American Electric Power 2008 Corporate Sustainability Report

52 Energy Security, Reliability & Growth of our country’s ability to use coal in the future. We will continue to develop coal and carbon capture technologies. The second plant, proposed for Oklahoma, was not approved. As a result, Public Service Company of Oklahoma is working with its stakeholders to assess how we will meet growing energy demand in that region. (See the Climate Change section for more information on this topic.) AEP also continues to pursue the construction of two IGCC coal plants, which convert coal into a gas before combustion. IGCC plants can be highly efficient and can be more easily configured for carbon capture than pulverized coal plants. Plants are tentatively planned for West Virginia, which would serve Appalachian Power customers in West Virginia and Virginia; and in Ohio. The West Virginia Public Service Commission approved the 629-MW IGCC plant for Appalachian Power in March 2008. Unfortunately, the Virginia Public Service Commission has denied our request to recover the cost of building the plant. We plan to appeal the decision. This plant is important to meeting the needs of both states. Because of the Ohio restructuring law that took effect in 2000, the proposed Ohio plant faces legal challenges. The Ohio Supreme Court ruled in March 2008 that the plant cannot be added to the regulated companies’ rate base and sent the case back to the Public Utilities Commission of Ohio. We hope to resolve the issue. Our stakeholders support adding carbon capture technology to these plants. We are prepared to go forward with regulatory aspects of such an action when the economics of this technology become clearer. We are not building only coal plants; other fuels have a role to play as well. Natural gas plants continue to be added to our generation fleet because of their favorable emissions profiles, quick build times and scheduling flexibility. In 2007, AEP added 12 gas units with a total capacity of 2,020 MW. Although natural gas has a useful place in our national energy system, it also has its limits due to price volatility and supply issues. In addition to building more generating capacity, we are also focusing on supply-side efficiency in order to make the best possible use of existing generating capacity. Generating unit efficiency is expressed in terms of heat rate – the amount of energy required to generate one kilowatt hour of electricity. The less energy that is needed, the more efficient is the plant. AEP has long been a leader in efficiency. Our systemwide average heat rate for AEP-owned coal-fired units was 9,962 Btu/kWh in 2007. In 2006, our heat rate was 9,915 Btu/kWh, which is just under 4 percent better than the national fossil fuel average of about 10,300 Btu/kWh. Heat rate increased in 2007 primarily because of the addition of three scrubbers. As additional environmental controls are retrofit on plants, efficiency decreases, as reflected by an increase in heat rate. To improve plant efficiency, we routinely evaluate design improvements and have formed the Generation Performance Team to develop an integrated performance monitoring program for heat rate improvement and to provide guidance for a coordinated, disciplined approach to performance improvement. We also incorporate heat rate targets into the Generation group’s incentive compensation program. NUCLEAR ENERGY Nuclear energy is again being considered a viable option for AEP Chairman Mike Morris (left) leads a tour of the Cook Nuclear Plant for U.S. Energy Secretary Samuel Bodman (right). new generation, primarily as a response to climate change. We believe that nuclear should be among our power options

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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