A.E. Power Chief Says Company Will Be Exonerated

Responding to a shareholder's question at AEP's annual meeting, Chairman and Chief Executive E. Linn Draper Jr. said that the Securities and Exchange Commission had asked for "a lot'' of information about AEP's trading activities.

"We believe our activities were open and aboveboard, and we think they (the SEC) will come to the same conclusion,'' Draper said.

Columbus-based AEP also has acknowledged receiving subpoenas or information requests from the Federal Energy Regulatory Commission, the Commodity Futures Trading Commission and the Justice Department.

Those agencies have been investigating the trading industry since Enron's collapse in December 2001. The investigations have resulted in millions of dollars in fines against other trading companies and several criminal indictments.

AEP was one of the nation's largest electricity and natural-gas traders when it said in October that it would exit trading markets where it doesn't own power plants or gas pipelines.

The announcement came a day after it said it fired five natural-gas traders who had provided false prices to a trade publication that publishes a gas-price index.

Draper said yesterday that pressure from corporate debt-ratings agencies and analysts and a plunging stock price had more to do with the decision to get out of energy trading than the actions of the five traders.

"Even though we were making money, we reluctantly decided that it was better for the stock price to scale back those activities,'' he said.

AEP's shares, which hit $48.06 in April 2002, closed at $17.69 the day the trader firings were announced. Shares closed yesterday at $24.94.

AEP lost $571 million last year, compared with profits of nearly $1 billion in 2001.

Draper told shareholders that AEP will look for more ways to cut expenses, continue to scale back energy trading and sell assets to pay down debt.