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 gridSMARTSM that 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 Combustion Cycle (IGCC) plant in West Virginia.
Finally, we reorganized our already 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 customers 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.
