American Electric Power 2008 Corporate Sustainability Report

2008 Corporate Sustainability Report 47 Energy Security, Reliability & Growth During 2007, AEP began several breakthrough projects designed to put more control in the hands of customers, bolster the supply of available energy and strengthen the overall reliability of our system. The first is a major initiative called gridSMART that SM tomers that encourage energy conservation. Any change in rate structures will require investments in advanced metering and approval by state regulatory commissions. Those discussions, including time-of-day rates and others, will be addressed during regulatory filings this year. In each filing, the company will consider the impact on business, economic growth or vulnerable customers. GRIDSMART SM will allow customers to better manage energy demand, usage and cost. We will update and automate our electric distribution system so that customers will receive more reliable service while also having more choices about usage; we will have real-time information about the status of the system; and we will have a greater ability to conserve energy through more efficient operations. To facilitate this system, we signed an agreement with the General Electric Co. to jointly develop and deploy equipment and technology programs to enable these “smart grid” features. On the energy supply front, we received conditional approval to build a more efficient ultra-supercritical coal plant in Arkansas and approval to build a commercial-scale Integrated Gasification Combined Cycle (IGCC) plant in West Virginia. Finally, we reorganized our already Imagine being able to automatically postpone some energy intensive functions, such as running the air conditioner, hot water heater, pool functions or a manufacturing line, until after the hours of peak demand, when the cost is lower. With gridSMART SM customers will have control in their homes and in businesses that doesn’t exist today, giving traditional energy efficiency and demand-side management programs a big technological boost. gridSMART SM is the cornerstone of AEP’s energy delivery system of the future. Not every need or technological innovation that customers will demand in the future can be envisioned today, but gridSMART SM is being designed to pro- The Dolan Chemistry Lab processes insulating oil samples from electrical equipment for maintenance support. strong transmission operations as we advocate our vision for a nationwide extra-high voltage network that would add reliability and the ability to bring electricity from more diverse fuels to market. Despite these accomplishments and plans, many challenges remain. Although the Energy Information Administration’s projected growth in electricity demand has been lowered to 1.3 percent a year through 2030, from the 1.5 percent annual rate projected in 2007, that growth still will require new generating capacity. AEP is examining new rate structures that better link prices to the value of electricity at various times. Rates that increase with consumption provide price signals to cus- vide a much greater degree of flexibility than is now possible. gridSMARTSM provides three major benefits: it adds automation and capabilities to allow customers to better manage their energy use and improve reliability; it allows AEP to monitor and operate its system more efficiently and create fewer emissions; and it prepares the system for new technologies that could greatly affect how power is generated, distributed and consumed. Smart meters would communicate with an AEP data center to indicate the price of power at a given time and how much energy is being used. Coupled with time-of-day or other innovative rates, home or business ownEnergy Security, Reliability & Growth T Maryam Larijani, engineer, gridSMART SM equipment test lab

Table of Contents Feed for the Digital Edition of American Electric Power 2008 Corporate Sustainability Report

American Electric Power 2008 Corporate Sustainability Report Contents Leadership, Management & Strategy A Message from Michael G. Morris A Message from Dennis E. Welch About This Report Environmental Performance Work Force Issues Public Policy Climate Change Energy Security, Reliability & Growth Stakeholder Engagement Glossary GRI Table of Contents

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