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AMERICAN ELECTRIC POWER EXECUTIVES SEEK REGIONAL EFFORT FOR FAIRNESS ON TAX AND ENERGY POLICY

 COLUMBUS, Ohio, Feb. 1 /PRNewswire/ -- American Electric Power (AEP) (NYSE: AEP) has asked President Bill Clinton and governors from its seven-state region to monitor proposed energy taxes to encourage fairness, gradualism and clear understanding of the economic impact, warning that a carbon tax could cost the Midwest industrial heartland thousands of jobs and damage the region's industrial competitiveness.
 Company Chairman and CEO Richard E. Disbrow and President E. Linn Draper Jr. wrote to President Clinton to express concerns that certain energy taxes could have vastly uneven effects on different regions of the country. AEP operating company presidents sent similar letters to the governors in their states.
 "The stakes in our effort are high. The health of our region's economy and the economic health of the nation are linked to a reliable, low-cost, environ- mentally sound use of energy," the AEP executives wrote. "Energy taxes will affect jobs and our customers' pocketbooks. If such taxes must be considered at all, we must ensure that our federal policy makers consider their impact carefully and impartially, without undue harm to our region or any other."
 The AEP executives acknowledged the need to discuss a wide range of options to combat the federal budget deficit. The company offered to supply information and support to the administration during the current discussions.
 According to news reports, there are many kinds of energy taxes under consideration, including oil import fees, broad taxes on energy consumption or specific taxes on gasoline, carbon or quantities of British thermal units (Btu) -- the heat content of fuels.
 A tax on carbon, or on the heat content of fuels, would have an undue effect on the cost of coal. That would raise the amount our customers pay for electricity, as well as the cost of a wide range of goods and services here," the AEP executives wrote in the letter to Clinton. "Meanwhile, electricity generated from hydroelectric power and nuclear power would be relatively unaffected by a carbon tax, and electricity from natural gas would experience a smaller impact.
 "A carbon tax effectively means a penalty tax on the use of coal. We don't believe that policy passes the fairness test.
 "The potentially uneven effects of a carbon tax on the Midwestern industrial heartland could well run counter to our common goal of improving American economic competitiveness," the executives concluded.
 Carbon taxes threaten low-cost electricity from the coal-rich regions of Ohio, i?nois, Pennsylvania, West Virginia, Virginia, Kentucky and Indiana, the executives told Clinton. They pointed out that coal is the nation's most plentiful energy resource and that the East and West coasts, where other fuels and hydro-power are more common, would feel less impact from a carbon tax.
 The letter also stressed that the direct effect of carbon taxes would be especially hard, not only on the coal mining and petroleum industries, but also on the steel, auto, metalworking, chemical, plastics, paint, paper and primary manufacturing industries, which rely heavily on coal-fired electricity or on carbon-based fuels, according to a November 1992 study prepared for the American Council for Capital Formation Center for Policy Research.
 "Six of the states we serve -- Ohio, Indiana, Michigan, Kentucky, West Virginia, and Virginia -- are among the top 12 states with jobs at risk from a carbon tax," the executives wrote, citing a May 1992 study by CONSAD Research Corp.
 "Clearly, our key industrial customers and the many people they employ are at risk in any tinkering with energy taxes. We must evaluate those risks and avoid them, wherever possible," the executives wrote.
 Although a carbon tax has been advocated as a way to lower carbon dioxide emissions into the atmosphere, available scientific information on global climate patterns does not justify this approach, AEP said. In addition, studies have shown that a carbon tax would have to be set at an economically crippling level to achieve a significant reduction in carbon emissions.
 "We believe we can slow the growth of carbon dioxide emissions through efforts to conserve energy while enhancing our operational efficiency. And we believe that clean coal technologies and the availability of a wide range of energy choices will support our common environmental goals as well," the executives wrote.
 The executives said the AEP System would try to provide leadership, testimony and other input into the public policy debate over energy taxes, and it encouraged manufacturers, consumers and retail interests to become more involved as well.
 -0- 2/1/93
 /CONTACT: Luke M. Feck of American Electric Power, 614-223-1650/
 (AEP)


CO: American Electric Power ST: Ohio IN: UTI SU:

BM -- CL011 -- 6648 02/01/93 16:18 EST
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Date:Feb 1, 1993
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