We seek to maintain our leadership as one of the largest generation and transmission
companies in the United States and as the largest electric distribution business
throughout the regions we serve, and to be a leader in technical innovation of power
systems, environmental technology, transmission systems and customer service.
American Electric Power enters its second century committed to operating responsibly,
efficiently and profitably for customers, shareholders, employees and communities.
We will safely provide reliable, reasonably priced electric power while working
to protect people and the environment. We will engage stakeholders and continue
our role in making people's lives better today and for generations to come.
Like last year's report, this report covers seven material issues identified by
man agement and our Board of Directors that (1) have a significant impact on the
finances or operation of the company; (2) have significant impact on the environment
or society now or in the future; or (3) substantially influence the assessments
and decisions of stakeholders.
The seven material issues we have identified are:
- Leadership, Management & Strategy: Our sustainability requires a strong
and visionary leadership team willing to take prudent risks to maintain AEP's role
as an industry leader, meet the needs of our customers and deliver value to our
shareholders.
- Environmental Performance: Although environmental laws and regulations
are complex and change frequently, we must comply at all times, and we have made
significant investments in order to do so. Our challenge is to continually achieve
compliance and to reduce risks to the environment and the health of our communities.
- Work Force Issues: Protecting our employees' safety and health
and ensuring that we have a skilled, diverse work force to build, operate and maintain
new generation, transmission and distribution technologies are imperative if we
are to remain an industry leader.
- Public Policy: We must actively engage policymakers, employees,
community leaders and other stakeholders to ensure that public policy, laws and
regulations allow us to continue to serve our customers, reward our shareholders
and pursue our vision for sustainability.
- Climate Change: We are one of the largest greenhouse gas emitters
in the Western Hemisphere. Our sustainability and financial stability, and the economic
well-being of our service territory, are at risk if we are not able to prosper with
the proposed passage of a U.S. climate policy. Our success will be based on our
ability to work with technology providers to bring new technologies to commercial
scale.
- Energy Security, Reliability & Growth: Our electric delivery
system must be modern, reliable and keep pace with customer demand with a diverse
fuel supply. This requires us to collaborate with regulators, legislators and other
stakeholders not only to create and maintain such a system, but to ensure timely
regulatory cost recovery.
- Stakeholder Engagement: We need to work closely with our numerous
stakeholders, such as investors, customers, employees, regulators and policymakers.
If we are to be sustainable, we must be transparent and listen to all points of
view while measuring and holding ourselves accountable for our impacts.
American Electric Power conducted eight stakeholder meetings in the process of preparing
this report, enabling us to engage many more stakeholders than in the past. Our
operating companies and power plants, as well as senior management, participated
in this process.
We worked with SustainAbility,
a highly regarded sustainability firm, to facilitate most of our stakeholder meetings.
We spoke with state and federal regulators, power plant neighbors, environmental
and conservation groups, customers, employees, academia and community leaders. We
worked again with Ceres, a network
of investors, environmentalists and other public interest groups that works with
companies and investors to address sustainability challenges. Ceres brought together
17 organizations for this process. A group of investors also met with AEP to talk
specifically about sustainability issues. Our discussions are reflected throughout
this report.
Our primary stakeholders are:
- Shareholders and prospective investors
- Customers – large and small
- AEP employees and retirees
- Labor unions
- Local communities
- Federal and state legislators and regulators
- Prospective employees
- Suppliers and others doing business with the company
- Non-governmental organizations (NGOs)
- Professionals from industry, government, labor and academia
This report is based on performance and information for calendar year 2007, but
also provides available data for 2005 and 2006 to establish trends against which
current performance can be compared. Financial performance is covered in
AEP's 2007 Annual Report to Shareholders. This report contains forward-looking
information about our goals and progress.
AEP's Steering Committee for Sustainable Development, co-chaired by the chief financial
officer and the executive vice president of environment, safety & health and
facilities, guides the company's sustainable development and participated in creating
this report. This executive-level steering committee represents every business function
at AEP and met periodically throughout the year. The Committee on Directors and
Corporate Governance of AEP's Board of Directors reviewed the report and its content.
The full Board of Directors also reviewed the report and voted to approve it.
AEP joined SustainAbility's Engaging Stakeholders Program, which conducted a benchmark
of last year's report. The benchmark study offered several suggestions for improvement,
such as to make a clearer business case for climate change action and to show how
sustainability is being integrated within the company. The study also found the
report to be comprehensive, candid and transparent.
Last year's report was reviewed by
Ethical Corporation magazine, which said: [our] "approach to corporate responsibility
reporting is proportionate in size yet without verbosity or hype." The review offered
thoughtful suggestions for improvement that we considered in developing this report.
This report includes metrics for each material issue within each section of the
report relating to that issue, eliminating the need for an overview section (formerly
entitled "Challenges, Goals, Progress"). Many of our stakeholders asked for a shorter
summary report and we will publish one starting this year.
AEP is participating in the
Global Reporting Initiative (GRI) Electric Utility Sector Supplement Pilot
designed to identify relevant performance indicators for the electric utility industry
globally. This report incorporates more of the Supplement's indicators than did
last year's report.
Through AEP's Enterprise Risk and Insurance Department and oversight by the Risk
Executive Committee, AEP established a formal information collection and reporting
process for GRI indicators that allows us to track our progress against our commitments.
Reports to the Risk Executive Committee are made twice a year and are reported to
the Board of Directors. Each business unit collects and verifies data for which
it is responsible. Some of the data presented are required to be filed with other
entities (e.g., Chicago Climate Exchange, U.S. EPA) and are verified accordingly.
We continue to develop a more complete information management system as part of
our sustainable development initiative.
We continue to follow GRI's G3 Reporting Principles in an effort to provide a
balanced and reasonable representation of AEP's sustainability performance. These
principles are materiality, stakeholder inclusiveness, sustainability context, completeness,
comparability, accuracy, timeliness, clarity, reliability and boundary setting.
For additional information about this report, the GRI information on AEP's web site
or the company's sustainability initiative, please contact Sandy Nessing at
smnessing@aep.com.
