The 1970 Clean Air Act (CAA) and subsequent amendments created public awareness about the importance of pollution control. The CAA helped to change the public's attitude about the value of environmental protection and created widespread understanding that economic growth and a clean environment can go hand-in-hand.

The investments we've made to improve power plant operations have contributed to better air quality by reducing coal consumption and producing fewer emissions. AEP consistently has produced electricity more efficiently than the national average for coal-fired power plants: our coal-fired power plant fleet is approximately 3.5 percent more efficient than the national average. Between 2001 and 2007, for example, we avoided burning 16.2 million tons of coal and the associated costs and space for ash disposal, saved approximately $559 million in fuel costs and avoided 39 million metric tons of carbon dioxide emissions as a result of our ongoing efficiency efforts. Because AEP has a large percentage of coal-fired capacity, the economic conditions of our service territory and the markets have resulted in lower coal consumption.

Although we have been reducing coal plant emissions since the 1970s, our efforts have intensified the past 10 years. Court decisions in 2008 about U.S. Environmental Protection Agency regulations created regulatory uncertainty, with the expectation that the rules will change and compliance costs will increase.

AEP's environmental retrofit program to comply with the Clean Air Interstate Rule (CAIR) continues despite uncertainty over CAIR's future. We devoted 14.5 million work hours to CAIR-related construction in 2008, making it among the largest construction programs in the country. Last year, new scrubbers were brought online at two coal units, and major construction continued on four additional units. One of these units also is being equipped with a selective catalytic reduction system to reduce nitrogen oxide (NOx) emissions; three others already have been equipped.

The D.C. Circuit Court of Appeals found significant legal deficiencies in CAIR and ultimately ordered the U.S. EPA to revise and correct the rule. Concerned the court would completely set aside the rule and leave no program in place, we advocated with state regulatory agencies and other utilities to keep CAIR in place. CAIR requires significant emission reductions and provides a degree of planning certainty for states and the private sector. Although the impact of the court's decision is uncertain and a new rule may be more stringent than CAIR, the original program is still in place. We are working with the U.S. EPA and others to help reach a realistic, achievable solution.

Because of the global financial crisis, we are facing severe financial issues that are likely to continue through 2010 or longer, forcing us to delay some of the scrubber projects that are planned. We want our stakeholders to understand that this is strictly a financial issue, not a change in our commitment to the environment.