File No. 70-10252

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________

AMENDMENT NO. 2 to

FORM U-1

________________________________

APPLICATION-DECLARATION

under

THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935

***

SOUTHWESTERN ELECTRIC POWER COMPANY

DOLET HILLS LIGNITE COMPANY, LLC

1 Riverside Plaza, Columbus, Ohio 43215

(Name of company or companies filing this statement

and address of principal executive offices)

***

AMERICAN ELECTRIC POWER COMPANY, INC.

1 Riverside Plaza, Columbus, Ohio 43215

(Name of top registered holding company parent)

***

Stephen P. Smith, Treasurer

AMERICAN ELECTRIC POWER SERVICE CORPORATION

1 Riverside Plaza, Columbus, Ohio 43215

John B. Keane, Senior Vice President and General Counsel

AMERICAN ELECTRIC POWER SERVICE CORPORATION

1 Riverside Plaza, Columbus, Ohio 43215

(Names and addresses of agents for service)

Southwestern Electric Power Company, a Delaware corporation (“SWEPCO”) is an indirect public utility subsidiary of American Electric Power Company, Inc. (“AEP”), a registered public utility holding company under the Public Utility Holding Company Act of 1935, as amended (the “Act”). Dolet Hills Lignite Company, LLC, a Delaware limited liability company (“Dolet Hills”), is a wholly-owned nonutility subsidiary of SWEPCO. SWEPCO and Dolet Hills hereby file this Amendment No. 2 to the Application-Declaration on Form U-1, File No. 70-10252 (the “Application”), to amend and restate the Application to update the captioned Rule 54 Compliance Section language and to file updated financial statements. In all other respects, the Application as previously filed will remain the same.

ITEM 1.  DESCRIPTION OF PROPOSED TRANSACTIONS

Background. By order dated July 1, 2004, in File No. 70-10166 (HCAR No. 35-27872) from the Securities and Exchange Commission (the “Commission”) granted authority to the direct and indirect nonutility subsidiaries of AEP to pay dividends out of capital or unearned surplus to the fullest extent of the law, provided however that, without further approval of the Commission, no nonutility subsidiary will declare or pay any dividend out of capital or unearned surplus if such nonutility subsidiary derives any material part of its revenues from the sale of goods, services or electricity to any public utility subsidiary of its parent.

Proposed Transaction. Dolet Hills is a mining company which provides lignite to the Dolet Hills Power Plant (the “Plant”), a 650-megawatt lignite fired generating plant located in north Louisiana. The Plant is jointly owned by SWEPCO and Cleco Power LLC (“Cleco”), a nonaffiliate, along with two nonaffiliated minority owners. Cleco operates the Plant. Because Dolet Hills derives a material part of its revenue from the sale of lignite to its parent SWEPCo, approval of the Commission is required for Dolet Hills to pay dividends out of capital to SWEPCO.

As of June 30, 2004, Dolet Hills has paid in capital of $4,712,000.

Dolet Hills proposes that its Board of Managers declare and pay dividends out of its capital surplus over time in an amount up to the full amount of $4,712,000, when cash is available.

The Delaware Limited Liability Company Act (Title 6, Chapter 18, Section 607) provides that: “A limited liability company shall not make a distribution to a member to the extent that at the time of the distribution, after giving effect to the distribution, all liabilities of the limited liability company, other than liabilities to members on account of their limited liability company interests and liabilities for which the recourse of creditors is limited to specified property of the limited liability company, exceed the fair value of the assets of the limited liability company, except that the fair value of property that is subject to a liability for which the recourse of creditors is limited shall be included in the assets of the limited liability company only to the extent that the fair value of that property exceeds that liability.”

SWEPCO is entitled to earn a specified rate of return on its capital contributions to Dolet Hills. [Louisiana Order No. U-21453, U-20925(SC), and U-22092(SC)(Subdocket G)] This return is factored in to the cost of the lignite sold to the Plant. If the Commission authorizes Dolet Hills to pay the requested dividends out of capital, SWEPCO’s total capital investment in Dolet Hills will be reduced by the amount of such dividend. The effect of this reduction in SWEPCO’s capital investment will be to reduce the cost of the lignite provided to the Plant.

Thus, Dolet Hills is seeking authorization from the Commission to pay SWEPCO dividends in an amount up to the full amount of its capital surplus on its common stock to the full extent of the Delaware Limited Liability Company Act.

* * *

Rule 54 Compliance. The proposed transaction is also subject to Rule 54. Rule 54 provides that, in determining whether to approve the issue or sale of any securities for purposes other than the acquisition of any “exempt wholesale generator” (“EWG”) or “foreign utility company” (“FUCO”) or other transactions unrelated to EWGs or FUCOs, the Commission shall not consider the effect of the capitalization or earnings of subsidiaries of a registered holding company that are EWGs or FUCOs if the requirements of Rule 53(a), (b) and (c) are satisfied. Under Rule 53(a), the Commission shall not make certain specified findings under Sections 7 and 12 in connection with a proposal by a holding company to issue securities for the purpose of acquiring the securities of or other interest in an EWG, or to guarantee the securities of an EWG, if each of the conditions in paragraphs (a)(1) through (a)(4) thereof are met, provided that none of the conditions specified in paragraphs (b)(1) through (b)(3) of Rule 53 exists. Set forth below is a discussion of the compliance with Rule 53 for AEP.

AEP consummated the merger with Central and South West Corporation, now AEP Utilities, Inc. (“CSW”), on June 15, 2000 pursuant to an order dated June 14, 2000 (HCAR No. 35-27186), which further authorized AEP to invest up to 100% of its consolidated retained earnings, with consolidated retained earnings to be calculated on the basis of the combined consolidated retained earnings of AEP and CSW (the “Rule 53(c) Order”).

AEP currently meets all of the conditions of Rule 53(a). At September 30, 2004, AEP’s “aggregate investment”, as defined in Rule 53(a)(1), in EWGs and FUCOs was approximately $332 million, or about 19.9% of AEP’s “consolidated retained earnings”, also as defined in Rule 53(a)(1), for the four quarters ended September 30, 2004 ($1.675 billion).

