Our continued success as an organization will depend on our ability to maintain a knowledgeable, skilled and diverse work force. We see several challenges ahead, including:

• An aging work force and projected employee retirements;
• Enhancing workplace diversity;
• Long lead times to develop skilled workers for many key jobs; and
• Economic impacts on workers, including a wage freeze, limited hiring and budget reductions.

We have had to make deep budget cuts due to the recession and are focused on keeping our employees engaged and productive. We expect these financial hardships to continue through 2010 and perhaps longer. This year, we are freezing wages and limiting hiring and business travel. We recognize these are tough times for our employees as well. We are offering tools to help, including free financial counseling, investment seminars, stress management programs and health and wellness activities.

Our newer employees must be trained and ready to step in when our experienced employees retire. Our Legacy of Knowledge Program allows critical, retirement-age employees to continue working part-time with full-time benefits while they share their invaluable knowledge and experience with their successors. We also established "communities of practice" to help with knowledge transfer by capturing and sharing best practices and other job-related information. Our first community focused on power plant efficiencies with 40 active participants, and we hope to add communities on change management and error reduction in 2009.

Some of our stakeholders asked that we continue providing growth opportunities for our seasoned employees. We address this through programs such as Grid®, which instills a common set of core leadership skills such as listening, collaboration, team-building and learning to be candid in a respectful, constructive way. Since the program was implemented at AEP in 2005, about 1,600 leaders have attended, including 238 employees in 2008. In addition, our targeted leadership program focuses on the early identification and accelerated development of future leaders at all levels. We also are implementing a new system to improve the quality and consistency of how individual performance is managed by providing feedback and coaching to employees throughout the year.