A financially strong and responsible company is one that delivers profits to its shareholders, meets its commitments to its lenders and provides benefits to society. The actions we have taken during the past two years put AEP in a position to do all three. Being financially strong allows us to deliver on our social and environmental commitments. Improving our environmental and social performance helps us to increase our financial strength. We believe that our strategy and approach provide value for shareholders, stakeholders and society.

The sluggish economy was a factor in both business and politics. Decreased demand for electricity from the highs of 2007 and 2008, regulatory delays and environmental challenges compelled us to rethink how we manage our operations and where we make our investments. Regulators also demonstrated that they are unwilling to approve rate increases for some renewable and environmental initiatives without a legal mandate to do so. Virginia and Kentucky regulators did not allow us to include renewable energy contracts in our base rates, for example, citing cost as the main factor.

Our actions to bolster our financial health during the past two years helped to pave the way for long-term sustainable growth. Our goal is always to efficiently convert the capital investments we make to better serve our customers and deliver earnings for our investors. Throughout AEP, we reduced our cost structure and brought more discipline to operations and maintenance (O&M) and capital spending. Through this discipline, we were able to improve the balance sheet of the company and maintain adequate liquidity through the renewal and extension of a $1.5 billion bank facility.

Our credit ratings are at the investment grade level (BBB/Baa2/BBB), which provides adequate access to debt capital at a reasonable cost. This allows us to continue to invest low-cost debt capital into our critical electric infrastructure to better serve our customers. We must prioritize our spending to secure solid investment-grade ratings by striking the right balance between the cost of operations and these financial objectives.