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A ME RIC A N E L EC T RIC P O W E R
2011 CORPORATE SOCIAL
RESPONSIBILITY REPORT
< 2 >
›› ENVIRONMENT
›› CLIMATE CHANGE
About AEP
At American Electric Power, no aspect of operations
is more important than the health and safety of people.
Our customers’ needs are met in harmony with
environmental protection.
AEP ranks among the nation’s largest generators of elec- AEP’s utility units operate as AEP Ohio, AEP Texas,
tricity, owning nearly 38,000 megawatts of generating Appalachian Power (in Virginia, West Virginia), AEP
capacity in the U.S. AEP also owns the nation’s largest Appalachian Power (in Tennessee), Indiana Michigan
electricity transmission system, a nearly 39,000-mile Power, Kentucky Power, Public Service Company of
network that includes more 765 kilovolt extra-high volt- Oklahoma, and Southwestern Electric Power Company (in
age transmission lines than all other U.S. transmission Arkansas, Louisiana and east Texas). AEP’s headquarters
systems combined. are in Columbus, Ohio.
A CL IM AT E OF CH A NGE
Our Progress,
Board of Directors
Our Future
American Electric Power (AEP) will be GLOBAL REPORTING INITIATIVE
an energy leader through programs and This report was developed according
technologies that protect people, manage to the Global Reporting Initiative (GRI)
our impacts on the environment, promote Sustainability Reporting Guidelines Version
energy efficiency, provide for customer 3.0 (G3) and meets the content require-
control over electricity usage and provide ments of Application Level A. Our GRI
for greater access to renewable forms elements were reviewed by and our
of energy and advanced clean energy Application Level A was affirmed by
technologies. We will work with our regu- GRI. Additional information on the GRI
lators and other stakeholders to achieve can be found on our website—www.
this through an approach that maxi- AEPsustainability.com. We also report on
mizes the positive economic, social and electric utility industry-specific indicators.
environmental impacts of our operations.
GIVE US YOUR FEEDBACK We want
to hear from you and we welcome your
feedback on this report. Hearing from our
stakeholders helps us understand what
concerns them. E-mail your comments to
Sandy Nessing at smnessing@AEP.com.
Many AEP power plants are being retrofitted with emission control systems, such as these
Cardinal units in Brilliant, Ohio.
Company Overview
American Electric Power has been providing SERVICE TERRITORY
STATISTICAL OVERVIEW
2008 2009
ECONOMIC IMPACT (2009) TOTAL SYSTEM ANNUAL SO2 EMISSIONS (in thousand U.S. tons)
Goods & Services from Diverse Suppliers . . . . . . . . . . . . . . . . . $698 million 2005 2006 2007 2008 2009
Coal Average Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $50/ton TOTAL SYSTEM ANNUAL NOX EMISSIONS (in thousand U.S. tons)
Corporate Giving. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11.8 million
275 270 266
AEP Foundation Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11.3 million3 249
121
N U CL E A R 6%
BU SINE S S P E R F OR M A NCE
2
effectively. While the system we operate is hydro, natural gas, biomass and solar
MILLION TIME S CUSTOMERS complex and aging, it is vital to the econ- power to generate electricity.
LOGGED IN TO CON DUCT omy and to our quality of life.
BUSINE SS ON LINE
We have begun to lay the foundation to
Demand for electricity is growing despite transform our energy delivery system to
energy efficiency programs, largely due to lower emissions, improve efficiency and
population growth and the rising number of reliability, give customers more control
110,000
electronic appliances, industrial equipment over their usage and costs, and ensure
CUSTOMERS IN A EP and other devices that people rely on for energy security. This foundation is being
OHIO’S GRIDSM A RT everything from entertainment to health built through our gridSMART® initiative,
DEMONSTR ATION PROJECT care. Although the pace of growth has construction of power plants, diversification
slowed due to the recession, we must plan of our resources and investments in trans-
for these needs. As the demand for electric- mission and advanced coal technologies.
ity increases, so does the expectation that
96
we will deliver uninterrupted power wher-
CONSUMPTION OF NATUR A L ever and whenever it is wanted. We invest
GAS IN BILLIONS OF CUBIC
significant resources in new equipment
FEET IN 2009
and processes to meet that expectation.
ENERGY SECURITY
Ensuring an adequate supply of energy at any We already have some generation projects under
2009 OPERATING COMPANY EARNINGS CONTRIBUTIONS
given time requires determining the demand for way that anticipate a lower-carbon future, including
power today, anticipating short-term demand in the 600 megawatt (MW) John W. Turk Jr. ultra-
the days and weeks ahead, and predicting long- supercritical coal plant under construction in
K E N T U CK Y P O W ER 2% O HI O P O W ER 22%
term demand in the years to come. The stakes are southwest Arkansas, which is scheduled to be in
P S O 5% high in getting this right because of the significant service by late 2012. The plant was designed to
capital and construction costs of new power allow for the future installation of carbon capture
OT H ERS 6% plants and transmission and distribution systems, and storage technology. Read more about this
not to mention the time it takes for siting new plant in the Environmental Performance section.
infrastructure and getting regulatory support for Work also continues on the J. Lamar Stall Plant,
T E X A S 7% C S P 20% cost recovery. a 500-MW natural gas combined-cycle facility in
Shreveport, La., that will begin operation in 2010.
