American Electric Power Retirement Savings Plan
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



          


FORM 11-K


          
 
(Mark One)
 
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d)
   OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended December 31, 2005
 
OR
 
       [   ] TRANSITION REPORT PURSUANT TO SECTION 15(d)
                                                                                  OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from               to








AMERICAN ELECTRIC POWER SYSTEM
RETIREMENT SAVINGS PLAN
(Full title of the plan)







AMERICAN ELECTRIC POWER COMPANY, INC.
1 Riverside Plaza, Columbus, Ohio 43215
(Name of issuer of the securities held
pursuant to the plan and the address
of its principal executive office)



 

 
AMERICAN ELECTRIC POWER SYSTEM RETIREMENT SAVINGS PLAN

 
TABLE OF CONTENTS
 

   
PAGES
 
3
     
 
4
     
FINANCIAL STATEMENTS:
    
5
 
6
 
7-10
     
SUPPLEMENTAL SCHEDULE:
    
 
11-12
     
EXHIBITS:
    
 
13
 
14








AMERICAN ELECTRIC POWER SYSTEM RETIREMENT SAVINGS PLAN



SIGNATURES
 
    Pursuant to the requirements of the Securities Exchange Act of 1934, the Benefits Finance Committee has duly caused this annual report to be signed by the undersigned thereunto duly authorized.







                                    By:  /s/ J. Steven Kiser                
     J. Steven Kiser, Secretary
 
 

Date: June 29,  2006



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

American Electric Power Service Corporation, as Plan Administrator:

We have audited the accompanying statements of net assets available for benefits of the American Electric Power System Retirement Savings Plan (the “Plan”) as of December 31, 2005 and 2004, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by Plan management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2005 and 2004, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule listed in the Table of Contents is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic 2005 financial statements and, in our opinion, is fairly stated in all material respects when considered in relation to the basic 2005 financial statements taken as a whole.



 
Columbus, Ohio
June 29, 2006
 
 

AMERICAN ELECTRIC POWER SYSTEM RETIREMENT SAVINGS PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2005 AND 2004


       
           
           
     
         
         
         
         
         
               
         
               
     

See notes to financial statements.


AMERICAN ELECTRIC POWER SYSTEM RETIREMENT SAVINGS PLAN

STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004


       
           
           
     
         
         
         
               
             
         
         
         
               
     
               
           
     
     
     
   
(2,156,352
  
               
         
               
         
               
     
 
See notes to financial statements.


AMERICAN ELECTRIC POWER SYSTEM RETIREMENT SAVINGS PLAN    

NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004


1.    PLAN DESCRIPTION

The following description of the American Electric Power System Retirement Savings Plan (the “Plan”) is provided for general information purposes only. Participants should refer to the Plan documents for more complete information.

The Plan is a defined contribution plan that became effective and commenced operations on January 1, 1978. The Plan covers eligible regularly scheduled full-time and part-time employees of the participating subsidiaries of American Electric Power Company, Inc. (“AEP” or the “Company”). Eligible employees may enroll in the Plan upon commencement of employment. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). Generally, eligible employees participating in the Plan may make contributions in 1% increments up to 30% of their eligible pay (within IRS limits). Participants who are age 50 and older are able to save additional pre-tax dollars; the catch-up contribution limit was $4,000 and $3,000 for 2005 and 2004, respectively. The Company contributes to the Plan, on behalf of each participant, an amount equal to 75% of the participant’s contributions up to 6% of the participant’s eligible compensation for each payroll period, subject to certain limitations. All contributions are deposited to the American Electric Power System Retirement Savings Plan Trust after each pay period. The Plan, in a manner consistent with the requirements under section 401 et seq., of the Internal Revenue Code, restricts the amount that certain participants who are deemed highly compensated may contribute to the Plan. Participants are allowed to change investment elections, change investment percentages in the funds, or move existing fund balances on a daily basis. Participants are immediately vested in their pre-tax, after-tax and the Company matching contributions, including earnings thereon.

American Electric Power Service Corporation (“AEPSC”) is the plan administrator (Plan Administrator) and plan sponsor. AEPSC is a wholly-owned subsidiary of AEP. Fidelity Management Trust Company (“Fidelity” or “Trustee”) is the trustee for all funds and is the record keeper for the entire Plan.

In July 2006, Fidelity Management Trust Company is being replaced by JPMorgan Chase Bank N.A. as custodian and trustee and JP Morgan Retirement Plan Services LLC as recordkeeper with respect to the Plan.  When this transition occurs, the investment options offered by the Plan will change to a series of separately managed accounts, interests in commingled and collective trusts and self-directed mutual fund brokerage accounts for which JP Morgan affiliates will provide custody, trustee, recordkeeping and other services. 
 
