Referring to Mr. Roberson S Testimony, Page 12, Please Explain

RESPONSE

QUESTION NO. 165

Referring to Mr. Roberson’s testimony, page 12, please explain:

a. Describe all systems that must be integrated after the merger closes;

b. what actions must be taken to combine the separate telecommunications systems;

c. what actions must be taken to combine the internal and external communications systems;

d. what employee retraining will be necessary separate and apart from ongoing training programs currently in place; and

e. whether the director’s and officer’s liability coverage referenced consists in part of coverage for former CSW Board members? If so, why should retail customers contribute to this expense?

RESPONSE NO. 165

The subject testimony refers to the estimated costs required to achieve the merger. These costs were developed as part of the synergy study prepared with the assistance Deloitte & Touche.

a. With regard to systems integration costs and the systems, which must be integrated after the merger closes, please refer to Mr. Flaherty's workpapers, pages 160-285.

b. With regard to the expected telecommunications costs related to the merger integration, please refer to Mr. Flaherty's workpapers, page 494. A summary of the existing telecommunications systems and the actions which must be taken to combine them are as follows:

 The mobile radio systems supporting field operations do not appear to require any significant actions to combine the systems.

 The impact on fixed point telecommunication assets (e.g. fiber, microwave, etc.) serving substations, distribution, and power plant operations will be minimal.

 Data/voice communication needs are anticipated to connect existing offices of AEP and CSW. Teams are currently studying the best approach to connecting systems.

 The needs for transmission dispatch, generation dispatch and other related areas will depend upon results of Process Teams that will be tasked with studying these areas.

c. Specific actions required in the subject merger will be identified by the Process Teams that will be studying this area.

d. AEP and CSW have historically utilized out-placement assistance programs to help displaced employees find new opportunities. Although final plans have not yet been developed in this area, it is expected that employee retraining activities may be part of such a program. As noted on page 491 of Mr. Flaherty's workpapers, Separation Assistance program costs have been estimated based on previous transactions.

Employee retraining program costs would be incremental to the expenses expected to be incurred by the companies for general training activities and should result in a reduction in the employee severance costs.

e. The Directors and Officers Liability coverage included in the costs required to achieve the merger assumes that such coverage would be obtained to cover all directors of both AEP and CSW. This coverage is required under the merger agreement. Like the other costs to achieve the merger, these costs are necessary to be incurred in order to achieve the savings that benefit customers.

Prepared By: Thomas S. Jobes