Underestimating future demand could create Our use of natural gas has grown; we consume
power constraints and higher rates for customers approximately 100 billion cubic feet per year.
S W E P CO 9%
as we scramble to secure power in a tight market. Between 2005 and the end of 2010 we will have
Overestimating demand could burden customers added more than 4,600 MW of natural gas to our
with paying for unneeded and underused system, further diversifying our fuel mix.
A P PA L ACH A I N P O W ER I N DI A N A M I CHI G A N
CO M PA N Y 16% P O W ER 16% infrastructure. Planning for long-term generation
is complicated by the potential for legislative and The Federal Energy Regulatory Commission (FERC)
regulatory actions on climate change. We are granted a 30-year extension of the license for
uncertain about these possibilities and related the Smith Mountain 586-MW pumped storage
future costs. Current environmental regulations are hydroelectric plant on the Roanoke River in Virginia
also in a state of flux and could change the way we in December 2009. The plant’s initial license was
UTILITY CAPITAL INVESTMENTS (in millions)
produce or transmit electricity. granted in 1960 and expired in March 2010. We
worked closely with area groups, communities
It is therefore difficult to determine with certainty and regulators to address concerns about water
$3,914 $3,852
$3,522 whether we can meet future demand with our own level, shore erosion, sediment and endangered
generation or will need a combination of our own species. Hydro-electric power is an important part
$2,393
$2,044 $1,961
generation and electricity we purchase. We are of our resource base; we operate 16 hydroelectric
developing tools that will help inform this planning plants plus Smith Mountain’s pumped storage
process. One component of our gridSMART® facility on six rivers in five states, generating
initiative will allow us to evaluate our infrastructure approximately 1,549-gigawatt hours (GWh) each
2006 2007 2008 2009 2 0 10 2 0 11 needs from the power plant to the customer meter. year. Approximately 940 GWh of that is free of
Utility Capital Investments for 2010 and 2011 are estimated. This technology, known as a virtual power plant, carbon emissions.
helps us to better understand what we will need if
we are to deploy a robust smart grid system. It also
will allow us to modernize the grid cost-effectively
by showing us what we need or don’t need.
ENERGY RELIABILITY
Our electric generation and delivery systems must AEP is more than 100 years old, and many of our
THREE-YEAR AVERAGE ROLLING RELIABILITY PERFORMANCE
be modern, reliable and able to handle diverse assets are at or near the end of their useful and
fuels and technologies. They also must be able to depreciable life. For example, we have more than 5
keep up with customer demand. Overall reliability, million distribution poles in service, some of which 2005 2006 2007 2008 2009
as recorded by the average number and duration are more than 40 years old, increasing the likeli-
of sustained outages on our distribution system, hood of failure when stressed by wind, snow or ice. SAIFI1 1.502 1.527 1.547 1.526 1.470
improved systemwide in 2009. SAIFI, the average To prevent this, we have a pole inspection program
number of interruptions a customer experiences, to continually evaluate the status of all distribution SAIDI2 210.8 202.9 198.9 201.0 198.1
declined to 1.369 in 2009 compared with 1.507 poles. In addition, 21 percent of our distribution
in 2008. SAIDI, the average number of minutes of station power transformers and 22 percent of our
each outage, also decreased, to 187.3 from 211.1 distribution line transformers are beyond their 1. System Average Interruption Frequency Index is the average number of
interruptions a customer experiences
in 2008. expected operational life. New, higher efficiency
2. System Average Interruption Duration Index is the average outage duration for
equipment is available that we will use to begin each customer served
Rather than focusing on single-year numbers, we replacing these aging assets while also achieving
have begun using a three-year rolling average, demand and energy efficiency goals.
which evens out weather-related outages. We
believe this is a more meaningful measure that Our generation and transmission businesses face
better reflects changes in the overall status of the similar challenges as equipment ages. We conduct
system. The three-year SAIFI average was 1.470 in regular operational risk audits in our Generation
2009, compared with 1.526 in 2008. The SAIDI business unit to assure equipment reliability, as
average in was 198.1 in 2009 versus 201.0 the well as inspecting, testing and monitoring equip-
previous year. ment. However, at no time are we compromising
safety and health. We also formed an aging asset
Distribution—the infrastructure and the pro- task force to develop a long-term plan to address
cesses that deliver electricity from high-voltage the issue in each state in our service territory.
transmission lines to customers’ homes and busi-
nesses—continues to improve as we develop better New tools and processes enhance our ability to
tools and processes to manage our system. Several manage the system. For example, we began using
challenges remain, however. a Line Equipment Analysis Device (LEAD), an
electronic “sniffer” developed in our own labs, that
detects interference caused by cracked insula-
tion or other difficult-to-detect failures. Combined
with GPS technology, this allows crews to check
the status of equipment more easily and accu-
rately by driving along our lines. The LEAD can
find electrical “leaks” that the human eye cannot,
providing us with advance warning about potential
imminent failure.
