Doing what is right is the foundation of all environmental activity at AEP; compliance is the baseline by which we measure our performance. We are committed to being 100 percent compliant at all times, to zero environmental enforcement actions and to go beyond compliance wherever possible. AEP received one significant enforcement action in 2008 compared with two during 2007 and nine in 2006.¹ We tie compensation to this metric for most of our Generation organization and other business units, such as Environmental Services, as well as for all senior officers. Whereas our compliance record has improved, we will not be satisfied until we achieve and sustain zero environmental compliance actions.

The enforcement action occurred when the West Virginia Department of Environmental Protection (DEP) found that we had exceeded the permit discharge limit for selenium in the fly ash pond at the Mitchell Plant from June 2006 to May 2008. It proposed a fine of $47,530.

We first became aware of the problem after we installed a flue gas scrubber and a trona system at Mitchell. Trona is a mineral used to control sulfur trioxide levels in flue gas. Its installation increased the pH of the fly ash pond and resulted in selenium levels rising above permit limits. We identified this issue in our 2008 sustainability report, although the enforcement action was issued after the report was published. As we gained operating experience with the new air quality control equipment, we were able to better control the balance between the trona and the pH levels in the ash pond to bring the selenium levels within the permit limit. We have been in compliance with the permit limit since May 2008.

Our John Amos Plant near Charleston, W.Va., was involved in two air quality episodes in 2008. In both, weather conditions caused haze to form in the Kanawha Valley near the plant, and the state’s DEP determined that the plant was a primary contributor. As part of our overall upgrade program, the plant is being retrofitted with scrubbers, including new equipment to control the visible emissions that can be caused by the scrubbers. We are working with the DEP to identify appropriate operating parameters for the trona injection systems to control the visible appearance of the stack plumes. The operating parameters come from lessons learned and experience gained in operating similar systems at other AEP plants. These events demonstrate the complexity of installing new environmental equipment on our power plants.

Unfortunately, we received three enforcement actions early in 2009. The first was issued by the Virginia Department of Environmental Quality for exceeding a new SO₂ limit at our Clinch River Plant. In the process of switching to a lower-sulfur coal, we inadvertently reclaimed older, slightly higher-sulfur coal from the coal pile. The remaining two actions were issued by the West Virginia DEP related to the Amos Plant’s fly ash landfill and the Mountaineer Plant’s fly ash and gypsum landfill. A plan to address these concerns is being implemented.

¹Significant enforcement actions are defined as actions arising from events that are within our control, have more than a minor environmental impact, and result in fines greater than $1,000.