AEP's major subsidiaries are regulated utilities that must comply with laws and
regulations at the federal, state and local levels. To increase rates or build new
facilities, we must justify the need and obtain approval. Working with regulators
is the only way we can serve our customers' needs cost-effectively while earning
a fair return for our shareholders.
We have always invested time to strengthen trust and credibility with our regulators.
During hearings for permission to build the John W. Turk Plant in Arkansas, that
state's Public Utility Commission (PUC) asked to visit one of AEP's plants before
rendering a decision. We invited the regulators, the state's attorney general and
the interveners to visit our Flint Creek Plant.
SWEPCO understood the concerns of the local communities that would be affected by
the new plant's construction and reached out across its three-state service territory
to outline the facts and answer questions. Months after testimony and stakeholder
discussions began, the Arkansas and Louisiana PUCs conditionally approved the new
plant – a significant milestone because it came at a time when other proposed
coal plants around the country were being rejected.
Our top priority is our employees', customers' and contractors' safety and health.
To improve our safety performance, we invited OSHA to meet with management and employees
and to visit our plants.
Raising customer rates is and will be necessary to keep pace with the increasing
cost of maintaining and operating AEP's system. When we needed rate increases in
Texas, AEP Texas initiated a campaign to educate regulators and customers about
why it was necessary. The Public Utilities Commission of Texas approved rate increases
in 2007. In the case of Texas North Company (part of AEP Texas), the commission
required us to make annual $50,000 contributions to the Texas Association of Community
Action Agencies to help subsidize electricity for low-income customers in its service
territory
After working with Ceres to develop the 2006 Corporate Responsibility Report, we
pledged to hold quarterly stakeholder briefings. Although not quite quarterly, we
did hold periodic meetings with Ceres, the Pew Center for Global Climate Change,
the NRDC and the Environmental Defense Fund to discuss our climate change strategy
and plans for carbon capture and storage. Our CEO and Chairman, Mike Morris, led
most of these meetings.
We continued to touch base with the Ceres stakeholder team (17 organizations) throughout
the year. For example, we briefed them when the New Source Review (NSR) settlement
was being announced, and when we decided to support the Bingaman/Specter climate
bill in Congress. In November 2007, we organized a stakeholder briefing call, led
by AEP Chairman Mike Morris. We also worked with other groups throughout the year,
including The Great Plains Institute, the Clean Air Task Force, ACEEE and the National
Wild Turkey Federation on various initiatives.
When the Oklahoma Corporation Commission opened a notice of proposed rulemaking
for development of energy efficiency programs, AEP seized the opportunity to work
with stakeholders, including Ceres and the NRDC, on this issue of mutual concern.
While they did not agree completely with our position, the dialogue we had was productive.
We learned more about what is important to them in establishing energy efficiency
programs and they learned how AEP recovers its costs for such programs.