In addition, AEP has complied and will continue to comply with the record-keeping requirements of Rule 53(a)(2), the limitation under Rule 53(a)(3) on the use of operating company personnel to render services to EWGs and FUCOs, and the requirements of Rule 53(a)(4) concerning the submission of copies of certain filings under the Act to retail rate regulatory commissions. Further, none of the circumstances described in Rule 53(b)(1) or (3) has occurred or is continuing.

The circumstances described in Rule 53(b)(2) have occurred. As a result of the recording of a loss with respect to impairment charges, AEP’s consolidated retained earnings declined for the period ending December 31, 2003. The average consolidated retained earnings of AEP for the four quarterly periods ended September 30, 2004 was $1.695 billion, or a decrease of approximately 24.8% from the Company’s average consolidated retained earnings for the four quarterly periods ended September 30, 2003 of $2.226 billion. In addition, AEP’s “aggregate investment” in EWGs and FUCOs as of September 30, 2004 exceeded 2% of the total capital invested in utility operations.

In the fourth quarter of 2003, AEP recorded pre-tax impairments of assets (including goodwill) and investments totaling $1.4 billion that reflected downturns in energy trading markets, projected long-term decreases in electricity prices, and other factors. The impairments consisted of $650 million related to asset impairments, $70 million related to investment value and other impairment losses, and $711 million related to discontinued operations. Of the discontinued operations, $577 million was attributable to the impairment of the fixed-asset carrying value of AEP’s two coal-fired generation plants in the United Kingdom (“U.K. Generation”). AEP recorded a pre-tax impairment of $70 million on certain of its qualifying facilities, as defined under the Public Utility Regulatory Policies Act of 1978, as amended (“QFs”), in the third quarter of 2003.

Applicant respectfully submits that AEP meets the requirements of Rule 53(c). If the effect of the capitalization and earnings of EWGs and FUCOs in which AEP has an ownership interest upon the AEP holding company system were considered, there would be no basis for the Commission to withhold or deny approval for the proposal made in this Application-Declaration. The action requested in the instant filing would not, by itself, or even considered in conjunction with the effect of the capitalization and earnings of AEP’s EWGs and FUCOs, have a material adverse effect on the financial integrity of the AEP system, or an adverse impact on AEP’s Utility Subsidiaries¹, their customers, or the ability of state commissions to protect such public utility customers. The Rule 53(c) Order was predicated, in part, upon an assessment of AEP’s overall financial condition which took into account, among other factors, AEP’s consolidated capitalization ratio and the growth trend in AEP retained earnings.

As of December 31, 1999, the most recent period for which financial statement information was evaluated in the 53(c) Order, AEP’s consolidated capitalization (including CSW on a pro forma basis) consisted of 37.3% common and preferred equity, 61.3% debt and $335 million principal amount of certain subsidiary obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely junior subordinated debentures of such subsidiaries (“Trust Preferred Securities”) representing 1.4%.

As of September 30, 2004, AEP’s consolidated capitalization consisted of 60.4% debt, 39.6% common and preferred equity (consisting of common stock representing 39.0% and $133 million principal amount of preferred stock representing 0.6%).

Since the date of the Rule 53(c) Order, there has been an increase in AEP’s consolidated equity capitalization ratio. In addition, the Utility Subsidiaries, which will have a significant influence on the determination of the AEP corporate rating, continue to show strong financial statistics as measured by the rating agencies.

As of December 31, 1999, Standard and Poor’s (“S&P”) rating of secured debt for AEP’s Utility Subsidiaries was as follows: Appalachian Power Company, A; Columbus Southern Power Company, A-; Indiana Michigan Power Company, A-; Kentucky Power Company, A; Ohio Power Company, A-; AEP Texas Central Company (formerly Central Power and Light Company), A; Public Service Company of Oklahoma, AA-; Southwestern Electric Power Company, AA-; and AEP Texas North Company, A. AEP did not have a long-term debt rating as of December 31, 1999.

As of September 30, 2004, S&P’s rating of secured debt for AEP’s Utility Subsidiaries was as follows: Appalachian Power Company, BBB; Columbus Southern Power Company, BBB; Indiana Michigan Power Company, BBB; Kentucky Power Company, BBB, Ohio Power Company, BBB, AEP Texas Central Company (formerly Central Power and Light Company), BBB; Public Service Company of Oklahoma, BBB; Southwestern Electric Power Company, BBB; and AEP Texas North Company (formerly, West Texas Utilities Company), BBB.

ITEM 2.  FEES, COMMISSIONS AND EXPENSES

No fees, commissions or other expenses are to be paid or incurred, directly or indirectly, by the Applicants or any associated company in connection with the proposed transactions, other than fees and expenses to be billed at cost by the American Electric Power Service Corporation and not to exceed $1,000 in the aggregate.

ITEM 3.  APPLICABLE STATUTORY PROVISIONS

Section 12(c) and Rule 46 thereunder are or may be applicable to the proposed transactions. To the extent any other sections of the Act may be applicable to the proposed transactions, the Applicants hereby request appropriate orders thereunder.

ITEM 4.  REGULATORY APPROVAL

No state regulatory authority and no federal regulatory authority, other than the Commission under the Act has jurisdiction over the proposed transactions.

ITEM 5.  PROCEDURE

It is requested, pursuant to Rule 23(c) of the Rules and Regulations of the Commission, that the Commission's order granting and permitting to become effective this Application or Declaration be issued on or before November 30, 2004. Applicants waive any recommended decision by a hearing officer or by any other responsible officer of the Commission and waive the 30-day waiting period between the issuance of the Commission's order and the date it is to become effective, since it is desired that the Commission's order, when issued, become effective forthwith. Applicants consent to the Division of Investment Management assisting in the preparation of the Commission's decision and/or order in this matter, unless the Division opposes the matter covered by this Application or Declaration.

