Our business is regulated at the federal, state and local levels and is therefore heavily influenced by public policy. We need regulatory approval for the rates we charge, the investments we make, the projects we undertake, the programs and services we can offer to customers, and the actions we must take to protect the environment. For these reasons, we are actively engaged in Washington, D.C., in the 11 state capitals covering our service territory and in the communities where our facilities are located. We strive to work closely with regulators, legislators, environmental agencies, and environmental and consumer groups. Our involvement includes lobbying activities as well as relationship building at all levels.

On the national level, global climate change and energy policy are our top public policy issues because of their potentially far-reaching effects. We are also active in our states on a wide range of issues: building support for investments in our system, potential nuclear power expansion, renewable energy, transmission siting, eminent domain, smart grid deployment, energy efficiency, and legislation that would enable new technologies such as carbon capture and storage.

The recession played a key role in policy development during 2009, and the expectation that customer rates will be higher continued to be a concern in our states. The cost of electricity is increasing due to the need to modernize our infrastructure, transmission and distribution equipment that is nearing the end of its life, the need for new plants to meet growing customer demand, higher fuel costs and environmental compliance.

We work with utility commissions and state legislatures on policies and regulatory actions that allow us to be as cost-effective and efficient as possible while recovering our costs in a timely and fair manner. State regulators approved $725 million in rate increases in 2009 to address this. These rate increases, while necessary, can cause difficulty for our customers and we work hard to find ways to reduce the burden.

"We are the most imaginative people in the industry and the cost of energy is one of, if not the most important, cost in doing business these days. We must stay competitive in this world or we cannot survive. We need a fair playing field with all other businesses in order to compete."

Q&A with Ed Kersey (pdf)

AEP statement to U.S. Senate Subcommittee on the U.S. EPA's Proposed Transport Rule -- July 22, 2010 (PDF)