The 600MW plant - planned for a site in Meigs County, Ohio - will be owned and operated by AEP.
The agreement will now set the process in motion to being the project's front-end engineering design (FEED) phase, which could take 10-12 months.
Construction commencement dates are pending the successful attainment of key milestones during the FEED Phase, but the companies are targeting 2010 for startup of production.
"We're thrilled to be moving forward with our goal of building the next generation of coal-fuelled power plants that offer enhanced environmental performance," said AEP chairman Michael Morris.
"We need additional generation, and we believe an IGCC plant, over its expected lifespan, offers the right, environmentally responsible, cost- effective option for our customers."
The AEP complex would certainly set a precedent, as it would be the first IGCC facility of commercial scale in the United States since 1996, when Tampa Electric began production at its Polk Power Station. GE president John Krenicki Jr is confident in the growth of technology during the last decade.
"Since then, advances such as higher efficiency gas turbines have moved IGCC technology forward," he said.
"Today's announcement is a clear sign the energy industry is ready to enter a new era of cleaner coal power plants."
Pending an official contract award, GE Energy's involvement with the endeavour will include providing the IGCC technology for the facility, while Bechtel will handle construction issues such as engineering and procurement.
GE Energy is the leading gasification technology and IGCC gas turbine provider since the Cool Water Power Plant – the first demonstration IGCC complex in the US – went on-line more than 20 years ago.
Bechtel, one of the leading engineering and construction corporations in the world, has not only worked with all types of generation plants, including IGCC, but also worked with GE Energy on the Cool Water and Polk Projects.
Columbus, Ohio-based AEP is one of the largest utilities in the US, with over five million consumers on its 11-state transmission grid.