ITEM 6.  EXHIBITS AND FINANCIAL STATEMENTS:

The following exhibit and financial statements are filed as part of this statement:

(a)   Exhibit:

Exhibit A Opinion of counsel

(b)   Financial Statements:

Balance Sheets as of September 30, 2004 and Statements of Income and Retained Earnings for the nine months ended September 30, 2004 of SWEPCo and Dolet Hills.

ITEM 7.  INFORMATION AS TO ENVIRONMENTAL EFFECTS

The Commission's action in this matter will not constitute any major federal action having a significant effect on the human environment. To the best of AEP's knowledge, no federal agency has prepared or is preparing an environmental impact statement with respect to the proposed transaction.

¹ Appalachian Power Company (“APCo”), Columbus Southern Power Company (“CSPCo”), Indiana Michigan Power Company (“I&M”), Kentucky Power Company (“KPCo”), Ohio Power Company (“OPCo”), AEP Texas Central Company (“TCC”), Public Service Company of Oklahoma (“PSO”), Southwestern Electric Power Company (“SWEPCo”) and AEP Texas North Company (formerly West Texas Utilities Company) (“TNC”), collectively, the “Utility Subsidiaries”).

SIGNATURE

Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned company has duly caused this Amendment No. 2 to Form U-1 to be signed on its behalf by the undersigned thereunto duly authorized.

SOUTHWESTERN ELECTRIC POWER COMPANY

DOLET HILLS LIGNITE COMPANY

By:  /s/ Stephan T. Haynes

Stephan T. Haynes, Assistant Treasurer

of each of the above companies

Dated: January 6, 2005

EXHIBIT A

January 6, 2005

SECURITIES AND EXCHANGE COMMISSION

Office of the Public Utility Regulation

Washington, D.C. 20549

RE:File No. 70-10252

 Southwestern Electric Power Company (SWEPCO”)

 Dolet Hills Lignite Company, LLC (“Dolet Hills”)

Gentlemen:

In connection with the transaction proposed and described in this Amendment No. 2 to the Application-Declaration on Form U-1 filed with the Securities and Exchange Commission by Southwestern Electric Power Company (“SWEPCO”) and Dolet Hills Lignite Company, LLC (“Dolet Hills”), to which this opinion is an Exhibit, I have examined, among other things, the Amendment No. 2 to the Application-Declaration on Form U-1 filed with your Commission under the Public Utility Holding Company Act of 1935, and the documents referred to in it, the action to be taken by the shareholders of Dolet Hills authorizing the transaction described in said Application-Declaration, and such other documents as I have found necessary to form the basis of this opinion.

In my opinion, if the Application-Declaration is granted and permitted to become effective; if all the actions proposed to be taken by the shareholder and the Board of Directors of Dolet Hills, and if the proposed to be transaction is consummated in accordance with the aforesaid Application-Declaration:

I. all state laws applicable to the proposed transaction will have been complied with;

II.  Dolet Hills may lawfully make a distribution to its shareholder out of capital surplus described in the Application-Declaration; and

III. the consummation of the proposed transaction will not violate the legal rights of the holders of any securities issued by Dolet Hills or

   any associated company.

I consent to the use of this opinion as part of the above-mentioned Application-Declaration.

Very truly yours,

/s/ Ann B. Graf

Ann B. Graf

Counsel for the Companies

Dolet Hills Lignite Company, LLC
Income Statement
	Twelve Months Ending Dec 31, 2003			Nine Months Ending Sept 30, 2004
OPERATING REVENUES
SALE TO NON AFFILIATES		32,016,775			23,360,631
SALE TO AFFILIATES		32,016,775			23,360,631
GROSS OPERATING REVENUES		64,033,549			46,721,261
OPERATING EXPENSES
4010001 Operation Exp - Nonassociated		40,333,841			28,444,116
4111005 Accretion Expense					208,988
9200000 Administrative & Gen Salaries		1,988,100			1,483,978
9210001 Off Supl & Exp - Nonassociated		726,035			706,990
9230001 Outside Svcs Empl - Nonassoc		53,079			3,432
9230002 Outside Svcs Empl - Assoc		333,803			-
9230003 AEPSC Billed to Client Co		966,045			1,173,279
9240000 Property Insurance		7,684			-
9250000 Injuries and Damages		-			11
9260000 Employee Pensions & Benefits		3,954,224			3,687,825
9302003 Corporate & Fiscal Expenses		-			0
9302016 Coal Inventory Expense		(2,777,133	)		(1,763,098	)
9302017 SellingPrice Normalization Exp		-			(1,325,327	)
9310000 Rents		1,154,756			1,337,722
OTHER OPERATION		46,740,436			33,957,916
MAINTENANCE		-			-
TOTAL OPER/MAINT EXPENSES		46,740,436			33,957,916
DEPRECIATION AND AMORTIZATION		10,391,199			8,711,132
TAXES OTHER THAN INCOME TAXES		2,186,150			1,513,889
FEDERAL INCOME TAXES		732,056			214,143
STATE INCOME TAXES		63,485			18,537
TOTAL OPERATING EXPENSES		60,113,326			44,415,617
NET OPERATING INCOME		3,920,223			2,305,645
OTHER INCOME AND DEDUCTIONS
OTHER INCOME		212,338			7,736
OTHER INCOME DEDUCTIONS		(154,833	)
INC TAXES APPL TO OTH INC&DED		419,440			(200	)
NET OTHR INCOME AND DEDUCTIONS		476,945			7,536
INCOME BEFORE INTEREST CHARGES		4,397,168			2,313,181
INTEREST CHARGES
NET INTEREST CHARGES		3,035,145			1,915,483
NET INCOME -EARN FOR COMMN STK		1,362,023			397,698

