Distribution refers to the system that delivers electricity from the high-voltage transmission system into homes, offices or factories. Three key indices representing electric delivery system reliability are the average number of outages in a given time period, the frequency of interruptions (SAIFI), and the amount of time that the average customer is without power (SAIDI). During the past five years, AEP's systemwide SAIFI has improved, SAIDI has trended in a slight negative direction, and the number of outages has increased.

Our performance data indicate that our reliability varies widely from company to company. For example, the average customer in Texas was without power 107 minutes in 2008 (excluding major storms), whereas the average customer of Kentucky Power was without power for almost 500 minutes. This range reflects factors such as terrain, climate, vegetation, customer density and staffing. Since 2004, distribution equipment failures have replaced vegetation inside the right-of-way as the number one cause of customer interruption time.

We would like to say that our outage numbers will improve, but our ability to invest in reliability is limited. We are talking with regulators and legislators about alternative rate-making arrangements to better facilitate the investments we need to improve reliability. Our long-term goal is to move to the next generation of smart grid technology to bring about significant improvements. We continue to uncover ways to optimize our vegetation management spending.

AEP is constantly working to improve reliability by minimizing the number and length of outages, and the number of customers affected by each outage