Effective January 1, 2002, the AEP Stock Fund, a Plan investment option, was converted to an Employee Stock Ownership Plan (“ESOP”). As a result, participants can elect to have dividends generated from their AEP Stock Fund holdings paid out in cash, rather than automatically reinvested in the fund. The dividend payouts are made each December and are treated as ordinary income for tax purposes. The 10 percent early withdrawal penalty for individuals under age 59-1/2 does not apply to these dividend payouts.

Participants may transfer the value of their own cumulative contributions, in any whole percentage or dollar amount, among investments, and change their investment elections on a daily basis. Participants may change their payroll contribution elections coinciding with company payroll periods. Excluding their pre-tax contributions, participants may make an unlimited number of withdrawals of their interest in the Plan, including company matching contributions, which are immediately vested. Pre-tax contributions are not eligible for withdrawal by participants not yet age 59-1/2, except under hardship as defined by the Plan or severance of employment.

Participants may borrow from their savings plan accounts, a minimum of $1,000 but no more than the lesser of $50,000 or 50% of their account balance. Loan terms range from 12 months to 60 months (or up to 180 months for certain residential loans), or any monthly increment in-between. Interest rates, fixed for the life of the loan, are calculated by adding 1% to the prime rate, as reported in the Eastern edition of the Wall Street Journal, in effect as of the first business day of the calendar quarter in which the loan is taken. Active employees make principal and interest payments through payroll deductions.
 
Retirees/surviving spouses make monthly payments using a coupon book. Participant loans and the accrued interest are collateralized by the account balance, and upon default, the outstanding balance is subjected to income taxes and possibly penalty taxes.
 
2.    ACCOUNTING POLICIES

The accompanying financial statements are prepared on the accrual basis of accounting.

Investments have been recorded based on the trade-date and are reported in the Statements of Net Assets Available for Benefits at fair value or contract value. The AEP Stock Fund investments are valued at year-end quoted AEP common stock closing prices. The year-end valuations for the various Fidelity funds are based on the closing market prices for the underlying securities as provided by the Trustee. The Managed Income Fund contracts are valued at book value, which is equal to cost (contributions), plus interest, less withdrawals. All participant loans are valued at cost, which approximates fair value at the time the loan is processed.

Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. These amounts are reinvested by the Trustee in the same funds that generated such income with the exception of the AEP Stock Fund, which pays out or reinvests dividends at the participants’ discretion. Administrative and Management Fees include short-term redemption fees for certain funds and management fees for the Managed Income Fund. Fees paid to Fidelity totaled $904,495 and $842,014 for 2005 and 2004, respectively. Other Plan administration expenses are paid by the employer and not included in the accompanying statement of changes in net assets available for benefits.

Distributions are recorded when paid. There were no amounts due to participants who requested distributions from the Plan as of December 31, 2005 and 2004.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of net assets available for benefits and changes therein. Actual results could differ from those estimates.
 
Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the financial statements.
 
3.    INVESTMENT CONTRACT VALUATION

The Plan has a Managed Income Fund with Fidelity as trustee, which invests primarily in fully benefit responsive investment contracts. Fidelity maintains the assets in a custodian account. There are no reserves against contract value for credit risk of the contract issuer or otherwise. The account is credited with earnings on the underlying investments and charged for Plan withdrawals (credited interest rates ranged from 5.65% to 3.76% at both December 31, 2005 and 2004). The average yield was 3.87% and 4.16% for fiscal years ending December 31, 2005 and 2004, respectively. The investment is recorded in the financial statements based on the contract value of the underlying investment contracts as reported to the Plan by Fidelity. Contract value represents contributions made under the contract, plus earnings, less withdrawals.
 
4.    INVESTMENTS EXCEEDING 5% OF PLAN NET ASSETS
 
Investments exceeding five percent of net assets as of December 31, 2005 and 2004 were:

   
FAIR VALUE
  
   
2005
  
2004
  
AEP Common Stock
  
$
517,452,122
  
$
488,809,605
  
               
Fidelity Blue Chip Growth Fund
  
$
245,710,255
  
$
260,990,466
  
               
Fidelity US Equity Index Commingled Pool
  
$
211,263,445
  
$
213,447,570
  
               
Morgan Guaranty Act Contract
  
$
206,692,392
  
$
174,785,820
  
               
Bank of America Contract
  
$
206,691,132
  
$
174,783,709
  
               
State Street Bank & Trust Company Contract
  
$
206,691,243
  
$
174,783,455
  
               
Rabobank Nederland Contract
  
$
206,684,414
  
$
174,775,218
  
               
Fidelity Low-Priced Stock Fund
  
$
152,202,523
  
$
138,270,884
  
               
 