Dolet Hills Lignite Company, LLC
Balance Sheet - Assets
ELECTRIC UTILITY PLANT	December 31, 2003		September 30,2004
1010001 Plant in Service		54,461,471.86		54,545,903.53
PRODUCTION		54,461,471.86		54,545,903.53
1010006 Dolet Hills FAS 143 ARO Asset				15,163,477.00
GENERAL		0		15,163,477.00
TOTAL ELECTRIC UTILITY PLANT		54,461,471.86		69,709,380.53
1080001 A/P for Deprec of Plt		-18,612,859.52		-23,895,147.53
1080012 Dolet Hills FAS 143 ARO Deprec				-5,096,967.54
1110001 A/P for Amort of Plt		-3,622.05		-10,141.74
LESS ACCUM PRV-DEPR,DEPL,AMORT		-18,616,481.57		-29,002,256.81
NET ELECTRIC UTILITY PLANT		35,844,990.29		40,707,123.72
CURRENT AND ACCRUED ASSETS
CASH AND CASH EQUIVALENTS		150,500.00		150,500.00
ADVANCES TO AFFILIATES		2,911,142.24		0
1430001 Other Accounts Rec-Regular		2,547,655.96		3,235,589.86
1430023 A/R PeopleSoft Billing System		32,902.76		1
ACCOUNTS RECEIVABLE - MISC		2,580,558.72		3,235,590.86
ACCOUNTS RECEIVABLE- ASSOC COS		3,019,117.62		3,296,140.10
1510001 Fuel Stock - Coal		4,119,657.33		5,882,755.78
FUEL		4,119,657.33		5,882,755.78
1540001 M&S - Regular		4,372,000.00		5,251,000.00
MATERIALS & SUPPLIES		4,372,000.00		5,251,000.00
1650001 Prepaid Insurance		289,290.93		1,493,238.14
PREPAYMENTS		289,290.93		1,493,238.14
TOTAL CURRENT ASSETS		17,442,266.84		19,309,224.88
DEFERRED CHARGES
1901001 Accum Deferred FIT - Other		122,502.00		142,208.00
1860086 Advanced Royalties		21,736,066.16		19,513,059.68
1860089 Reclamation Advance		13,999,658.00		10,650,000.00
1860090 Reclamation Adv - Unamort Disc		-1,605,211.00		-1,591,000.00
1810003 Unamort Debt Exp Notes Payable		352,488.25		316,438.30
TOTAL DEFERRED CHARGES		34,605,503.41		29,030,705.98
TOTAL ASSETS		87,892,760.54		89,047,054.58

Dolet Hills Lignite Company, LLC
Balance Sheet- Capitalization & Liabilities
	December 31,  2003		September 30, 2004
CAPITALIZATION COMMON STOCK
2080000 Donations Recvd from Stckhldrs		4,907,153.08		4,712,148.92
PAID-IN CAPITAL		4,907,153.08		4,712,148.92
RETAINED EARNINGS		688,154.09		688,154.26
COMMON SHAREHOLDERS' EQUITY		5,595,307.17		5,400,303.18
LT DEBT (LESS AMT DUE IN 1 YR)
2230000 Advances from Associated Co		9,628,562.12		8,263,533.02
2240003 Notes		33,511,430.09		28,389,522.08
LG TERM DEBT LESS AMT DUE 1YR		43,139,992.21		36,653,055.10
LONG-TERM DEBT
TOTAL CAPITALIZATION		48,735,299.38		42,053,358.28
OTHER NONCURRENT LIABILITIES
2282003 Accm Prv I/D - Worker's Com				8,148.57
2284013 Reclamation Reserve		6,720,970.59		8,523,087.59
2284016 Mine Closure Costs		0		0
2284017 Reclamation Res - Preexisting		9,791,447.00		7,226,000.00
2284021 Reclamation Res - ARO portion				-8,009,495.73
ACCUMULATED PROVISIONS - MISC		16,512,417.59		7,747,740.43
2300001 Asset Retirement Obligations				18,076,005.19
Asset Retirement Obligations				18,076,005.19
TOTAL OTH NONCURRENT LIAB'S		16,512,417.59		25,823,745.62
CURRENT LIABILITIES
2240503 Notes - Current Portion		6,829,210.68		6,829,210.68
LONG-TERM DEBT DUE WITHIN 1 YR		6,829,210.68		6,829,210.68
2330000 Corp Borrow Program (NP-Assoc)		0		1,589,039.23
2330001 Non Corp Borrow Prg NP-Assoc		1,820,038.80		1,820,038.80
A/P-ADVANCES FROM AFFILIATES		1,820,038.80		3,409,078.03
2320001 Accounts Payable - Regular		98,422.00		0
A/P-GENERAL		98,422.00		0
2340001 A/P Assoc Co - InterUnit G/L		0		2,286.85
2340027 A/P Assoc Co - Intercompany		11,652.00		0
2340029 A/P Assoc Co - AEPSC Bills		89,299.59		133,519.80
2340030 A/P Assoc Co - InterUnit A/P		341.73		1,586.72
A/P-AFFILIATED COMPANIES		101,293.32		137,393.37
2360001 Federal Income Tax		-2,115,338.00		-1,432,883.00
236000203 State Income Taxes		90,934.00		2,358.00
236000204 State Income Taxes				74,106.00
236000803 Real & Personal Property Taxes		80,857.40		0
236000804 Real & Personal Property Taxes				453,434.07
236001204 State Franchise Taxes				-43,031.00
TAXES ACCRUED		-1,943,546.60		-946,015.93
2370003 Interest Accrued-Notes Pay		40,071.70		34,983.94
INTEREST ACCRUED		40,071.70		34,983.94
DIVIDENDS DECLARED		0		0
2420000 Misc Current & Accrued Liab		2,345,137.52		1,946,395.48
2420511 Control Cash Disburse Account		4,630,993.70		2,314,922.11
2420532 Adm Liab-Cur-S/Ins-W/C		17,457.45		21,088.81
2420595 Reclamation Reserve - Current		2,032,978.00		2,032,978.00
2420619 Reclamation Res - Preexisting		2,603,000.00		1,833,000.00
2420643 Accrued Audit Fees		0		72,557.00
OTHR CURR & ACCRUED LIAB		11,629,566.67		8,220,941.40
TOTAL CURRENT LIABILITIES		18,575,056.57		17,685,591.49
DEF CREDITS & REGULATORY LIAB
2821001 Accum Defd FIT - Utility Prop		3,995,747.00		4,679,141.00
2830002 ADIT - Other - State		59,027.00		0
2830004 ADIT - Other - Foreign				0
2831001 Accum Deferred FIT - Other		15,213.00		15,213.00
2831002 Accum Deferred SIT - Other				115,332.00
DEFERRED INCOME TAXES		4,069,987.00		4,809,686.00
2540050 Def Rev Selling Price Variance		0		-1,325,326.81
REGULATORY LIABILITIES		0		-1,325,326.81
DEFERRED CREDITS
TOTAL DEF CREDITS & REG LIAB'S		4,069,987.00		3,484,359.19
TOTAL CAPITAL AND LIABILITIES		87,892,760.54		89,047,054.58