ENERGY GROWTH
AEP remains committed to developing an extra-
2009 RETAIL LOAD
high voltage transmission “superhighway” that
would facilitate the movement of power among
regions of the country. This system would reduce
congestion and costs and enable the transmission
* Wholesale includes sales to
RE SIDE N T I A L 32% municipal and cooperative power
of renewable power such as wind and solar from I N DUS T RI A L 30%
systems, other wholesale, and
where it is generated to where it is needed. We miscellaneous retail sales
believe that widespread use of renewable energy
depends on the ability of the transmission system
to transport it.
E N V IRONME N TA L P E R F OR M A NCE
Environment
4
AEP produces and delivers an energy Environmental regulation is in flux: the U.S.
N UMBER OF A EP FACILITIE S resource that is essential to society. Our Environmental Protection Agency (EPA) is
TH AT A RE LEED CERTIFIED success is measured by our ability to meet reviewing or rewriting several key regula-
customers’ energy needs while making a tions pertaining to air emissions, water
profit, doing it responsibly, with respect quality and waste storage and disposal.
for the environment, in compliance with all Many potential changes are aimed directly
181
laws and regulations, and by engaging with at coal-fired power plants and could
MILLION GA LLONS OF those who have a stake in our business. We adversely affect our net income, financial
WATER / Y EA R USED FOR ASH believe that our environmental performance position and the cost of electricity.
H A N DLING AT COA L PL A N TS overall is excellent, but we know there is
If, for example, emission limits become
room for improvement.
more restrictive, or if additional substances
Our $5.4 billion program to retrofit many are regulated, we would face significant
21
of our coal-fired power plants with environ- additional costs. We have obtained cost
N UMBER OF mental controls is already having significant recovery for our environmental program
EN VIRONMEN TA L AUDITS positive impacts on our performance and so far, and we expect we would continue
PER FORMED IN 2009 the environment. Today, our sulfur dioxide to be allowed to do so if new government
(SO2) and nitrogen oxide (NOx) emissions mandates are imposed.
are at their lowest levels in two decades.
These reductions reflect our compliance
43 %
with the Clean Air Act (CAA) Title IV regula-
L A N D OW NED BY A EP tions, the NOx State Implementation Plan
SUBSIDIA RY COMPA NIE S
Call and the Clean Air Interstate Rule.
COVERED BY FORE STS
E N V IRONME N TA L P E R F OR M A NCE
Climate Change
6%
For more than 100 years, AEP has We are leading in terms of our measurable,
GENER ATING CA PACIT Y produced low-cost electricity by burning voluntary efforts to reduce our carbon
FROM RENEWA BLE ENERGY coal—a plentiful, domestic and cost- emissions and use more renewable fuels,
effective source of energy. Coal-fired and through our efforts to modernize the
electricity has played a vital role in electric grid, put more control of energy
expanding the American economy, creating use in consumers’ hands, and increase
130
well-paying jobs and assuring the safety, energy efficiency.
health and well-being of our customers.
MILLION METRIC TONS OF We expect the makeup of our generation
Nearly half of the nation’s daily electricity
CO 2 EMISSIONS IN 2009 portfolio to change in response to several
comes from coal. We firmly believe that
external factors, including global climate
coal will continue to be a significant
change. The number of coal-fired units we
component of America’s energy mix for the
operate in the future will be determined
foreseeable future.
66 %
by new or more stringent environmental
At the same time, we recognize that the regulations; greater potential use of natural
GENER ATING CA PACIT Y
carbon dioxide (CO2) emissions created gas, including shale gas; the age and
FROM COA L
through the combustion of fossil fuels, efficiency of some of our coal units; and
including coal, are a matter of concern. The the outcome of the climate change debate.
AEP system includes the largest portfolio The transition to other fuel sources will
of coal-based generation in the United take time and will be expensive, but we are
2%
States, so we have a responsibility to lead preparing for it. The actions that we take
SF 6 EMISSIONS R ATE OF our industry in proactively addressing today will determine how well we meet this
TOTA L SYSTEM CA PACIT Y
this issue. We are doing so through our challenge.
IN 2009
investments in clean-coal technology and
carbon offsets and in our vocal support for
responsible federal legislation, including
cap-and-trade policies.
CONTACT US
by mail by phone or online
VISIT OUR
SUSTAINABILITY WEBSITE
micro-site
http://grdedev.ferris.edu/~drieseb/grde320/aepsustainability
iphone app
http://grdedev.ferris.edu/~drieseb/grde320/aepsustainability/iphone.html