5.    NET APPRECIATION IN FAIR VALUE OF INVESTMENTS
 
During 2005 and 2004, the Plan's investments (including investments purchased, sold as well as held during the year) appreciated in value as follows:

   
December 31
  
   
2005
  
2004
  
Investment at Fair Value:
            
American Electric Power Company, Inc. - Common Stock
  
$
39,600,019
  
$
57,775,118
  
               
Investments at Estimated Fair Value:
              
Registered Investment Companies and Group Annuity, Bank Investment and Other Fixed Income Contracts
  
 
48,173,123
  
 
84,821,282
  
Total Net Appreciation
  
$
87,773,142
  
$
142,596,400
  
 
6.    FEDERAL INCOME TAX

The Internal Revenue Service (IRS) has determined that the Plan meets the requirements of Section 401(a) of the Internal Revenue Code (the Code); therefore, the Plan’s Trust is exempt from federal income tax pursuant to Section 501(a) of the Code.

The Plan obtained its latest determination letter on February 15, 2005, in which the IRS stated that the Plan, as then designed, was in compliance with the applicable requirements of the Code; provided however, the letter merely acknowledges receipt of (without approving) the provisions intended to satisfy the requirements of the Code, as amended by the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”) and it contemplates that AEP will make some additional changes to the plan documents that were proposed in correspondence sent to the IRS in connections with its determination letter application. Those changes were made pursuant to documents signed on May 11, 2005. The Company may timely further amend the Plan so that it remains in compliance with the requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan’s financial statements.
 
Under current income tax laws and regulations, participants are not subject to federal income tax on the employer contributions to their accounts or on the accumulated earnings on employee and Company contributions until such amounts are distributed to participants. Employees have the option to make contributions to the Plan on a pre-tax basis, in which case federal income tax is deferred until such amounts are distributed.
 
7.    PLAN TERMINATION

Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants remain 100 percent vested in their accounts.
 
8.     RELATED-PARTY TRANSACTIONS

Certain Plan investments are shares of mutual funds managed by Fidelity Investments. Fidelity is the trustee as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions.
 
9.     LEGAL ISSUES
 
In the fourth quarter of 2002 and the first quarter of 2003, three putative class action lawsuits were filed on behalf of the Plan against American Electric Power Company, Inc., certain AEP executives, and AEP’s ERISA Plan Administrator alleging violations of ERISA in the selection of AEP stock as an investment alternative and in the allocation of assets to AEP stock. The ERISA actions are pending in Federal District Court, Columbus, Ohio. In these actions, the plaintiffs seek equitable relief and recovery of an unstated amount of compensatory damages, attorney fees and costs. The Defendants have filed a motion to dismiss these actions, which the Court denied. The cases are in the discovery stage. The Court has scheduled a hearing on class certification for late June 2006. The Defendants intend to continue to vigorously defend against these claims. The ultimate outcome of these cases cannot be determined at this stage of the proceedings.


AMERICAN ELECTRIC POWER SYSTEM RETIREMENT SAVINGS PLAN    

SUPPLEMENTAL SCHEDULE OF ASSETS HELD AS OF DECEMBER 31, 2005
 
 

     
Number of SHARES/UNITS
    
FAIR/CONTRACT VALUE
    
COST
MANAGED INCOME FUND:                
 
Fixed Income Contract - Bank of America variable annual yield (3.76% at
   December 31, 2005) with an indeterminate maturity date
      
$
206,691,132
 
$
206,691,132
 
Commingled Pool - Key Bank EPL variable annual yield (4.43% at December
   31, 2005) with an indeterminate maturity date
        
83,387,346
   
83,387,346
 
Group Annuity Contract - Monumental Life Insurance Company 5.65%
   effective annual yield with an indeterminate maturity date
        
6,375,569
   
6,375,569
 
Group Annuity Contract - Morgan Guaranty Act variable annual yield
   (3.76% at December 31, 2005) with an indeterminate maturity date
        
206,692,392
   
206,692,392
 
Group Annuity Contract - Rabobank Nederland variable annual yield
   (3.76% at December 31, 2005) with an indeterminate maturity date
        
206,684,414
   
206,684,414
 
Group Annuity Contract - Security Life of Denver Insurance Company
   5.25% effective annual yield with an indeterminate maturity date
        
13,632,061
   
13,632,061
 
Group Annuity Contract - State Street Bank & Trust Company
   variable annual yield (3.76% at December 31, 2005) with an indeterminate
   maturity date
        