Dolet Hills Lignite Company, LLC

Pro forma Cash Flow

(All dollar amounts are stated in 000's)

	Sept 30, 2004 to Dec 31 2004		Jan 1, 2005 to Mar 31, 2005		Apr 1, 2005 to Jun 30, 2005		July 1, 2005 to Sept. 30, 2005		Oct 30, 2004 to Dec. 31, 2005
Beginning Cash Balance	151		1,807		3,386		163		232
Gross Sales	18,151		17,161		14,334		17,699		16,657
Expenses	18,021		17,041		14,220		17,591		16,553
Gross Margin	130		120		114		108		104
Add Back:
Depreciation	1,777		1,431		1,431		1,431		1,431
Amortization	743		744		744		744		744
Final Reclamation	499		514		535		454		487
Amort of Arrangement Fee	12		12		12		12		12
Total Cash Available	3,312		4,628		6,222		2,912		3,010
Cash Uses
Coal Inventory	(979	)	726		(3,543	)	933		2,274
Payments on Long Term Debt	(2,162	)	(2,162	)	(2,162	)	(2,162	)	(2,162	)
Change in Rec/Payables	-		-		1,200		-		-
Selling Price Norm	1,325		1,388		(744	)	(676	)	31
O&M Inventory	500		-		-		-		-
Current Reclamation	125		(100	)	(300	)	(300	)	(300	)
Deferred Income Taxes	(184	)	(190	)	(197	)	(168	)	(180	)
Dividend / Capital	-		(784	)	(199	)	(199	)	(199	)
Dividend / Retained Earnings	(130	)	(120	)	(114	)	(108	)	(104	)
Total Cash Uses	(1,505	)	(1,242	)	(6,059	)	(2,680	)	(640	)
Ending Cash Balance	1,807		3,386		163		232		2,371

Dolet Hills Lignite Company, LLC

Equity Account

Date	Paid in Capital		Retirement of Equity			End Balance		Retained Earnings Beg Balance		Net Income		Dividends Paid			Retained Earmings End Balance
12/31/2001		25,210,448.69					25,210,448.69		466,394.00		233,197.00					699,591.00
1/31/2002		25,210,448.69					25,210,448.69		932,785.00		233,197.00					1,165,982.00
2/28/2002		25,210,448.69					25,210,448.69		1,165,985.00		233,197.00					1,399,182.00
3/31/2002		25,210,448.69					25,210,448.69		1,399,182.00		233,197.00		(932,788.00	)		699,591.00
4/30/2002		25,210,448.69					25,210,448.69		699,591.00		233,197.00					932,788.00
5/31/2002		25,210,448.69					25,210,448.69		932,788.00		233,197.00		(699,591.01	)		466,393.99
6/30/2002		25,210,448.69					25,210,448.69		466,393.99		233,197.00					699,590.99
7/31/2002		25,210,448.69					25,210,448.69		699,590.99		233,197.00					932,787.99
8/31/2002		25,210,448.69					25,210,448.69		932,787.99		233,197.00					1,165,984.99
9/30/2002		25,210,448.69		(2,394,645.99	)		22,815,802.70		1,165,984.99		217,210.00		(699,591.00	)		683,603.99
10/31/2002		22,815,802.70					22,815,802.70		683,603.99		211,046.00					894,649.99
11/30/2002		22,815,802.70					22,815,802.70		894,649.99		211,046.00					1,105,695.99
12/31/2002		22,815,802.70		(1,440,450.76	)		21,375,351.94		1,105,695.99		211,046.00					1,316,741.99
1/31/2003		21,375,351.94		628,575.21			22,003,927.15		1,316,741.99		203,539.00		(628,575.21	)		891,705.78
2/28/2003		22,003,927.15					22,003,927.15		891,705.78		203,539.00					1,095,244.78
3/31/2003		22,003,927.15		(1,800,000.00	)		20,203,927.15		1,095,244.78		203,539.00		(610,617.30	)		688,166.48
4/30/2003		20,203,927.15					20,203,927.15		688,166.48		186,889.00					875,055.48
5/31/2003		20,203,927.15		(13,297,304.10	)		6,906,623.05		875,055.48		171,018.01					1,046,073.49
6/30/2003		6,906,623.05					6,906,623.05		1,046,073.49		63,886.00					1,109,959.49
7/31/2003		6,906,623.05					6,906,623.05		1,109,959.49		59,511.00		(421,796.27	)		747,674.22
8/31/2003		6,906,623.05		(666,489.99	)		6,240,133.06		747,674.22		57,721.00					805,395.22
9/30/2003		6,240,133.06		(666,489.99	)		5,573,643.07		805,395.22		57,721.00		(174,953.54	)		688,162.68
10/31/2003		5,573,643.07					5,573,643.07		688,162.68		51,557.00					739,719.68
11/30/2003		5,573,643.07					5,573,643.07		739,719.68		51,557.00					791,276.68
12/31/2003		5,573,643.07		(666,489.99	)		4,907,153.08		791,276.68		51,546.00		(154,668.59	)		688,154.09
1/31/2004		4,907,153.08					4,907,153.08		688,154.09		45,390.97					733,545.06
2/29/2004		4,907,153.08					4,907,153.08		733,545.06		45,390.97					778,936.03
3/31/2004		4,907,153.08		(195,004.16	)		4,712,148.92		778,936.03		45,391.00		(136,173.50	)		688,153.53
4/30/2004		4,712,148.92					4,712,148.92		688,153.53		43,588.00					731,741.53
5/31/2004		4,712,148.92					4,712,148.92		731,741.53		43,587.00					775,328.53
6/30/2004		4,712,148.92					4,712,148.92		775,328.53		43,588.00					818,916.53
7/31/2004		4,712,148.92					4,712,148.92		818,916.53		43,587.00					862,503.53
8/31/2004		4,712,148.92					4,712,148.92		862,503.53		43,587.00					906,090.53
9/30/2004		4,712,148.92					4,712,148.92		906,090.53		43,588.00		(261,524.28	)		688,154.25

