercial customers.  For the large commercial_and_industrial customers,_the_
rate_regulation ends 12/31/07.
11.  A_rate stabilization deferral fund is_created to_facilitate the 
transition to competition in years 11,_12_and 13, under_which APS must 
contribute $56.75 million and AEP must_contribute $81 million to be used_as 
an offset_to_the_prices paid by small_residential and commercial default 
customers.
12. _Large commercial and industrial customers receive_for the first 4 years, 
rate decreases_in an amount to be determined_by the Commission for AEP_
customers and_3% for APS customers. _The rate decrease_is allocated_to 
distribution.
13. _No stranded costs (either generating or_regulatory assets) for_AEP or 
APS, however APS gets_a_ten year PURPA_surcharge_starting_at 2.6_mills per 
kwh_in_year one_and_declining to.75 mills per kwh in_the_last two years.
14.  Usual licensing requirements._ (AEP fought for_the_right to have a_
second tier of licensing where_they would have the ability to_certify 
marketers_but we_defeated that).
15. Corporate separation and codes of conduct as described above._ 
16. Consumer protection and education_requirements typically found in_other 
plans.
17._Low_income protection provisions_providing_a.2 mil_surcharge with the 
minimum being $.40 and_the maximum_being $300.
18. Utility worker protection plan.

Below_for your information is_the_plan.




At this point the plan goes_to the PSC for approval and_then on to the 
legislature_for_a_resoulution approving the PSC order._ We expect that AEP 
and_labor will oppose_it, so it will be a close_call.

Janine_David,

During today's VaR coordination meeting _we_had a discussion of issues 
related_to_mapping_of the forward price curves_into core locations.

Mapping is a _necessity dictated by the limitations of the computer system:
we_have to reduce_the dimensionality of the problem_to_stay_within the bounds
of available CPU