206,691,243
   
206,691,243
 
Group Annuity Contract - Travelers Insurance Co. 4.67% effective
   annual yield with an indeterminate maturity date
        
10,196,989
   
10,196,989
 
Subtotal
        
940,351,146
   
940,351,146
 
Fidelity Institutional Cash Portfolio Fund
  
9,671,011
 units
  
9,671,011
   
9,671,011
 
TOTAL - MANANAGED INCOME FUND
      
$
950,022,157
 
$
950,022,157




AMERICAN ELECTRIC POWER SYSTEM RETIREMENT SAVINGS PLAN    

SUPPLEMENTAL SCHEDULE OF ASSETS HELD AS OF DECEMBER 31, 2005 (continued)

 
   
Number of SHARES/UNITS
    
FAIR/CONTRACT VALUE
    
COST
AEP STOCK FUND:
                
American Electric Power Company, Inc. Common Stock $6.50
   par value
  
13,951,257
 Shares
$
517,452,122
 
$
449,014,903
Fidelity Institutional Cash Portfolio Fund
  
2,206,530
 Units
 
1,697,569
   
1,697,569
TOTAL - AEP STOCK FUND
      
$
519,149,691
 
$
450,712,472
                 
REGESTERED INVESTMENT COMPANY:
                
Fidelity Blue Chip Growth Fund
  
5,693,009
 Units
$
245,710,255
 
$
217,259,515
Fidelity Diversified International Fund
  
1,546,617
 Units
 
50,326,914
   
42,396,477
Fidelity Equity Income Fund
  
2,218,617
 Units
 
117,098,588
   
99,259,154
Fidelity Freedom 2000 Fund
  
569,497
 Units
 
6,953,558
   
6,773,819
Fidelity Freedom 2010 Fund
  
2,313,471
 Units
 
32,504,269
   
31,129,913
Fidelity Freedom 2020 Fund
  
2,467,133
 Units
 
36,291,525
   
33,855,125
Fidelity Freedom 2030 Fund
  
904,755
 Units
 
13,589,423
   
11,794,788
Fidelity Freedom 2040 Fund
  
639,529
 Units
 
5,647,044
   
5,110,970
Fidelity Freedom Income Fund
  
901,477
 Units
 
10,249,797
   
10,021,547
Fidelity Low-Priced Stock Fund
  
3,726,800
 Units
 
152,202,523
   
122,739,827
Fidelity OTC Portfolio
  
3,195,112
 Units
 
120,743,274
   
118,287,458
Fidelity Overseas Fund
  
1,157,782
 Units
 
48,175,307
   
37,101,938
Fidelity Puritan Fund
  
5,026,979
 Units
 
94,155,319
   
88,815,816
Fidelity Small Cap Stock Fund
  
1,286,395
 Units
 
23,541,020
   
21,886,231
Fidelity U.S. Equity Index Comingled Pool
  
5,383,880
 Units
 
211,263,445
   
151,973,577
PIMCO Total Return Institutional Fund
  
3,776,987
 Units
 
39,553,367
   
40,210,304
T. Rowe Price Mid-Cap Growth Fund
  
934,334
 Units
 
50,584,817
   
44,582,902
T. Rowe Price Mid-Cap Value Fund
  
2,127,500
 Units
 
49,740,954
   
46,379,503
Fidelity Retire Money Market Fund
  
1,344
 Units
 
1,344
   
1,344
TOTAL - REGISTERED INVESTMENT COMPANY
  
 
   $ 
1,308,332,743
  $
1,129,580,208
         
 
      
PARTICIPANT LOANS (interest rate ranging from 6.25% through
    7.75% maturing through December 2020)
        
55,014,826
   
55,014,826
                 
TOTAL INVESTMENTS
      
$
2,832,519,417
 
$
2,585,329,663

 

 

AMERICAN ELECTRIC POWER SYSTEM RETIREMENT SAVINGS PLAN


EXHIBIT INDEX
 

Exhibit Number
      
Description
23
      
Consent of Independent Registered Public Accounting Firm

 



EXHIBIT 23

AMERICAN ELECTRIC POWER SYSTEM RETIREMENT SAVINGS PLAN

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


American Electric Power Company, Inc.:


We consent to the incorporation by reference in Registration Statement No. 333-128042 on Form S-8 and Post-Effective Amendment No. 3 to Registration Statement No. 33-1052 of American Electric Power System Retirement Savings Plan on Form S-8 of our report dated June 29, 2006 appearing in this Annual Report on Form 11-K of American Electric Power System Retirement Savings Plan for the year ended December 31, 2005.







DELOITTE & TOUCHE LLP
Columbus, Ohio
June 29, 2006