In response to the recession and credit crisis, we reduced the distribution capital budget by 39 percent, from $1.1 billion to $686 million in 2009. Less money will be available for preventive maintenance and equipment upgrades. These cuts mean AEP will not be able to make any significant investments in new distribution technology or system upgrades in 2009. Some employees and labor leaders have expressed concern with this strategy even though they understand the circumstances that led to these decisions.

The company's aging work force might also adversely affect reliability. While we hired approximately 575 line workers in the last five years to replace retiring employees, including distribution linemen, our new employees will not be as productive as the more experienced workers they are replacing until they gain more job experience.

Our goal for 2009, therefore, is to maintain our current reliability levels through more effective use of crews and equipment. We are planning process improvements such as how we locate and dispatch crews, as well as continuing our replacement program for porcelain cutouts with high failure rates in our eastern companies and using heavy-duty, tank-mounted lightning arresters on our new service transformers.