AEP: Strong 3Q; Merchant Business Continues to Gain Traction

*	AEP reported 3Q:01 operating EPS of 1.43, up 13% from EPS of $1.27
reported in 3Q00.  YTD earnings were $3.00 vs. $2.23 in 2000. Excluding the
positive effect of Cook nuclear restart ($0.48), 9 mo. EPS are up 11%.
*	We feel that their recent growth in gas marketing activities has
moved AEP towards achieving the Scale & Scope necessary to succeed as an
Energy Merchant.
*	We are maintaining our 2001 estimate of $3.60, although it is at the
high end of the range of the company guidance. Our 2002 estimate of $3.80 is
at the low end of the range and reflects a likely weakening of the economy. 
*	Strong results appear to be helping separation plans gain momentum,
which we feel would be a catalyst for AEP shares.
*	We believe that AEP's growing strength as an Energy Merchant is not
reflected in its current share price and maintain our $55 target.


 <<AEP10-23-01.pdf>>  <<AEP10-23-01.doc>> 
Daniele M. Seitz 
Integrated Electrics 
Salomon Smith Barney 
(212) 816-6547 
daniele.seitz@ssmb.com 

                                                  
Raymond C. Niles
Power/Natural Gas Research
Salomon Smith Barney
(212) 816-2807
ray.niles@ssmb.com

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