Objective

Goal

2009 Progress

Future Target

Challenge

Current rate-making models incorporate too much lag and do not account for the large investments necessary by utilities to replace existing facilities, expand capacity to meet growing demand, to comply with changing environmental regulations and anticipated carbon mandates, and modernize the grid. New ratemaking plans are needed for timely cost recovery so that we can deliver reliable service to customers and earn a fair return for our shareholders.

Advocate for alternate regulatory frameworks that reduce the time from investment to return on investment and help facilitate societal goals, such as energy conservation. 

Approximately 100 rate “trackers” in effect across our 11 states that help with timely recovery of costs associated with energy efficiency programs, construction, technology investments, etc.  (Not all trackers were implemented in 2009.)

Continued success in adopting appropriate regulatory plans throughout our service territory.

Regulators and customers are concerned about the increasing cost of energy. Our challenge is to seek ways to reduce our operating costs and our cost of capital, mitigating the ultimate cost to customers for the many investments we need to make.

As carbon capture technology becomes commercially available, there must be regulations in place that permit its safe long-term storage and that deal with long-term liability. 

Passage of state legislation that establishes a funding mechanism for long-term storage and limits liability.

Model legislation approved in Louisiana. Bills being developed in Indiana, Oklahoma, Texas and West Virginia.

Passage of enabling legislation in all states.

Resistance to transfer of liability will challenge passage in some states.

The state of the nation’s transmission grid is inadequate to meet future needs. We need an extra-high voltage (EHV) transmission grid overlay, which requires modernization of siting processes and an interconnection-wide planning and cost allocation protocol.

Lead the national policy effort to establish public policies that allow for the construction of EHV transmission and provide for appropriate cost allocation. 

AEP has testified before Congress about the need for a nationwide transmission policy; provided testimony to FERC on transmission planning and cost allocation, as well as made numerous presentations advocating this position.

Promote transmission vision in all possible venues, including white papers, presentations, formal regulatory filings, and testimony at the state and federal levels.

Continue to work with all stakeholders to address issues and concerns.

Transmission policy remains controversial and contentious. There is no consensus in the industry on oversight, cost allocation or siting. By delaying expansion and modernization of the grid we risk potentially jeopardizing reliability.

Some advocates are concerned about an EHV system that enables fossil fuels as well as renewable energy. Siting and cost allocation are also a concern.