Dear Stakeholders,
At AEP we are trying hard to balance meeting the needs of shareholders, customers,
employees, communities, the environment, public health and the world in which we
live. The better we strike this balance, the better we will do as a business.
We live and work today in an interconnected world, side-by-side with many different
stakeholders: advocates and community groups, neighbors, customers, investors, regulators
and national and international political leaders. They often have different points
of view from ours and from one another. We are starting to discover that by simply
listening to each other and working together, we all make more informed and better
decisions. AEP does not have all the answers to climate change or any other issue.
But we are more likely to find the right answers by working closely with others
to build knowledge, trust, mutual awareness and respect for each others' needs.
It is also vitally important that each of these groups interact in the same way
with us.
We have committed to you to be candid and transparent about our business. Last year
we reached out to many of our stakeholders and collaborated with them throughout
the year about climate change, technology, energy efficiency and transmission siting.
Our first sustainability report gave us a meaningful vehicle for those discussions
and we hope this one will as well. What we learn not only helps to shape this report
but also to influence the decisions we make, the programs and practices we implement
and our fundamental understanding of who we are and what we are about.
I cannot emphasize enough that we view this document as much more than a "report";
rather, we see it as a road map for the future, guiding our actions and bringing
us closer to our stakeholders.
As a result of these discussions, we have become more aggressive about our own energy
conservation and have begun to reduce the demand for electricity from our customers;
we have started to work with our coal suppliers and others to improve their environmental,
safety and health practices; we have become more engaged internationally, as well
as nationally, in the drive to find achievable solutions for global climate change;
and we continue to engage more of our stakeholders on a wider range of issues.
Sustainability is a journey for AEP, but it must be a personal journey for our management
and our employees, too. One of our continuing challenges is to spread our vision
for sustainability throughout the company so that we all understand and embrace
it and are aware of our personal roles in leading AEP into the future. We are developing
a plan that will raise awareness among employees and embed sustainability within
training, leadership communications, new employee orientation and day-to-day operations.
Our employees and company have succeeded for more than 100 years by being innovative
and bringing new technologies forward to address challenges. One of today's greatest
challenges is climate change and the solutions will affect AEP and our industry
far into the future. As Mike Morris has said, we believe that advanced technology
combined with an enlightened public and responsible regulation are the essential
elements in addressing climate change. We are prepared to do our part.
If we are to achieve a reasonable solution to global climate change, we have to
significantly increase investments in new technologies and energy efficiency programs.
Our job is to convince our customers and regulators that these investments are necessary
and appropriate. We work continuously with our federal regulators, state public
utility commissions, customers and legislators to convey our message and points
of view.
It is gratifying to hear from so many of our stakeholders that they believe we are
making progress. But we know our actions speak much louder than any document and
we recognize there is much more to do. Our environmental compliance performance
was excellent in 2007; we made tremendous progress toward achieving our ultimate
goal of zero environmental enforcement actions. We had fewer incidents of non-compliance
last year than in 2006 and, more importantly, when something did occur we reached
out to regulators and advocates to work with them to prevent future incidents.
It would be wrong for AEP to advocate energy efficiency as part of the climate change
solution and not practice it ourselves. With more than 400 facilities in 11 states,
we have a unique opportunity to be more energy efficient and to demonstrate the
value and cost-effectiveness of "green" buildings, especially in an industrial
setting. Through the Clinton Global Initiative we committed that, as we invest approximately
$100 million during the next five years to build or update existing facilities,
we will do so according to Leadership in Energy and Environmental Design (LEED)
standards as those opportunities arise. We are also working toward achieving greater
efficiencies through more efficient electrical transformers, heating and cooling
equipment and other initiatives.
We settled our New Source Review litigation in 2007, enabling us to move forward
with plans to lessen our environmental impacts over time. The settlement provides
for a broad range of environmental projects: reducing emissions from our coal-fired
power plants, adding more hybrid cars and trucks to our automotive fleet, converting
our river fleet to ultra low-sulfur diesel fuel and developing land conservation
and restoration programs.
The safety and health of our work force, our customers and the general public are
always our top concern. We are very grateful that we had no AEP fatalities last
year – the first time since 1997 and only the second time since 1970. We know
we can work safely when we stay focused and look out for each other. Unfortunately,
contractors working for us and members of the public were fatally injured after
coming in contact with electrical facilities.
We are concerned about the growing number of accident near-misses that are occurring
within AEP, too. We must work harder to take the "luck factor" out of
safety and health and replace it with the "on purpose" factor, which entails
aggressive, relentless preventive action. Our focus on hazard recognition is changing
how and when employees and contractors think about the risks associated with their
jobs. By identifying all hazards and risks associated with any job, we can change
tools or procedures and influence behaviors to prevent injuries and occupational
illnesses from happening. That sounds easy, but we all know that changing human
behavior is often a difficult challenge.
We have renamed this report the AEP Corporate Sustainability Report based on stakeholder
feedback. While similar to our first Corporate Responsibility Report, we believe
the new title better reflects its content and orientation. Also, several stakeholders
suggested we identify it as the 2008 report, rather than the 2007 report, because
we look forward as much as we review past performance.
Sustainability is a process of continuous change and improvement. We are on a pathway
that bends and turns as we work with others to address the issues that face us.
With hard work and dedication, we will move forward on that path so that we can
be proud of what we have accomplished and give the next generation the ability to
meet its needs.
The constructive tension between non-governmental organizations, such as environmental
groups, and the business community has helped each of us to improve who we are as
people, as organizations and as corporations. What's changed is that we now collaborate
more frequently because we are more willing to listen to each other and have productive
discussions on issues of mutual interest.
We enjoy and continue to learn from our ongoing dia-logue and collaboration with
our stakeholders and I thank them for their efforts. To those who are new to us,
we welcome your comments and invite you to join us – and to challenge us –
as we move forward.
Dennis E. Welch
Senior Vice President,
Environment, Safety & Health
