EXHIBIT 18.4

LETTER RE:  CHANGE IN ACCOUNTING PRINCIPLE



Southwestern  Electric  Power Company  (SWEPCO)
Form 10-Q Report for the quarter ended March 31, 1999


Ladies and Gentlemen:

This letter is written to meet the  requirements of Regulation S-K calling for a
letter from a  registrant's  independent  accountants  whenever there has been a
change in accounting principle or practice.

As stated in Note 1 to the  financial  statements  of this Form 10-Q,  effective
January 1, 1999, SWEPCO incorporated the five-year average market related method
(the "Market  Method") in its calculation of pension costs.  Prior to January 1,
1999,  SWEPCO  utilized the market value of the pension assets at September 30th
in its  calculation of pension  costs.  The change was made to minimize the plan
asset  market  value  volatility  effect on  SWEPCO's  recorded  pension  costs.
Adopting  the  Market  Method did not have a  material  effect on first  quarter
results of  operations  or  financial  position.  The  cumulative  effect of the
accounting change to the Market Method was not material to first quarter results
of operations or financial position.

A complete  coordinated set of financial and reporting standards for determining
the  preferability  of  accounting   principles  among  acceptable   alternative
principles  has not been  established  by the  accounting  profession.  Thus, we
cannot  make an  objective  determination  of whether  the change in  accounting
described in the preceding paragraph is to a preferable method. However, we have
reviewed the pertinent factors,  including those related to financial reporting,
in this particular case on a subjective  basis,  and our opinion stated below is
based on our determination made in this manner.

We are of the opinion  that  SWEPCO's  change in method of  accounting  is to an
acceptable alternative method of accounting, which based upon the reasons stated
for the  change  and our  discussions  with  you is also  preferable  under  the
circumstances  in this  particular  case. In arriving at this  opinion,  we have
relied on the business  judgement and business  planning of your management.  We
have not audited the  application  of the change to the financial  statements of
any period subsequent to December 31, 1998. Further, we have not examined and do
not express any opinion with respect to your financial  statements for the three
months ended March 31, 1999.


Very Truly Yours

Arthur Andersen LLP