Dolet Hills Lignite Company, LLC
Cost of Coal Analysis
Net Income is calculated as required in the Louisiana Public Service Commission Order.
The Net Income formula is: (Total Capitalization x Retained Earnings) x 11.1%
Cost of coal is reduced as equity is reduced due to the cost based contract.
Projected Cost Effect of Net Income on Lignite Cost
	Avg. Cap Balance		Net Income
Year	less Ret Erngs		Billed		¢/MMBTU
2005		3,932,132.28		436,466.68		9.494297
2006		3,444,621.88		382,353.03		8.915019
2007		2,664,605.24		295,771.18		6.423717
2008		1,884,588.60		209,189.33		4.527988
2009		1,104,571.96		122,607.49		2.662810
2010		237,407.29		35,136.28		0.765187
2011		-

SOUTHWESTERN ELECTRIC POWER COMPANY CONSOLIDATED

CONSOLIDATED STATEMENTS OF INCOME

For the Three and Nine Months Ended September 30, 2004 and 2003

(Unaudited)

	Three Months Ended						Nine Months Ended
	2004			2003			2004			2003
				(in thousands)
OPERATING REVENUES
Electric Generation, Transmission and Distribution	$	315,482		$	347,672		$	780,661		$	835,193
Sales to AEP Affiliates		14,888			13,950			54,597			63,013
TOTAL		330,370			361,622			835,258			898,206
OPERATING EXPENSES
Fuel for Electric Generation		109,468			155,853			292,536			360,471
Purchased Electricity for Resale		18,958			6,567			20,884			29,499
Purchased Electricity from AEP Affiliates		6,685			10,055			21,105			35,706
Other Operation		45,628			43,091			140,168			129,702
Maintenance		15,350			15,959			55,009			47,707
Depreciation and Amortization		33,676			30,381			96,940			89,284
Taxes Other Than Income Taxes		16,544			16,517			48,259			45,558
Income Taxes		23,443			23,970			38,013			39,418
TOTAL		269,752			302,393			712,914			777,345
OPERATING INCOME		60,618			59,229			122,344			120,861
Nonoperating Income		704			1,364			2,899			2,711
Nonoperating Expenses		669			577			2,735			1,453
Nonoperating Income Tax Expense (Credit)		(398	)		18			(1,295	)		(37	)
Interest Charges		12,944			16,981			41,034			48,058
Minority Interest		(898	)		(836	)		(2,592	)		(836	)
Income Before Cumulative Effect of Accounting Changes		47,209			42,181			80,177			73,262
Cumulative Effect of Accounting Changes (Net of Tax)		-			-			-			8,517
NET INCOME		47,209			42,181			80,177			81,779
Preferred Stock Dividend Requirements		57			57			172			172
EARNINGS APPLICABLE TO COMMON  STOCK	$	47,152		$	42,124		$	80,005		$	81,607

The common stock of SWEPCo is owned by a wholly-owned subsidiary of AEP.

SOUTHWESTERN ELECTRIC POWER COMPANY CONSOLIDATED

CONSOLIDATED BALANCE SHEETS

ASSETS

September 30, 2004 and December 31, 2003

(Unaudited)

	2004			2003
	(in thousands)
ELECTRIC UTILITY PLANT
Production	$	1,660,575		$	1,622,498
Transmission		631,169			615,158
Distribution		1,110,441			1,078,368
General		443,001			423,427
Construction Work in Progress		33,651			60,009
TOTAL		3,878,837			3,799,460
Accumulated Depreciation and Amortization		1,700,023			1,617,846
TOTAL - NET		2,178,814			2,181,614
OTHER PROPERTY AND INVESTMENTS
Non-Utility Property, Net		4,050			3,808
Other Investments		4,675			4,710
TOTAL		8,725			8,518
CURRENT ASSETS
Cash and Cash Equivalents		3,324			5,676
Other Cash Deposits		5,243			6,048
Advances to Affiliates		95,026			66,476
Accounts Receivable:
Customers		39,881			41,474
Affiliated Companies		19,112			10,394
Miscellaneous		7,849			4,682
Allowance for Uncollectible Accounts		(2,573	)		(2,093	)
Fuel Inventory		48,242			63,881
Materials and Supplies		34,928			33,775
Regulatory Asset for Under-recovered Fuel Costs		3,778			11,394
Risk Management Assets		27,056			19,715
Margin Deposits		2,063			5,123
Prepayments and Other		19,197			19,078
TOTAL		303,126			285,623
DEFERRED DEBITS AND OTHER ASSETS
Regulatory Assets:
SFAS 109 Regulatory Asset, Net		6,475			3,235
Unamortized Loss on Reacquired Debt		21,463			19,331
Minimum Pension Liability		35,487			-
Other		18,638			15,859
Long-term Risk Management Assets		15,234			12,178
Deferred Charges		61,081			55,605
TOTAL		158,378			106,208
TOTAL ASSETS	$	2,649,043		$	2,581,963

