Each year that the United States fails to enact a comprehensive energy policy, two things happen: the nation’s energy future is put in greater jeopardy, and AEP’s public policy function becomes an evermore important aspect of what this company does and its future.

When the economy slows, energy often becomes the public policy stepchild. The nation’s focus turns to protecting jobs, maintaining family incomes and managing government revenues. The Congress’s failure to pass significant energy legislation in 2010 reflects that pattern.

As AEP deals with issues such as climate change, environmental regulation, transmission policy, rate regulation, inland waterway maintenance and a host of others, we recognize that our public policy efforts are a basic element of our success. We realize we have a responsibility to be truthful, honorable, fair and transparent, and to serve the interests of many diverse stakeholders. Because congressional inaction is likely to lead to an even greater collision between energy supply, increasing demand and prices, environmental policy and international dynamics, we expect to be even more involved in public policy matters in the future.

Our goal remains to deliver safe and reliable energy at the most reasonable cost to our customers. We have taken our own steps to trim corporate expenses, including reducing the size of our work force during the past year, reducing travel, cutting our own energy use and improving operating efficiencies. However, we also believe that the nation’s energy future is put at more risk by inaction and short-sighted decisions that consider only today’s circumstances.

We believe that strong public policy must be based not only on today’s concerns but tomorrow’s needs, especially in regard to energy. America is at a crossroads: One road requires investment today that will bring us new supplies, including more renewable, nuclear and clean-coal energy tomorrow. The other road fosters lower prices today but leads to higher prices in the years ahead and a much more uncertain energy future. Unfortunately, it is far from clear which path the nation’s leadership will choose.

As the prospect for climate change legislation has receded, the attention to other environmental regulations affecting the power sector has grown. In 2010, the U.S. Environmental Protection Agency (EPA) proposed new rules for air emission reductions and the disposal of coal ash with additional proposals this year for air and water. These proposals raise serious concerns for us about the timing for compliance, the ability to secure the billions of dollars in capital that will be needed and the potential reliability risks created by the proposed timetables. Read more about our positions on these issues, how they will affect AEP and what we are doing in Environmental Performance'.

During 2010, we engaged in a robust advocacy campaign on these issues, educating our state environmental regulators, elected officials, customers, employees and other stakeholders about the implications of these rules and asking for support of our positions. Many of these stakeholders shared our concerns and communicated that to the EPA.

Rather than isolated rules that often are not coordinated and fail to consider the impact on the nation’s electrical system or our communities, we support a more comprehensive approach that considers the impact of plant closings on the nation’s grid, and sets a more rational time frame for compliance. AEP alone would save billions of dollars in costs, retain more jobs and impact our communities less severely if allowed to spread these major environmental projects over a longer period.

AEP’s Mike Morris, Scott Osterholt and Karen Sloneker join U.S. Energy Secretary Steven Chu on a tour of the mobile gridSMART® showcase.