AEP works diligently to maintain an excellent compliance record. In keeping with its Environment, Safety & Health Policy, the company has continued its focus on improving compliance and has strived to reach a higher level of environmental excellence with each new year. To track environmental performance, the company has established certain performance metrics. These results of these metrics provide AEP with direction on where to focus improvement efforts. One key metric is the number of enforcement actions received by company facilities each year. The following table summarizes these enforcement actions, along with fines paid on an annual basis:

Four of the sixteen enforcement actions in 2004 were withdrawn or otherwise dismissed by state agencies and one of the six in 2005 was withdrawn. A closer look at the remaining enforcement actions from 2003 and 2004 reveals an increasing trend of actions that can be categorized as administrative or procedural. In 2003, fifty percent of the actions were administrative or procedurally related, and this percentage increased to 85 percent in 2004. The remainder of the enforcement actions in each year were equipment related. In 2005, AEP took action to further drive environmental compliance awareness into the organization, conducted a review of its environmental management system, and implemented a program to focus on equipment performance improvement. These efforts paid some dividends in 2005, but are expected to result in more sustainable long range improvement. The majority of the enforcement actions in 2005 can again be categorized as administrative or procedurally related. Therefore, looking toward 2006, AEP will further evaluate its environmental management system for improvements.

Another key metric addresses reportable oil spills for the Generation and the Transmission and Distribution business areas. The table below quantifies these spills for the years 2003-2007:

External forces that are generally impossible to control cause the majority of the reported oil spills. Therefore, the facilities focus their efforts on those spills that are preventable. Each reported release undergoes review by the source facility. If the cause was procedural or related to equipment failure, changes are made in the process or the equipment is repaired or replaced.