The U.S. electric power generating sector may be down, due to the recession and a cooler-than-normal summer across much of the U.S., but it's not out.

Hence, it goes without saying that I'm reiterating my Buy rating for American Electric Power (NYSE: AEP), first recommended on May 4, 2009 at a price of $25.38.

Readers of this space know that one of the preferred sectors is the electric power generation sector.

And it's preferred for a reason that may not be obvious to all. Electricity via win, solar, and nuclear generation is likely to play a large role in energy as climate change reduction, then elimination, becomes a societal goal. Electricity also remains a potential propulsion source for cars, particularly once oil resumes its inevitable clime. And with the above in mind, electric power generator American Electric Power (NYSE: AEP) is worth a review.

MAJOR PAPERS:

• The books of Fannie Mae -- Federal National Mortgage Association (NYSE: FNM) -- and Freddie Mac -- Federal Home Loan Mortgage Corporation (NYSE: FRE) -- are being examined by the Federal Reserve and the Office of the Comptroller of the Currency to review their financial condition, according to the Wall Street Journal.
• The Wall Street Journal also reported that the Chevy Volt, an electric car from General Motors Corporation (NYSE: GM), is slated to roll out in two years and it received a major boost from 36 utilities that operate in 40 states who agreed to work together to make the plug-in vehicle possible. Among the utilities are American Electric Power Company Inc (NYSE: AEP), Consolidated Edison Inc (NYSE: ED), Duke Energy Corporation (NYSE: DUK), and Edison International (NYSE: EIX).
• Struggling mortgage lender Paragon is reportedly in talks with The Blackstone Group LP (NYSE: BX) about a potential takeover by Blackstone, the Financial Times reported.

OTHER PAPERS:

• The New York Times reported that TiVo Inc (NASDAQ: TIVO) will today introduce a "product purchase" feature in partnership with Amazon.com Inc (NASDAQ: AMZN). Under TiVo's plan, the television remote control will be turned into a tool for buying products that are advertised and promoted on talk shows and commercials.

MOST NOTEWORTHY: Wachovia, American Electric Power and Consol Energy were today's noteworthy upgrades:

• Deutsche Bank upgraded Wachovia (NYSE: WB), citing valuation and recent capital actions.
  
• Bank of America upgraded American Electric Power (NYSE: AEP), citing the new Ohio rate structure which will provide steady growth.
  
• Merrill upgraded Consol Energy (NYSE: CNX) based on higher coal prices.

OTHER UPGRADES:

• Goldman upgraded the Integrated Oils sector based on risk/reward relative to oil prices. ConocoPhillips (NYSE: COP) is the firm's favorite pick.
  
• Affiliated Computer Services (NYSE: ACS) was upgraded to Buy from Neutral. Goldman expects Affiliated to do well in the current slower macro backdrop and views shares as relatively insulated to government cutbacks.

MAJOR PAPERS:

• American Electric Power (NYSE: AEP) has agreed to pay penalties totaling $15M to end a Clean Air Act lawsuit brought by the Justice Department for the EPA, reported the Wall Street Journal (subscription required).
• In 1992 Ecuador left OPEC, but this month is expected to rejoin the organization, according to the Wall Street Journal.
• Barron's Online's (subscription required) "Inside Scoop" section reported that Warren Buffett exercised call options to purchase 7.847M shares of Burlington Northern Santa Fe (NYSE: BNI).

OTHER PAPERS:

• The UK is going to purchase 140 armored vehicles from Force Protection (NASDAQ: FRPT) for use in Iraq and Afghanistan, according to the Associated Press.
• India's Reliance Retail has won the exclusive marketing and distribution rights for Apple (NASDAQ: AAPL) stores in India. The first Apple-owned store in India is scheduled to open at the end of this month, reported the Economic Times.
• Independent movie studio Lions Gate Entertainment Corp (NYSE: LGF) has signed a partnership agreement with Mexican media conglomerate Grupo Televisa (NYSE: TV) to make movies and TV shows, and distribute Grupo's film library, reported the Los Angeles Times.

The Washington Post reports that pension fund managers representing $1 trillion have petitioned the Securities and Exchange Commission (SEC) to required public companies to disclose the impact of global warming on their business prospects. If the SEC agrees, the change could threaten investors in utility stocks -- which are among the biggest private sources of carbon dioxide emissions that cause global warming.

Here's a list of utility stocks which could be most affected:

• American Electric Power (NYSE: AEP). AEP produced 145.4 million tons of carbon dioxide in 2006. In Europe, where legislation already limits carbon dioxide emissions, allowances for a ton of carbon dioxide sell or 20.5 euros, or about $28.50. So if its 2006 carbon dioxide had been emitted in Europe, AEP would have had to pay over $4 billion.
• Dominion Resources (NYSE: D)
• Dynegy (NYSE: DYN)
• Xcel Energy (NYSE: XEL)

Coal producer, Peabody Energy Corp. (NYSE: BTU) could also be among those companies affected.