An Integrated, Stakeholder-Informed Strategy
The connections between our environmental, financial and social performance are central to our strategy and to our thinking about who we are and what we do. The more we align and integrate our activities in these three areas, the more successful we will be.

For more than 100 years, AEP has provided affordable, reliable electricity for our customers; steady, competitive returns for our shareholders; and safe, rewarding jobs for our employees. While doing so, we have worked to protect the environment and to support the communities in which we operate.

The link between our environmental and financial performance has become much stronger and clearer to us during the past several years. Environmental issues became a larger part of our risk portfolio, and our performance as a company began to be seen, at least in part, in terms of our ability to address global climate change. We have made major investments in environmental controls at many of our coal-fired plants, which have resulted in reductions in sulfur dioxide and nitrogen oxide emissions by about 80 percent since 1980. While there is a clear environmental benefit, these investments have also led to major rate increases for our customers. At the same time, we have led the way in testing and deploying new technologies that will make us more efficient, give customers more control over energy use, enable modernization of the grid, and further reduce our environmental impacts.

AEP was presented with a new challenge in 2010. In Ohio, customers have had choice for generation service since 2001, but 2010 was the first year where we have seen active retail marketing targeting our commercial customers. While we expect this trend to continue in 2011, we are taking steps through the regulatory process to address this while entering the competitive market ourselves. Our new AEP Retail Energy business has initiated retail marketing efforts in our service territory as well as other service territories in Ohio. Read more about this in Public Policy.

Employee and other human-resource issues remain vitally important. We are focused on a strategy that ensures we can attract and retain the talent we will need to build, operate and maintain new technologies and interactive energy supply-and-demand systems, such as our gridSMART® initiative.

Our extensive stakeholder engagement process has helped to inform our business strategy, and it has begun to produce synergies and business opportunities for us. We are discovering that many of the lines we had drawn separating financial from nonfinancial strategies, activities and reporting are no longer relevant and, in some cases, are counterproductive.

In response, we have worked to embed and integrate environmental and societal issues and performance into our strategy, our operations and our measurement and reporting systems. For example, in our Engineering, Projects & Field Services organization, the annual business plan is based on our sustainability strategy, and we’ve designed goal-setting and performance systems that emphasize the connection between each employee’s job and our company’s overall environmental, social and financial performance.