AEP is concerned about the nation's economy. With nearly 22,000 employees, we must ensure that our own finances and business are sound.

We need to provide our shareholders with the opportunity to earn a reasonable return on their investments and ensure we have suitable access to capital to fund our operations.

As we develop or advocate public policies, we also must keep in mind that our customers are experiencing their own economic difficulties.

The economic turbulence has created additional policy challenges. Through rate freezes and caps, the prices we charge customers for electricity have been kept artificially low in many of our states. The rates also are relatively low because a high percentage of our electricity comes from low-cost coal-fired generation. New laws requiring environmental controls on coal-fired generation and the rising cost to build needed generation are driving up the cost of energy. Electricity is going to cost more in the future — the best that AEP and other utilities can do is to mitigate those increases by helping customers reduce their usage and demand. That will delay or avoid the cost of new facilities. We also need policies that will create a healthy and reasonable business environment for the industry.

It would be wrong to say that the financial policy and alternative ratemaking initiatives at AEP are based solely on the current recession. In reality, the credit crunch has simply made worse what had already shaped up as a "perfect storm" in the realm of utility policy and regulation. Rising costs for all fuels, an infrastructure that is aging and widely recognized as needing substantial investment for technological advancements, and a cost recovery system that requires utilities to carry the debt of new investments for years prior to any recovery does not work given the magnitude of investment needed for this industry.

Compared with many nations, power prices in the United States remain a bargain. However, some of the countries with which the United States competes most heavily still have very low prices for power. One of the ongoing obstacles to enacting climate change legislation in the United States is ensuring that our trading partners will take comparable action and that their prices for power will reflect the cost of those actions. This is an issue AEP follows closely and has addressed in its proposal that it drafted with the International Brotherhood of Electrical Workers.