SOUTHWESTERN ELECTRIC POWER COMPANY CONSOLIDATED

CONSOLIDATED BALANCE SHEETS

CAPITALIZATION AND LIABILITIES

September 30, 2004 and December 31, 2003

(Unaudited)

	2004			2003
	(in thousands)
CAPITALIZATION
Common Shareholder’s Equity:
Common Stock - $18 Par Value:
Authorized - 7,600,000 Shares
Outstanding - 7,536,640 Shares	$	135,660		$	135,660
Paid-in Capital		245,003			245,003
Retained Earnings		394,912			359,907
Accumulated Other Comprehensive Income (Loss)		(24,908	)		(43,910	)
Total Common Shareholder’s Equity		750,667			696,660
Cumulative Preferred Stock Not Subject to Mandatory Redemption		4,700			4,700
Total Shareholders’ Equity		755,367			701,360
Long-term Debt:
Nonaffiliated		547,160			741,594
Affiliated		50,000			-
Total Long-term Debt		597,160			741,594
TOTAL		1,352,527			1,442,954
Minority Interest		1,043			1,367
CURRENT LIABILITIES
Long-term Debt Due Within One Year		209,974			142,714
Accounts Payable:
General		27,336			37,646
Affiliated Companies		25,061			35,138
Customer Deposits		32,133			24,260
Taxes Accrued		92,231			28,691
Interest Accrued		11,967			16,852
Risk Management Liabilities		28,922			11,361
Obligations Under Capital Leases		3,695			3,159
Regulatory Liability for Over-recovered Fuel		8,866			4,178
Other		36,060			53,753
TOTAL		476,245			357,752
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred Income Taxes		355,368			349,064
Long-term Risk Management Liabilities		8,095			4,667
Reclamation Reserve		7,740			16,512
Regulatory Liabilities:
Asset Removal Costs		248,686			236,409
Deferred Investment Tax Credits		36,620			39,864
Excess Earnings		3,167			2,600
Other		17,868			18,779
Asset Retirement Obligations		27,043			8,429
Obligations Under Capital Leases		31,302			18,383
Deferred Credits and Other		83,339			85,183
TOTAL		819,228			779,890
Commitments and Contingencies (Note 5)
TOTAL CAPITALIZATION AND LIABILITIES	$	2,649,043		$	2,581,963

SOUTHWESTERN ELECTRIC POWER COMPANY CONSOLIDATED

CONSOLIDATED STATEMENTS OF INCOME

For the Years Ended December 31, 2003, 2002 and 2001

	2003			2002		2001
	in thousands
OPERATING REVENUES
Electric Generation, Transmission and Distribution	$	1,077,988		$	1,012,421	$	1,022,089
Sales to AEP Affiliates		68,854			72,299		79,237
TOTAL		1,146,842			1,084,720		1,101,326
OPERATING EXPENSES
Fuel for Electric Generation		441,445			388,334		457,613
Purchased Electricity for Resale		34,850			44,119		18,164
Purchased Electricity from AEP Affiliates		47,914			42,022		15,858
Other Operation		173,349			189,024		171,314
Maintenance		70,443			66,855		74,677
Depreciation and Amortization		121,072			122,969		119,543
Taxes Other Than Income Taxes		53,165			55,232		55,834
Income Taxes		54,468			33,696		42,116
TOTAL		996,706			942,251		955,119
OPERATING INCOME		150,136			142,469		146,207
Nonoperating Income		3,978			3,260		4,512
Nonoperating Expenses		2,607			1,797		3,229
Nonoperating Income Tax Expense (Credit)		(3,396	)		1,772		542
Interest Charges		63,779			59,168		57,581
Minority Interest		(1,500	)		-		-
Income Before Cumulative Effect of  Accounting Changes		89,624			82,992		89,367
Cumulative Effect of Accounting Changes  (Net of Tax)		8,517			-		-
NET INCOME		98,141			82,992		89,367
Preferred Stock Dividend Requirements		229			229		229
EARNINGS APPLICABLE TO COMMON  STOCK	$	97,912		$	82,763	$	89,138

The common stock of SWEPCo is owned by a wholly-owned subsidiary of AEP.

SOUTHWESTERN ELECTRIC POWER COMPANY CONSOLIDATED

CONSOLIDATED BALANCE SHEETS

ASSETS

December 31, 2003 and 2002

	2003			2002
	(in thousands)
ELECTRIC UTILITY PLANT
Production	$	1,622,498		$	1,503,722
Transmission		615,158			575,003
Distribution		1,078,368			1,063,564
General		423,427			378,130
Construction Work in Progress		60,009			75,755
TOTAL		3,799,460			3,596,174
Accumulated Depreciation and Amortization		1,854,255			1,697,338
TOTAL - NET		1,945,205			1,898,836
OTHER PROPERTY AND INVESTMENTS
Non-Utility Property, Net		3,808			4,203
Other Investments		4,710			1,775
TOTAL		8,518			5,978
CURRENT ASSETS
Cash and Cash Equivalents		11,724			2,069
Advances to Affiliates		66,476			-
Accounts Receivable:
Customers		41,474			61,478
Affiliated Companies		10,394			19,253
Miscellaneous		4,682			881
Allowance for Uncollectible Accounts		(2,093	)		(2,128	)
Fuel Inventory		63,881			61,741
Materials and Supplies		33,775			33,539
Regulatory Asset for Under-recovered Fuel Costs		11,394			2,865
Risk Management Assets		19,715			4,388
Margin Deposits		5,123			105
Prepayments and Other		19,078			17,746
TOTAL		285,623			201,937
DEFERRED DEBITS AND OTHER ASSETS
Regulatory Assets:
SFAS 109 Regulatory Asset, Net		3,235			19,855
Unamortized Loss on Required Debt		19,331			17,031
Other		15,859			12,347
Long-term Risk Management Assets		12,178			5,119
Deferred Charges		55,605			47,572
TOTAL		106,208			101,924
TOTAL ASSETS	$	2,345,554		$	2,208,675

