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SWEPCO and Subsidiary Dolet Hills Sign Agreement to Acquire Oxbow Mine Lignite Reserves and Mining Assets

Friday, May 1st, 2009

AEP Southwestern Electric Power Co. (SWEPCO) and its subsidiary Dolet Hills Lignite Co. (DHLC), announce that they have entered into an agreement with The North American Coal Corporation and its affiliates, Red River Mining Company (RRMC) and Oxbow Property Company L.L.C. (OPC), to acquire 50 percent of the Oxbow Mine lignite reserves and all associated mining equipment and assets. As part of the transaction, Cleco Power LLC, a subsidiary of Cleco Corp., is acquiring the remaining 50 percent of Oxbow Mine lignite reserves, located near Coushatta, La.
SWEPCO is a subsidiary of American Electric Power (NYSE:AEP). RRMC is a joint venture between North American Coal and OPC.
Consummation of the transaction is subject to regulatory approval by the Louisiana and Arkansas Public Service Commissions and the transfer of other regulatory instruments. If approved, DHLC will acquire and own the Oxbow Mine mining equipment and related assets and it will operate the Oxbow Mine.
The preliminary purchase price of approximately $42 million includes the lignite reserves, mining equipment and related assets and permits.
SWEPCO and Cleco Power, along with Northeast Texas Electric Cooperative and Oklahoma Municipal Power Authority (OMPA), are co-owners of the 650-megawatt Dolet Hills Power Station located approximately 20 miles from the Oxbow Mine. SWEPCO and Cleco Power also control the Dolet Hills Mine lignite reserves in DeSoto Parish, La. Lignite from the Dolet Hills Mine (3.3 million tons annually) and the Oxbow Mine (550,000 tons annually) has been the sole fuel source for the Dolet Hills Power Station since it started operating in 1985.
“This acquisition would ensure a stable and affordable fuel supply for the Dolet Hills Power Station, extending the supply of local lignite to the plant through the year 2026. It would also maintain a positive economic impact on employment and state and local tax base,” said Paul Chodak, SWEPCO president and chief operating officer. “We anticipate that most of the existing RRMC workforce will remain in place,” Chodak said.
“This acquisition will strengthen our local lignite fuel supply and our ongoing relationship with SWEPCO,” said Dilek Samil, president and chief operating officer of Cleco Power LLC, which operates the Dolet Hills Power Station.

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