SOUTHWESTERN ELECTRIC POWER COMPANY CONSOLIDATED

CONSOLIDATED BALANCE SHEETS

CAPITALIZATION AND LIABILITIES

December 31, 2003 and 2002

	2003			2002
	(in thousands)
CAPITALIZATION
Common Shareholder’s Equity:
Common Stock - $18 Par Value:
Authorized - 7,600,000 Shares
Outstanding - 7,536,640 Shares	$	135,660		$	135,660
Paid-in Capital		245,003			245,003
Retained Earnings		359,907			334,789
Accumulated Other Comprehensive Income (Loss)		(43,910	)		(53,683	)
Total Common Shareholder’s Equity		696,660			661,769
Cumulative Preferred Stock Not Subject to Mandatory Redemption		4,700			4,701
Total Shareholder’s Equity		701,360			666,470
SWEPCo - Obligated, Mandatorily Redeemable Preferred Securities of Subsidiary  Trust Holding Solely Junior Subordinated Debentures of SWEPCo		-			110,000
Long-term Debt		741,594			637,853
TOTAL		1,442,954			1,414,323
Minority Interest		1,367			-
CURRENT LIABILITIES
Long-term Debt Due Within One Year		142,714			55,595
Advances from Affiliates		-			23,239
Accounts Payable:
General		37,646			62,139
Affiliated Companies		35,138			58,773
Customer Deposits		24,260			20,110
Taxes Accrued		28,691			19,081
Interest Accrued		16,852			17,051
Risk Management Liabilities		11,361			3,724
Obligations Under Capital Leases		3,159			-
Regulatory Liability for Over-recovered Fuel		4,178			17,226
Other		53,753			34,565
TOTAL		357,752			311,503
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred Income Taxes		349,064			341,064
Long-term Risk Management Liabilities		4,667			1,806
Reclamation Reserve		16,512			13,826
Regulatory Liabilities:
Deferred Investment Tax Credits		39,864			44,190
Excess Earnings		2,600			3,700
Other		18,779			3,394
Asset Retirement Obligations		8,429			-
Obligations Under Capital Leases		18,383			-
Deferred Credits		85,183			74,869
TOTAL		543,481			482,849
TOTAL CAPITALIZATION AND LIABILITIES	$	2,345,554		$	2,208,675

SOUTHWESTERN ELECTRIC POWER COMPANY CONSOLIDATED

CONSOLIDATED STATEMENTS OF CHANGES IN COMMON SHAREHOLDER’S

EQUITY AND COMPREHENSIVE INCOME

For the Nine Months Ended September 30, 2004 and 2003

(in thousands)

(Unaudited)

	Common Stock		Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
DECEMBER 31, 2002	$	135,660	$	245,003	$	334,789		$	(53,683	)	$	661,769
Common Stock Dividends						(54,596	)					(54,596	)
Preferred Stock Dividends						(172	)					(172	)
TOTAL												607,001
COMPREHENSIVE INCOME
Other Comprehensive Income (Loss),  Net of Taxes:
Cash Flow Hedges									510			510
NET INCOME						81,779						81,779
TOTAL COMPREHENSIVE INCOME												82,289
SEPTEMBER 30, 2003	$	135,660	$	245,003	$	361,800		$	(53,173	)	$	689,290
DECEMBER 31, 2003	$	135,660	$	245,003	$	359,907		$	(43,910	)	$	696,660
Common Stock Dividends						(45,000	)					(45,000	)
Preferred Stock Dividends						(172	)					(172	)
TOTAL												651,488
COMPREHENSIVE INCOME
Other Comprehensive Income (Loss),  Net of Taxes:
Cash Flow Hedges									(4,064	)		(4,064	)
Minimum Pension Liability									23,066			23,066
NET INCOME						80,177						80,177
TOTAL COMPREHENSIVE INCOME												99,179
SEPTEMBER 30, 2004	$	135,660	$	245,003	$	394,912		$	(24,908	)	$	750,667

SOUTHWESTERN ELECTRIC POWER COMPANY CONSOLIDATED

CONSOLIDATED STATEMENTS OF CHANGES IN COMMON SHAREHOLDER’S

EQUITY AND COMPREHENSIVE INCOME

For the Years Ended December 31, 2003, 2002 and 2001

(in thousands)

	Common Stock		Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
DECEMBER 31, 2000	$	135,660	$	245,003	$	293,989		$	-		$	674,652
Common Stock Dividends						(74,212	)					(74,212	)
Preferred Stock Dividends						(229	)					(229	)
TOTAL												600,211
COMPREHENSIVE INCOME
NET INCOME						89,367						89,367
TOTAL COMPREHENSIVE INCOME												89,367
DECEMBER 31, 2001	$	135,660	$	245,003	$	308,915		$	-		$	689,578
Common Stock Dividends						(56,889	)					(56,889	)
Preferred Stock Dividends						(229	)					(229	)
TOTAL												632,460
COMPREHENSIVE INCOME
Other Comprehensive Income, Net of Taxes:
Unrealized Gain on Cash Flow Power Hedges									(48	)		(48	)
Minimum Pension Liability									(53,635	)		(53,635	)
NET INCOME						82,992						82,992
TOTAL COMPREHENSIVE INCOME												29,309
DECEMBER 31, 2002	$	135,660	$	245,003	$	334,789		$	(53,683	)	$	661,769
Common Stock Dividends						(72,794	)					(72,794	)
Preferred Stock Dividends						(229	)					(229	)
TOTAL												588,746
COMPREHENSIVE INCOME
Other Comprehensive Income, Net of Taxes:
Unrealized Gain on Cash Flow Hedges									232			232
Minimum Pension Liability									9,541			9,541
NET INCOME						98,141						98,141
TOTAL COMPREHENSIVE INCOME												107,914
DECEMBER 31, 2003	$	135,660	$	245,003	$	359,907		$	(43,910	)	$	696,660